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Mexican Gold Mining Corp. — Management Reports 2025
May 27, 2025
46185_rns_2025-05-27_ed7fc5d9-d201-4fb3-a427-77d1f4311329.pdf
Management Reports
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MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
The following discussion is management's assessment and analysis of the results and financial condition of Mexican Gold Mining Corp. (the "Company" or "Mexican Gold") and should be read in conjunction with the accompanying condensed consolidated interim financial statements and related notes. The financial data was prepared using accounting policies consistent with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and all figures are reported in Canadian dollars unless otherwise indicated. The effective date of this Management Discussion and Analysis ("MD&A") is May 27, 2025.
This discussion provides management's analysis of the Company's historical financial and operating results and provides estimates of the Company's future financial and operating performance based on information currently available. Actual results will vary from estimates and the variances may be significant. Readers should be aware that historical results are not necessarily indicative of future performance.
Certain information set forth in this MD&A, including management's assessment of the Company's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be inaccurate and, as such, reliance should not be placed on forward-looking statements. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, if any, that the Company will derive there from. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law.
The scientific and technical geological content and interpretations contained in this report have been reviewed and approved by Mr. Sonny Bernales, P. Geo., a Qualified Person as defined by National Instrument 43-101, Standards of Disclosure for Mineral Projects ("NI 43-101").
Corporate Overview
The Company was incorporated under the Business Corporations Act (Alberta) on October 5, 2006. On January 17, 2011, the Company was continued into the jurisdiction of Ontario and on February 10, 2020, was continued as a British Columbia corporation under the Business Corporations Act in the Province of British Columbia. The address of the Company's registered office is 2500 - 700 West Georgia Street, Vancouver, BC, Canada V7Y 1B3.
The Company is a mineral exploration company engaged in the acquisition, exploration and evaluation of resource properties in Mexico. The Company is in the process of exploring and evaluating its mineral properties and, on the basis of the information to date, has not yet determined whether any of the properties contain economically recoverable reserves. The recovery of expenditures on the mineral properties is dependent upon the existence of economically recoverable mineralization, the Company securing and maintaining title and beneficial interest in the properties, and the ability of the Company to obtain the necessary financing to complete the exploration and development and future profitable production or, alternatively, on the sufficiency of proceeds from disposition.
As of the date of this MD&A, the Company's Board of Directors consisted of the following: Jack Campbell, John Anderson, and Ali Zamani. Additional information relating to the Company is available on SEDAR+ at www.sedarplus.ca and on the Company's website at www.mexicangold.ca.
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Operational Highlights
Exploration Program
On August 4, 2021, the Company announced a positive Preliminary Economic Assessment (PEA) for its 100% owned Las Minas project. The PEA is based on exploration and drilling programs conducted in 2019 and 2020, and detailed exploration results are provided in previous quarterly MD&A discussions.
The summary economic results of the PEA are as follows:
Las Minas PEA Financial Highlights, including Metal Prices Sensitivity
| Base Case (BC) | Spot Price (Jul 29, 2021) | Upside | Downside | |
|---|---|---|---|---|
| Au (US$/oz) | 1625 | 1830 | 2000 | 1200 |
| Ag (US$/oz) | 20 | 25.5 | 28 | 14 |
| Cu (US$/lb) | 3.25 | 4.45 | 4.75 | 2.25 |
| Magnetite Concentrate (US$/dmt) | 100 | 213.5 | 220 | 65 |
| Cumulative Cash Flow (US$M) | $99 | $237 | $276 | -$22 |
| After Tax NPV @ 5% (US$M) | $55 | $157 | $187 | -$37 |
| After Tax NPV @ 8% (US$M) | $35 | $122 | $148 | -$43 |
| After Tax IRR (%) | 16% | 31% | 35% | -5% |
| Capex Payback (Years) | 4.4 | 2.8 | 2.6 | n/a |
| EBITDA for First Year of Full Production (US$M) | $43 | $70 | $77 | $19 |
Notes:
Metal prices for Upside and Downside cases represent the individual metal historical 3-year highs and lows.
The PEA is preliminary in nature and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The Company also announces a new mineral resource estimate, prepared in accordance with National Instrument 43-101, of 443,000 gold equivalent ounces within indicated resources of 4.13 million tonnes at grades of 1.96 g/t gold, 4.64 g/t silver, 1.08% copper, 14.77% magnetite and 361,000 gold equivalent ounces within inferred resources of 5.20 million tonnes at grades of 1.44 g/t gold, 5.97 g/t silver, 0.95% copper, 17.54% magnetite, all reported at a US$80 per tonne Net Smelter Return (NSR) cut-off.
MEXICAN
GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
PEA Conceptual Design Summary
The concept for recovery of the Las Minas resource is through multiple underground mining methods at a production rate of 1,400 t/d with the mineralized material being hauled via truck to an underground crusher, where it is then crushed and conveyed to the processing plant. Processing will produce a copper concentrate containing gold and silver. Additionally, the tailings would be processed to recover magnetite. Tailings after magnetite recovery would be de-watered and pumped underground as cemented paste backfill. Tailings not placed as paste would be trucked to the tailings storage facility (TSF). Production at the mine would ramp up in year 1, maintain full production to the end of year 8, and decrease in year 9 as the deposit is depleted.
| Las Minas Resource Exploitation - PEA Highlights and Project Performance | |
|---|---|
| Total Tonnes Mined | 4,043 kt |
| Diluted Grades | |
| Gold | 1.84 g/t |
| Silver | 5.53 g/t |
| Copper | 1.06% |
| Magnetite | 15.7% |
| Mine Life | 8.5 years |
| Average Annual Production | |
| Gold Equivalent Ounces | 45,000 |
| Gold Ounces | 21,000 |
| Silver Ounces | 24,000 |
| Copper Pounds | 9,533,000 |
| Magnetite Concentrate Tonnes | 75,000 |
| Average Cash Cost Per Gold Equivalent Ounce | US$786 |
| Average Cash Cost Per Gold Ounce, Net of By-Product Credits | US$158 |
| Average AISC Per Gold Equivalent Ounce | US$928 |
| Average AISC Per Gold Ounce, Net of By-Product Credits | US$145 |
| Initial CAPEX | US$90.4 M |
| Sustaining CAPEX | US$54.7 M |
| Processing Plant Recoveries | |
| Gold | 80% |
| Silver | 70% |
| Copper | 90% |
| Magnetite | 90% |
Notes:
LOM Metal Prices - US$1,625/oz. Au, US$3.25/lb. Cu, US$20.00/oz. Ag, US$100/t Magnetite Concentrate
MEXICAN
GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
The following is the projected production for the Las Minas project over the expected life of the mine:
Las Minas PEA Mine Production from Indicated and Inferred Resources
| Production Year | Au (K oz) | Ag (K oz) | Cu (M lbs) | Magnetite (k tonnes) |
|---|---|---|---|---|
| 1 | 32 | 57 | 4 | 32 |
| 2 | 29 | 96 | 13 | 79 |
| 3 | 32 | 76 | 11 | 66 |
| 4 | 34 | 65 | 10 | 62 |
| 5 | 31 | 84 | 13 | 66 |
| 6 | 27 | 91 | 13 | 86 |
| 7 | 23 | 108 | 13 | 103 |
| 8 | 23 | 92 | 12 | 94 |
| 9 | 9 | 48 | 6 | 48 |
| Total | 239 | 719 | 94 | 635 |
Notes:
Assumed metal prices over life of mine: Gold US$1,625/oz - Silver US$20/oz - Cu US$3.25/lb - Magnetite Concentrate US$100/t.
