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Prosper Gold Corp — Management Reports 2024
Feb 17, 2024
46228_rns_2024-02-16_ee4a0c02-2a6b-4859-aedd-8692f7ef9cb1.pdf
Management Reports
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PROSPER GOLD CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED OCTOBER 31, 2023
1.1 DATE
This management’s discussion and analysis ("MD&A") of the financial condition and operating results of Prosper Gold Corp. (“Prosper Gold” or the “Company”) for the year ended October 31, 2023 is derived from, and should be read in conjunction with, Prosper Gold’s audited consolidated financial statements for the year ended October 31, 2023, as publicly filed on SEDAR+ at www.sedar.com.
The Company prepared the audited consolidated financial statements and note disclosures for the year ended October 31, 2023 in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). This MD&A complements and supplements but does not form part of the Company’s audited consolidated financial statements.
During the year, the Company incorporated a subsidiary in the state of Arizona for the purpose of entering into an option agreement for the Mohave Gold Project located in Arizona in the United States.
All dollar amounts contained herein are expressed in Canadian dollars unless otherwise stated.
‐ Cautionary Note to Investors Concerning Forward looking Statements
Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as “plans”, “intends”, “anticipates”, “should”, “estimates”, “expects”, “believes”, “indicates”, “suggests” and similar expressions.
This MD&A contains forward-looking statements that are based on the Company’s expectations, estimates and projections regarding its business, and the economic environment in which it operates. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to control or predict. Examples of specific risks associated with the operations of the Company are set out under “Risk Factors”. Actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements.
All forward-looking statements have been made subject to risk factors summarized on page 17 of this MD&A.
This MD&A has been prepared using information as of February 16, 2024 and approved by the Board on February 16, 2024.
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1.2 BUSINESS OVERVIEW
Prosper Gold is an exploration and development company focused on acquiring and advancing mineral prospects in British Columbia and Ontario, Canada and in Arizona, United States.
PROJECTS
Golden Sidewalk
The Golden Sidewalk is a district-scale gold exploration project covering over 160 square kilometres of contiguous mineral claims and mining leases in the western Birch-Uchi Greenstone Belt, approximately 60 km east of Red Lake, Ontario and 60 km northeast of Kinross Gold’s Dixie Project, acquired from Great Bear Resources in 2022. The vehicle-accessible project straddles 12 kilometres of the Balmer Assemblage – Narrow Lake Assemblage unconformity, a regional-scale feature that has been the Red Lake exploration guide, but which has seen limited exploration in the project area. The “Golden Corridor” lies immediately north of the unconformity and is characterized as a highly prospective trend of coincident favourable magnetic and resistivity lineaments supported by highly anomalous gold-in-till samples covering 7.0 by 0.5 kilometres. An additional highly prospective target area was defined in 2021, termed the Skinner North Target Area, where 2022 channel sampling results include 9.69 gpt gold over 3.0 metres and 13.13 gpt gold over 1.8 metres and till samples containing up to 1,014 gold grains, was drilled for the first time in November of 2022. Historical drilling by previous operators at the Bathurst Mine, Joe Vein, KT vein, Dunkin and Vihonen prospects reported high-grade gold intercepts which have yet to be followed up by Prosper Gold.
In February and March of 2023, the Company completed an Induced Polarization (“IP”) survey comprising approximately 25 line-kilometres covering an area of 5 square kilometres at the Skinner Target area. The objective of the survey was to outline sulphide mineralization and silica alteration associated with gold mineralization encountered in 2022 trenching and drilling activities. The positive survey results outlined a 2 square kilometre area of high chargeability and coincident high resistivity immediately east of the lithological contact between the Narrow Lake Assemblage mafic volcanics and the granodioritic Trout Lake Batholith to the west. The Company intends to drill test the most promising targets outlined in the IP survey as soon as practicable.
ONTARIO PROJECTS
Wydee & Galahad, Matachewan
In 2016, Prosper Gold entered into a definitive agreement to acquire the option to earn a 90% interest in the extensive land position surrounding the Ashley Gold Mine and Young Davidson Mine Area in the Cadillac Larder Lake Fault Area in Ontario. The Wydee and Matachewan properties were both subject to the 2016 agreement. In February 2021, the Company withdrew from the option agreement. Prosper Gold still holds a 100% interest in 13 mineral claims and 9 mineral leases (the Galahad) contiguous to the ground previously under option.
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The Company received 60,000 common shares of Canada Nickel Company Inc. (“CNC”) on January 12[th] , 2022, in consideration for the sale of 43 mineral claims from the Company’s Wydee claim block. The purchase and sale of the mineral claims is further subject to a 2.0% Net Smelter Returns royalty to be granted to Prosper Gold of which one half (1.0%) can be purchased by CNC at any time during the entirety of the life of the royalty.
No exploration activities were completed at the Matachewan, Wydee or Galahad projects for the year ended October 31, 2023.
THE STAR
The Star Project is an alkalic porphyry copper-gold prospect in northwest BC. Prosper Gold holds a 51% majority interest in the Star Project joint venture pursuant to the Joint Venture Agreement dated September 2, 2016 between the Company and Otso Gold Corp. (formerly Firesteel Resources Inc.).
The Company signed a definitive option agreement with CAVU Mining Corp. (“CAVU”) to grant CAVU the exclusive right and option to acquire the Company’s 51% interest in the Star Project. Under the terms of the option agreement, CAVU may exercise the option by issuing 1,250,000 common shares of CAVU by May 23, 2022 (received) and making aggregate cash payments of $1,155,000 to the Company consisting of $100,000 by May 23, 2022 (received), $285,000 by July 1, 2022 (received), $385,000 by May 23, 2023 (received) and $385,000 by May 23, 2024.
On December 19, 2022, CAVU was acquired by Alpha Copper Corp. (“ALCU”). Shareholders of CAVU received 0.7 common share of ALCU for each CAVU common share held. On October 18, 2023, ALCU consolidated its common share with 4 old shares for 1 new share. Therefore, the Company now holds 218,750 common shares of ALCU. All other terms of the option agreement remain the same.
