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Metalsource Mining Inc. Management Reports 2025
48213_rns_2025-11-17_98734861-4b45-4dd9-bffa-a0a600e16761.pdf
Management Reports
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METALSOURCE MINING INC.
Management's Discussion and Analysis
For the three months ended September 30, 2025
Introduction
The following Management's Discussion and Analysis ("MD&A") contains a review and analysis of financial results for Metalsource Mining Inc. (the "Company") for the three months ended September 30, 2025.
This MD&A supplements but does not form part of the condensed consolidated interim financial statements of the Company and should be read in conjunction with the condensed consolidated interim financial statements of the Company and notes thereto for the three months ended September 30, 2025 and 2024 (the "Financial Statements"). The Financial Statements have been prepared in accordance with IFRS Accounting Standards ("IFRS"). The following MD&A is current as of November 17, 2025.
All amounts in this MD&A are expressed in Canadian dollars, unless otherwise stated. The scientific and technical information in this MD&A has been reviewed by Rory Kutluoglu, P. Geo., a Qualified Person as defined by NI 43-101.
Additional information relating to the Company and its business activities is available under the Company's profile on SEDAR+ at www.sedarplus.ca.
Forward-Looking Statements
This MD&A contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable Canadian legislation, operations and financial performance and condition of the Company. All statements, other than statements of historical fact, included herein including, without limitation, management's expectations regarding the Company's growth, results of operations, estimated future revenues, future demand for and prices of gold and precious metals, business prospects and opportunities, future capital expenditures and financings (including the amount and nature thereof), anticipated content, commencement, and cost of exploration programs in respect of the Company's projects and mineral properties, anticipated exploration program results from exploration activities, the discovery and delineation of mineral deposits, resources and/or reserves on the Company's projects and mineral properties, and the anticipated business plans and timing of future activities of the Company, are forward-looking statements. In making the forward-looking statements in this MD&A, the Company has applied several material assumptions, including without limitation, that there will be investor interest in future financings, market fundamentals will result in sustained precious metals demand and prices, the receipt of any necessary permits, licenses and regulatory approvals in connection with the future exploration and development of the Company's projects in a timely manner, the availability of financing on suitable terms for the exploration and development of the Company's projects and the Company's ability to comply with environmental, health and safety laws. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct.
Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "may", "will", "budget", "scheduled", "estimates", "forecasts", "predicts", "intends", "targets", "aims", "anticipates" or "believes" or variations (including negative or grammatical variations) of such words and phrases or may be identified by statements to the effect that certain actions "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information. Such risks and other factors include, among others: the ability of the Company to obtain sufficient financing to fund its business activities and plans on an ongoing basis; operating and technical difficulties in connection with mineral exploration for the Company's projects; the Company's strategies and objectives, both generally and in respect of its specific mineral properties or exploration and evaluation assets; future prices of precious metals, currency fluctuations, changes in governmental and regulatory conditions, changes in the financial markets and in the demand and market price for commodities; and general business, economic,
competitive, political and social uncertainties, as well as those factors discussed in the section entitled "Risk of Foreign Operations."
These factors should be carefully considered and readers are cautioned not to place undue reliance on forward-looking statements. Although the forward-looking information contained in this MD&A is based upon what management believes to be reasonable assumptions, there can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Such forward-looking information is made as of the date of this MD&A and, other than as required by law, the Company assumes no obligation to update or revise such forward-looking information to reflect new events or circumstances.
Business Overview
The Company is a junior exploration company incorporated under the laws of the Province of British Columbia, Canada and whose common shares are listed on the Canadian Securities Exchange. The Company has one wholly owned subsidiary, Red Ridge Mining Proprietary Limited ("Red Ridge"), incorporated under the laws of Botswana.
The Company is principally engaged in the acquisition and exploration of mineral properties. The Company is currently exploring properties located in the United States and Botswana. The properties in the United States include the Byrd-Pilot Property and the Silver Hill Property, both located in the State of North Carolina. The property in Botswana is the Aruba Property, located in south-central Botswana. The Company is in the exploration stage and has not yet determined whether any of these properties contain mineral reserves that are economically recoverable.
Description of Property
Aruba Property
On September 26, 2023, the Company acquired the Aruba Property by purchasing all of the issued and outstanding securities of Red Ridge in exchange for 13,000,000 common shares of the Company with a fair value of $2,470,000.
The Aruba Property originally comprised five prospecting licenses totaling approximately 4,663 km². In accordance with Botswana's Mines and Minerals Act, license holders are required to reduce their prospecting areas upon each renewal. During the year ended June 30, 2025, the Company relinquished 1,985 km² (2024 – 436 km²) as part of this statutory reduction and to focus exploration efforts on the most prospective areas based on existing geological data. As at September 30, 2025, the Company's five prospecting licenses covered approximately 2,241 km² (June 30, 2025 – 2,241 km²).
