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Q-Gold Resources Ltd. Management Reports 2024
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Management Reports
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Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
Q-GOLD RESOURCES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
DATED: NOVEMBER 28, 2024
GENERAL
The following Management's Discussion and Analysis ("MD&A") provides a review of the financial position and results of operations of Q-Gold Resources Ltd. ("Q-Gold" or the "Company") and its subsidiaries and should be read in conjunction with the consolidated financial statements and the notes thereto for the three and nine months ended September 30, 2024 and 2023. This MD&A covers the most recently completed financial period and the subsequent period up to the date of this MD&A. All amounts are expressed in Canadian dollars, unless otherwise noted.
The accompanying consolidated financial statements have been prepared by management and are in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretation Committee ("IFRIC") interpretations. Other information contained in this document has been prepared by management and is consistent with the data contained in the consolidated financial statements.
The Company's consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the usual course of business. The reader should be aware that historical results are not necessarily indicative of future performance.
This MD&A and the consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 have been reviewed by the audit committee and approved by the Company's Board of Directors prior to release.
Qualified Persons
The scientific and technical information contained in this MD&A has been reviewed, prepared and approved by Jason Arnold P.Geo (#1662), who is a "Qualified Person" as defined by NI 43-101.
Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
OVERVIEW
Q-Gold Resources Ltd. ("Q-Gold" or the "Company") was incorporated under the Business Corporations Act (Alberta) on March 25, 1998 under the name Solana Petroleum Corp. In January 2004, the Company changed its name to Q-Gold Resources Ltd., and in December 2011, continued to British Columbia. In October 2018, the Company continued to Ontario.
The registered head office of the Company is located at 198 Davenport Road, Toronto Ontario M5R 1J2. The Company's shares trade on the TSX Venture Exchange ("TSXV") under the symbol QGR.
Q-Gold is a mineral exploration company focused on exploring its mineral properties near Mine Centre, Ontario and formerly in Peru and has not yet identified a commercial resource. During the year ended December 31, 2023 the Company terminated its option agreement associated with the Peru property. During the nine months ended September 30, 2024 Q-Gold maintained its precious metals properties within Ontario, while reviewing prospective alternative opportunities.
Mine Centre, Ontario Properties
The Company has maintained its mineral properties near Mine Centre, Ontario that include the historic Foley gold mine and the McKenzie Gray gold/silver zone.
Q-Gold holds 9,965 acres of contiguous mining claims, Crown leases and leasehold patents located within the historic Mine Centre 1890's gold camp, which historically produced 16,025 ounces of gold from the Foley Gold Mine and the Golden Star Mine. The property has favourable logistics with direct access to Highway 11 and being located 250 km west of Thunder Bay and 65 km Northeast of the U.S. border at International Falls. It is also proximal to two major gold discoveries 95 km on either side of Mine Centre: Rainy River (New Gold) (4.5 M oz. Au & 11.4 M oz. Ag) & Hammond Reef (Agnico Eagle) (4.5 M oz.).
The Q-Gold Mine Centre Project hosts two historic gold mines, the Foley and Golden Star, as well as a silver/gold discovery on the McKenzie Gray property (Figure 1). Over 100 gold-bearing surface quartz veins have been identified in the Mine Centre Archean lode gold system. Since 2005, over 5,900 m of drilling was completed at the Foley gold mine with the goal of delineating veins. Since 2009, over 6,500 m of drilling was completed at the McKenzie Gray deposit with the goal of defining the mineralized zone at depth and at edges. Further exploration drilling is required on all claims to determine the size of the mineralized zones and define a resource.
Q-GOLD RESOURCES LTD.
MD&A - Three and Nine months ended September 30, 2024
Figure 1 – Assorted Mine Centre Gold Vein Systems
On July 7, 2020, the Company announced its 2020 Mine Centre Area Work Plan, which included a data review and site reclamation work. Since that announcement, the Company completed the data review and determined there was meaningful exploration potential at the Company's Mine Centre claims.
