Nexco Resources Inc. — Management Reports 2023

Jul 31, 2023

NEXCO RESOURCES INC.

Management Discussion and Analysis For the nine months ended May 31, 2023 and 2022

The Management Discussion and Analysis (“MD&A”), prepared on July 31, 2023, should be read in conjunction with Nexco Resources Inc.’s (the “Company”) unaudited condensed interim financial statements and the accompanying notes for the nine months ended May 31, 2023 and 2022 and the audited financial statements and accompanying notes for the year ended August 31, 2022. The unaudited condensed interim financial statements for the nine months ended May 31, 2023 and 2022 have been prepared in accordance with IAS 34 and International Financial Reporting Standards (“IFRS”). Except as otherwise disclosed, all dollar figures included therein and in the following MD&A are quoted in Canadian dollars. Additional information relevant to the Company’s activities can be found on SEDAR at www.sedar.com.

This management discussion and analysis may contain forward-looking statements in respect of various matters including upcoming events. The results or events predicted in these forward-looking statements may differ materially from the actual results or events. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

DESCRIPTION OF BUSINESS

The Company was incorporated on December 14, 2012 under the laws of British Columbia. The address of the Company’s corporate office and its principal place of business is 750-1095 West Pender Street, Vancouver, British Columbia, Canada.

The Company’s principal business activities include the acquisition and exploration of mineral property assets. During the year ended August 31, 2021, the Company recorded an impairment charge of $174,594 to reflect the uncertainty related to the Company’s future work on the Berger property. During the nine months ended May 31, 2023, the Company was unable to maintain its minimum listing requirements with the Canadian Securities Exchange (the “CSE”) relating to its Berger Property asset and on March 24, 2023, the Company resumed trading on the Canadian Securities Exchange under the symbol ‘NXU.X’. On June 30, 2023, the Company’s Berger property mineral claims consisting of 1,178.04 hectares were forfeited by the Company.

As at May 31, 2023, the Company had a deficit of $7,160,222 (August 31, 2022 – $6,678,923), which has been funded by the issuance of debt and equity. The Company’s ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing to cover its operating costs. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these financial statements.

TERMINATION OF PROPOSED TRANSACTION

On March 20, 2023, the Company announced that the Company will not be proceeding with the proposed business combination and fundamental change transaction with Soter Technologies, LLC (the “Transaction”). The Company advanced a total of USD $3,450,000 (“Bridge Loan”) to Soter Technologies, LLC (“Soter”) and SymptomSense, LLC (“SymptomSense”) during the course of the Transaction. During the year ended August 31, 2022, the Company provided for an impairment charge of $4,318,870 (USD $3,450,000) against the Bridge Loan as a result of the uncertainty related to recovering the advances. On February 28, 2023, the Company executed a debt-swap agreement with Soter and SymptomSense whereby, in exchange for the Company forgiving the Bridge Loan, Soter issued to the Company an unsecured subordinated convertible note in the principal amount of US$3,250,000 (the “Debenture”). The Debenture bears interest of 12% per annum and is convertible into shares of common stock of Soter at the Company’s option and has a maturity date of the earlier of: (a) the date of a liquidity event, being a public offering of shares of common stock of Soter resulting in the listing for trading or quoting of Soter’s common stock on the NYSE, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, or the Nasdaq Global Select Market; and (b) November 28, 2023.

The Company and Soter also entered into a registration rights agreement, pursuant to which Soter agreed to register all applicable securities issuable upon conversion of the Debenture in accordance with its terms such that whenever Soter is required or proposes to register any of its equity securities under the United States Securities Act of 1933, as amended from time to time, Soter will, among other things, give the Company at least fifteen days prior written notice of its intention to effect such registration.

Concurrent with the issuance of the Debenture, Nexco and Soter entered into subordination agreement whereby Nexco released all security interests it held in respect of Soter under the security agreements entered into in connection with the Bridge Loan. Due to the uncertainty of recovering the amount due pursuant to the convertible note, the Company did not record the unsecured convertible note as an asset of the Company.