MOHAVE GOLD PROJECT, ARIZONA
On April 21, 2023, Prosper Gold USA LLC, a wholly-owned subsidiary of the Company entered into a definitive option agreement with DDS Resources LLC and Mohave Mine Partnership LLC (collectively, the “Optionors”), whereby the Optionors have granted the Company the option to acquire a 100% interest in the Mohave Project.
The Option Agreement on the Property calls for the Company to pay US$3,350,000 cash and for work expenditures totaling US$1,700,000 over 5 years for the Company to earn a 100% interest in the Property. The Company may, in its sole and absolute discretion, accelerate payment of the cash payments. In the event that the Company accelerates the cash payments in full, the Option will be deemed to be exercised whether or not all the Expenditures have been incurred. Upon full payment of the cash payments, the Company will grant a 1.5% net smelter royalty to the Optionors and Desert Ventures Inc.
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The Mohave Gold Project encompasses a large, robust low-sulphidation epithermal gold system that is host to three mineralized trends: the Golden Door Trend, the Klondyke Trend and the Dixie Trend. Over 40 historical mine workings exist on the Property, with over half of those situated in the Dixie Trend in the southern one-third of the Property. The Dixie Trend has seen no historical drilling despite the high number of historical mine workings, the widespread high-grade gold in surface rock-chip sampling and the presence of highly anomalous gold-in-soil geochemistry over an area of 1.8 by 1 kilometre.
1.3 SELECTED ANNUAL FINANCIAL INFORMATION
The Company’s financial statements and the financial information set out below are prepared in accordance with IFRS as issued by the IASB. The Company’s significant accounting policies are disclosed in note 3 to the Company’s audited financial statements for the year ended October 31, 2023. The Company’s functional and reporting currency is the Canadian dollar.
| Statement of Financial Position | ||||||
|---|---|---|---|---|---|---|
| Selected Information | October 31, 2023 | October 31,2022 | October 31,2021 | |||
| Total current assets | $ | 297,323 | $ | 622,367 |
$ | 4,437,651 |
| Total non-current assets | 1,545,560 | 1,495,066 | 1,498,642 | |||
| Total assets | $ | 1,842,883 | $ | 2,117,433 | $ | 5,936,293 |
| Total current liabilities | $ | 133,545 | $ | 255,551 |
$ | 718,627 |
| Total non-current liabilities | - | 40,000 | 40,000 | |||
| Total liabilities | 133,545 | 295,551 | 758,627 | |||
| Total equity | 1,709,338 | 1,821,882 | 5,177,666 | |||
| Total liabilities and shareholders’ equity | $ | 1,842,883 | $ | 2,117,433 |
$ | 5,936,293 |
Total current assets are comprised of cash, amounts receivable, marketable securities and prepaid expenses and deposit.
At October 31, 2023, current assets decreased by $325,044 compared to October 31, 2022. The decrease is due to the decrease in cash of $69,129; the decrease in marketable securities of $232,510; the decrease in prepaid expenses and deposit of $54,814; offset by the increase in amounts receivable of $31,409. The decrease in cash is due to the usage of funds for operations and exploration expenditures during the 2023 fiscal year. The increase in amounts receivable is due to the increase in rent receivable from sub-tenants at the shared office on West Pender Street. The decrease in marketable securities is due to the write-down of the securities to the fair market value at October 31, 2023. The decrease in prepaid expenses and deposit is due to the decrease in prepaid rent for the West Pender office of $25,669, decrease in deposit for the Company’s credit
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card of $17,231 and decrease in deferred charges of $6,478, and the decrease of $5,436 for prepaid portion of insurance and annual listing fees for 2023 compared to 2022.
At October 31, 2022, current assets decreased by $3,815,284 compared to October 31, 2021. The decrease is due to the decrease in cash of $3,411,503, the decrease in amounts receivable of $448,906, the increase in marketable securities of $252,945 and the decrease in prepaid expenses and deposits of $207,820. The decrease in cash is due to the operations and exploration expenditures incurred for the 2022 fiscal year. The decrease in amounts receivable is due to the refund of the second quarter GST refund for the 2021 fiscal year that was received in the 2022 fiscal year. The increase in marketable securities in 2022 is due to the 1,250,000 CAVU common shares received for the option of the Star Property. The decrease in prepaid expenses and deposit is due to the amortization of prepaid advertising and promotional expenses and the expense of a non-refundable deposit paid for the camp facility that the Company has determined not viable.
Total non-current assets consist of reclamation deposits, right-of-use asset, furniture, computers, camp equipment, vehicle, leasehold improvements, and the acquisition costs of mineral properties.
At October 31, 2023, the Company’s non-current assets increased by $50,494. On October 31, 2023, the Company’s Right-of-use assets is $Nil due to the expiry of the office lease at West Pender Street. The reclamation deposits are also $Nil due to the return of the two letters of credit totalling $219,000 from the Ministry of Energy, Mines and Low Carbon Innovation. In addition, there is a net decrease of $75,486 in equipment and leasehold improvements due to the depreciation expense recorded of $76,615 offset by the addition of field equipment of $1,129. Lastly, the increase in non-current assets is mainly due to the increase in mineral properties of $443,399 for option payments and common shares issued for the Mohave Project and the Ontario Projects.
During the 2022 fiscal year, the Company entered into an 18-month lease agreement for the West Pender Street office premise effective May 1, 2022. The Company recorded the right-of-use asset with the initial fair value of $147,628 and recorded amortization of $49,209 resulting in a net value of $98,419 at October 31, 2022.
In addition, the Company also incurred $37,244 for equipment and leasehold improvements in the 2022 fiscal year. Amortization of equipment and leasehold improvements for the 2022 year totalled $87,495.
During the 2021 fiscal year, the Company capitalized $384,104 for camp equipment, vehicles, and computer equipment for Golden Sidewalk project. Amortization of fixed assets for the 2021 fiscal year totalled $50,167.