On September 25, 2020, the Company announced its 2020-2021 exploration program at its wholly owned Foley Gold Mine complex, near the town of Mine Centre, Ontario. The Company will drill targets at the past-producing Foley Gold Mine; a high-grade gold-vein system with over $5,900\mathrm{m}$ of drilling with results of up to $53.47\mathrm{g/t}$ Au over $1.5\mathrm{m}$ and $106.7\mathrm{g/t}$ Au over $0.23\mathrm{m}$ (refer to Q-Gold Resources press release September 30, 2020 for additional details).
On September 30, 2020, the Company announced it submitted an exploration permit for its previously announced 2020-2021 exploration program at its wholly owned Foley Gold Mine complex.
On April 20, 2021, the Company announced the launch of Phase 1 drill program at Foley Gold Mine complex. Q-Gold geologists have completed an extensive data compilation and 3D Leapfrog modeling of the high-grade gold-vein system that includes over $5,900\mathrm{m}$ of drilling with results of up to $53.47\mathrm{g/t}$ Au over $1.5\mathrm{m}$ and $106.7\mathrm{g/t}$ Au over $0.23\mathrm{m}$ (refer to Q-Gold Resources press release September 30, 2020 for additional details). This exercise has resulted in the finalization of a two-phase drill program.
The Phase 1 program includes a total of $2,745\mathrm{m}$ of drilling that will infill and extend coverage to the $-200\mathrm{m}$ depth. The approved program will allow Q-Gold to infill and extend previous drilling on the four main vein arrays at the past-producing Foley Gold Mine (see Figure 1 below). The Phase 2 program contains an additional 4,035 m that will add additional infill holes as well as expand coverage laterally and down to $-225\mathrm{m}$ depth. Q-Gold has a large land position around the Foley Gold Mine property and the property has considerable exploration
Q-GOLD RESOURCES LTD.
MD&A - Three and Nine months ended September 30, 2024
potential with its range of drill-ready targets on multiple historic deposits as well as grassroots potential that has not been tested with modern exploration methods.
Figure 1 - Foley Mine Target - Phase 1 DDH (yellow traces)
Recent Developments
On June 29, 2022, the Company announced the successful completion of a LiDAR survey, kicking off it's 2022 exploration program. The results of the LiDAR survey combined with the geophysical survey, completed on January 30, 2021 and the proposed geochemical survey will enable Q-Gold to generate a targeted diamond drill program in the Foley Mine area of the Property.
On August 9 2022, the Company announced the completion of a MMI® survey over the Foley Mine area and an area to the northeast of the mine. Results of the survey aided in the positioning of the holes in a drill program to be completed in Q4 2022.
In December 2022, an 8-hole 1,163m diamond drill program was completed targeting the extensions of the known gold-bearing veins around the Foley Mine area.
On February 13, 2023 the Company announced the results of the 2022 Drill Program which indicate that 5 of the 8 holes drilled intersected their targeted vein system. The part of the 2022 Drill Program that focused on the historic Foley Mine successfully extended the strike of the Bonanza vein $300\mathrm{m}$ to the north, with the most northernly hole, Q22-14 intersecting $9.3\mathrm{m}$ grading $0.75\mathrm{g / t}$ . Bonanza silver grades were encountered to the east of Foley in Q22-12 grading $1910\mathrm{g / t}$ Ag which equates to $23.875\mathrm{g / t}$ AuEq* yielding an intersection of $1.6\mathrm{m}$ @ $14.30\mathrm{g / t}$ AuEq (refer to Q-Gold Resources press release February 13, 2023 for additional details). The results to date are shown in Table 1.
Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
On July 10, 2024, the company filed a new NI 43-101 technical report on its wholly owned Mine Centre property located in Ontario, Canada.