BERGER PROPERTY

	Acquisition	Exploration
	costs	costs	Total
	$	$	$
Balance, August 31, 2022	1	-	1
No Activity	-	-	-
Balance,May 31,2023	1	-	1

Pursuant to an initial and amended option agreements (the “Agreement”) dated August 21, 2014 and July 31, 2015, with the Optionor, the Company was granted an option to acquire a 100% undivided interest in the Berger Property (the “Property”) which consists of 2 mining claims located in the Kamloops Mining District of British Columbia. In accordance with the Agreement, the Company has acquired a 100% undivided interest in the Property by issuing a total of 100,000 common shares and making cash payment of $12,000. The Optionor will retain a 2% Net Smelter Returns (“NSR”) royalty on the Property. The Company has the right to purchase the NSR at a purchase price of $1,000,000 per percentage point during the 5-year period commencing from the date upon which the Property is put into commercial production. During the year ended August 31, 2021, the Company recorded an impairment charge of $174,594 to reflect the uncertainty related to the Company’s future work on the property.

Subsequent to the nine months ended May 31, 2023, the Company’s Berger Property mineral claims consisting of 1,178.04 hectares were forfeited by the Company on June 30, 2023.

CONVERTIBLE DEBENTURES

Balance outstanding, August 31, 2022	$2,095,896
Adjustment to the carrying value at September 1, 2022	($78,702)
Accretion and interest	$327,412
Balance outstanding,May31,2023	$2,344,606

The convertible debentures were issued in three tranches as follows:

• i. On July 20, 2021, the Company closed the first tranche of its non-brokered private placement of unsecured convertible debentures (each, a “Debenture”) of the Company for total gross proceeds of $350,000.

All securities issued in connection with the first tranche will be subject to a hold period expiring November 21, 2021. In connection with the closing of the first tranche, the Company paid finders’ fees in the amount of $28,100 and issued 112,000 broker warrants exercisable at $0.25 for two years.

The fair value of the brokers’ warrants was $23,666 and was estimated using the Black-Scholes pricing model with the following assumptions:

Risk free interest rate	0.4%
Expected life	2 years
Expected volatility	109%
Expected dividends	0%

• ii. On July 30, 2021, the Company closed a second tranche of a non-brokered private placement of unsecured convertible debentures (each, a “Debenture”) of the Company for total gross proceeds of $959,500. All securities issued in connection with the second tranche will be subject to a hold period expiring December 1, 2021. In connection with the closing of the second tranche, the Company paid finders’ fees in the amount of $77,360 and issued 307,040 broker warrants exercisable at $0.25 for two years. The fair value of the brokers’ warrants was $64,878 and was estimated using the BlackScholes pricing model with the following assumptions:

Risk free interest rate	0.4%
Expected life	2 years
Expected volatility	109%
Expected dividends	0%

• iii. On August 25, 2021, the Company announced it closed a third tranche of a non-brokered private placement of unsecured convertible debentures (each, a “Debenture”) of the Company for total gross proceeds of $720,500. All securities issued in connection with the third tranche will be subject to a hold period expiring December 26, 2021. In connection with the closing of the third tranche, the Company paid finders’ fees in the amount of $57,740 and issued 230,560 brokers’ warrants exercisable at $0.25 for two years. The fair value of the brokers’ warrants was $48,531 and was estimated using the Black-Scholes pricing model with the following assumptions:

Risk free interest rate	0.4%
Expected life	2 years
Expected volatility	109%
Expected dividends	0%

On August 9, 2022, the Company announced it entered into agreements to amend the maturity dates for the convertible debentures. All other terms of the convertible debentures remain the same. Amended maturity dates are as follows:

		Original	Amended Maturity
Principal Amount	Effective Date	Maturity Date	Date
$350,000	July 20, 2021	July 20, 2022	July 20, 2023*
$959,500	July 31, 2021	July 30, 2022	July 30, 2023*
$720,500	August 25,2021	August 25,2022	August 25,2023
$2,030,000

• these convertible debentures matured on their respective dates

The Company recorded an adjustment of $78,702 to reduce the carrying value of the convertible debentures to its fair value as at September 1, 2022 and was netted against accretion and interest expense for the nine month period ended May 31, 2023. During the nine months ended May 31, 2023, the Company recorded accretion and interest expense of $327,412 which resulted in a net accretion and interest expense for the nine months ended May 31, 2023 of $248,710 (2022 - $378,110).

