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Olivut Resources Ltd. Management Reports 2025
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Management Reports
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OLIVUT RESOURCES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
APRIL 30, 2025
Olivut RESOURCES LTD.
OLIVUT RESOURCES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
APRIL 30, 2025
The effective date of this report is June 11, 2025.
This Management's Discussion and Analysis ("MD&A") contains certain "Forward-Looking Statements." All statements, other than statements of historical fact included herein, including without limitation, statements regarding potential mineralization and resources, exploration and evaluation activities, and future plans of Olivut Resources Ltd. (the "Company" or "Olivut") are forward-looking statements that involve various known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from expected results, including but not limited to changes in future prices of precious minerals, variations in resources and grades, accidents, labour disputes and other risks associated with the exploration and mining industry, delays in obtaining governmental approvals and financing, and the emergence of widespread health emergencies or pandemics and any related impacts on the global economy and financial market conditions and the Company's business, employees and consultants, results of operations, financial condition and prospects. Other than as required by applicable laws, the Company does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.
This MD&A provides a detailed analysis of the business of the Company and compares the results for the six months ended April 30, 2025 and the comparative period in 2024. In order to better understand this MD&A, it should be read in conjunction with the unaudited condensed interim financial statements for the quarter ended April 30, 2025 and the annual financial statements of the Company for the year ended October 31, 2024. The Company prepares and files with various Canadian regulatory authorities its financial statements and MD&A in Canadian dollars and in accordance with International Financial Reporting Standards ("IFRS").
The Company's news releases and other regulatory filings can be found on SEDAR+ at www.sedarplus.ca.
Description of Business
The Company is engaged in the acquisition, exploration and evaluation of mineral properties for the purpose of mining diamonds and other precious and base minerals.
As of the date of this report, the Company has a 100% mineral interest in the HOAM Project located in the Mackenzie Region (the "HOAM Project") and a 50% interest in the Seahorse Project (the "Seahorse Project") as described below. Both projects are located in Canada's Northwest Territories.
In addition, the Company has completed in the past, and may, where warranted and subject to available cash, continue to seek opportunities in the future to complete early stage evaluations for precious and base mineral potential in other relatively unexplored regions of the world. Olivut views these opportunities to be worthwhile for its shareholders as a way to provide possible additional upside potential through new exploration of promising terrain. If any such opportunities are investigated, the intent is to focus limited, initial expenditures to evaluate the potential for economic precious and base mineral deposits of meaningful size. The aim of the Company's management and the Company's technical team is to acquire if warranted, in their view, enough new scientific information from early stage analysis to conclude relatively quickly if a new project warrants further corporate commitment.
Further detail is provided under "Mineral Property and Exploration and Evaluation Activities".
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Summary of Quarterly Results
| | 2025
2^{nd} Quarter
$ | 2025
1^{st} Quarter
$ | 2024
4^{th} Quarter
$ | 2024
3^{rd} Quarter
$ |
| --- | --- | --- | --- | --- |
| Total interest income | 2,339 | 3,450 | 4,460 | 7,189 |
| Net (loss) | (108,537) | (130,688) | (323,149) | (82,391) |
| Basic and diluted net (loss) per share | (0.00) | (0.00) | (0.00) | (0.00) |
| | 2024
2^{nd} Quarter
$ | 2024
1^{st} Quarter
$ | 2023
4^{th} Quarter
$ | 2023
3^{rd} Quarter
$ |
| --- | --- | --- | --- | --- |
| Total interest income | 6,925 | 7,252 | 7,712 | 7,390 |
| Net income (loss) | (110,005) | 1,169,019 | (246,192) | (138,073) |
| Basic and diluted net income (loss) per share | (0.01) | 0.02 | (0.01) | (0.00) |
Results of Operations
Three and six months ended April 30, 2025 compared to three and six months ended April 30, 2024.