Geology
The Las Minas project is located in southeastern Mexico within the eastern portion of the Trans Mexico Volcanic Belt (TMVB), an east-west belt of Miocene to recent volcanic rocks that transects the country from the Pacific coast to the Gulf of Mexico. The pre-Miocene basement in the Las Minas region consists of a sequence of Jurassic and Cretaceous marine sedimentary rocks including sandstone, siltstone, limestone and shale. These have been intruded by Tertiary and Mesozoic plutonic rocks mapped as dominantly granodiorite and porphyritic dacite, with lesser amounts of granite, diorite and tonalite.
Copper and gold mineralization have been recognized in three settings within the Las Minas property: proximal skarn, distal skarn and quartz veins. Proximal-type skarn is the dominant skarn alteration observed within the Las Minas resource zones (El Dorado and Santa Cruz) while distal and gold-bearing quartz veins occur in the exploration targets to the east and north of the Las Minas resources.
Proximal skarn developed along marble-diorite contacts, both as exoskarn developed within the sedimentary rock, and as endoskarn developed within the intrusion. The skarn alteration has a typical zoning of marble-exoskarn-endoskarn-diorite. The distinction between exoskarn and endoskarn can be very difficult because the skarn alteration (especially garnet replacement) can be texturally destructive.
Proximal skarn alteration is dominantly garnet-rich with lesser amounts of pyroxene, and locally garnet appears to have replaced pyroxene. The skarn contains variable amounts of magnetite and lesser sulfide minerals.
Within the Las Minas resource zones, chalcopyrite is the dominant sulfide mineral with lesser amounts of bornite and pyrite. Sulfide grains usually are associated with magnetite and are present as relatively coarse-grained disseminations while sulfide blebs, bands, and veinlets cutting magnetite are also observed. Pyrite occurs as an accessory mineral in the main resource area.
Gold-silver-copper mineralization at El Dorado zone occurs as two horizons that are separated by a barren north-northwest trending diorite dike. The current modeling indicates that the El Dorado skarn zone on the west side of the diorite dike has an 800 m northwest strike length, extends up to 450 m to the southwest away from the diorite dike, is on average 15 to 20 m thick, and can reach over 50 m in thickness along the northwest-striking contact with the diorite
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
dike. In contrast, the El Dorado zone on the east side of the dike has a strike length of 250 m northwest, extends up to 200 m to the northeast from the diorite dike, and is 5 to 10 m in thickness.
The Santa Cruz zone lies about 0.5 km south of the Las Minas pueblo and is well exposed on a west-facing canyon wall just above a tributary of the Rio Las Minas. Skarn within the Santa Cruz zone lies along the west side of the dike, immediately to the south of and stratigraphically higher than the El Dorado zone. The primarily east-dipping mineralization at Santa Cruz is more complex and discontinuous than observed at El Dorado due to the more variable intrusive-marble contact orientations (both near-vertical dike and east-dipping sills).
Mineral Resource Estimates
The mineral resource estimates for Las Minas were prepared to industry standards and best practices and verified by Garth Kirkham, P.Geo., an Independent Qualified Person for the purposes of NI 43-101.
Within the Las Minas Project, 206 drill holes (32,058 meters) supports the mineral resource estimate. The deposit was segregated into multiple estimation domains based on geologic models for each of the mineralized units. The estimated mineral resources occur within the Las Minas gold-copper-silver-magnetite skarn deposit, which consists of the mineralized endo-skarn and exo-skarn units within the El Dorado and Santa Cruz zones. The mineral domains were then used to code the block model, and assays within the modeled domains were evaluated geostatistically to establish estimation parameters. Assays were composited into 2-meter lengths. MineSightTM, a commercially available geologic modeling and mine planning software package, was used to produce a three-dimensional block model while LeapFrogTM Software was utilized to produce the solids models for the estimation domains.
The gold, copper, silver and iron grades were estimated into a three-dimensional, 12 m by 12 m by 3 m block model which was sub-blocked to 0.5 m in three dimensions. Gold (Au g/t), copper (Cu%), silver (Ag g/t) and total iron (Fe%) block grades were estimated from capped composited samples in a single pass. The mineral resources were estimated using ordinary kriging interpolation for the continuous mineralized domains. Search ellipse anisotropy and orientation were guided by the orientation of the domain solids models and omni-directional ellipsoids were employed in the individual zones.
Magnetite estimates were based on applying mathematical regression, as derived from SATMAGAN testing results, to the Total Fe% estimates. A total of 2,601 specific gravity readings were derived from measurements within individual rock types and estimated on a block-by-block basis using inverse distance.
Mineral resources are classified in accordance with the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves, and the 2019 CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines. Mineral Resources are classified under the categories of Indicated and Inferred according to CIM guidelines. Mineral Resource classification was based primarily on drill hole spacing and on continuity of mineralization. There are no measured resources at Las Minas. Indicated resources were defined as blocks with a distance to three drill holes of less than ~30 m to nearest composite and occurring within the estimation. Inferred resources were defined as those with a drill hole spacing of less than ~60 m.
Final resource classification shells were manually constructed on plan sections and all resources are constrained within lithological domains and by the continuous solids. Final Resource classification shells were manually constructed on sections. These interpreted boundaries were created for the indicated and inferred thresholds in order to exclude orphans and reduce potential "spotted dog" effect.
This estimate is also based upon the reasonable prospect of eventual economic extraction using estimates of reasonable operating costs and price assumptions. The mineral resources do not represent an attempt to estimate Mineral Reserves.