Table 1: 2022 Mine Centre Assay Results
| Hole | From | To | Interval | Au | Ag | AuEq |
|---|---|---|---|---|---|---|
| (m) | (m) | (m) | (g/t) | (g/t) | (g/t) | |
| Q22-11 | - | - | - | - | - | - |
| Q22-12 | 35.40 | 37.00 | 1.60 | 4.23 | 1910 | 14.30 |
| 35.40 | 36.18 | 0.78 | 4.23 | - | 4.23 | |
| 36.18 | 37.00 | 0.82 | - | 1910 | 23.875 | |
| 44.10 | 45.05 | 0.95 | 4.85 | - | ||
| Q22-13 | - | - | - | - | - | |
| Q22-14 | 125.32 | 125.90 | 0.58 | 1.82 | - | |
| Including Including Including | 134.70 | 144.00 | 9.30 | 0.75 | - | |
| 134.70 | 135.20 | 0.50 | 6.11 | - | ||
| 135.20 | 135.90 | 0.70 | 0.97 | - | ||
| 143.00 | 144.00 | 1.00 | 2.71 | - | ||
| 146.14 | 147.03 | 0.89 | 0.68 | - | ||
| 147.03 | 148.14 | 1.11 | 0.51 | - | ||
| Q22-15 | - | - | - | - | - | |
| Q22-16 | 34.78 | 35.30 | 0.52 | 6.66 | 21.7 | |
| 100.30 | 101.00 | 0.70 | 0.51 | - | ||
| Q22-17 | 45.00 | 46.00 | 1.00 | 1.50 | - | |
| Q22-18 | - | - | - | - | - |
*: AuEq based on $1600 Au and $20 Ag
Surupana, Peru Property
On July 20, 2020, the Company entered into an share exchange agreement (the "Share Exchange Agreement") to indirectly acquire an option agreement through 1253034 BC Ltd. ("BCCO"), who had acquired an option right to earn a 100% interest (the "Acquisition") in the Surupana Silver Property (the "Surupana Property") on July 6, 2020 (the "Option"), covering the historical Surupana Silver Mining Camp, located in central Puno province of southern Peru. Pursuant to the Share Exchange Agreement, issued 11,000,000 shares of the Company to BCCO's shareholders.
Over a period of five years, the Company had the exclusive right to acquire a 100% interest in the Surupana Property from the grantor of the Option (the "Optionee") for a proposed aggregate purchase price consisting of:
- $175,000 payable by Q-Gold in cash over a period of four years ($25,000 upon closing of the Acquisition (paid); $25,000 on or before 12 months from Closing (paid); $25,000 on or before 24 months from Closing (paid); $25,000 on or before 36 months from Closing; and $75,000 on or before 48 months from Closing); As a result of the Cancellation, as at September 30, 2024 $nil (September 30, 2023 - $nil) remains outstanding.
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Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
- an aggregate of 14,000,000 common shares of Q-Gold (13,000,000 Payment Shares (issued); 250,000 Payment Shares on or before 12 months from Closing (issued); 250,000 Payment Shares on or before 24 months from Closing; 250,000 Payment Shares on or before 36 months from Closing; and 250,000 Payment Shares 48 months from Closing). As at December 31, 2023, an aggregate of 13,500,000 shares have been issued in connection with this transaction and the remaining 500,000 shares will not be issued as a result of the Cancellation. As at September 30, 2024, no shares remain to be issued in connection with the Acquisition.
- Q-Gold was initially required to incur aggregate exploration expenditures totaling $1,800,000 over a period of five years on the Surupana Property ($135,000 on or before 12 months from Closing (incurred); an additional $165,000 on or before 24 months from Closing (partially incurred); an additional $200,000 on or before 36 months from Closing; $500,000 on or before 48 months from Closing; and an additional $800,000 on or before 60 months from Closing); and
- the Optionee had been granted a 2.0% net smelter returns royalty upon commencement of commercial production (of which 1.0% can be purchased by Q-Gold for US$850,000).
A Force Majeure notice was delivered to the Optionee on July 9, 2022 as SAIS Sollocota, the owners of the Surupana Property, has not permitted the Company to access the Surupana Property. SAIS Sollocota is in substance, the local community that regulates physical access to the Surupana Property. As a result, the Company cancelled the Option and forfeited its interest in the Surupana Property during the year ended December 31, 2023 (the "Cancellation").
RESULTS OF OPERATIONS
As the Company is a mineral exploration company, it did not have any revenues or profits from operations during the nine months ended September 30, 2024, or as of the date of this MD&A.