The Company's net (losses) for the three and six months ended April 30, 2025 were ($108,537) and ($239,225) respectively (2024 – ($110,005) and net income of $1,059,014 respectively).
The promissory note outstanding at October 31, 2023 was forgiven by the President and CEO during the quarter ended January 31, 2024 resulting in a gain on its forgiveness of $1,331,003 being recorded through the statements of operations and comprehensive income and loss (see below under "Transactions with Related Parties").
The Company has no active business income. Interest income is earned on cash deposits, as well as from the loan receivable during the three and six months ended April 30, 2024. Interest income in the three and six months ended April 30, 2025 amounted to $2,339 and $5,789 respectively (2024 - $6,925 and $14,177 respectively). The loan receivable, which earned 7% per year, was repaid in full on June 21, 2024.
Administrative and general expenses for the three and six months ended April 30, 2025 were basically consistent with the amounts incurred in the three and six months ended April 31, 2024.
Exploration expenses for the three and six months ended April 30, 2025 were $15,878 and $40,115 respectively (2024 - $22,951 and $64,260 respectively). The change in exploration expenses period over period is explained below under "Mineral Property and Exploration and Evaluation Activities".
Mineral Property and Exploration and Evaluation Activities
The HOAM Project
The Company has a 100% interest in certain permits in the HOAM project located in the Mackenzie Region, Northwest Territories, Canada. This interest is subject to a 1.5% Net Smelter Return royalty ("NSR"), 50% of which is held by a director and officer of the Company.
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The Company relinquishes or acquires land holdings based on the evaluation of technical information. The Company currently has interest in permits totaling approximately 36,800 hectares.
The Company has been very successful in identifying kimberlite occurrences in this previously unexplored area of the Northwest Territories. Twenty-nine kimberlite discoveries have been made to date. Although some of the kimberlites are microdiamond bearing, they do not contain the extremely positive diamond inclusion field indicator mineral populations (including G10 garnets) that were previously found in regional stream sediment and till samples in the HOAM Project area. The presence of these high priority indicator minerals warrants continued exploration to discover their source.
In prior years, a detailed helimag program was undertaken by the Company to assess moderate to high priority anomalies. Twenty-three blocks were flown at 50 metre line spacing. The blocks were selected based on logistical parameters to maximize the amount of data that could be obtained within a limited field budget.
Seventeen targets have been classified as being of moderate to high priority. In addition, as part of the helimag program, a larger block was flown over an area of known kimberlite occurrences to assess regional structures and define weaker magnetic responses. The Company is very pleased with the results from this test area as additional high interest targets have been identified; many of these correlate to structural features. These results have positive implications for exploration within the broader region of the HOAM project area.
In-depth interpretation of the Company's extensive regional airborne geophysical database is ongoing. Modeling of certain targets also has been undertaken. Numerous additional new anomalies have been defined up ice from high interest kimberlite and diamond inclusion field indicator mineral populations. The bedrock sources for these indicator mineral populations have yet to be identified. Based on the encouraging results to date, detailed airborne magnetic surveys will be required over these new anomalies to provide increased definition. It is anticipated that many additional new targets will be added to the current list of priority drill targets.
Numerous targets are drill ready on the HOAM Project and a detailed helimag program is proposed for additional regional geophysical anomalies in order to finalize the drill priority list. Completion of further work programs is contingent on the raising of funds and potential supply chain disruptions and additional related costs arising from the COVID-19 pandemic, particularly on planning and work in the Northwest Territories.
Actual exploration costs on the HOAM Project for the three and six months ended April 30, 2025 were $8,681 and $8,681 respectively (2024 - $20,674 and $35,769 respectively).