The Las Minas resources are reported in the following Table at a base case cut-off of US$80 NSR.
M
MEXICAN
GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Las Minas Deposit Indicated and Inferred Mineral Resource Estimate at a US$80 NSR
| Class | Tonnes | NSR (US$) | Au (g/t) | Au ('000 ounces) | Ag (g/t) | Ag ('000 ounces) | Cu (%) | Cu ('000 lbs) | Fe Magnetite (%) | Fe Magnetite ('000 tonnes) | AuEQ (g/t) | AuEq ('000 ounces) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Indicated | 4,133 | 138.58 | 1.96 | 260 | 4.64 | 617 | 1.08 | 98,311 | 14.77 | 610 | 3.34 | 443 |
| Inferred | 5,200 | 112.83 | 1.44 | 241 | 5.97 | 997 | 0.95 | 108,802 | 17.54 | 912 | 2.16 | 361 |
Notes:
1. Mineral Resource Statement prepared by Garth Kirkham (Kirkham Geosystems Ltd.) in accordance with NI 43-101.
2. Effective date: July 27, 2021. All Mineral Resources have been estimated in accordance with Canadian Institute of Mining and Metallurgy and Petroleum ("CIM") definitions, as required under NI 43-101.
3. Mineral resources reported demonstrate reasonable prospect of eventual economic extraction, as required under NI 43-101. Mineral resources are not Mineral Reserves and do not have demonstrated economic viability.
4. Underground Mineral Resources are reported at a cut-off grade of US$80 NSR. Cut-off grades are based on a price of US$1,700/oz gold, US$20/oz silver, US$3.50/lb copper and US$100/tonne magnetite concentrate and a number of operating cost and recovery assumptions, including a reasonable contingency factor.
5. Numbers are rounded.
6. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
7. The Mineral Resources may be affected by subsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors.
8. The table below illustrates the sensitivity of the indicated and inferred mineral resource estimate to changes in cut-off grade. The base case at a cut-off grade of US$80 NSR is highlighted in bold. The table suggests that the mineral resource estimate is moderately sensitive to cut-off grade in terms of estimated contained metal.
MEXICAN
GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Sensitivity of Las Minas Indicated and Inferred Mineral Resource Estimate to Cut-Off Grade (base case is highlighted)
| Class | NSR COG (US$) | Tonnes | NSR (US$) | Au (g/t) | Au ('000 ounces) | Ag (g/t) | Ag ('000 ounces) | Cu (%) | Cu ('000 lbs) | Fe Magnetite (%) | Fe Magnetite ('000 tonnes) | AuEQ (g/t) | AuEq ('000 ounces) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Indicated | >=60 | 5,431 | 122.00 | 1.71 | 299 | 4.27 | 746 | 0.95 | 114,341 | 13.84 | 752 | 2.94 | 514 |
| >=70 | 4,750 | 130.25 | 1.83 | 280 | 4.44 | 678 | 1.02 | 106,373 | 14.35 | 682 | 3.14 | 479 | |
| >=80 | 4,133 | 138.58 | 1.96 | 260 | 4.64 | 617 | 1.08 | 98,311 | 14.77 | 610 | 3.34 | 443 | |
| >=90 | 3,549 | 147.47 | 2.09 | 239 | 4.87 | 555 | 1.14 | 89,467 | 15.31 | 543 | 3.55 | 405 | |
| >=100 | 3,009 | 156.99 | 2.24 | 217 | 5.12 | 495 | 1.21 | 80,326 | 16.19 | 487 | 3.77 | 365 | |
| >=110 | 2,572 | 165.96 | 2.38 | 197 | 5.36 | 444 | 1.27 | 72,146 | 16.86 | 434 | 3.98 | 329 | |
| Inferred | >=60 | 6,769 | 102.84 | 1.32 | 287 | 5.49 | 1,195 | 0.86 | 128,586 | 16.23 | 1,099 | 1.97 | 428 |
| >=70 | 6,012 | 107.69 | 1.38 | 266 | 5.73 | 1,108 | 0.91 | 119,959 | 16.95 | 1,019 | 2.06 | 398 | |
| >=80 | 5,200 | 112.83 | 1.44 | 241 | 5.97 | 997 | 0.95 | 108,802 | 17.54 | 912 | 2.16 | 361 | |
| >=90 | 4,228 | 119.33 | 1.54 | 209 | 6.19 | 842 | 1.00 | 93,057 | 18.00 | 761 | 2.29 | 311 | |
| >=100 | 3,226 | 127.04 | 1.67 | 173 | 6.44 | 668 | 1.05 | 74,354 | 18.24 | 589 | 2.44 | 253 | |
| >=110 | 2,106 | 138.88 | 1.84 | 125 | 7.07 | 479 | 1.14 | 52,930 | 18.42 | 388 | 2.66 | 180 |
Notes:
1. Mineral Resource Statement prepared by Garth Kirkham (Kirkham Geosystems Ltd.) in accordance with NI 43-101.
2. Effective date: July 27, 2021. All Mineral Resources have been estimated in accordance with Canadian Institute of Mining and Metallurgy and Petroleum ("CIM") definitions, as required under NI 43-101.
3. Mineral resources reported demonstrate reasonable prospect of eventual economic extraction, as required under NI 43-101. Mineral resources are not Mineral Reserves and do not have demonstrated economic viability.
4. Underground Mineral Resources are reported at a cut-off grade of US$80 NSR. Cut-off grades are based on a price of US$1,700/oz gold, US$20/oz silver, US$3.50/lb copper and US$100/tonne magnetite concentrate and a number of operating cost and recovery assumptions, including a reasonable contingency factor.
5. Numbers are rounded.
6. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
7. The Mineral Resources may be affected by subsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors.
Mining Methods
The mining methods proposed are a split of lateral and stoping methods. Long-hole stopes account for 52% of production, 41% from room and pillar, and the remaining 7% from development. Full production of 1,400t/d is achieved in year 2 and sustained for the remainder of the mine life. The design allows for multiple production areas.
Stopes are sequenced using a primary-secondary layout and are backfilled using cemented tailings (paste) and development waste rock. Room and pillar areas are mainly mined as a single lift; however, in areas where the mineralization is thicker, multiple lifts might be required. Development waste and lightly cemented tailings are used as backfill in the room and pillar zones as a way of decreasing waste and tailings quantities on surface. The mine will be developed using a conventional mechanized underground mining fleet consisting of development jumbos, longhole
MEXICAN
GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
drills, bolters, LHDs, and haul trucks. The equipment and operation will be owner operated. Stope optimization and design was based on geotechnical design criteria and a NSR cut-off value of US$90/tonne.