Mineral properties had a net decrease of $51,744 for the 2022 fiscal year compared to the 2021 fiscal year. The decrease includes the sale of the option of the Star Property to CAVU with carrying cost of $446,715 offset by cash proceeds of $385,000 and 1,250,000 common shares of CAVU
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received with a fair value of $450,000 and legal costs of $12,898 incurred for transaction costs. The decrease is offset by the issuance of 800,000 common shares with a value of $352,000 for the Golden Sidewalk project and $42,971 in acquisition costs of which $6,000 were for payment of claims, $20,000 for option payment and $16,971 in legal fees for transaction costs.
Total current liabilities include accounts payable and accrued liabilities and the current portion of lease liability.
Current liabilities in 2023 decrease due to the decrease of $61,496 for accounts payable and accrued liabilities for decrease in operation expenses incurred. For the 2023 fiscal year, the current liabilities include the reclassification of the loan payable of $40,000 for the Federal government loan due for repayment by January 18, 2024 (repaid subsequent to the 2023 year end).
Current liabilities in 2022 decreased by $463,076 compared to the 2021 fiscal year. Accounts payable and accrued liabilities decreased by $563,586 due to no drilling activities for the last 6 months of the 2022 fiscal year. The current liabilities in 2022 include the current portion of lease liabilities of $100,510 for the Vancouver office lease from May 1, 2022 to October 31, 2023.
Total equity consists of share capital, reserves and deficit. Increase in share capital is due to the share issuances for private placements and mineral property options, offset by share issue costs. The increase in reserves is due to the recording of the fair value share-based compensation including the graded vesting of stock options and restricted share units, the fair value of warrants issued to unit holders and brokers for private placements, offset by the forfeiture of stock options by the departure of employees and officers of the Company. Deficit changes are due to the net loss for the year offset by the forfeiture of stock options.
Total equity decreased by $112,544 at the end of 2023 fiscal year compared to the 2022 fiscal year. The decrease is due to net loss for the year of $2,417,955 offset by the gross proceeds from private placement of $1,691,000, net of share issue costs of $105,861; the issuance of shares for property of $215,200; and the share-based payment of $505,072 for the 2023 year.
Total equity decreased by $3,355,784 at the end of the 2022 fiscal year compared to the end of the 2021 fiscal year. The decrease is due to the exploration and operation expenses incurred with net loss of $5,523,828 for the year, offset by the increase in contributed surplus of $1,816,313 for share-based payments and the increase in share capital of $351,731 consisting of common share issuance of $352,000 for mineral property option, offset by share issue costs of $269.
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| Statement of Comprehensive Loss – Selected Information Year ended October 31, 2023 |
Year ended October 31,2022 Year ended October 31,2021 |
|---|---|
| Expenses Exploration and property investigation expenditures $ 1,231,907 General administration 859,026 Share-basedpayments 505,072 |
$ 3,049,034 $ 4,891,020 941,332 1,295,916 1,816,313 2,427,844 |
| 2,596,005 | 5,806,679 8,614,780 |
| Other (income) and expenses Interest income (25,560) Other (income)/expenses (net) (152,490) Write-off of mineralproperties - |
(5,681) (16,347) (277,170) (8,557) - 83,517 |
| Net loss and comprehensive loss $ 2,417,955 |
$ 5,523,828 $ 8,673,393 $ 0.23 $ 0.42 |
| Basic and diluted loss per share $ 0.08 |
Exploration and property investigation expenditures are costs incurred for the Star Property in British Columbia, the Ontario Projects in Ontario and the Mohave Project in Arizona, United States.
The decrease in exploration expenditures in the 2023 and 2022 fiscal years compared to the 2021 fiscal year is due to the decrease in drilling programs for the Golden Sidewalk Property in 2023 and 2022 while in the 2021 fiscal year, the Company conducted a multi-phase drilling program for the Golden Sidewalk Property. During 2023, the Company acquired the option for the Mohave Project and incurred $83,686 for exploration expenses included in the total of $1,231,907 for exploration and property investigation expenditures.
General administration includes general and administrative expenses; management salaries and fees, professional fees and transfer agent, listing and filing fees.
General administrative expenses decreased by $82,306 in 2023 compared to 2022. The decrease is due to the decrease of $43,800 in general and administrative expenses, a decrease of $12,750 for management salaries and fees, a decrease of $20,713 for professional fees and a decrease of $5,043 for transfer agent, listing and filing fees.
General administrative expenses decreased by $354,584 in the 2022 fiscal year compared to the 2021 fiscal year. The decrease is due to the decrease in management salaries and fees of $126,867; a decrease of $32,788 for legal and audit fees; a decrease of $202,430 in general and administrative expenses which includes operation expenses such as promotional expenses, insurance, rent, insurance, and conferences; offset by an increase of transfer agent, listing and filing fee of $7,501.
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Share-based payment in 2023 decreased by $1,311,241 compared to 2022 fiscal year. The decrease is due to stock options outstanding which were fully vested in 2023 and the decrease in share-based payment expenses for the Company’s RSU as the fully vesting of the RSU is approaching in May 2024.
Share-based payments in 2022 include the fair value of stock options of 2,204,000 and the fair value of restricted share units of 1,513,000. The fair value recorded in 2022 decreased by $611,531 from $2,427,844 in 2021 to $1,816,313 in 2022.
Interest income include interest earned on the balance in the current account with interest rate at composite prime less 2.90% and interest paid by the bank on the Company’s term deposits and reclamation deposit from 1.25% to 4.40% interest. The interest rate provided on the deposit balances are subject to the change in the interest rate during the period.
Other income/expenses for the 2023 fiscal year include $385,000 for gain on sale of mineral properties and $232,510 for unrealized loss on marketable securities.
Other income/expenses for the 2022 fiscal year include $580,587 for the gain on sale of mineral properties, $106,362 for loss on sale of marketable securities and $197,055 for unrealized loss on marketable securities.
Other income/expense for the 2021 fiscal year includes the gain on sale of mineral claims of $14,557 and the unrealized loss of $6,000 for marketable securities for shares in LaSalle Exploration Corp.
During 2021, the Company wrote off $83,517 for the Galahad property.