The Seahorse Project
General
In July 2018, the Company signed an option agreement (the "Option Agreement") with Talmora Diamond Inc. ("Talmora") to earn 50% in Talmora's Seahorse Project, located in the Northwest Territories, by spending $1,200,000 (in a combination of cash and in-kind expenses) over two years on exploration expenditures and making a $200,000 payment to Talmora (the "Option Payment"). The Company exercised its option to earn 50% of the Seahorse Project in accordance with the terms of the Option Agreement. Olivut and Talmora are joint (50/50) owners of the assets. Olivut is the Operator. Talmora retains a 1% NSR on certain land. The Company and Talmora have not yet entered into a new formal joint venture company structure as contemplated in the Option Agreement.
The Company considers the Seahorse Project to have the potential to host diamondiferous kimberlite bodies of significant size based on a combination of: caustic fusion results including 19 microdiamonds (<0.5mm) and one macrodiamond (>0.5 mm); 2019 program results as described below; favourable diamond inclusion field indicator minerals found regionally and locally, including 18 macrodiamonds found down-ice in regional samples to the west and northwest; specific geophysical targets; regional and local faults that would favour kimberlite emplacement; occurrence of diamondiferous kimberlites to the north and southeast, as well as other geochemical data in the area.
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2018 Field Program
Crews and equipment were mobilized to initiate a detailed airborne geophysical survey program on the Seahorse Project. Unseasonable, extremely poor weather conditions severely hampered field progress with the helimag survey since flying was not possible throughout the majority of the field program. However, reconnaissance work to assist with a future drill program was carried out and included collection of a 1.8kg beach sand sample, which was subsequently sent to Saskatchewan Research Council ("SRC") and analyzed for kimberlitic indicator minerals ("KIMs") and subjected to geochemical analysis. Two G-9 pyrope garnets and a picroilmenite were confirmed and elevated rare earth elements ("REE") content was noted.
2019 Field Programs
Olivut successfully completed a helimag geophysical program during 2019. Detailed, low-level, 50 metre line spacing magnetic information was collected and analyzed over multiple anomalies previously identified from regional geophysics.
During August and September 2019, six reverse circulation drill holes were drilled to test certain regional geophysical targets that had been confirmed and further delineated by the detailed helimag program. The holes were drilled to a maximum depth of 316' (96.3 metres).
Beneath tills, each of the holes intersected varying depths of a distinct homogeneous, extremely fine-grained clay that did not appear to be derived from the dolomite country rock that is exposed proximal to the targets. Down hole drilling conditions were exceptionally challenging, as was the recovery of drill sample material, due primarily to the nature of these intersected clays.
Preliminary visual inspection, as well as further microscopic examination of many of the collected samples, could not specifically identify the host rock from which the clay material is derived. Subsequently, samples were collected from each of the six holes and sent for analysis to SRC.
Whole rock and multi-element geochemical results returned complex chemistry characterized by elevated REE content. Further analysis is ongoing to relate these findings to till samples taken down-ice in the general region. Sulphides, including pyrite, galena and sphalerite, as well as mafic silicate minerals were easily identified in many downhole samples.
The Seahorse Project area underwent periods of extreme warming and laterization historically that destroyed silicate indicator minerals as evidenced from regional till sampling results. However, some opaque oxide KIMs and diamonds survive this type of weathering.
To determine the potential presence of any KIMs, additional samples from five of the six drill holes, each consisting mostly of the homogeneous clay, were submitted for heavy mineral analysis to SRC in 2019. Chromites, ilmenites (some manganese bearing) and abundant pseudorutile (an alteration product of ilmenite which is common in intensely weathered kimberlite) are present. Although the chromites and ilmenites are not unequivocally kimberlitic, a few definite KIMs (G-9 pyropes and picroilmenites) were recovered from beach sand concentrates taken from a lake in the vicinity of the drill holes.
A surprising result of the heavy mineral analysis is the number of microfossils and the abundance of various forms of pyrite (some replacing organic material and microfossils) found in the concentrates. Also present are spherules (tiny bead-like features) believed to be associated with a meteorite impact. Microfossils and pyrite associated with anoxic (low oxygen) conditions require a different explanation for the origin of the clay than intensely altered kimberlite. Given the results to date, there are a number of possible scenarios that could explain the genesis of these clays and further work is required to obtain more information before arriving at a definite conclusion.