At the Maturity Date, the outstanding Debentures will automatically convert into units of the Company (each, a “Unit”) at the following conversion price: (a) if the Company’s Transaction with Soter and SymptomSense has not yet closed, $0.225 per Unit (the “Conversion Price”), with each Unit consisting of one common share in the capital of the Company (each, a “Share”) and one-half of one non-transferable share purchase warrant (each whole warrant, a “Warrant”), with each Warrant exercisable into one Share (each, a “Warrant Share”) at a price of $0.75 per Warrant Share for a period of two years from the date of the Closing; (b) if the Transaction has closed, the greater of: (i) the Conversion Price and (ii) a price (the “Alternative Conversion Price”) equal to 75% of the price per security at which equity securities are issued by the Company in the concurrent financing (the “Concurrent Financing”) carried out in connection with the Transaction (the “Concurrent Financing Price”).

Selected Financial Data - Summary of Quarterly Results

The following selected financial information is derived from the unaudited interim financial statements prepared in accordance with IFRS.

	May 31, 2023 $	Feb 28, 2023 $	Nov 30, 2022 $	Aug 31, 2022 $
Revenues	-	-	-	-
General and administrative expenses	(198,774)	(173,910)	(108,615)	(137,987)
Loss and comprehensive loss	(198,774)	(173,910)	(108,615)	(4,358,133)
Basic and diluted lossper share	(0.01)	(0.01)	(0.00)	(0.11)
Workingcapital(deficiency)	(2,389,338)	(2,190,564)	(2,016,654)	(1,908,039)
Total assets	34,463	95,505	151,384	248,766
Non-current liabilities	-	-	-	-
	May 31, 2022 $	Feb 28, 2022 $	Nov 30, 2021 $	Aug 31, 2021 $
Revenues	-	-	-	-
General and administrative expenses	(220,889)	(240,916)	(200,164)	(194,952)
Loss and comprehensive loss	(220,889)	(240,916)	(200,164)	(332,536)
Basic and diluted lossper share	(0.01)	(0.01)	(0.01)	(0.01)
Workingcapital(deficiency)	(1,674,372)	(1,503,483)	(1,262,567)	(1,062,403)
Total assets	4,665,807	4,690,096	4,780,348	4,902,682
Non-current liabilities	-	-	-	-

Three months ended May 31, 2023 compared to three months ended May 31, 2022

During the three months ended May 31, 2023 (the “Q3-2023 Quarter”) the Company reported a net and comprehensive loss of $198,774 compared to a net and comprehensive loss of $220,889 for the three months ended May 31, 2022 (the “Q3-2022 Quarter”). The Company’s net and comprehensive loss during the Q3-2023 Quarter included general and administrative expenses as follows: $115,934 (Q3-2022 Quarter - $135,609) for accretion and interest expense on convertible debentures, $35,599 (Q3-2022 Quarter - $65,982) for consulting fees, $8,324 (Q3-2022 Quarter – $6,572) incurred for professional fees, $9,000 (Q3-2022 Quarter - $8,680) incurred for rent, $2,900 (Q3-2022 Quarter - $3,532) for transfer agent and filing fees and $15 (Q3-2022 Quarter - $514 expense) for recovery of office and general. Other items included $27,032 (Q3-2022 Quarter - $Nil) for a write-down of receivables due to uncertainty of recovering the balance.

The most significant changes between quarters related to accretion and interest expense of $115,934 (Q32022 Quarter - $135,609) recorded for convertible debentures that were issued during the quarter ended August 31, 2021. Additionally, in Q3-2022 the Company engaged a strategic advisor to advise the Company regarding its transaction with Soter. These strategic advisor consulting fees were reduced in the Q3-2023 Quarter.

Three months ended May 31, 2022 compared to three months ended May 31, 2021

During the Q3-2022 Quarter the Company reported a net and comprehensive loss of $220,889 compared to a net and comprehensive loss of $89,631 for the three months ended May 31, 2021 (the “Q3-2021 Quarter”). The Company’s net and comprehensive loss during the Q3-2022 Quarter included general and administrative expenses as follows: $135,609 (Q3-2021 Quarter - $Nil) for accretion and interest expense on convertible debentures, $65,982 (Q3-2021 Quarter - $48,686) for consulting fees, $6,572 (Q3-2021 Quarter – $16,842) incurred for professional fees, $8,680 (Q3-2021 Quarter - $18,113) incurred for rent, $3,532 (Q3-2021 Quarter - $3,299) for transfer agent and filing fees, $514 (Q3-2021 Quarter - $1,786) for office and general and $Nil (Q3-2021 Quarter - $905) for marketing.