The property is located in south-central Botswana, approximately 200 km west of the Bushveld Complex in neighboring South Africa. The prospecting licenses are located between the cities of Jwaneng and Werda, near the border with the Republic of South Africa. The Transvaal Supergroup is a late Archaean to early Proterozoic (2.65-2.05 Ga) platform succession developed on the Kaapvaal Craton and is subdivided into three basins: the Griqualand West, Kanye, and Transvaal Basins. Generally, the supergroup is consistently comprised of lower clastic sediments and volcanic rocks overlain by chemical sedimentary units, with a regional unconformity, which in turn is overlain by clastic sediments and volcanic lithologies. In Botswana and within the property, the portion of the Transvaal Supergroup is the Kanye Basin. The western portion of the licenses are underlain by Transvaal Supergroup, which, in South Africa, contains 40% of world Manganese reserves. There are very few prospective Manganese assets being explored in the western world. Property and regional geology also includes a portion of the western margin of the approximately 1300 km² Molopo Farms Complex ("MFC"), and includes the basal units known to be prospective for Nickel, Copper and PGE mineralization. The Company believes that these projects offer great upside for its shareholders and give them exposure to critical minerals within an exceptional mining jurisdiction. The MFC is made up by a well layered lower ultramafic sequence containing; chromite bearing hezburgite, olivine
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orthopyroxinite and dunite. The upper mafic layers consist of norite, gabbros and diorites with pegmatitic areas. Structurally, the MFC consists of a folded, block-faulted and tilted lopolith now warped into a southwest-plunging syncline and divided into northern and southern lobes by the east-northeast trending Jwaneng-Makopong and northeast-trending Werda-Kgare shear zones. Parts of the intrusion and its roof-rocks were later eroded and unconformably overlain by Waterberg Group and Kalahari sands.
The Company is required to pay to the Government of Botswana at the Office of the Director of Mines, an annual charge equal to Five Pula (P5) multiplied by the number of square kilometers in the license are subject to a minimum annual charge of One Thousand Pula (P1,000). The annual charge for the claims is P20,585 (approximately $2,115).
The Company completed its exploration program for 2025. The following exploration activities were carried out during the year ended June 30, 2025:
- Desktop Study - Detailed research on the Geology and mineral potential of the area.
- Field Mapping – Although there are limited outcrops in the area, there is a percentage of bedrock exposure and the licenses should be mapped at a property scale.
- Work with Botswana Geoscience Institute (BGI) and compile both digital and physical library.
- Identify historic water boreholes in the area – potentially adding to the geologic picture from historic logs, or where possible, chip samples to be re-logged.
- Identification and incorporation of relevant historic work on and around the prospecting licenses
- Geochemistry - Conduct soil sampling programs in selected areas that coincide with high magnetic and gravity readings. XRF samples and a few selected samples to be sent to an accredited laboratory for multi-element analysis.
Management is also planning additional exploration for 2026:
- Geophysics (CSAMT and/or Gravity surveys) – estimated 55,000 line km
- Drilling (Reverse Circulation) / Diamond Drilling (2,400m)
- Petrology analysis
Byrd-Pilot Property
On October 9, 2025, the Company closed an option agreement pursuant to which the Company has an option to acquire a 100% interest in certain mineral lease agreements and mineral exploration licenses with respect to the Byrd-Pilot Mountain Project and the Silver Hill Mine Project, consisting of approximately 2,160 total acres located in portions of Davidson County and Randolph County, North Carolina.
Under the terms of the option agreement, in order to earn a 100% interest, the Company must make cash payments totaling $250,000, issue 15,000,000 common shares, and incur $1,000,000 in exploration expenditures on the claims, as follows:
a. pay $25,000 and issue 3,000,000 common shares upon closing of the option agreement (paid and issued);
b. pay $100,000, issue 5,000,000 common shares, and incur $350,000 in exploration expenditures within 12 months of the closing date; and
c. pay $125,000, issue 7,000,000 common shares, and incur $650,000 in exploration expenditures within 24 months of the closing date.
The Company has agreed to pay a finder's fee equal to 10% of the value of the transaction, payable in a combination of cash and common shares. The Company paid $2,500 and issued 300,000 common shares as the initial finder's fee upon closing. The remaining finder's fee will be payable upon each subsequent annual payment and share issuance under the option agreement, and the Company will only be liable to pay such finder's fees if the corresponding payments are made.