No field programs were undertaken in 2020, 2021 and 2022 due to COVID-19 pandemic restrictions and the related ramifications on work in the Northwest Territories.
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2022 Analytical Work
The Company applied for and was awarded a research grant that would allow for more detailed investigation by SRC of the REE content of the drill hole samples analyzed in 2019. The REE levels of the 2019 samples are generally higher than, or consistent with, levels of REE detected in clays found to occur over some identified kimberlites in various locations of the world (e.g., western Australia and Namibia). Accordingly, selected homogeneous clay samples were sent to SRC during late 2022. The sample results received in February 2023 (further below) warranted further investigations regarding REE potential of the beach sands in the vicinity of Seahorse Lake.
2023 Analytical Work and Field Program
As a result of the SRC REE evaluation of the clays noted above, the 2018 beach sand concentrates were treated and microscopically re-examined by Dr. Malcolm McCallum and associate in laboratory facilities located in Loveland, Colorado, in an attempt to determine the source of the REE content. Dr. McCallum's evaluation of the beach sands indicates that heavy minerals such as opaque oxides (rutile, pseudorutile, ilmenite, titanium magnetite, chromite), garnet of various compositions, REE minerals (allanite, monazite), zircon, barite and hypersthene are concentrated in the less than 1mm fraction. In addition to elevated REE values, this beach sand also contains significantly elevated titanium oxide ("TiO₂"), zirconium and barium in heavy mineral concentrates. A sample of these <1mm concentrates that was sent to SRC for additional geochemical analysis reconfirmed elevated REE content. In addition, Dr. McCallum identified a microdiamond (<0.5mm) from the same 1.8kg sample.
On July 17, 2023, the Company reported that SRC recovered one macrodiamond (>0.5mm) from caustic fusion analysis of the 2018 1.8kg beach sand heavy mineral concentrate sample. The macrodiamond has dimensions of approximately 1.9mm x 1.4mm and weighs 5.2628mg. The diamond is described as off-white, transparent, distorted, octahedral, and having minor resorption with inclusions and surface pitting.
The identification of a macrodiamond and a microdiamond, in addition to the previously reported geochemical results, from this relatively small 1.8kg sample is highly encouraging in the context of the sample's proximity to geophysical targets.
In light of these results, a field sampling program was expedited in September 2023. A 323.35kg mini bulk sample of beach sand heavy mineral concentrate taken proximal to the main Seahorse target was sent to SRC for caustic fusion analysis. On February 5, 2024 the Company reported that SRC recovered 18 microdiamonds from the sample. The beach sand sample was collected from paleo strand line material, naturally concentrated through wave action and typically fine grained in small lakes. More than 95% of the material analyzed was less than 0.5 mm in grain size, which would limit the probability of the recovery of any macrodiamonds (>0.5 mm).
During the 2023 field program, five stream samples were also obtained in the general area of the main Seahorse geophysical target and sent to SRC for KIM analysis. Four pyrope garnets in addition to numerous picroilmenites and chromites were identified by SRC in these samples.
The identification of a total of 19 microdiamonds and one macrodiamond from these 2018 and 2023 beach sand samples proximal to geophysical targets is extremely positive and very encouraging, as it is very rare to identify microdiamonds or macrodiamonds in field sediment samples. Several of these microdiamonds have features that indicate they are fragments of larger diamonds.
2024 Field Program
A field program was undertaken during August and September 2024 to conduct staking within the Seahorse Project prospecting permit boundaries and to sample in the vicinity of the main Seahorse Project geophysical target. General reconnaissance work to aid future work program planning was also carried out. The program included collection of a mini bulk sample from the beach sands for caustic fusion analysis for potential recovery of additional diamonds.