The primary operating activities during the three and nine months ended September 30, 2024 consisted of exploration work on the Company's 100% owned Mine Centre in Ontario, in addition to maintaining the Company's mineral properties and general corporate activities. During the three and nine months ended September 30, 2024, the Company incurred exploration expenditures totaling $3,721 and $28,973 (three and nine months ended September 30, 2023 - $8,692 and $95,295) on its Mine Centre, Ontario Properties and former Surupana Property in Peru.
Acquisition, field exploration, supervisory costs and costs associated with maintaining its mineral properties are expensed and charged against earnings until the Company has a reasonable expectation that the property is capable of commercial production, supported by a positive economic analysis showing a NI 43-101 compliant Mineral Reserve, approved by the Board.
Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
SELECTED ANNUAL RESULTS
The following table shows financial results from the Company's three most recently completed fiscal years:
| December 31, 2023 | December 31, 2022 | December 31, 2021 | |
|---|---|---|---|
| $ | $ | $ | |
| Net loss attributable to shareholders of the Company | 612,003 | 1,973,034 | 2,321,373 |
| Basic and diluted loss per share | 0.01 | 0.04 | 0.05 |
| Total assets | 101,156 | 481,527 | 1,407,984 |
| Total non-current financial liabilities | - | - | - |
The Company's results during the past financial year were driven primarily by the maintenance of its mineral property interests in Ontario, Canada and corporate expenditure as management assessed the existing properties and actively evaluates new potential opportunities.
SUMMARY OF QUARTERLY RESULTS
The following table shows financial results from the Company's eight most recently completed quarters:
| 2024 | 2023 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| Earnings and Cash Flow | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | 4th Qtr. | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | 4th Qtr. |
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Net (loss) | (96,495) | (151,426) | (72,799) | (185,604) | (105,766) | (143,456) | (177,177) | (1,004,266) |
| (Loss) per share, basic & diluted | - | - | - | - | - | - | - | (0.02) |
| Cash flow from (used in) operating activities | 5,702 | (56,374) | 6,838 | (8,280) | 6,759 | (116,202) | (109,237) | (326,847) |
| Cash flow from (used in) investing activities | - | - | - | - | - | - | - | (6,255) |
| Cash flow from financing activities | - | 47,000 | - | - | - | - | 47,000 | (15,000) |
| Balance Sheet | ||||||||
| Total Assets | 104,069 | 107,214 | 110,271 | 101,156 | 198,056 | 210,595 | 313,944 | 481,527 |
FINANCIAL CONDITION
Net loss for the three and nine months ending September 30, 2024, totaled $96,495 and $320,720 ($(0.00) and $(0.01) per share), compared to a loss of $105,766 and $316,470 ($(0.00) and $(0.01) per share) for the same period in 2023.
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Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| EXPENSES | ||||
| Consultants (Note 12) | $ 53,659 | $ 52,393 | $ 161,196 | $ 157,404 |
| Exploration and evaluation expenditures (Note 7) | 3,721 | 8,692 | 28,973 | 95,295 |
| Office expenses | 15,151 | (40,555) | 45,433 | - |
| Professional fees | 11,175 | 17,446 | 33,175 | 58,871 |
| Investor relations and filing fees | 1,318 | 7,420 | 23,315 | 36,913 |
| Total expenses | $ 85,024 | $ 97,902 | $ 292,092 | $ 400,989 |
| Other income (expense) | ||||
| Foreign exchange (loss) gain | 268 | $ 277 | $ (323) | $ 623 |
| Interest expense | (11,739) | (8,141) | (28,305) | (15,217) |
| Interest expense on flow through expenditure | - | - | - | (10,816) |
| Total other expense | (11,471) | (7,864) | (28,628) | (25,410) |
| Net loss and comprehensive loss | $ (96,495) | $ (105,766) | $ (320,720) | $ (426,399) |
Operating expenses were lower in the nine ended September 30, 2024, compared to the same period in 2023 primarily due to a decrease in exploration and evaluation expenditures on the properties in Ontario as well as a decrease in office expenses due to decrease in insurance premiums paid. Professional fees also decreased due to reduced activity within the Company. Expenditures are expected to increase in future periods as the Company progresses into new exploration opportunities.