The Byrd-Pilot Mountain Project, comprising approximately 1,032 acres in Randolph County, North Carolina, is located in central North Carolina within the Carolina Terrane. Early U.S. Geological Survey
work in the 1980s identified the area as potentially hosting a porphyry gold-copper system. Subsequent work demonstrated broad gold mineralization in soils, trenches, and shallow RC drilling, coincident with strong self-potential anomalies. The geology exhibits intense quartz-sericite-pyrite alteration, high-sulfidation signatures, and high-alumina minerals (similar to the Haile and Brewer deposits to the south), suggesting potential for a large epithermal or porphyry-related gold system. Geological modelling indicates an east-west trend to the mineralization, which remains open in multiple directions, with oxidation noted down to a depth of approximately 30 metres. No drilling has tested the Meridian discovery zone since the 1980s campaigns, leaving potential for significant resource expansion through work commitments under the option agreement.
Silver Hill Property
The Silver Hill Property forms part of the same option agreement described above under the heading "Byrd-Pilot Property."
The Silver Hill Mine Project is located within the Carolina Terrane and underlain by volcaniclastic and volcano-sedimentary rocks of predominantly Neoproterozoic and Cambrian age, interpreted to represent an extension of the Avalon Terrane. The property covers 1,128 acres in Davidson County, North Carolina. As the first significant silver discovery and the first silver-producing mine in the United States, Silver Hill hosts an extensive historical dataset, including drillhole records, underground mapping, historic dumps, and underground chip samples. Mineralization extends to approximately 550 metres from surface in steeply trending lenses that remain open in multiple directions. Recent surface sampling includes result SH25-003, which returned 444 g/t Ag, 17.7 g/t Au, 8.61% Pb, and 0.507% Zn.
In 2023, SRK Consulting conducted a review of existing data and prepared a "mineral inventory." This historical estimate suggests the presence of 347,422 tonnes grading 23.7 g/t silver, 2.17 g/t gold, 0.20% copper, 2.55% lead, and 7.89% zinc (SRK Technical Memorandum Project #USPR001521, 2023). This historical estimate was characterized as a "mineral inventory" and was not calculated in accordance with CIM or SME-defined standards and, therefore, should not be considered a current mineral resource. However, it demonstrates the geological potential of the property.
The historical "mineral inventory" utilized a MetVal calculation expressed as:
$$
(\text{Ag OPT} \times \text{Ag recovery} \times \text{Ag US\$/oz}) + (\text{Au OPT} \times \text{Au recovery} \times \text{Au US\$/oz}) + [(\text{Cu \%} \times \text{Cu recovery} \times \text{Cu US\$/lb} \div 100) \times 2000] + [(\text{Pb \%} \times \text{Pb recovery} \times \text{Pb US\$/lb} \div 100) \times 2000] + [(\text{Zn \%} \times \text{Zn recovery} \times \text{Zn US\$/lb} \div 100) \times 2000],
$$
where metal prices and recoveries were: US $1,805/oz Au, US $22.70/oz Ag, US $3.75/lb Cu, US $1.34/lb Zn, and US $0.94/lb Pb; and recoveries were 95.5% Au, 89.9% Ag, 86.3% Cu, 91.4% Zn, and 84.5% Pb.
A Qualified Person has not conducted sufficient work to determine what work would be required to upgrade the historical estimate to meet current CIM definitions of a resource. Additional drilling and related work would likely be required. The Company is not treating this historical estimate as current mineral resources, and a Qualified Person has not verified or classified the data underlying the historical estimate
Results of Operations
First Quarter Results
During the three months ended September 30, 2025, the Company recorded a net loss of $191,614, compared to a net loss of $67,802 for the same period in the prior year, representing an increase of $123,812. The higher loss was primarily attributable to increased consulting, listing, management, and professional fees during the quarter.
The following higher expenditures for the three months ended September 30, 2025, compared to the same period in 2024, contributed to the increase in loss:
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- Consulting fees were $41,644 (2024 - $21,000), an increase of $20,644, due to additional market support and technical consulting services.
- Listing fees were $66,317 (2024 - $3,919), an increase of $62,398, due to fees associated with the Company's listing on the OTCQB.
- Management fees were $48,000 (2024 - $42,000), an increase of $6,000, due to higher management compensation.
- Professional fees were $27,724 (2024 - $473), an increase of $27,251, due to legal fees related to a property acquisition and general corporate matters.
Financial Condition – First Quarter September 30, 2025 and Year End June 30, 2025
The Company's total assets as at September 30, 2025, were $2,869,541 (June 30, 2025 - $2,712,834), an increase of $156,707. The Company's current liabilities as at September 30, 2025, were $193,083 (June 30, 2025 - $63,682), an increase of $129,401, primarily due to higher accounts payable and accrued liabilities, as well as a loan payable.