One hundred and eighty-three (183) samples were collected of +0.5mm to -1.0mm and +1.0mm to -3.5mm beach material. Of these, the budgeted fifty-one (51) samples (averaging approximately 7kg per sample) of the coarser size fraction were analyzed using caustic fusion by SRC. No macrodiamonds were recovered. Dilution is almost certainly a result of the dominance of lighter minerals in the +1mm -3.5mm fraction.
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Analysis of the remaining 132 samples will not be conducted at this time as drill testing of the main Seahorse target is considered the priority given the previously recovered 19 microdiamonds and the macrodiamond from 2018 and 2023 samples, as well as the presence of relatively large pyrope grains recovered from 2024 caustic fusion.
Examination of the 51 sample residues by Dr. Malcolm McCallum and associate in laboratory facilities located in Loveland, Colorado, indicate that these coarse samples contain very few heavy minerals relative to the diamond bearing samples collected in previous field programs that were taken proximally to the main Seahorse target. These 51 samples have been reduced by caustic fusion to generally less than only two grams per sample indicating that the original sample was comprised primarily of diluting lighter, silicate minerals. In contrast, the previous diamond bearing samples were obtained by careful collection of only very fine grained (>95% less than 0.5mm), heavy mineral rich beach sands.
One unscreened 2024 sample (apparently mostly <0.5mm) collected under shallow water and near shore, was analyzed by SRC using Inductively Coupled Plasma ("ICP"). Relative to previous program samples of similar grain size, this sample had relatively elevated levels of potassium, aluminum and sodium which could be expected due to the presence of observed clay minerals. This also supports the probable dilution explanation. Otherwise, the material had similar chemistry to that of previously reported samples containing microdiamonds.
The Company's interest in the Seahorse Project includes any mineral deposits discovered, whether diamonds or other minerals.
This region has been subjected to no known previous detailed exploration work. Due to its remoteness, the project area must be supplied by small aircraft and helicopter. Although Talmora has been active in the area of the Seahorse Project, prior to Olivut's involvement it had not been able to conduct meaningful exploration due to a lack of financing during the prolonged negative capital market environment for junior exploration companies.
Actual cash exploration costs incurred by the Company on the Seahorse Project for the three and six months ended April 30, 2025, were $7,197 and $31,434 respectively (2024 - $2,277 and $28,491 respectively).
Covid-19 and its effects prevented any field program related work being conducted from 2020 to 2022 on the HOAM Project and on the Seahorse Project. Work programs may continue to be affected by potential supply chain disruptions and additional related costs arising from the COVID-19 pandemic, particularly on planning and work in the Northwest Territories.
Total cash expenditures on exploration and evaluation activities to date on the HOAM Project and the Seahorse Project included the following:
| HOAM Project $ | Seahorse Project (1)(2) $ | |
|---|---|---|
| Project to October 31, 2023 | 15,107,750 | 1,365,717 |
| Field related costs | 51,430 | 294,225 |
| For the year ended October 31, 2024 | 51,430 | 294,225 |
| Project to October 31, 2024 | 15,159,180 | 1,659,942 |
| Field related costs | 8,681 | 31,434 |
| Project to April 30, 2025 | 15,167,861 | 1,691,376 |
Note 1: excludes in-kind expenses incurred in respect of the Seahorse Project
Note 2: includes the Option Payment
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Cumulative exploration expenditures made by the Company as at April 30, 2025 total $17,808,325 (at October 31, 2024 - $17,768,210), including amounts spent in prior years on other projects where the Company's interests have been terminated.
Additional information is available at www.sedarplus.ca and the Company's website at www.olivut.com.
Liquidity and Capital Resources
As at April 30, 2025, the Company had a cash balance of $422,941 to settle accounts payable and accrued liabilities of $55,180.
On September 11, 2024 the Company issued a total of 7,462,500 common shares at a price of $0.08 per common share through a non-brokered private placement for aggregate proceeds of $597,000.