1.4 SUMMARY OF QUARTERLY INFORMATION
The following is the selected financial information for the Company’s most recent eight quarters ended October 31, 2023:
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----- Start of picture text -----
Quarter ended Total revenue Net loss and Net loss per share (basic Total assets
comprehensive loss and diluted)
$ $ $ $
– -
Q4/23 October 31, 2023 (421,270) (0.013) 1,842,883
– -
Q3/23 July 31, 2023 (82,457) (0.003) 2,251,709
– -
Q2/23 April 30, 2023 (908,506) (0.03) 2,379,474
– -
Q1/23 January 31, 2023 (1,005,722) (0.03) 3,114,970
– -
Q4/22 October 31, 2022 (631,483) (0.03) 2,117,433
– -
Q3/22 July 31, 2022 (963,968) (0.04) 2,530,014
– -
Q2/22 April 30, 2022 (2,001,260) (0.08) 2,984,573
– -
Q1/22 January 31, 2022 (1,927,117) (0.08) 4,142,482
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In the first quarter of the 2022 fiscal year, the net loss is due to the continuation of exploration activities on the Golden Sidewalk Project totaled $1,178,560 and the recording of the fair value of $634,720 for stock options and restricted share units granted in the prior quarters. The Company also received a grant of $60,000 from the Ministry of Northern Development, Mines, Natural Resources and Forestry under an Ontario Transfer Payment Agreement which has been applied against exploration expenditures for the period. In addition, the Company sold 43 claims to the Wydee Property to Canadian Nickel Company Inc. in exchange for 60,000 common shares of CNC with a fair value of $205,200. The claims were previously written off and the gain of $205,200 has been recognized during this quarter.
The net loss incurred in the second quarter of the 2022 fiscal year is due to the net exploration expenses of $1,144,025 including $140,000 received for the grant from the Ministry of Northern Development, Mines, Natural Resources and Forestry under an Ontario Transfer Payment Agreement. The net loss also includes share-based payment expenses of $580,132 for stock options and restricted share units.
The decrease in net loss for the third quarter of 2022 compared to the second quarter of 2022 is due to no drilling program scheduled for the period. The decrease in total assets is due to the decrease in mineral properties from funds received for the CAVU option agreement for the Star Project and the usage of the cash received for operating and exploration expenses.
The Company continued to incur operation expenses and lower exploration expenses in the last quarter of the 2022 fiscal year. There were no drilling activities during the last quarter of the year.
The total assets decreased in the last quarter compared to the third quarter of 2022 due to the use of cash for operations and exploration expenses.
The increase in net loss in the first quarter of 2023 compared to the last quarter of the 2022 fiscal year is due to the gain on sale of mineral properties of $375,386 recorded in the last quarter of 2022.
The total assets increased in the first quarter of 2023 is due to the increase in cash from the gross proceeds of $1,691,000 for the private placement complete in the first quarter of 2023.
For the second quarter of 2023, net loss for the quarter compared to the previous quarter decreased due to no drilling program planned for the quarter.
The total assets decreased in the second quarter of 2023 compared to the first quarter of 2023 due to cash used to fund operational expenses.
For the third quarter of 2023, there is a decrease in net loss compared to the second quarter due to the option payment of $385,000 received for the Star property. There is also a decrease in
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exploration expenditures of $207,876, a decrease in share-based payment expenses of $101,265 and a decrease in unrealized loss on marketable securities of $115,378.
The decrease in total assets as at July 31, 2023 compared to April 30, 2023 is due to the amortization of equipment and leasehold and right-of-use assets totaling $131,266.
For the last quarter of 2023, the decrease in total assets of $408,826 is mainly due to the decrease in cash of $258,504; a decrease of $39,563 for amounts receivable; a decrease of $72,022 for marketable securities; a decrease of right-of use asset of $24,605 and a decrease of $19,163 for equipment and leasehold improvements, offset by an increase of $3,027 of prepaid expenses and deposit and an increase in mineral properties of $2,004 compared to the third quarter of 2023.
1.5 RESULTS OF OPERATIONS
The Company recorded a net loss and comprehensive loss of $2,417,955 and $5,523,828 for the year ended October 31, 2023 and 2022 respectively. The decrease in net loss totaled $3,105,873 is due to the decrease in exploration expenses of $1,817,127; decrease of $43,800 for general and administration expense; decrease of $12,750 for management fees; decrease of $20,713 for professional fees; decrease of $1,311,241 for share-based payment expenses; decrease of $5,043 for transfer agent, listing and filing fees and an increase of interest income of $19,879. The Company also recorded a decrease in gain on sale of mineral properties of $195,587 for the current fiscal year compared to the fiscal year of 2022, and an increase in unrealized loss on sale of marketable securities of $34,545 for the 2023 year compared to the 2022 fiscal year. The decreases reflect the Company decrease in exploration activities in the fiscal year compared to the 2022 fiscal year.
The following table provides a breakdown of exploration expenditures on the Ontario Projects incurred during the year ended October 31, 2023:
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3 months ended October 31, 2023 Accumulated-to-date – October 31, 2023
Airborne survey $ - $ 539,543
Assay and analysis - 1,329,206
Camp accommodations - 622,738
Drilling - 5,567,768
Equipment rentals - 160,019
Field costs 24,860 1,283,182
Geological 40,000 1,812,102
Property rentals 21,283 516,232
Salaries and benefits 25,914 2,131,293
Staking and mining rent 1,300 66,664
Transportation and freight 2,971 240,482
Travel and accommodations - 296,046
Total $ 116,328 $ 14,565,275
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The Company began exploration on the Ontario Projects during May 2016. Airborne survey and soil sampling were completed in July 2016 and the drilling program began shortly thereafter. Field costs include camp construction and camp fuel, rental costs for accommodations for camp personnel, camp food and supplies and repair and maintenance of camp equipment. Geological costs include fees paid to geological consultants and geophysics reports. Transportation and freight costs include the fuel costs for vehicles and courier charges to camp. Travel and accommodation costs include travel, meals and accommodation costs for staff and management personnel to travel to camp.
During the year ended October 31, 2023, the Company continued to incur costs for work on the Golden Sidewalk property as part of the Ontario Projects with the cost of geological expenses of totaling $1,148,211 for 2023 fiscal year versus $3,047,034 for 2022 fiscal year, a decrease of $1,898,823 for 2023.