The Company had cash of $219,161 as at September 30, 2025 (June 30, 2025 - $64,842) and working capital of $37,212 (June 30, 2025 - $9,882). The increase in cash and working capital was primarily due to proceeds received from share subscriptions and a loan payable.
When comparing the Company's financial condition for the three months ended September 30, 2025 with that of the year ended June 30, 2025, management notes that the Company continues to have limited financial resources. In October 2025, the Company completed a non-brokered private placement for gross proceeds of $4,000,000, providing additional funding for operations and exploration activities.
Summary of Unaudited Quarterly Results
Below is a summary of the Company's last eight quarterly results, selected from financial statements prepared under International Financial Reporting Standards:
| 2026 | 2025 | 2024 | ||||||
|---|---|---|---|---|---|---|---|---|
| 1^{st} Quarter | 4^{th} Quarter | 3^{rd} Quarter | 2^{nd} Quarter | 1^{st} Quarter | 4^{th} Quarter | 3^{rd} Quarter | 2^{nd} Quarter | |
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Loss for the period | (191,614) | (143,335) | (103,148) | (388,206) | (67,802) | (109,679) | (405,797) | (136,137) |
| Loss per share | (0.01) | (0.00) | (0.00) | (0.01) | (0.00) | (0.00) | (0.01) | (0.01) |
| Total assets | 2,869,541 | 2,712,834 | 2,814,696 | 2,895,673 | 2,758,873 | 2,749,467 | 2,748,964 | 3,010,458 |
The variability of net loss during the quarterly results is typically due to increases or decreases in exploration and business activity. During periods of greater activity consulting fees, general and administration fees, and professional fees will typically increase.
During the second quarter of 2025, the Company recorded a $227,514 impairment of exploration and evaluation assets. During the third quarter of 2024, the Company recorded a $273,710 impairment of exploration and evaluation assets.
Liquidity and Capital Resources
The Company does not generate cash flows from operations and accordingly, the Company will need to raise additional funds through the issuance of shares. When acquiring an interest in mineral properties through purchase or option the Company will sometimes issue common shares to the vendor or optionee of the property as partial or full consideration for the property interest to conserve its cash. Although, the Company has been successful in raising funds in the past there can be no assurance that the Company will be able to raise sufficient funds in the future, in which case the Company may be unable to meet obligations in the normal course of business. These factors may cast significant doubt regarding the Company's ability to continue as a going concern. Should the Company be unable to discharge liabilities in
the normal course of business, the net realizable value of the Company's assets may be materially less than amounts on the statement of financial position.
As at September 30, 2025, the Company had limited financial resources and was minimally funded to meet its short-term obligations. Subsequent to period-end, in October 2025, the Company completed a non-brokered private placement for gross proceeds of $4,000,000, providing additional funding for operations and exploration activities. As a result, the Company is considered adequately funded for the short to medium term.
Mineral exploration requires a significant amount of capital, and in order to carry out its longer-term exploration plans, the Company must raise additional equity capital, though there is no certainty that such financing will be completed. The Company is able to meet all of its ongoing financial obligations as they become due. The Company has no long-term debt obligations; however, a short-term loan payable is included in current liabilities. The Company has no commitments other than those described herein and in its financial statements.
Cash Flows
As at September 30, 2025, the Company had cash of $219,161 and working capital of $37,212, available to meet its short-term business requirements.
During the three months ended September 30, 2025 and 2024, the Company experienced the following changes in cash flows:
Cash Used in Operating Activities
Cash used in operating activities for the three months ended September 30, 2025, was $111,256, compared to $31,599 for the three months ended September 30, 2024, an increase of $79,657. The increase was primarily due to a higher net loss compared to the same quarter of the prior year, partially offset by non-cash adjustments and an increase in accounts payable and accrued liabilities.
Cash Used in Investing Activities
Cash used in investing activities for the three months ended September 30, 2025, was $Nil, compared to $1,300 for the three months ended September 30, 2024, a decrease of $1,300, due to lower cash payments related to exploration and evaluation assets.
Cash Provided by Financing Activities
Cash provided by financing activities for the three months ended September 30, 2025, was $265,575, compared to $40,000 for the three months ended September 30, 2024, an increase of $225,575, primarily due to proceeds received from share subscriptions and the issuance of shares, as well as higher proceeds from loans payable.
Effect of Foreign Exchange on Cash
The effect of foreign exchange on cash for the three months ended September 30, 2025, was $Nil, compared to a decrease of $88 for the three months ended September 30, 2024.