All of the Company's financial liabilities have contractual maturities of less than one year. The promissory note outstanding at October 31, 2023 was forgiven by the President and CEO during the quarter ended January 31, 2024 (see "Transactions with Related Parties" below).
During the three and six months ended April 30, 2025, cash used in operating activities was $96,618 and $267,477 respectively, generally consistent with the same periods in the prior fiscal year (2024 - $110,066 and $230,229 respectively), with any difference primarily due to working capital changes.
The Company's ability to continue operations and fund its business is dependent on management's ability to secure additional financing, the potential forgiveness or deferral of some or all of the President and CEO's salary and the health and well-being of its key employees and consultants.
The Company will continue to solicit additional equity financing to enable the Company to meet its ongoing working capital requirements, to continue to operate as a going concern, to continue exploration on its projects, and to consider new opportunities. Management carefully monitors its cash balances and may postpone exploration expenses to protect the Company's working capital if equity markets do not permit additional financing.
As at April 30, 2025, the Company did not have any long-term debt or contractual liabilities or obligations other than as reported in the unaudited condensed interim financial statements for the six months ended April 30, 2025.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet transactions.
Transactions with Related Parties
In addition to salaries and benefits, during the three and six months ended April 30, 2025, a total of $3,000 and $6,000 respectively (2024 - $3,000 and $5,600 respectively) for administrative and general expenses included in the statements of operations were accrued or paid to directors and officers of the Company or persons or companies related to or controlled by them. The directors and officers of the Company or persons or companies related to or controlled by them were also reimbursed at cost for expenses incurred on behalf of the Company.
Promissory Note
During the quarter ended January 31, 2024 the Company's President and CEO agreed to a modification of her employment contract which resulted in the forgiveness of the amounts owing under the promissory note as at October 31, 2023 in exchange for an arrangement that includes certain amounts that would become owing to the President and CEO upon the occurrence of certain events. Under this new arrangement, the President and CEO will receive up to approximately $2,700,000 upon the occurrence of certain triggering events. As a triggering event has not taken place, these contingent payments have not been reflected in the unaudited condensed interim financial statements for the quarter ended April 30, 2025.
Amounts owing to the related parties are unsecured and non-interest bearing with no fixed terms of repayment.
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Critical Accounting Estimates
The areas which require management to make significant judgements, estimates and assumptions are described in detail in Note 3 to the audited financial statements for the year ended October 31, 2024.
Changes in Accounting Policies and Recent Accounting Pronouncements
Please refer to Note 4 to the audited financial statements for the year ended October 31, 2024.
Outstanding Share Data
As of June 11, 2025, an unlimited number of common shares with no par value are authorized of which 82,403,111 shares are issued and outstanding.
Under the terms of the Company's Share Option Plan, as at June 11, 2025 a total of 8,135,000 options to purchase common shares at exercise prices ranging from $0.05 to $0.11 per common share and expiring between October 25, 2027 and April 30, 2035 are outstanding.
Included in the total options outstanding are 3,415,000 options granted May 1, 2025 for an exercise price of $0.05 per common share and expiring on April 30, 2035.
Commitments and Contingencies
1. Environmental Contingencies
The Company's exploration activities are subject to various federal, provincial and international laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.
2. Management Contracts
The Company is party to a management contract. Upon the occurrence of certain events, prior to the expiry of the contract, such as: a change in control; termination without cause; the completion of financing of $15,000,000 or more from the effective date of the agreement or upon the death of the President and CEO, the contract requires payments of up to approximately $2,700,000. As a triggering event has not taken place, the contingent payments have not been reflected in the unaudited condensed interim financial statements for the quarter ended April 30, 2025. The expiry date of the contract is June 2, 2034. See "Transactions with Related Parties" above.
3. Litigation
The Company is not involved in any outstanding litigation.