The most significant change between quarters related to accretion and interest expense of $135,609 (Q32021 Quarter - $Nil) recorded for convertible debentures that were issued during the quarter ended August 31, 2021. Of the $135,609 accretion and interest expense, $51,167 related to interest expense and $84,442 related to accretion expense. Additionally, in Q3-2022 the Company engaged a strategic advisor to advise the Company regarding its transaction with Soter.

Nine months ended May 31, 2023 compared to nine months ended May 31, 2022

During the nine months ended May 31, 2023 (the “Q3-2023 Period”) the Company reported a net and comprehensive loss of $481,299 compared to a net and comprehensive loss of $661,969 for the nine months ended May 31, 2022 (the “Q3-2022 Period”). The Company’s net and comprehensive loss during the Q3-2023 Period included general and administrative expenses as follows: $248,710 (Q3-2022 Period - $378,110) for accretion and interest expense on convertible debentures, $135,749 (Q3-2022 Period - $158,736) for consulting fees, $25,693 (Q3-2022 Period – $49,379) incurred for professional fees, $27,000 (Q3-2022 Period - $53,437) incurred for rent, $12,507 (Q3-2022 Period - $11,709) for transfer agent and filing fees, $738 (Q3-2022 Period - $6,475) for office and general and $3,870 (Q3-2022 Period - $4,123) for travel. Other items included $27,032 (Q3-2022 Period - $Nil) for a write-down of receivables due to uncertainty of recovering the balance.

The most significant changes between periods related to accretion and interest expense of $248,710 (Q32022 Period - $378,110) recorded for convertible debentures that were issued during the period ended August 31, 2021. Additionally, in the Q3-2022 Period, the Company engaged a strategic advisor to advise the Company regarding its transaction with Soter. These strategic advisor consulting fees were reduced in the Q3-2023 Period.

Nine months ended May 31, 2022 compared to nine months ended May 31, 2021

During the Q3-2022 Period, the Company reported a net and comprehensive loss of $661,969 compared to a net and comprehensive loss of $426,914 for the nine months ended May 31, 2021 (the “Q3-2021 Period”). The Company’s net and comprehensive loss during the Q3-2022 Period included general and administrative expenses as follows: $378,110 (Q3-2021 Period - $Nil) for accretion and interest expense on convertible debentures, $158,736 (Q3-2021 Period - $211,161) for consulting fees, $49,379 (Q3-2021 Period – $83,938) incurred for professional fees, $53,437 (Q3-2021 Period - $52,758) incurred for rent, $11,709 (Q3-2021 Period - $17,220) for transfer agent and filing fees, $6,475 (Q3-2021 Period - $7,467) for office and general, $4,123 (Q3-2021 Period - $2,312) for travel, $Nil (Q3-2021 Period - $5,293) for interest and $Nil (Q3-2021 Period - $46,765) for marketing.

The most significant change between periods related to accretion and interest expense of $378,110 (Q32021 Period - $Nil) recorded for convertible debentures that were issued during the quarter ended August 31, 2021.

Of the $378,110 accretion and interest expense, $151,832 related to interest expense and $226,278 related to accretion expense. During the Q3-2021 Period, the Company incurred $46,765 in marketing expenses relating to branding and web development. The Company did not have any marketing expenses during the Q3-2022 Period. During the Q3-2021 Period, the Company was pursuing the proposed transaction with Soter and incurred $71,438 related to legal fees for the preparation and execution of its definitive and loan agreements with Soter. During the Q3-2022 Period, the Company was continuing to negotiate with Soter and incurred $29,879 in legal fees, primarily for amending applicable agreements and for general corporate matters.

SUBSEQUENT EVENTS

• i. The Company’s Berger property mineral claims consisting of 1,178.04 hectares were forfeited on June 30, 2023;

• ii. $350,000 in principal amounts of convertible debentures matured on July 20, 2023;

• iii. $959,500 in principal amounts of convertible debentures matured on July 30, 2023;

• iv. 112,000 warrants with an exercise price of $0.25 expired unexercised on July 20, 2023; and

• v. 307,040 warrants with an exercise price of $0.25 expired unexercised on July 30, 2023.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash at May 31, 2023 was $20,791 compared to $165,147 at August 31, 2022. The Company’s current liabilities at May 31, 2023 are $2,423,800 (August 31, 2022 - $2,156,805). Of the current liabilities, $2,344,606 are convertible debentures which are expected to be converted to equity within the next twelve months. At May 31, 2023, accounts payable was $79,194 (August 31, 2022 - $60,909). The Company believes the Company does not have sufficient funds to cover costs of operations over the next twelve months.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has not entered into any off-balance sheet arrangements.