Share Capital
As at September 30, 2025, the Company has the following outstanding securities:
(i) Common Shares: 35,353,500
(ii) Warrants: 3,518,000
As at the date hereof, the Company has the following outstanding securities:
(i) Common Shares: 58,926,000
(ii) Warrants: 13,987,500
The Company has obtained its capital funding through equity financing.
Related Party Transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Key management personnel includes directors and key officers of the Company, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO").
The Company had incurred the following key management personnel costs:
| Three months ended September 30, 2025 | Three months ended September 30, 2024 | |
|---|---|---|
| Management fees paid to Joseph Cullen, the CEO | $ 24,000 | $ 21,000 |
| Management fees paid to Brandon Schwabe, the CFO | - | 8,000 |
| Management fees paid to 1499004 B.C. Ltd., a corporation controlled by the CFO | 15,000 | 4,000 |
| $ 39,000 | $ 33,000 |
During the three months ended September 30, 2025, the Company borrowed $50,000 from York Harbour Metals Inc., a non-arm's length party. Brandon Schwabe, the Company's CFO, also serves as CFO of York Harbour Metals Inc., and Joseph Cullen, the Company's CEO and a director, is also a director of York Harbour Metals Inc. The loan is unsecured, bears interest at 5% per annum, and is repayable upon the closing of the Company's next private placement. The Company recorded $274 of interest expense during the period
As at September 30, 2025, accounts payable and accrued liabilities included $22,050 (June 30, 2025 - $8,400) due to key management personnel. Included in this amount was $16,800 (June 30, 2025 - $8,400) due to the CEO for management fees and $5,250 (June 30, 2025 - $Nil) due to a company controlled by the CFO for management fees. The amounts payable are unsecured, non-interest bearing and due on demand.
Critical Accounting Estimates
Please refer to the June 30, 2025, audited consolidated financial statements on www.sedarplus.ca for critical accounting estimates.
Financial Instruments
The Company's financial instruments include cash, accounts payable and accrued liabilities, and loans payable. The risks associated with these financial instruments and any mitigating factors are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner. There were no changes to the Company's risk exposures during the period ended September 30, 2025.
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Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company's maximum exposure to credit risk is the carrying amount of cash. To minimize the credit risk, the Company places its cash with a high-quality financial institution.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. In the management of liquidity risk, the Company maintains a balance between continuity of funding and the flexibility through the use of borrowings. Management closely monitors the liquidity position and expects to have adequate sources of funding to finance the Company's projects and operations. All of the Company's accounts payable and accrued liabilities are due within 30 days and are subject to normal trade terms. The Company had cash at September 30, 2025 in the amount of $219,161 (June 30, 2025 – $64,842) in order to meet short-term business requirements. At September 30, 2025, the Company had current liabilities of $193,083 (June 30, 2025 – $63,682).
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Currency risk
Currency risk is the risk that the fair value of, or future cash flows from, the Company's financial instruments will fluctuate because of changes in foreign exchange rates. The Company's property interests in Botswana make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company's financial position, financial performance and cash flows. The Company is not exposed to material currency risk at September 30, 2025.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on the variable rate of interest earned on bank deposits. The fair value interest rate risk on bank deposits is insignificant as the deposits are short- term.
The Company has not entered into any derivative instruments to manage interest rate fluctuations.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market. The Company is not exposed to material other price risk at September 30, 2025.
Commitments and Contingencies
The Company is committed to certain cash payments, common share issuances and exploration expenditures as described in the Description of Property.
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Off Balance Sheet Transactions
The Company has no off-balance-sheet transactions.
Risk of Foreign Operations
The Company has a material property and operating subsidiary in Botswana which may expose the Company to a certain degree of additional risk and uncertainty. These additional risks may negatively impact the Company's business and operations and may include any of the following: changes in government regulations; changes in economic or tax policies; tariffs and trade barriers; regulations related to customs and import/export matters; limitations on foreign ownership; cultural and language differences; employment regulations; crimes, strikes, riots, civil disturbances, terrorist attacks, and wars; a deterioration of political relations with Canada or other governments or sanctions imposed by Canada or other governments; and currency exchange risks. In addition, Botswana is considered a developing economy which may pose a greater degree of risk to the Company than more mature economies because the economies in the developing world are more susceptible to destabilization resulting from domestic and international developments. The current, or a future government in Botswana may adopt substantially different policies, take arbitrary action which might halt exploration or production, re-nationalize private assets or cancel contracts, or mining or exploration rights, any of which could result in a material and adverse effect on the Company's results of operations and financial condition.