During the nine months ended September 30, 2024, expenses incurred by the Company on its mineral properties decreased to $28,973 (nine months ended September 30, 2023 - $95,295) due to reduced activity in both Ontario and Peru mining properties.
Cash Flows
Operating Activities
Operating activities in the three and nine months ended September 30, 2024 provided (used) $5,703 and $3,166 compared to $6,759 and $(218,680) in the three and nine months ended September 30, 2023. In the three and nine months ended September 30, 2024 this included $89,659 and $245,057 generated as a result of changes in non-cash working capital, compared to $103,159 and $169,052 generated in working capital for the same period in 2023. (see non-GAAP measures)
Investing Activities
Investing activities in the three and nine months ended September 30, 2024 and 2023 generated (used) $nil.
Financing Activities
Financing activities in the three and nine months ended September 30, 2024 generated $nil and $47,000 compared to generated (used) $nil for the comparative periods in 2023.
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Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
LIQUIDITY AND CAPITAL RESOURCES
The Company spends available funds on corporate obligations and to maintain its mineral properties with the objective of carrying out exploration to establish ore of commercial tonnage and grade. As the Company is in the exploration stage and generates no revenues, the necessary funds must be raised through equity or debt financing, most commonly within the Canadian public markets. Factors such as equity market conditions and the results of exploration activities will affect future capital raising. There are no assurances that the Company will continue to be successful in raising additional funds or that equity capital or debt financing will be available to the Company in the future or on satisfactory terms. Additional equity financing may be on terms that are dilutive, or potentially dilutive, to the Company's shareholders and debt financing, if available, may involve restrictive covenants impacting the Company's ability to raise capital or execute financial and operational plans.
If, at any time, the Company's Board of Directors deems continued exploration at its properties to be unwarranted, based on the results of work done up to that time or for any other reason, the Company may suspend or discontinue exploration of such properties and apply the funds on hand towards the acquisition, exploration or development of new properties or, if required, the general working capital of the Company. The Company does have commitments for option payments and exploration expenditures in the next five years on the Surupana Property in Peru. As at September 30, 2024, the Company had no long-term debt and no definitive agreements with respect to long-term borrowings had been entered into by the Company.
The Company's objective is to maintain a strong capital base in order to:
- maintain financial flexibility;
- maintain creditor and investor confidence; and
- sustain the future development of the business.
The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. The most significant alternatives available for the management of the capital structure include the issue of shares or raising of debt finance when management and the board of directors feel the timing is appropriate.
The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. The most significant alternatives available for the management of the capital structure include the issue of shares or raising of debt finance when management and the board of directors feel the timing is appropriate.
Non IFRS Measures
The Company has included certain non-IFRS performance measures, namely working capital, throughout this document. In the gold mining industry, this is a common non-IFRS performance measures but does not have a standardized meaning. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, we and certain investors use this information to evaluate the Company's performance and ability to generate cash, profits and meet financial commitments. Non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following table provides a reconciliation of working capital to the Company's eight most recently completed quarters.
Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
As at September 30, 2024, the Company had working capital (deficit) of $(2,158,751) compared to $(1,892,743) as at December 31, 2023, including cash of $13,642 (December 31, 2023: $10,476). The Company's primary capital needs are funds for the exploration of its mineral properties, administrative expenses and working capital. The Company will maintain its excess working capital in Canadian dollars, at a large reputable Canadian commercial bank, in high quality short-term deposits or cash.
| 2024 | 2023 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| 3^{rd} Qtr. | 2^{nd} Qtr. | 1^{st} Qtr. | 4^{th} Qtr. | 3^{rd} Qtr. | 2^{nd} Qtr. | 1^{st} Qtr. | 4^{th} Qtr. | |
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Cash | 13,642 | 7,940 | 17,314 | 10,476 | 18,756 | 11,997 | 128,199 | 237,436 |
| Receivables/Prepaids | 86,139 | 94,056 | 86,810 | 82,727 | 94,543 | 112,036 | 97,379 | 153,921 |
| Loan receivable | - | - | - | - | 75,000 | 75,000 | 75,000 | 75,000 |
| Current Liabilities | (2,258,532) | (2,167,632) | (2,067,862) | (1,985,946) | (1,897,242) | (1,804,015) | (1,763,908) | (1,754,314) |
OFF-BALANCE SHEET ARRANGEMENTS
To the best of management’s knowledge, the Company has no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or the financial condition of the Company.