RELATED PARTY BALANCES AND 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 includes directors and key officers of the Company, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). The Company had the following related party transactions during the nine months ended May 31:

	2023	2022
	$	$
Consultingfees -CEO	90,000	90,000

As at May 31, 2023 there is $10,500 (August 31, 2022 - $Nil) in accounts payable and accrued liabilities owing to related parties of the Company. During the nine months ended May 31, 2023, the Company wrote-down $27,032 receivable from a company with common management personnel due to the uncertainty of recovering the balance. As at May 31, 2023, there is $Nil (August 31, 2022 - $27,032) recorded in accounts receivable from related parties.

ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

The Company has performed an assessment of new standards issued by the IASB that are not yet effective. The Company has assessed that the impact of adopting these accounting standards on its financial statements would not be significant.

CRITICAL ACCOUNTING ESTIMATES

The preparation of these 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 financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The Company’s financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the 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 the financial position reporting date, 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, but are not limited to, the following:

Significant accounting estimates

• i. the assessment of indications of impairment of the mineral property and related determination of the net realizable value and write-down of the mineral property where applicable; and

• ii. the inputs used in accounting for share-based payments.

Significant accounting judgments

• i. the measurement of deferred income tax assets and liabilities;

• ii. the determination of categories of financial assets and financial liabilities

• iii. the evaluation of the Company’s ability to continue as a going concern; and

• iv. realization of advance receivables.

CRITICAL ACCOUNTING POLICIES

Share-based payments

The Company has a stock option plan, which is described in to the financial statements. Share-based payments to employees and others providing similar services are measured at the estimated fair value of the instruments issued on the grant date and amortized over the vesting periods. Share-based payments to nonemployees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received.

The amount recognized as an expense is adjusted to reflect the number of awards expected to vest. The offset to the recorded cost is to equity settled share-based payments reserve (Contributed Surplus).

Consideration received on the exercise of stock options is recorded as share capital and the related equity settled share-based payments reserve is transferred to share capital. Charges for options that are forfeited before vesting are reversed from equity settled share-based payment reserve.

Share-based compensation expense relating to deferred share units is accrued over the vesting period of the units based on the quoted market price. As these awards can be settled in cash, the expense and liability are adjusted each reporting period for changes in the underlying share price.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK

International Financial Reporting Standards 7, Financial Instruments: Disclosures , establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements.

The fair value hierarchy has the following levels:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Fair Value of Financial Instruments

The Company’s financial assets include cash and are classified as Level 1. The carrying value of these instruments approximates their fair values due to the relatively short periods of maturity of these instruments.

Assets measured at fair value on a recurring basis were presented on the Company’s statements of financial position as at May 31, 2023 are as follows:

	Fair Value Measurements Using	Fair Value Measurements Using
	Quoted prices in	Significant
	active markets	other	Significant
	for identical	observable	unobservable
	instruments	inputs	inputs
	(Level 1)	(Level 2)	(Level 3)	**Total **
Cash	$20,791	-	-	$20,791

Financial risk management objectives and policies

The Company’s financial instruments include cash and accounts payable. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below.

Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

(i) Currency risk

The Company’s expenses are denominated in Canadian dollars. The Company’s corporate office is based in Canada and current exposure to exchange rate fluctuations is minimal.

The Company does not have any significant foreign currency denominated monetary liabilities. The principal business of the Company is the identification and evaluation of assets or a business and once identified or evaluated, to negotiate an acquisition or participation in a business subject to receipt of shareholder approval and acceptance by regulatory authorities.

(ii) Interest rate risk

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.

(iii) Credit risk

Credit risk is the risk of loss associated with the counterparty’s inability to fulfill its payment obligations.

Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash. To minimize the credit risk, the Company places these instruments with a high quality financial institution.

(iv) Liquidity risk

In the management of liquidity risk of the Company, 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.

FINANCINGS

• i. During the nine months ended May 31, 2023, the Company did not complete any financings or issue any common shares.