Capital Management
There were no changes in the Company's approach to capital management during the six months ended April 30, 2025. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and evaluation of mineral properties. The capital of the Company consists of capital stock and equity reserves. The Board of Directors does not establish quantitative return on capital criteria for the Company's management, but rather relies on the expertise of management to sustain future development of the business.
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The properties in which the Company currently has an interest are in the exploration stage. Accordingly, the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for its administrative costs, the Company will spend its existing working capital and raise additional amounts as needed and if reasonably available. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange ("TSXV") which requires a minimum activity level defined as exploration spending of $100,000 during the past two years and adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of six months. As of April 30, 2025, the Company believes that it is compliant with these policies of the TSXV.
Risks and Uncertainties
The Company's risk management policies and practices have not substantially changed during the six months ended April 30, 2025. The most significant risks and uncertainties facing the Company include, but are not limited to, the following:
1. Financial Risk Factors
The Company's financial risk exposures and the impact on the Company's financial instruments are summarized below:
a) Liquidity Risk / Going Concern
As at April 30, 2025, the Company had a cash balance of $422,941 to settle accounts payable and accrued liabilities of $55,180. All of the Company's financial liabilities have contractual maturities of less than one year, with the exception of an immaterial office equipment lease. The Company's ability to continue operations and fund its business is dependent on management's ability to secure additional financing, the potential forgiveness or deferral of some or all of the President and CEO's salary and the health and well-being of its key employees and consultants. Although the Company has been successful in the past in obtaining financing, there can be no assurance that additional funding will be available or available under terms favourable to the Company, or that the President and CEO will elect to forgive or defer some or all of her salary. The Company needs equity capital financing in order to explore and evaluate its properties and for working capital requirements. Because of limited working capital and continuing operating losses, the Company's continuance as a going concern is dependent upon its ability to obtain adequate financing and/or to reach profitable levels of operation. Sustained global economic and political uncertainty could result in more costly or limited access to funding sources and there is no assurance that funds will be available on terms acceptable to the Company or at all. All of these factors indicate the existence of material uncertainties that cast significant doubt about the Company's ability to continue as a going concern.
Management of the Company is actively investigating additional financing to enable the Company to continue to operate, including exploration on its projects, and to consider new opportunities.
Failure to obtain additional financing could result in delay or the indefinite postponement of further exploration and the development of the HOAM and/or Seahorse Projects, as well as the loss of prospecting permits and/or mineral claims and the risk of the Company failing to continue as a going concern.
Further discussion relating to liquidity risk is described above under "Liquidity and Capital Resources".
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b) Credit Risk
The Company's credit risk is primarily attributable to cash and amounts receivable. The Company has no significant credit risk arising from operations. Cash consists of bank deposits with a Canadian chartered bank.
c) Market Risk
i. Interest Rate Risk
The Company periodically monitors its investments in investment grade short-term guaranteed investment certificates issued by its banking institution and is satisfied with the credit rating of its banks. The Company considers interest rate risk to be minimal. It is expected that future financings, if any, would be secured from equity placements rather than debt obligations.
ii. Foreign Currency Risk
The Company's functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars. Management believes that the foreign exchange risk from currency conversions is negligible. The Company does not hold any balances in foreign currencies to give rise to foreign exchange risk.
iii. Price Risk
The Company is exposed to price risk with respect to commodity prices. Although the Company has no influence on commodity prices, it closely monitors commodity prices to determine appropriate courses of action.
d) Fair Value
The carrying amounts for cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities on the statements of financial position approximate fair value because of the limited terms of these instruments.
e) Sensitivity to Financial Risks
The Company considers interest rate risk to be minimal. The Company does not carry interest bearing debt. It is expected that future financings, if any, would be secured from equity placements rather than debt obligations. Based on the cash held by the Company as at April 30, 2025, a 1% increase or decrease in the interest rate would generate a respective increase or decrease in interest income of approximately $4,000 annually.