Material Handling
An underground crusher would be located in the upper mining area of Eldorado Zone. Mineralized material would be crushed underground and fed onto a conveyor that crosses the river located near the process plant. At that point, the crushed material would be fed into the mill. Placing the crusher underground would decrease noise on surface and help reduce surface building congestion. Tailings from the process plant would be de-watered and either trucked to the TSF or mixed with water and cement to form paste. Paste would be pumped underground for use as backfill.
Binder content varies depending on the mining area being backfilled.
| Mining Method | % of total | Tonnes x 1000 |
|---|---|---|
| Development | 7% | 279 |
| Long-hole Stoping | 52% | 2,087 |
| Room and Pillar | 41% | 1,677 |
| Total | 100% | 4,043 |
| Development Type | Metres | |
| --- | --- | |
| Lateral Development – Waste | 8,426 | |
| Lateral Development – Mineralized (includes Room & Pillar) | 20,488 | |
| Vertical Development – Waste | 260 | |
| Total Development | 29,174 |
Processing
The Las Minas ore responds well to traditional copper flotation strategies, which the mill circuit's conceptual design is based on. In addition, the high values of magnetite in the ore allow for magnetite recovery from the copper tailings. The mill circuit consists of crushing, grinding, gravity gold recovery, flotation and magnetic separation.
The copper in this deposit is mostly found in chalcopyrite, bornite and chalcocite minerals which tend to float very well. The gold is mostly associated with sulphide minerals and therefore recovers well to the flotation concentrate. The flotation circuit utilizes a primary grind of 150 µm, but the test work does leave room for a coarser grind to be tested in the future. The process recovers copper and gold at 90% and 85% respectively, into a copper concentrate with high gold grades (>25 g/t), and magnetite recoveries of over 90%. The magnetite concentrate from the conceptual design would be sold to iron ore smelters, but test work identified that upgrading to magnetite for dense media separation is possible.
Infrastructure & Tailings Management
The village of Las Minas is within kilometers of a high-speed road and rail corridor. It is 250 km from Mexico City and 160 km from the Gulf port of Veracruz.
Within the resource area, there is a small hydroelectric facility supplied by steel penstock tubes from a reservoir several hundred meters up the ridge. This has been assessed as the most viable and efficient option for power supply of the project while supporting the local power plant. The area has an existing road network, abundant water and a highly collaborative local labour pool.
MEXICAN
GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
The conceptual design of the overall project layout considers the natural topography when locating the plant, camp, offices and truck shop, in conjunction with the town of Las Minas.
Tailings generated from mineral processing will be stored in an engineered TSF. Filtered (dry stack) tailings technology will be utilized for removal of free draining liquids from the tailings during operations, and water conservation. Approximately 50% of the generated tailings will be stored on surface in the TSF after removing magnetite and using paste tailings for underground mine backfill. Filtered tailings will be delivered by truck and spread and compacted in the TSF. The facility will be developed in stages over the life of the project and at closure the tailings surface will be covered with a suitable growth media and revegetated.
| PEA - Planned Costs | (US$/t processed) |
|---|---|
| Mining | US$35.83 |
| Processing | US$14.55 |
| G&A | US$7.37 |
| Treatment | US$16.70 |
Metal Prices Sensitivity
| 20% < BC | 10% < BC | Base Case (BC) | 10% > BC | 20% > BC | |
|---|---|---|---|---|---|
| Cumulative Cash Flow (US$M) | $17 | $58 | $99 | $140 | $182 |
| After Tax NPV @ 5% (US$M) | -$7 | $24 | $55 | $86 | $117 |
| After Tax NPV @ 8% (US$M) | -$18 | $8 | $35 | $62 | $88 |
| After Tax IRR (%) | 3% | 10% | 16% | 21% | 26% |
| Capex Payback (Years) | 7.1 | 5.4 | 4.4 | 3.7 | 3.2 |
| EBITDA for First Year of Full Production (US$M) | $27 | $35 | $43 | $51 | $59 |
Notes:
Base Case metal prices over life of mine: Gold US$1,625/oz. - Silver US$20/oz. - Cu US$3.25/lb. - Magnetite Concentrate US$100/t
Quality Assurance and Quality Control (QA/QC)
All Las Minas project drill and surface samples were sent to SGS for processing, except for a limited number of second-lab QA/QC check samples that were sent to ALS Minerals. SGS is presently accredited by the International Organization for Standardization (ISO) and has ISO 9001 certification and fulfills ISO/IEC 17025 testing requirements.
Samples were prepared following protocol for mineral sample preparation including weighing, drying, crushing, sieving, splitting, and pulverization. Samples were analyzed for gold and silver using fire assay techniques, and for copper and 33 other elements using inductively coupled plasma - atomic emission spectroscopy ("ICP-AES") techniques. SGS has used the same analytical methods and procedures for all of Mexican Gold's drill samples commencing in 2011.
QA/QC samples were inserted into the sample stream sent to SGS on a regular basis for all Mexican Gold drill campaigns. The QA/QC samples consisted of pulp blanks, certified reference materials, and duplicate samples. The duplicates samples consisted of field duplicates (quarter-core splits), preparation pulp duplicates from coarse rejects, and second-lab pulp re-assays. The QA/QC samples have made up about 10% of the total samples analyzed.
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
PEA Report
The PEA for the Las Minas Project is in accordance with National Instrument 43-101. The PEA is filed on SEDAR+ and is available on the Company's website.
Pepe Concessions
As previously disclosed, the Company, through its Mexican subsidiary Roca Verde, S.A. de C.V. (Roca Verde) filed a response as a third party of interest after receiving notification of an appeal by the heir of one of the five co-owners of a neighbouring concession (the "Neighbouring Concession Co-owner") to an earlier decision by the General Bureau of Mining ("GBM") located in Mexico regarding an overlapping area of its Las Minas property. The overlapping area comprises approximately 11% of the Las Minas project. The Company's interest in the Las Minas Project is held through Roca Verde, which owns six concessions, including the Pepe and Pepe Tres mining concessions (Collectively the "Pepe Concessions"). In 2016, Roca Verde received notice from the Regional Court of Tlaxcala of the Federal Tribunal of Administrative Justice ("RCT") advising that Neighbouring Concession Co-owner has appealed (the "2016 Appeal") against the GBM's decision to nullify a portion of the area of the concession that overlaps a portion of the Pepe Concessions.