• ii. During the nine months ended May 31, 2022, the Company received net proceeds of $50,000 for the exercise of 250,000 share purchase warrants at an exercise price of $0.20.

SHARE CAPITAL

Authorized

The Company is authorized to issue an unlimited number of common shares without par value.

Issued

Common Shares

During the nine months ended May 31, 2022, 250,000 warrants were exercised for $50,000.

As at May 31, 2023, August 31, 2022 and the date of this report, there were 35,862,666 common shares issued and outstanding. As at May 31, 2022, there were 35,862,666 common shares issued and outstanding.

Warrants

During the nine months ended May 31, 2023 and 2022, the Company did not issue any warrants.

On January 12, 2023, the Company announced that 7,205,340 warrants expiring on December 31, 2022 were extended to December 31, 2024 and 6,131,666 warrants expiring on January 20, 2023 were extended to January 20, 2025.The following table summarizes the warrants outstanding and exercisable as at May 31, 2023:

Warrant Exercise	# of Warrants	# of Warrants
price	Issued	Exercisable	Expiry date
$ 0.25	112,000	112,000*	July 20, 2023
$ 0.25	307,040	307,040*	July 30, 2023
$ 0.25	230,560	230,560	August 25, 2023
$ 0.15	3,399,000	3,399,000	October 16, 2023
$ 0.30	6,211,500	6,211,500	December 31, 2024
$ 0.20	993,840	993,840	December 31, 2024
$ 0.30	5,288,333	5,288,333	January 20, 2025
$ 0.20	843,333	843,333	January20,2025
	17,385,606	17,385,606

• These warrants expired unexercised subsequent to May 31, 2023.

Share Purchase Options

The Company has adopted a 10% rolling incentive stock option plan, which provides that the Board of Directors may from time to time, in its discretion, grant to directors, officers, employees and consultants of the Company non-transferable options (“Options”) to purchase up to 10% of the issued and outstanding common shares of the Company at the date of grant. In addition, no Options may be granted under the stock option plan if the number of common shares, calculated on a fully diluted basis, issued within 12 months to (i) related persons, exceeds 10% of the outstanding common shares of the Company, or (ii) a related person and the associates of the related person, exceeds 5% of the outstanding common shares of the Company.

During the nine months ended May 31, 2023 and 2022 the Company did not grant any stock options.

As at May 31, 2023, August 31, 2022, May 31, 2022 and the date of this report, there were nil stock options outstanding.

Escrow shares

As at May 31, 2022, August 31, 2022, May 31, 2022 and at the date of this report, there were nil shares held in escrow.

Corporate Governance

The Company’s Board and its committees substantially follow the recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders. The current Board and Audit Committee members are comprised of 3 individuals: Zayn Kalyan, Brandon Rook and Geoff Balderson.

Risk Factors

Exploration and Mining Risks

Mineral exploration and development involves a high degree of risk and few properties which are explored are ultimately developed into producing mines. The long-term profitability of operations will be in part directly related to the cost and success of exploration programs, which may be affected by a number of factors beyond the Company’s control. Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of mineral resources, any of which could result in work stoppages, damage to property, and possible environmental damage.

Hazards such as unusual or unexpected formations and other conditions such as formation pressures, fire, power outages, labor disruptions, flooding, explorations, cave-ins, landslides and the inability to obtain suitable machinery, equipment or labor are involved in mineral exploration, development and operation. We may become subject to liability for pollution, cave-ins or hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material, adverse effect on our financial position.

The Company relies upon consultants and others for exploration and development expertise. Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.

The economics of developing mineral properties is affected by many factors including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, allowable production, importing and exporting of minerals and environmental protection.

Financing Risks

The Company is currently limited in financial resources, has no sources of operating cash flow and can provide no assurance that additional funding will be available to the Company for any further exploration and/or development. There can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favorable.

Regulatory Requirements

Even if mineral properties are proven to host economic reserves of mineral resources, factors such as governmental expropriation or regulation may prevent or restrict mining of any such deposits or repatriation of profits.

The Company may acquire other properties in other jurisdictions or countries. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect our business. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, and expropriation of property, environmental legislation and mine safety.

Uninsurable Risks

In the course of exploration, development and production of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions including rock bursts, cave-ins, fires, flooding and earthquakes may occur. It is not always possible to fully insure against such risks and the Company has currently decided not to take out insurance against such risks as a result of high premiums or other reasons. 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 securities of the Company.