FINANCIAL COMMITMENTS, CONTINGENCIES AND LITIGATION
Ontario Mineral Properties
The mining claims held by Q-Gold in the Kenora Mining Division of Ontario require an annual application of assessment work credits.
Peru Surupana Silver Property
The Company was required to make certain options payments in cash and shares and incur exploration spending as per the option agreement signed in July 2020. During 2022, the Company claimed force majeure due to property access issues. During the year ended December 31, 2023 the Company cancelled its option agreement forfeiting its remaining interest in the Surupana property. See Overview section for details.
Management contracts
The Company is party to certain management contracts and severance obligations. These contracts contain clauses requiring additional payments of $302,000 to be made to the officers of the Company upon the occurrence of certain events such as a change of control. As the triggering effect has not taken place, the contingent payments have not been reflected in the consolidated financial statements. Minimum management contractual commitments remaining under the agreements are approximately $145,000 all due within one year.
Environmental
The Company’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are 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.
Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
RELATED PARTY TRANSACTIONS
The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee of $10,000 per month. As at September 30, 2024, the Company had a payable balance of $685,832 (December 31, 2023 - $554,132) to 2227929 Ontario Inc. to cover shared expenses. Amounts owing are unsecured, non-interest bearing and due on demand.
As at September 30, 2024, included in accounts payable is $30,000 (December 31, 2023 - $30,000) of funds advanced from 222792 Ontario Inc. This balance bears no interest and has no set repayment terms.
As at September 30, 2024, included in accounts payable is $25,000 (December 31, 2023 - $nil) of funds advanced from Forbes. This balance bears no interest and has no set repayment terms.
Compensation of Key Management
Key management includes the Company's directors and officers. Compensation awarded to key management included:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Short-term benefits | $ 38,250 | $ 38,250 | $ 114,750 | $ 114,750 |
| $ 38,250 | $ 38,250 | $ 114,750 | $ 114,750 |
Included in accounts payable and accrued liabilities as at September 30, 2024 is approximately $358,109 (December 31, 2023 - $227,195) due to directors and officers of the Company. These amounts are unsecured, non-interest bearing and due on demand.
In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including directors (executive and non-executive) of the Company.
Included in the February 1, 2022, options granted, 125,000 was granted to director of the Company.
Included in the July 6, 2022, options granted, 2,200,000 were granted to directors and officers of the Company.
CRITICAL MANAGEMENT JUDGEMENTS AND ACCOUNTING ESTIMATES
The preparation of the Company's consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reported period. Such estimates and assumptions affect the carrying value of assets and impact decisions as to when exploration and development costs should be capitalized or expensed. Other significant estimates made by the Company include factors affecting valuations of stock-based compensation and the valuation of income tax accounts. The Company regularly reviews its estimates and assumptions, however, actual results could differ from these estimates and these differences could be material.
Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
ACCOUNTING STANDARDS AND INTERPRETATIONS
Future Accounting Changes
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2024. Many are not applicable or do not have a significant impact to the Company and have been excluded.
IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. The amendments are effective for annual periods beginning on January 1, 2024.
RISKS AND UNCERTAINTIES
Investing in the Company involves risks that should be carefully considered. The operations of the Company are speculative due to the high-risk nature of its business, which is the acquisition, financing, exploration and development of mineral properties. These risk factors could materially affect the Company’s future operating results and could cause actual events to differ materially from those described in forward-looking information relating to the Company.
Liquidity Concerns and Financing Risks
The Company has limited financial resources, no source of operating cash flow and no assurance that additional funding will be available for further exploration of its projects or to fulfill its obligations under any applicable agreements. There can be no assurance that adequate financing will be obtained in the future or that the terms of such financing, if secured, will be favorable.
Failure to obtain such additional financing could result in the delay or indefinite postponement of further exploration of the Company’s projects with the possible loss of such properties. While the Company’s financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, failure to secure additional funding may cast doubt about the validity of that assumption.