The Company, after consulting with its Mexican legal counsel, is of the view that the appeal is without merit and that the February 28, 2014 decision by the General Bureau of Mining was correct in all material respects based on the review of the title documents relating to the Pepe Concessions and the neighbouring concessions, and both the former owners of the Pepe Concessions (from whom Roca Verde had acquired the Pepe Concessions) and currently Roca Verde have valid ownership to the overlapping area under applicable Mexican law. The Company believes that the 2016 Appeal will be denied in due course.
In early 2017, the above Neighbouring Concession Co-owner filed another petition with the General Bureau of Mining in Mexico requesting the cancellation of Roca Verde's Pepe mining concession. The GBM indicated that it would not review the petition until the 2016 Appeal is resolved. In 2017, the Neighbouring Concession Co-owner filed an appeal (the "2017 Appeal") in the RCT against the decision of the GBM as well.
The Company, after consulting its Mexican legal counsel, is of the view that the 2017 Appeal is also without merit and believes that the 2017 Appeal will be denied in due course. Based on a review of the title documents relating to the Pepe Concessions and the neighbouring concession and having consulted with Mexican legal counsel, the Company believes that both the former owners of the Pepe Concessions and now Roca Verde have valid ownership to the overlapping area under applicable Mexican law.
On December 15, 2021, the Company announced a positive resolution to the claims dispute, as resolved by the General Bureau of Mining. The GBM has nullified the portion of the neighbouring concession which overlaps the Pepe Concessions, and in turn has confirmed Roca Verde as the valid owners.
In early 2022, the above Neighbouring Concession Co-owner filed an appeal in the RCT against the most recent decision of the GBM.
The Company, after consulting with its Mexican legal counsel, is of the view that the 2022 Appeal is also without merit and believes that the 2022 Appeal will be denied in due course.
In September 2022, the RCT placed a suspension on the exploration of the properties of both parties involved in the legal process in accordance with legal precedent. Exploration will remain suspended until the court reaches a decision on the claims dispute. The suspension of the exploration activities applies within the overlapping area only.
MEXICAN GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Environmental Contingency
The Company's mining and exploration activities are subject to various laws and regulations relating to the protection of the environment. These environmental regulations are continually changing and are generally becoming more restrictive. As of March 31, 2025, the Company does not believe that there are any significant environmental obligations requiring material capital outlays in the immediate future.
Overall Objective
The Company's business objective is to generate returns for our shareholders by acquiring high potential precious metals exploration properties in safe jurisdictions and adding significant value by carrying out focused exploration and development programs.
Exploration and Evaluation Activities
On October 1, 2021, the properties were placed in care and maintenance. Care and maintenance costs of $75,195 (nine months ended March 31, 2024 - $71,353) were incurred in the nine months ended March 31, 2025.
Overall Performance and Results of Operations
Total assets decreased to $101,292 at March 31, 2025, from $231,955 at June 30, 2024 largely due to a decrease in cash and cash equivalents of $141,280. The decrease in cash and cash equivalents is attributable to net cash used in operating activities of $296,915 which was partially offset by a private placement financing for net proceeds of $155,635.
Three months ended March 31, 2025 and 2024
During the three months ended March 31, 2025, the loss for the period increased by $13,565 to $99,319 compared to $85,754 for the quarter ended March 31, 2024. Major variances are as follows:
- An increase of $6,949 in professional fees. Professional fees were $7,917 for the three months ended March 31, 2025, compared to $968 for the three months ended March 31, 2024. The increase is related to higher legal fees incurred in connection to activity surrounding the claims dispute in the current quarter.
- An increase of $2,449 in care and maintenance. Care and maintenance costs were $35,604 for the three months ended March 31, 2025, compared to $33,155 for the quarter ended March 31, 2024. The increase was related to repairs made to the core shack in the current quarter.
- A decrease of $2,175 in interest income. Interest income was $Nil for the quarter ended March 31, 2025, compared to $2,175 for the quarter ended March 31, 2024. The decrease is related to the redemption of the GIC's in the early part of the current fiscal year.
The Company recorded a loss of $99,319 or $0.00 basic and diluted loss per share for the quarter ended March 31, 2025 (March 31, 2024: $85,754 or $0.00 basic and diluted loss per share).
MEXICAN GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Summary of Quarterly Results
| Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | Jun. 30, 2023 | |
|---|---|---|---|---|---|---|---|---|
| Loss for the Period | (99,319) | (70,538) | (127,964) | (72,396) | (85,754) | (94,610) | (130,704) | (139,924) |
| Loss per Common Share Basic and Diluted(1) | (0.00) | (0.00) | (0.01) | (0.00) | (0.00) | (0.00) | (0.01) | (0.01) |
(1) Per share amounts are rounded to the nearest cent, therefore aggregating quarterly amounts may not reconcile to year-to-date per share amounts.
Nine months ended March 31, 2025 and 2024
During the nine months ended March 31, 2025, the loss for the period decreased by $13,247 to $297,821 compared to $311,068 for the period ended March 31, 2024. Major variances are as follows:
- A decrease of $84,040 in general and administrative expenses. General and administrative expenses were $180,679 for the nine months ended March 31, 2025, compared to $264,719 for the same period in the prior year. The decrease is related to the termination of the contract with an external consultant in the latter half of the prior year.
- A decrease of $52,000 in gain on forgiveness of debt. Gain on forgiveness of debt was $Nil for the nine months ended March 31, 2025, compared to $52,000 for the period ended March 31, 2024. The gain was related to a liability owed to a consultant that was forgiven in the prior year.
- An increase of $6,577 in professional fees. Professional fees were $43,280 for the nine months ended March 31, 2025, compared to $36,703 for the nine months ended March 31, 2024. The increase is related to higher legal fees incurred in connection with activity surrounding the claims dispute in the current period.
- An increase of $3,842 in care and maintenance. Care and maintenance costs were $75,195 for the nine months ended March 31, 2025, compared to $71,353 for the period ended March 31, 2024. The increase was largely related to repairs made to the core shack in the current period.
- A decrease of $6,072 in interest income. Interest income was $652 for the period ended March 31, 2025, compared to $6,724 for the period ended March 31, 2024. The decrease is related to the redemption of the GIC's in the early part of the current fiscal year.
The Company recorded a loss of $297,821 or $0.01 basic and diluted loss per share for the nine months ended March 31, 2025 (March 31, 2024: $311,068 or $0.01 basic and diluted loss per share).