In April 2023, the Company entered into an option agreement for the Mohave Gold Project in Arizona, United States. The Company incurred total exploration costs of $83,686 consisting of $35,999 for maintenance fees, $13,693 for geological expenses, salaries of $12,054, travel costs of $10,898, assay costs of $6,436, equipment rental of $1,179 and field and transportation costs of $3,427.
There were no exploration expenditures for the Star Property for the year ended October 31, 2023 due to no drilling programs conducted during the year.
The following table provides a breakdown of general administration costs incurred during the years ended October 31, 2023 and 2022:
| Year ended | Year ended | |
|---|---|---|
| General administration costs: | October 31, 2023 | October 31, 2022 |
| General and administrative | $316,266 | $360,066 |
| Management salaries and fees | 448,515 | 461,265 |
| Professional fees | 40,118 | 60,831 |
| Transfer agent,listingand filingfees | 54,127 | 59,170 |
| $859,026 | $941,332 |
The decrease in general and administrative expenses for the year ended October 31, 2023 compared to year ended October 31, 2022 of $43,800 is mainly due the decrease in advertising and promotion of $41,499; a decrease in meals and entertainment of $17,660; decrease in conference expense of $14,775; decrease in moving expense of $11,057; a decrease of $4,697 for liability insurance and D&O insurance, offset by the increase of $8,893 for travel expenses; an increase of $6,350 for depreciation of equipment; an increase of $5,385 for new dissemination; and an increase of $25,279 for rent expense.
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Management salaries and fees decreased by $12,750 for the year ended October 31, 2023 compared to the same period in 2022 due to reduction in salaries for the CEO and CFO of 20% starting in August 2023.
The decrease in professional fees of $20,713 is due to the decrease in legal fees and audit fees expensed for year ended October 31, 2023 compared to year ended October 31, 2022. During the year ended October 31, 2022, the legal fees include responding to enquiries from the BCSC. In addition, higher audit fees were incurred for the 2021 fiscal year resulting in additional fees expensed for the quarter ended April 30, 2022.
The decrease in transfer agent, listing and filing fees of $5,043 for the year ended October 31, 2023 compared to the year ended October 31, 2022 is due to the fee paid in filing fees expenses during the first quarter of 2022 for the listing fees with the OTCQX in the US.
1.6 LIQUIDITY
The Company’s main source of funding has been the issuance of equity securities for cash through private placements. During the first quarter of 2023, the Company completed a private placement consisting of 3,455,000 non-flow-through units at $0.20 per unit and 4,000,000 flow-through units at $0.25 per unit for total proceeds of $1,691,000. Each non-flow through unit consists of one common share and one warrant with an exercise price of $0.30 to purchase one common share for a period of 24 months from closing. Each flow through unit consists of one common share and one-half of one non-flow through warrant. Each whole warrant is exercisable at $0.30 for a period of 24 months from closing. In connection with the closing of the private placement, cash finder’s fees of $85,300 were paid and 354,550 common share purchase warrants with a fair value of $58,870 were issued. Each finder’s warrant is exercisable at $0.30 for a period of 24 months from closing. Additional share issue costs for filing fees, bank charges and legal fees of $20,561 were incurred.
The Company’s continuing operations are dependent on the ability of the Company to obtain the necessary financing to continue to explore the Ontario Projects, the Mohave Gold Project and any future projects, the existence of economically recoverable mineral reserves from each project and the proceeds of dispositions of its mineral interests.
During the year ended October 31, 2023, cash flow used for operating activities was $1,545,419 mainly due to exploration costs for the Ontario and Mohave Gold Projects, general and administrative costs including salaries and marketing. Management has estimated that the Company will continue to incur expenditures of $450,000 per month for the months when the Company’s drilling program is in effect and $75,000 per month during the months when no drilling is conducted.
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As at October 31, 2023, the Company had cash and cash equivalents of $155,667 which will be sufficient to meet current liabilities of $133,545 due within one year. The working capital of the Company at October 31, 2023 is $163,778.
Additional debt or equity financing will be required to fund additional exploration programs. The Company has a reasonable expectation that additional funds will be available to meet ongoing and future exploration costs. However, there can be no assurance that the Company will continue to obtain additional financial resources on terms suitable to the Company.
Although the Company was able to successfully complete the private placement during the current quarter, the deterioration in market conditions could potentially increase the cost of obtaining capital or limit the availability of funds in the future. Accordingly, management is actively monitoring the effects of the current economic and financing conditions on the Company and reviewing discretionary spending, capital projects and operating expenditures, and implementing appropriate cash management strategies.
During the year ended October 31, 2022, the Company signed a definitive option agreement with CAVU Mining Corp. (“CAVU”) to grant CAVU the exclusive right and option to acquire the Company’s 51% interest in the Star Project. Under the terms of the option agreement, CAVU may exercise the option by issuing 1,250,000 common shares of CAVU by May 23, 2022 (received) and making aggregate cash payments of $1,155,000 to the Company consisting of $100,000 by May 23, 2022 (received), $285,000 by July 1, 2022 (received), $385,000 by May 23, 2023 (received) and $385,000 by May 23, 2024. The fair value of the 1,250,000 common shares at issuance was $450,000. The fair value will be adjusted with an unrealized loss recorded in the statement of comprehensive loss.
During the first quarter of 2023, CAVU was acquired by Alpha Copper Corp. (“ALCU”). As CAVU shareholders received 0.7 of ALCU common shares, the original 1,250,000 common share of AVU has been converted to 875,000 common shares of ALCU. On October 18, 2023 ALCU consolidated its common shares for 4 old shares to 1 new share. The fair value of the 218,750 ALCU shares at October 31, 2023 is $30,625 resulting in an unrealized loss of $419,375 since inception.
During the first quarter of 2023, the Ministry of Energy, Mines and Low Carbon Innovation returned the two Letters of Credits of $190,000 and $29,000 and released the Company of any further obligations for the Star Property in British Columbia. The funds were placed in redeemable short-term investments with prevailing interest rate at the time of renewal. During the last quarter of 2023, the Company redeemed both of the short-term investments.
1.7 CAPITAL RESOURCES
As at October 31, 2023, there were no externally imposed capital requirements to which the Company is subject and with which the Company has not complied.