Exploration and Mining Risks
The Company is engaged in mineral exploration, which involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. The long-term profitability of the Company’s operations will be in part directly related to the cost and success of the Company’s exploration programs.
Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not overcome. Operations will be subject to all the hazards and risks normally incidental to the exploration and development of, and production from, mineral resources, any of which could result in work stoppages; damage to or destruction of property or production facilities; personal injury; environmental damage; monetary losses and legal liability. Hazards such as unusual or unexpected geological formations and other conditions such as formation pressures, flooding, fire, explosions, cave-ins, landslides, inclement or hazardous weather conditions, power outages, labour or transportation disruptions and the inability to obtain suitable
Q-GOLD RESOURCES LTD.
MD&A – Three and Nine months ended September 30, 2024
machinery, equipment or labour are associated with mineral exploration, development and operation.
Substantial expenditures are required to establish ore reserves through exploration techniques such as drilling, to carry out environmental and social impact assessments, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Even if commercial mineralization is discovered, it may take several years until production is possible, during which time the economic feasibility of production may change.
Stage of Development
The Company is in the business of exploring its mineral properties, with the ultimate goal of producing therefrom. None of the Company's properties have commenced commercial production and it has no history of earnings or cash flow from its operations. As a result of the foregoing, there can be no assurance that the Company will be able to develop any of its properties profitably or that its activities will generate positive cash flow. The Company's operating expenses and capital expenditures may increase in subsequent years in relation to the engagement of consultants and personnel and purchase of equipment associated with advancing exploration, development and commercial production at the Company's properties. The Company expects to continue to incur losses for the foreseeable future. There can be no assurance that the Company will generate any revenues or achieve profitability. A prospective investor in the Company must be prepared to rely solely upon the ability, expertise, judgment, discretion, integrity and good faith of management in all aspects of the development and implementation of the Company's business activities.
Markets for Securities
There can be no assurance that an active trading market in the Company's securities will be established and sustained. The market prices for securities of many companies, particularly exploration stage companies, are subject to wide fluctuations that are not necessarily reflective of their operating performance, underlying asset values or the prospects of such companies. Factors such as commodity prices, government regulation, interest rates, share price movements of peer companies and competitors, as well as overall market movements, may have a significant impact on the market price of the securities of the Company. There can be no assurance that significant fluctuations in the Company's share price will not occur.
Mineral Resource and Mineral Reserve Estimates
There are numerous uncertainties inherent in estimating Mineral Resources and Mineral Reserves, including many factors beyond the control of the Company. Such estimates are a subjective process and the accuracy of any Mineral Resource or Mineral Reserve estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. These amounts are estimates only and the actual level of mineral recovery from such deposits may be different. Differences between management's assumptions, including economic assumptions such as metal prices and market conditions, could have a material adverse effect on the Company's financial position and results of operations.
Regulatory Requirements, Permits and Licenses
Even if the Company's mineral properties are proven to host economic Mineral Reserves or Mineral Resources, factors such as government regulation may prevent or restrict the mining of any such deposits or the repatriation of profits. The Company's exploration and potential future development activities, including mine development, mill construction, road, rail and other transportation facilities, will require permits and approvals from various government authorities and are subject to extensive federal, departmental and local laws and regulations governing prospecting, 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 time consuming and costly. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. There
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can be no guarantee that the Company will be able to obtain or maintain all necessary licenses, permits and approvals that may be required to explore and develop its properties, commence construction or for the operation of mining facilities. In addition, the Company may be required to compensate those suffering loss or damage by reason of its activities.
Title to Properties
The Company holds its interest in properties through a number of mining claims and leases in Ontario, Canada. It is possible that the Company's mineral properties may be subject to prior unregistered agreements or transfers or native land claims and title may be affected by undetected defects. Title to, and the area of, the mining claims may be disputed and there may be challenges to the title of the properties in which the Company may have an interest, which, if successful, could result in the loss or reduction of the Company's interest in the properties.
Environmental Regulations
The Company's activities are subject to environmental protection and employee health and safety regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessment of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. The cost of compliance with changes in
governmental regulations has the potential to reduce the profitability of operations. Any failure to comply fully with all applicable laws and regulations could have significant adverse effects on the Company, including the suspension or cessation of operations, and there is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company's operations.