Liquidity and Capital Resources
At March 31, 2025, the Company had cash of $69,234 to settle current liabilities of $31,637.
The Company does not currently have a recurring source of revenue and has historically incurred negative cash flows from operating activities. At March 31, 2025, the Company had working capital of $69,655.
The Company has experienced recurring losses and although the Company presently has sufficient financial resources to cover its existing obligations and operating costs, the Company expects to require further funding in the longer term to fund its planned programs and ongoing operations for the next year. Management is actively targeting sources of additional financing through alliances with financial, exploration and mining entities, or other business and financial transactions which would assure continuation of the Company's operations and exploration programs. In
MEXICAN
GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing. These items may cast significant doubt on the Company's ability to continue as a going concern. The sources of funds currently available to the Company for its acquisition and exploration projects are solely due from equity financing. The Company does not have bank debt or banking credit facilities in place as at the date of this report.
On February 24, 2025, the Company completed a non-brokered private placement offering of 4,000,000 units of the Company at a price of $0.04 per unit to raise gross proceeds of CAD $160,000. Each unit consisted of one common share in the capital of the Company and one share purchase warrant. Each warrant is convertible into an additional common share at an exercise price of $0.06 for a period of three years from the date of issuance. Share issuance costs of $4,365 were incurred in connection with the private placement financing.
Prior Financings
February 2025 – Net Proceeds of $155,635
On February 24, 2025, the Company completed a non-brokered private placement offering of 4,000,000 units of the Company at a price of $0.04 per unit to raise gross proceeds of CAD $160,000. Share issuance costs of $4,365 were incurred in connection with the private placement financing.
| Uses of Funds: | Intended Use of Proceeds (Estimated) $ | Actual Use of Proceeds $ | Over/(Under)-Expenditure at March 31, 2025 $ |
|---|---|---|---|
| Property care and maintenance | 50,000 | 34,173 | (15,827) |
| Estimated operating expenses | 105,635 | 52,228 | (53,407) |
| Total Uses | 155,635 | 86,401 | (69,234) |
March 2023 – Net Proceeds of $869,186
On March 15, 2023, the Company completed a post-Consolidation non-brokered private placement financing for aggregate gross proceeds of $900,000 through the issuance of 7,499,998 units of the Company at a post-Consolidation price of $0.12 per unit. Share issuance costs of $30,814 were incurred in connection with the private placement.
| Uses of Funds: | Intended Use of Proceeds (Estimated) $ | Actual Use of Proceeds $ | Over/(Under)-Expenditure at March 31, 2025 $ |
|---|---|---|---|
| Property care and maintenance | 173,837 | 173,837 | - |
| Estimated operating expenses | 695,349 | 695,349 | - |
| Total Uses | 869,186 | 869,186 | - |
Outstanding Share Data
At March 31, 2025 and the date of this MD&A, there were 25,234,278 common shares, 400,400 stock options and 12,499,998 warrants outstanding.
MEXICAN
GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Related Party Transactions
Key management personnel compensation
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of corporate officers and executive and non-executive members of the Company’s Board of Directors.
During the nine months ended March 31, 2025, and 2024, key management personnel compensation was as follows:
| Period ended | March 31, | |
|---|---|---|
| 2025 | 2024 | |
| $ | $ | |
| Consulting fees paid to the CEO | 45,000 | 45,000 |
| Consulting fees paid to the CFO | 27,000 | 27,000 |
| Directors fees | 9,000 | 9,000 |
| 81,000 | 81,000 |
At March 31, 2025, $15,000 (June 30, 2024 - $6,000) is included in accounts payable and accrued liabilities for amounts owed to directors. Amounts due to or from related parties are unsecured, non-interest bearing and have no specified terms of repayment.
Risks and Uncertainties
The risks and uncertainties described in this section are considered by management to be the most important in the context of the Company’s business. The risks and uncertainties below are not inclusive of all the risks and uncertainties the Company may be subject to and other risks may exist. The Company is in the business of acquiring, exploring and evaluating mineral properties. It is exposed to a number of risks and uncertainties that are common to other exploration and mining companies. The industry is capital intensive at all stages and is subject to variations in commodity prices, market sentiment, inflation and other risks.
Mining Exploration and Development
Exploration for minerals is highly speculative in nature, involves many risks and frequently is unsuccessful. There is no assurance that any exploration activities of the Company will result in the development of an economically viable mine project. The economics of developing mineral properties are affected by many factors including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of mining and processing equipment, government regulations, location of the orebody and its proximity to infrastructure such as roads and power, required metallurgical processes, regulatory permit requirements, prevailing metal prices, economic and financing conditions at the relevant time.
Substantial expenditures are required to establish mineral resources and mineral reserves through drilling, to develop metallurgical processes to extract the metal from mineral resources, and in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Assuming discovery of an economic ore body, depending on the type of mining operation involved, several years may elapse from the initial phases of drilling until commercial operations are commenced and during such time the economic feasibility of production may change.
The Company has never completed a mining development project and does not generate any revenues from production. The future development of properties found to be economically feasible will require the construction and operation of mines, processing plants and related infrastructure and the Company does not have any experience in taking a mining project to production. As a result of these factors, it is difficult to evaluate the Company's prospects,
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
and the Company's future success is more uncertain than if it had a more proven history.
The Company is and will continue to be subject to all of the risks associated with establishing new mining operations, including risks relating to the availability and cost of skilled labour, mining equipment, fuel, power, materials and other supplies; the ability to obtain all necessary governmental approvals and permits; potential opposition from non-governmental organizations, environmental groups or local residents; and the availability of funds to finance construction and development activities. Cost estimates may increase as more detailed engineering work is completed on a project. It is common for new mining operations to experience unexpected costs, problems and delays during construction, development, and mine start-up. In addition, delays in the early stages of mineral production often occur. Accordingly, the Company cannot provide assurance that its activities will result in profitable mining operations at its mineral properties.
Infrastructure
Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants, which effect capital and operating costs. Unusual or infrequent weather phenomena, terrorism, sabotage, community, government or other interference in the maintenance or provision of such infrastructure could adversely affect the Company's operations, financial condition and results of operations.
Regulatory Risks
Mining activities are subject to extensive laws and regulations governing prospecting, development, production, exports, taxes, labor standards, occupational health and safety, water disposal, toxic substances, explosives, management of natural resources, environmental management and protection, mine safety, dealings with native groups, historic and cultural preservation and other matters. Compliance with such laws and regulations increases the costs of planning, designing, drilling, developing, construction, operating and closing mines and other facilities.
Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining or curtailing operations, requiring corrective measures or other remedial actions, any of which could result in the Company incurring significant expenditures. Changes to current laws, regulations and permits governing operations and activities of mining companies, including environmental laws and regulations or more stringent enforcement thereof, could have a material adverse impact on the Company and increase costs, affect the Company's ability to expand or transfer existing operations or require the Company to abandon or delay the development of new properties.
The Company may be subject to potential legal claims based on an infringement of applicable laws or regulations which, if determined adversely to the Company, could have a material effect on the Company or its financial condition or require the Company to compensate persons suffering loss or damage as a result of any such infringement.
Permitting Risks
There can be no assurance that all licenses, permits or property rights which the Company may require for any exploration or development of mining operations will be obtainable on reasonable terms or in a timely manner, or at all, that such terms will not be adversely changed, that required extensions will be granted, or that the issuance of such licenses, permits or property rights will not be challenged by third parties.
Delays in obtaining or a failure to obtain such licenses, permits or property rights or extension thereto, challenges to the issuance of such licenses, permits or property rights, whether successful or unsuccessful, changes to the terms of such licenses, permits or property rights, or a failure to comply with the terms of any such licenses, permits or property rights that the Company has obtained, could have a material adverse effect on the Company by delaying or preventing or making more expensive exploration, development and/or production.
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Environmental Risks and Hazards
The Company's activities are subject to extensive federal, provincial state and local laws and regulations governing environmental protection and employee health and safety. Environmental legislation is evolving in a manner that is creating stricter standards, while enforcement, fines and penalties for non-compliance are also increasingly stringent. Compliance with environmental regulations may require significant capital outlays on behalf of the Company and may cause material changes or delays in the Company's intended activities. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations. Further, any failure by the Company to comply fully with all applicable laws and regulations could have significant adverse effects on the Company, including the suspension or cessation of operations.
Risks with Title to Mineral Properties
Title on mineral properties and mining rights involves certain risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the ambiguous conveyance history of many mining properties. Although the Company has, with the assistance of its legal advisors, diligently investigated and validated title to its mineral claims, there is no guarantee that the Company will not encounter challenges or loss of title to its assets. The Company does not carry title insurance.
The Company is actively engaged in the process of seeking to strengthen the certainty of its title to its mineral concessions, which are held either directly or through its equity interest in its subsidiaries. The Company cannot give any assurance that title to properties it acquired individually or through historical share acquisitions will not be impugned and cannot guarantee that the Company will have or acquire valid title to these mining properties. Failure by the Company to retain title to properties which comprise its projects could have a material adverse effect on the Company and the value of its common shares.
Risks Associated with Potential Acquisitions
The Company may evaluate opportunities to acquire additional mining assets and businesses. These acquisitions may be material in size, may change the scale of the Company's business and may expose the Company to new geographic, political, operating, financial and geological risks. The Company's success in its acquisition activities depends on its ability to identify suitable acquisition targets, acquire them on acceptable terms and integrate their operations successfully with those of the Company. The Company may need additional capital to finance any such acquisitions.
Debt financing related to acquisition would expose the Company to the risk of leverage, while equity financing may cause existing shareholders to suffer dilution. There is a limited supply of desirable mineral lands available for claim staking, lease or other acquisition in the areas where the Company contemplates conducting exploration activities. The Company may be at a disadvantage in its efforts to acquire quality mining properties as it must compete with individuals and companies which in many cases have greater financial resources and more technical staff than the Company. Accordingly, there can be no assurance that the Company will be able to compete successfully for new mining properties.
Negative Operating Cash Flow
The Company is an exploration stage Company and has not yet commenced commercial production on any property and has not generated cash flow from operations. The Company has a history of losses and there can be no assurance that it will ever be profitable. The Company expects to continue to incur losses unless and until such time as it commences profitable mining operations on its properties. The development of the properties will require the commitment of substantial financial resources. The amount and timing of expenditures will depend on a number of factors, some of which are beyond the Company's control, including the progress of ongoing exploration, studies and development, the results of consultant analysis and recommendations, the rate at which operating losses are incurred and the execution of any joint venture agreements with any strategic partners, if any.
- 16 -
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
There can be no assurance that the Company will ever generate revenues from operations or that any properties the Company may hereafter acquire or obtain an interest in will generate earnings, operate profitably or provide a return on investment in the future. There can be no assurance that the Company's cost assumptions will prove to be accurate, as costs will ultimately be determined by several factors that are beyond the Company's control. The Company expects to continue to incur negative consolidated operating cash flow and losses until such time as it enters into commercial production.
Financing
Additional funding will be required to complete the proposed or future exploration and other programs on the Company's properties. There is no assurance that any such funds will be available. Failure to obtain additional financing, if required, on a timely basis, could cause the Company to reduce or delay its proposed operations.
The majority of sources of funds currently available to the Company for its acquisition and exploration projects are largely derived from the issuance of equity. While the Company has been successful in the past in obtaining equity financing to undertake its currently planned exploration and development programs, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company.
Personnel and Equipment
The ability to identify, negotiate and consummate transactions that will benefit the Company is dependent upon the efforts of the Company's management team. The loss of the services of any member of management could have a material adverse effect on the Company. The Company's future drilling activities may require significant investment in additional personnel and capital equipment. Given the current level of demand for equipment and experienced personnel within the mining industry, there can be no assurance that the Company will be able to acquire the necessary resources to successfully implement its business plan. The Company is heavily dependent on its key personnel and on its ability to motivate, retain and attract highly skilled people. If, for any reason, any one or more of such key personnel do not continue to be active in the Company's management, the Company could be adversely affected. There can be no assurance that the Company will successfully attract and retain additional qualified personnel to manage its current needs and anticipated growth. The failure to attract such qualified personnel to manage growth effectively could have a material adverse effect on the Company's business, financial condition or results of operations.
Insurance
In the course of exploration, development and production of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions and other environmental occurrences may occur. It is not always possible to fully insure against such risks and, even where such insurance is available the Company may decide to not take out insurance against such risks. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the Company.
Litigation
The Company is subject to litigation risks. All industries, including the mining industry, are subject to legal claims, with and without merit. Defense and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, there can be no assurance that the resolution of any particular legal proceeding will not have a material adverse effect on the Company's financial position or results of operations.
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Enforcement of Civil Liabilities
Certain of the Company's directors and certain of the experts named herein reside outside of Canada and, similarly, a majority of the assets of the Company are located outside of Canada. It may not be possible for investors to effect service of process within Canada upon the directors and experts not residing in Canada. It may also not be possible to enforce against the Company and certain of its directors and experts named herein judgements obtained in Canadian courts predicated upon the civil liability provisions of applicable securities laws in Canada.