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The Company’s capital consists of items in shareholders’ equity of $1,709,338 and loan payable of $40,000 as at October 31, 2023, compared to $1,821,882 in shareholders’ equity, lease liability of $100,510 and $40,000 of loan payable as at October 31, 2022. The decrease in shareholders’ equity is due to the private placement net proceeds of $1,582,439, an increase in shares issued for property for $215,200, an increase of $505,072 in share-based payments, offset by a net loss for the year ended October 31, 2023 of $2,417,955.
1.8 OFF-BALANCE SHEET ARRANGEMENTS
None.
1.9 TRANSACTIONS BETWEEN RELATED PARTIES
The Company’s related parties consist of its key management personnel, including its directors and entities controlled by key management personnel. During the normal course of business, the Company enters into transactions with its related parties that are considered to be arm’s length transactions and are made at normal market prices and on normal commercial terms.
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a) Key management compensation includes $757,649 for short-term benefits and share-based payments of $99,449 for stock options benefits and $414,699 for restricted share units for the year ended October 31, 2023. The amounts for stock options benefits and restricted share units are calculated fair values. As at October 31, 2023, the stock options outstanding and vested to related parties have not been exercised and the outstanding restricted share units granted and vested to related parties have not been redeemed. Therefore, the Company has not issued common shares or made cash payments to related parties for these stock options and restricted share units.
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b) As at October 31, 2023, accounts payable and accrued liabilities include $30,308 due to the management for accrued salary and fees and $nil for expense reimbursements.
1.10 FOURTH QUARTER
| .10 FOURTH QUARTER | ||||
|---|---|---|---|---|
| Statement of Financial Position | ||||
| Selected Information | October 31, 2023 | July31,2023 | ||
| Total current assets | $ | 297,323 | $ | 664,385 |
| Total non-current assets | 1,545,560 | 1,587,324 | ||
| Total assets | $ | 1,842,883 | $ | 2,251,709 |
| Total current liabilities | $ | 133,545 | $ | 182,402 |
| Total equity | 1,709,338 | 2,069,307 | ||
| Total liabilities and shareholders’ equity | $ | 1,842,883 | $ | 2,251,709 |
The decrease in current assets of $367,062 for the quarter is mainly due to the decrease in cash used for exploration and operation expenses and the write-down of marketable securities.
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The decrease in non-current assets of $41,764 is mainly due to the amortization of right-of use assets and equipment and leasehold improvements and the adjustment to mineral properties for the CAVU common shares issued to the Company.
The decrease in total equity is due to the net loss for the quarter offset by the increase in contributed surplus from the recording of the fair value of shared based payments.
The total equity has decreased mainly due to the net loss for the period.
| Statement of Comprehensive Loss – Selected Information 3 months ended October 31, 2023 |
3 months ended October 31,2022 |
|---|---|
| Expenses Exploration and property investigation expenditures $ 116,779 General administration 176,426 Share-basedpayments 58,586 |
$ 397,366 201,401 222,135 |
| 351,791 | 820,902 |
| Other (income) and expense Interest income (2,543) Gain on disposal of mineral property - Unrealized loss on marketable securities 72,022 |
(3,345) (375,387) 189,313 |
| Net loss and comprehensive loss $ 421,270 |
$ 631,483 $ 0.03 |
| Basic and diluted loss per share $ 0.01 |
Exploration and property investigation expenditures in the last quarter of 2023 decreased compared to the last 3 months of 2022 due to the decrease in the exploration activities in the last quarter of the 2023 year. General administration expenses also decreased due to the decrease in advertising and promotion expenses and other operation expenses because of the decrease in exploration activities for the last quarter.
The share-based payments decreased for the last quarter of 2023 due to the decrease in stock options and restricted share units vested compared to the 2022 year.
1.11 PROPOSED TRANSACTIONS
There are no proposed transactions currently in progress for the Company.
1.12 CRITICAL ACCOUNTING ESTIMATES
There have been no changes in critical accounting estimate for the year ended October 31, 2023.
Refer to Note 2 of the audited financial statements for the year ended October 31, 2023.
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1.13 CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies for the year ended October 31, 2023.
1.14 FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Company’s financial instruments consist of cash and cash equivalents, amounts receivable other than GST receivable, marketable securities, deposit, accounts payable and accrued liabilities, lease liability and loan payable. The fair values of the Company’s cash and cash equivalents, amounts receivable other than GST receivable, deposit and accounts payable and accrued liabilities approximate the carrying amounts due to the short-term maturities of these instruments. Marketable securities are valued at market value.
The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk, interest rate risk and foreign currency risk.
The Company considers its exposure to credit risk to be low as its cash and cash equivalents, and deposit are held with a large financial institution with a strong credit rating.
The Company manages liquidity risk by maintaining adequate cash and managing its capital. As at October 31, 2023, the Company had accounts payable and accrued liabilities of $93,545 and loan payable of $40,000 due within one year which is subject to a $10,000 debt forgiveness from the Federal government, and cash of $155,667. Subsequent to the 2023 fiscal year end, the Company repaid $30,000 of the loan payable and received $10,000 of debt forgiveness.
Floating interest earned on the Company’s cash equivalent balances are at market interest rates. The deposit earns no interest and was held as a deposit for the Company’s corporate credit card. Assuming all variables remain constant; a change representing a 1% increase or decrease in interest rate would not have a significant effect for the Company.
The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in foreign currency. As at October 31, 2023, the Company’s monetary assets and liabilities are primarily denominated in Canadian dollars.