No Assurance of Titles

It is possible that any of our properties may be subject to prior unregistered agreements or transfers or native land claims and title may be affected by undetected defects.

Permits and Licenses

The operations of the Company may require licenses and permits from various governmental authorities. There can be no assurance that such licenses and permits as may be required to carry out exploration, development and mining operations at our projects will be granted.

Competition

The mineral industry is intensely competitive in all its phases. The Company competes with many companies possessing greater financial resources and technical facilities than the Company for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees. In addition, there is no assurance that a ready market will exist for the sale of commercial quantities of ore. Factors beyond the control of the Company may affect the marketability of any substances discovered.

These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital or losing our investment capital.

Environmental Regulations

Operations may be subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result in imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments.

Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations. There is no assurance that future changes in environmental regulation, if any, will not adversely affect our operations.

Stage of Development

The Company is in the business of exploring for, with the ultimate goal of producing, mineral resources from mineral exploration properties. The Company has not commenced commercial production and we have no history or earnings or cash flow from operations. As a result of the foregoing, there can be no assurance that we will be able to develop any properties profitably or that our activities will generate positive cash flow. A prospective investor in the Company must be prepared to rely solely upon the ability, expertise, judgment, discretion, integrity and good faith of our management in all aspects of the development and implementation of our business activities.

Markets for Securities

There can be no assurance that an active trading market in our securities will be established and sustained. The market price for our securities could be subject to wide fluctuations. Factors such as commodity prices, government regulation, interest rates, share price movements of our peer companies and competitors, as well as overall market movements, may have a significant impact on the market price of the securities of the Company. The stock market has from time to time experienced extreme price and volume fluctuations, particularly in the mining sector, which have often been unrelated to the operating performance of particular companies.

Reliance on Key Individuals

Our success depends to a certain degree upon certain key members of the management. It is expected that these individuals will be a significant factor in our growth and success. The loss of the service of members of the management and certain key employees could have a material adverse effect on the Company.

Geopolitical Risks

The Company may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on future exploitation and production, price controls, export controls, currency availability, income taxes, delays in obtaining or the inability to obtain necessary permits, opposition to mining from environmental and other non-governmental organizations, expropriation of property, ownership of assets, environmental legislation, labor relations, limitations on mineral exports, increased financing costs, and site safety. In addition, legislative enactments may be delayed or announced without being enacted and future political action that may adversely affect the Company cannot be predicted.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A are forward-looking statements or forward-looking information (collectively “forward-looking statements”) within the meaning of applicable securities legislation.

We are hereby providing cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the forward-looking statements. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

Forward-looking statements in this MD&A may include, but are not limited to, statements with respect to: (i) the estimation of inferred and indicated mineral resources; (ii) the registration of the concession agreements; (iii) the market and future price of gold or gold equivalent; (iv) the timing, cost and success of future exploration activities, including, but not limited to, the Company’s proposed work program and the advancement of its Properties (v) currency fluctuations; (vi) requirements for additional capital; (vii) the Company’s ability to continue as a going concern; and (viii) increases in mineral resource estimates. Forward-looking statements are based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. The Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable.

The risks, uncertainties and other factors, many of which are beyond the control of the Company, that could influence actual results include, but are not limited to: risks inherent in the exploration and development of mineral deposits, including risks relating to changes in project parameters as plans continue to be redefined, risks relating to variations in ore reserves, grade or recovery rates resulting from current exploration and development activities, risks relating to changes in the price of gold, silver and copper and the worldwide demand for and supply of such metals, risks related to current global financial conditions, uncertainties inherent in the estimation of mineral resources, access and supply risks, reliance on key personnel, risks inherent in the conduct of mining activities, including the risk of accidents, labor disputes, increases in capital and the risk of delays or increased costs that might be encountered during the development process, regulatory risks, including risks relating to the acquisition of the necessary licenses and permits, financing, capitalization and liquidity risks, including the risk that the financing necessary to fund the exploration and development activities at the Company’s projects may not be available on satisfactory terms, or at all, risks related to disputes concerning property titles and interest, and environmental risks.

Readers are cautioned that the foregoing lists of factors are not exhaustive.

The forward-looking statements in this MD&A are based on the reasonable beliefs, expectations and opinions of management on the date of this MD&A.

Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

There is no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.

The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. Except as required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking statements contained in this MD&A.