Changes in Political and Market Conditions
The Company's business may be affected by changes in political and market conditions, such as interest rates, availability of credit, inflation rates, changes in laws, and national and international circumstances. Recent geopolitical events and potential economic global challenges, such as the risk of higher inflation and energy crises, may create further uncertainty with respect to the Company's ability to execute its business plans.
Critical Accounting Policies and Estimates
The Company prepares its condensed consolidated interim financial statements in accordance with IFRS. The preparation of the condensed consolidated interim financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated interim financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates.
The condensed consolidated interim financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant assumptions about the future and other sources of estimation uncertainty that management has made at year end that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to the following:
Critical accounting judgments
-
Presentation of the condensed consolidated interim financial statements as a going concern which assumes that the Company will continue in operation for the foreseeable future, obtain additional financing as required, and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.
-
The analysis of the functional currency for each entity of the Company. In concluding that the Canadian dollar is the functional currency of the parent and the Mexican peso of its subsidiary company, management considered the currency that mainly influences the cost of providing goods and services in each jurisdiction in which the Company operates. Management also considered secondary indicators including the currency in which funds from financing activities are denominated, the currency in which funds are retained and the degree of autonomy the foreign operation has with respect to operating activities.
There were no critical accounting estimates made in the preparation of the condensed consolidated interim financial statements.
MEXICAN GOLD MINING CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
Financial Instruments
The Company's operations include the acquisition and exploration of mineral properties in Mexico. The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other risks. Where material, these risks are reviewed and monitored by the Board of Directors.
(a) Fair Values
The Company's financial assets and liabilities are measured and recognized according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy are as follows:
- Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
- Level 2 – Quoted prices in markets that are not active, or inputs, other than quoted prices included in Level 1, that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
- Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
The Company does not have financial instruments carried at fair value.
The Company's financial instruments consist of cash and cash equivalents and accounts payable and accrued liabilities. The carrying values of cash and cash equivalents, amounts receivable and accounts payable and accrued liabilities approximate their fair values due to the short-term maturity of these financial instruments.
(b) Financial Instrument Risk Exposure
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company does not have financial instruments that potentially subject the Company to credit risk.
Overall, the Company's credit risk has not changed significantly from the prior year. The Company places its cash and cash equivalents with financial institutions with high credit ratings, therefore the credit risk is minimal.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company has historically relied on issuance of shares to fund exploration programs and may require doing so again in the future.
The Company has $31,637 in accounts payable and accrued liabilities that are due within one year of the date of the statement of financial position.
Market risk
Market risk is the risk that changes in market prices, such as commodity prices, interest rates and foreign exchange
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
rates will affect the Company’s net earnings or the value of financial instruments. The objective of the Company is to manage and mitigate market risk exposures within acceptable limits, while maximizing returns.
(i) Currency risk
Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because it is denominated in a currency that differs from the functional currency of the respective entity. The functional currency of the parent company is the Canadian dollar, and the functional currency of the operating subsidiary is the Mexican peso. As of March 31, 2025, the Company has US dollar denominated assets of $5,864 and US dollar denominated liabilities of $7,702. Based on this net US dollar exposure, at March 31, 2025, a 10% change in the Canadian dollar to the US dollar exchange rate would impact the Company’s net income or loss by $184.
(ii) Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company has no debt and holds its cash in non-interest-bearing bank accounts. As such, the Company has minimal interest rate risk.
(iii) Price risk
Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company’s property has exposure to commodity prices. Commodity prices, especially gold, greatly affect the value of the Company and the potential value of its property and investments.
Capital Management
The Company’s objectives when managing capital are:
- To safeguard its ability to continue as a going concern in order to develop and operate its current projects;
- Pursue strategic growth initiatives; and
- To maintain a flexible capital structure which lowers the cost of capital.
In assessing the capital structure, management includes in its assessment the components of equity. In order to facilitate the management of capital requirements, the Company prepares expenditure budgets and monitors and reviews actual and forecasted cash flows. To maintain or adjust the capital structure, the Company may, from time to time, issue new shares, issue new debt, repay debt or dispose of non-core assets. The Company’s current capital resources are insufficient to carry out exploration plans and support operations through the current operating period. The Company is dependent upon the ability to raise additional funding to meet its obligations and commitments.
The Company is not subject to any externally imposed capital requirements.
There were no changes in the Company’s approach to capital management during the period ended March 31, 2025.
Off-Balance Sheet Arrangements
The Company does not utilize off-balance sheet arrangements.
Proposed Transactions
There are no proposed transactions as of the date of this report.
MEXICAN GOLD MINING CORP
MANAGEMENT'S DISCUSSION & ANALYSIS
For the nine months ended March 31, 2025 and 2024
New and Amended Accounting Standards and Interpretations
Initial application of new and amended standards in the reporting period
The IASB issued certain new accounting standards or amendments that are mandatory for accounting periods on or after January 1, 2024, including amendments to IAS 1 “Classification of Liabilities as Current or Noncurrent”, amendments to IFRS 16 “Leases”, and amendments to IAS 7 “Statement of Cash Flow” and IFRS 7 “Financial Instruments Disclosures”. The effect of such new accounting standards or amendments did not have a material impact on the Company and therefore the Company did not record any adjustments to the condensed consolidated interim financial statements.
New accounting standards issued but not yet effective
Certain new accounting standards or interpretations have been published that are not mandatory for the current period and have not been early adopted. These standards and interpretations are not expected to have a material impact on the Company’s condensed consolidated interim financial statements, except for IFRS 18 “Presentation and Disclosure in Financial Statements.”
IFRS 18 includes requirements for all entities applying IFRS for the presentation and disclosure of information in financial statements and has an effective date of January 1, 2027. The effects of the adoption of IFRS 18 on the Company’s condensed consolidated interim financial statements have not yet been determined.
Management's Report on Internal Control over Financial Reporting
In connection with National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings (“NI 52-109”) adopted in December 2008 by each of the securities commissions across Canada, the Chief Executive Officer and Chief Financial Officer of the Company will file a Venture Issuer Basic Certificate with respect to the financial information contained in the condensed consolidated interim financial statements and respective accompanying Management’s Discussion and Analysis. The Venture Issuer Basic Certification does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109.
Additional Information
Additional information relating to the Company can be found on SEDAR+ at www.sedarplus.ca.