1.15 OTHER MD&A REQUIREMENTS
a) Disclosure of Outstanding Share Data
| ) Disclosure of Outstanding Share Data | |
|---|---|
| At the date of this MD&A | Number Outstanding |
| Common Shares | 39,181,476 |
| Stock Options | 1,981,500 |
| Restricted Share Units | 1,488,000 |
| Warrants | 9,516,800 |
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b) Limitations of Controls and Procedures
The Company's management, including its Chief Executive Officer and Chief Financial Officer, believe that any system of disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that ‐ judgments in decision making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
1.16 RISK FACTORS
The risk factors associated with the principal business of the Company are outlined in detail below for the year ended October 31, 2023. Due to the nature of the Company's business and the present stage of exploration of the Property, an investment in the securities of the Company is highly speculative and subject to risks. Briefly, these include the highly speculative nature of the resources industry characterized by the requirement for large capital investments from an early stage and a very small probability of finding economic mineral deposits. In addition to the general ‐ risks of mining, there are country specific risks, including currency, political, social, permitting and legal risk. An investor should carefully consider the risks and the other information that the Company provides on its website or files on Sedar before investing in the Company’s common shares and should not consider an investment in the Company unless the investor can sustain an economic loss of the entire investment. The Company's actual exploration and operating results may be very different from those expected as at the date of this MD&A.
Ongoing Need for Financing
As the Company has limited financial resources, its ability to continue acquisition, exploration and development activities may be reliant on its continued attractiveness to equity and/or debt investors. The Company has incurred operating losses as it continues to expend funds to explore and develop the Star Project and any other properties it may acquire. Even if its financial resources are sufficient to fund its exploration and development programs, which will allow the Company to arrive at conclusions regarding commercial viability of the resources and reserves in the Property, there is no guarantee that the Company will be able to develop them in a profitable manner. The
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Company's ability to arrange financing in the future will depend in part upon prevailing capital market conditions, as well as the Company's business success. There can be no assurance that the Company will be successful in its efforts to arrange additional financing on terms satisfactory to the Company, and failure to raise such capital could result in the Company forfeiting its interest in the Property, missing certain acquisition opportunities, or going out of business.
Volatile Stock Price
The price of the Company shares is expected to be highly volatile and will be drastically affected by the success of exploration and test results. The Company cannot predict the results of its exploration activities expected to take place in the future. The results of these tests will inevitably affect the Company’s decisions related to further exploration and/or production at any of the Property or other properties that the Company may explore in the future and will likely trigger major changes in the trading price of the Company shares.
Exploration, Development and Production Risks
There are inherent risks and speculation due to the expected nature of the Company’s involvement in the evaluation, acquisition, exploration and if warranted, development and production of metals. Mineral exploration involves a high degree of risk and there is no assurance that expenditures made on future exploration by the Company will result in discoveries of commercial grade and/or quantities. While the Company has or will develop a limited number of specific identified exploration or development prospects within the Property, management will continue to evaluate prospects on an ongoing basis in a manner consistent with industry standards. The long-term commercial success of the Company depends on its ability to find, acquire, develop and commercially produce reserves. No assurance can be given that the Company will be able to locate satisfactory properties for acquisition or participation. Moreover, if such acquisitions or participations are identified, the Company may determine that current markets, terms of acquisition and participation or pricing conditions make such acquisitions or participations uneconomic. The Company has no history of earnings and will have no producing resource properties to begin with.
Uninsurable Risks from Operations
The Company’s involvement in the exploration for and development of natural resource properties may result in the Company becoming subject to liability for certain risks, and in particular unexpected or unusual geological operating conditions including rock bursts, cave ins, fires, floods, earthquakes, pollution, blow-outs, property damage, personal injury or other hazards. Although the Company will obtain insurance in accordance with industry standards to address such risks, such insurance has limitations on liability that may not be sufficient to cover the full extent of such liabilities. In addition, such risks may not, in all circumstances, be insurable or, in certain circumstances, the Company may elect not to obtain insurance to deal with specific risks
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due to the high premiums associated with such insurance or other reasons. The payment of such uninsured liabilities would reduce the funds available to the Company. The occurrence of a significant event that the Company is not fully insured against, or the insolvency of the insurer of such event, could have a material adverse effect on the Company’s financial position, operations or prospects.
No assurance can be given that insurance to cover the risks to which the Company's activities will be subject will be available at all or at economically feasible premiums. Insurance against environmental risks (including potential for pollution or other hazards as a result of the disposal of waste products occurring from production) is not generally available to the Company or to other companies within the industry. The payment of such liabilities would reduce the funds available to the Company. Should the Company be unable to fully fund the cost of remedying an environmental problem, it might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy.
Prices, Market Conditions and Marketing of Mineral Resources
The Company’s ability to fund its exploration and development activities, and possible future profitability, will be directly related to the demand for the mineral resources found on its properties and their related market prices. Mineral prices are determined based on world demand, supply and other factors, all of which are beyond the control of the Company.
The Company must also successfully sell its mineral resources to prospective buyers. The marketability and price of natural resources which may be acquired or discovered by the Company will be affected by numerous factors beyond its control. These factors include market fluctuations, the proximity and capacity of natural resource markets, and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of natural resources and environmental protection. The exact effect of these factors cannot be accurately predicted, but any one or a combination of these factors could result in the Company not receiving an adequate return for shareholders. The Company has limited experience in the marketing of mineral resources.
Mineral Resource Estimates
The Company’s future cash flows and earnings will be highly dependent upon the Company discovering and developing mineral resources from its properties. Any mineralization figures or descriptions presented in the Company’s filings with securities regulatory authorities, press releases and other public statements that may be made from time to time are and will be based on descriptions and estimates made by the Company’s personnel and independent consultants. These descriptions and estimates are imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. The Technical Report states that no mineral resource or mineral reserve estimates have been completed
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for the Property. There can be no assurance that future estimates will be accurate, or reserves, resource or other mineralization figures will be accurate. There can be no assurance that the Company’s future exploration and development efforts will result in the discovery of commercial accumulations of natural or mineral resources that the Company can develop at economically feasible costs.
Regulatory Matters
The exploration, development or mining operations carried on by the Company will be subject to government, legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labour standards. The exercise of discretion by governmental authorities under existing regulations, the implementation of new regulations or the modification of existing regulations affecting the natural resources industry are beyond the control of the Company and could reduce demand for mineral resources, increase the Company’s costs and have a material adverse impact on the Company. Before proceeding with a project, the participants in the project must obtain all required regulatory approvals. Failure to obtain regulatory approvals, or failure to obtain them on a timely basis, could result in delays and abandonment or restructuring of the projects undertaken by the Company and increased costs, all of which could have a material adverse effect on the Company. In addition, the profitability of any mining prospect is affected by the markets for metals which are influenced by many factors including changing production costs, the supply and demand for metals, the rate of inflation, the inventory of metal producing companies, the political environment, and changes in industry investment patterns.