- Exploration
The Company's exploration projects are subject to conditions beyond its control that can affect the carrying costs and exploration and evaluation costs for varying lengths of time. Such conditions include environmental hazards, unusual or unexpected geological formations or pressures and periodic interruptions due to inclement or hazardous weather conditions, forest fires, geopolitical, economic, regulatory conditions, dependence on key employees and consultants as well as regional and global health emergencies. Such risks could result in damage to, or destruction of, mineral properties or facilities, personal injury, environmental damage, delays in exploration programs, monetary losses and possible legal liability. Mineral exploration is highly speculative in nature, involves many risks and frequently is non-productive. There is no assurance that exploration efforts will be successful. Success in establishing marketable mineral reserves is a result of a number of factors, including the quality of management, the Company's level of geological and technical expertise, the quality of land holdings, the availability of suitable employees, contractors, consultants and equipment and other factors.
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If mineralization is discovered, it may take several years in the initial phases of drilling until production is possible, during which time the economic feasibility of production may change. Substantial expenditures are required to establish proven and probable reserves through drilling, to determine the optimal recovery process to extract the minerals from the ore and to construct mining and processing facilities. Because of these uncertainties, no assurance can be given that exploration programs will result in the establishment of resources or reserves.
Whether a resource deposit will ultimately be commercially viable depends on a number of factors, including the particular attributes of the deposit such as the deposit's size, financing costs and the prevailing prices for the applicable resource. Also of key importance are government regulations, including those relating to prices, taxes, royalties, land tenure, land use, land treaties and environmental protection, and relations with local communities and Indigenous peoples.
The Company's continued existence is also dependent upon its extensive regional information database, the preservation and confirmation of its interest in the underlying exploration properties, management's ability to secure additional financing, the potential forgiveness or deferral of some or all of the President and CEO's salary, the health and well-being of its key employees and consultants and upon the Company's ability to dispose of its interests on an advantageous basis.
The Company relies on equity financings, if available, to meet its ongoing working capital requirements. There currently exists a low level of investor interest for equity financing of junior exploration companies. The uncertainty caused by the wars in various areas of the world may also impact the availability of equity financing, at terms satisfactory to the Company. Failure to obtain additional financing may result in delay or the indefinite postponement of further exploration and development of the HOAM and/or Seahorse Projects, as well as the potential loss of prospecting permits and/or mineral claims.
Although the Company has taken steps to verify title to the properties on which it and/or its joint venture partner (where applicable) is conducting exploration and in which it and/or its joint venture partner (if applicable) has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company's or its joint venture partner's (where applicable) title. Property title may be subject to unregistered prior agreements, indigenous land claims and non-compliance with regulatory requirements.
3. Licenses and Permits, Laws and Regulations
The Company's exploration activities may require permits from various government authorities, and are subject to extensive federal, provincial and local laws and regulations governing prospecting, exploration, development, production, exports, taxes, labour standards, occupational health and safety, mine safety and other matters. Such laws and regulations are subject to change, can become more stringent and compliance can therefore become more costly. The Company relies on the expertise and commitment of its management team, their advisors, and contractors to ensure compliance with current laws and fosters a climate of open communication and cooperation with regulatory bodies. The Company believes that it and its joint venture partner (if applicable) hold all necessary licenses and permits under applicable laws and regulations and believes it and its joint venture partner (if applicable) are presently complying in all material respects with the terms of such licenses and permits.
There can be no guarantee that the Company or its joint venture partner (if applicable) will be able to maintain or obtain all necessary licenses and permits that may be required to explore and evaluate the properties under exploration, commence construction or operation of mining facilities or to maintain continued operations.
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4. Climate Change
Execution of the Company's exploration programs are highly dependent on weather conditions in the areas of exploration and related risks. The risk of delays or cancellations of exploration programs due to poor weather conditions, possibly related to climate change, including the timing and expense of such delays or cancellations, is currently impossible to predict or measure.