Competition
The Company may actively compete for acquisitions, leases, licenses, concessions, claims, skilled industry personnel, equipment, and other related interests with a substantial number of other companies, many of which have significantly greater history of operating and financial resources than the Company. The Company's ability to successfully bid on and acquire additional property rights, to participate in opportunities and to identify and enter into commercial arrangements with other parties could be adversely affected by the intensely competitive nature of the mining industry.
Potential Conflicts of Interest
Certain directors or officers of the Company are also directors, officers, shareholders and/or Promoters of other reporting and non-reporting issuers, including those engaged in the business of acquiring, developing and exploiting mineral resource properties. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest which they may have in any project or opportunity of the Company. If a
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conflict of interest arises at a meeting of the Board of Directors, any director in a conflict will disclose his interest and abstain from voting on such matter.
Title to Properties, Investments in Properties
There can be no certainty that an unforeseen defect in the chain of title in the Company’s mineral properties will not arise to defeat the claim of the Company which could result in a reduction of any future revenue received by the Company. The possibility exists that title to the Property, or other properties of the Company, might be defective because of errors or omissions in the chain of title, including defects in conveyances and defects in locating or maintaining such claims or concessions. No assurances can be given that there are not title defects or other interests conflicting with the mining claims and interests subject to the Options, and the Property may be subject to prior unregistered liens, agreements or transfers, native land claims or other undetected title defects. As well, the Company may be required by its exploration and production contracts to make regular ongoing investments on its properties and perform minimum exploration work to maintain its exploration and production contracts and to be eligible for further extensions. If the Company is unable to meet those minimum requirements, it may impede the extension of its contracts. The Company's properties will have been acquired from third parties and the terms for exploration and investment requirements pursuant to the contracts governing its interest in each property may vary significantly.
There is uncertainty related to unsettled aboriginal rights and title in BC and this may adversely impact the Company’s operations and profit.
Native land claims in BC remain the subject of active debate and litigation. There can be no guarantee that the unsettled nature of land claims in BC will not create delays in project approval on the Property or unexpected interruptions in project progress or result in additional costs to advance the project.
Licensing and Permitting Delays
On February 20, 2014, the Company received a Multi-Year Area Based (“MYAB”) Notice of Work permit from the British Columbia government authorizing a five-year exploration program at the Star Property (extended to March 2026). The operations of the Company will require licenses and permits from various governmental authorities. There can be no assurance that the Company will be able to obtain all necessary licenses and permits that may be required to carry out the exploration and development of its projects in a timely manner or at all.
Environmental Legislation
All phases of the mineral resource business present environmental risks and hazards and are subject to environmental laws and regulations pursuant to a variety of governmental authorities.
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Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with operations. The legislation also requires that facility sites and mines be operated, maintained, abandoned, and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. The discharge of tailings or other pollutants into the air, soil or water may give rise to liabilities for third parties and may require the Company to incur costs to remedy such discharge. No assurance can be given that environmental laws, today or in the future, will not result in a curtailment of production or a material increase in the costs of productions, development or exploration activities or otherwise adversely affect the Company's financial condition, results of operations or prospects.
Companies engaged in the exploration and development of mineral properties generally experience increased costs and delays as a result of the need to comply with applicable laws, regulations and permits. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties, such as the Company, engaged in natural resource exploration and development activities may be required to compensate those suffering loss or damage by reason of its activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, environmental laws.
Amendments to current laws, regulations and permits governing operations and activities of natural resource companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or a reduction in levels of production at producing properties or require abandonment or delays in development of new properties.
Reliance on Others and Key Personnel
The success of the Company will be largely dependent upon the performance of its management and key employees, as well as the talents of its outside consultants and suppliers. The Company may not have any “key man” insurance policies, and therefore there is a risk that the death or departure of any one or more members of management or any key employee could have a material adverse effect on the Company. The Company also faces intense competition for qualified personnel and there can be no assurance that the Company will be able to attract and retain the employees, personnel and/or consultants necessary to successfully carry out its activities.
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Significant Capital Requirements
Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract 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 the funds required for development can be obtained on a timely basis. The discovery of mineral deposits is dependent upon several factors. The commercial viability of a mineral deposit once discovered is also dependent upon a number of factors, some of which relate to particular attributes of the deposit, such as size, grade and proximity to infrastructure, and some of which are more general factors, such as metal prices and government regulations. Most of these factors are beyond the Company's control. In addition, because of these risks, there is no certainty that the expenditures to be made by the Company on the exploration of the Property or other properties that it may acquire, as described herein, will result in the discovery of commercial quantities of ore.
Dilution to Existing Shareholders
The Company may be required to complete additional equity financings raised in the future. The Company may be required to issue securities on less than favorable terms to raise sufficient capital to fund its business plan in a timely manner. Any future transaction involving the issuance of equity securities or securities convertible into common shares would result in dilution, possibly substantial, to shareholders of the Company.
Dividends
To date, Prosper Gold has not paid any dividends on its outstanding securities and the Company does not expect to do so in the foreseeable future. Any decision to pay dividends on the Company shares will be made by the board of directors.
COVID-19
Since December 2019, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in a widespread health crisis that has affected economies and financial markets around the world resulting in an economic downturn. This outbreak may also cause staff shortages, reduced consumer demand, increased government regulations or interventions, all of which may negatively impact the business, financial condition, or results of operations of the Company. The duration and impact of the COVID-19 outbreak remains unknown and it is not possible to reliably estimate the length and severity of these developments.
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Russia-Ukraine and the Middle East Crisis
Russia’s invasion of Ukraine and the war between Israel and Hamas in the West Bank has injected new uncertainties into the global economy, the impact of which is difficult to predict, as its outcome and longevity are unknown. With rising oil and commodity prices, the developing situation remains fluid, and the impact on Canadian consumer confidence in the face of a potentially significant inflationary threat is difficult to assess at this time.
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