Commodity Prices
The ability of the Company to explore and evaluate its mineral properties and the future profitability of the Company are directly related to the price of gold and other metals. Gold and other metal prices fluctuate widely and are affected by numerous factors beyond the control of the Company. The level of interest rates, the rates of inflation, the world supply of gold and the stability of exchange rates can all cause significant fluctuations in prices.
Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The price of gold has fluctuated widely in recent years and future price declines could cause commercial production to be impracticable, thereby having a material adverse effect on the Company's business, financial condition and result of operations. The Company monitors metal prices to determine the appropriate course of action to be taken.
Uninsurable Risks
The Company maintains insurance to cover normal business risks. The Company may, however, become subject to liability for pollution or hazards against which it cannot insure or against which it may elect not to insure. The payment of such liabilities may have a material adverse effect on the Company's financial position. In the course of exploration of, and development and production from, mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions including explosions, rock bursts, cave-ins, land movements, earth work failures, fires, flooding and earthquakes may occur. It is not always possible to fully insure against such risks and the Company has currently decided not to take out insurance against such risks due
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to high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of the Company.
Reliance on Key Individuals and Outside Parties
The Company’s success depends upon the personal efforts and commitment of key members of management. It is expected that the contribution of these individuals will be a significant factor in the Company’s growth and success. The loss of the services of these members of management and certain key employees could have a material adverse effect on the Company. The Company will also rely upon consultants, engineers and others for exploration, development, construction and operating expertise. If such parties’ work is deficient or negligent or is not completed in a timely manner, it could have a material adverse effect on the Company.
Competition
The mineral industry is intensely competitive in all its phases. The Company competes with many companies possessing greater financial and technical resources for the acquisition of mineral properties, as well as for the recruitment and retention of qualified employees. Such competition may result in the Company being unable to acquire desired properties, recruit or retain qualified employees, or acquire the capital necessary to fund its operations and develop its properties. The Company’s inability to compete with other mineral companies for these resources would have a material adverse effect on the Company’s results of operation and business.
Conflicts of Interest
Certain directors of the Company are also directors, officers or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploiting natural resource properties. Such associations may give rise to conflicts of interest from time to time. The directors 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 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. In determining whether or not the Company will participate in any project or opportunity, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at that time.
Litigation
Legal proceedings, with and without merit, may arise from time to time in the course of the Company’s business. Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. The process of defending such claims could take away from management time and effort. Due to the inherent uncertainty of the litigation process, the resolution of any legal proceeding to which the Company or one or more of its subsidiaries may become subject, could have a material effect on the Company’s financial position, results of operations or project development activities.
Corruption and Bribery Laws
The Company’s operations are governed by, and involve interactions with, many levels of government in various countries. The Company is required to comply with anti-corruption and anti-bribery laws, including the Criminal Code (Canada), and the Canadian Corruption of Foreign Public Officials Act, as well as similar laws in the countries in which the Company conducts its business. In recent years, there has been a general increase in both the frequency of enforcement and the severity of penalties under such laws, resulting in greater scrutiny and punishment for companies convicted of violating anti-corruption and anti-bribery laws. Furthermore, a company may be found liable for violations by not only its employees, but also by its contractors and third party agents. Although the Company has adopted steps to mitigate such risks, such measures may not always be effective in ensuring that the Company, its employees, contractors or third party agents will comply strictly with such laws.
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If the Company finds itself subject to an enforcement action or is found to be in violation of such laws, this may result in significant penalties, fines and/or sanctions being imposed, resulting in a material adverse effect on the Company's reputation and results of its operations.
Foreign Mining Tax Regimes
Mining and corporate tax regimes in foreign jurisdictions are subject to differing interpretations and are subject to constant change. The Company's interpretation of taxation law as applied to its transactions and activities may not coincide with that of the tax authorities. As a result, transactions may be challenged by tax authorities and the Company's operations may be reassessed, which could result in significant additional taxes, penalties and interest. In addition, future changes to mining tax regimes in foreign jurisdictions could result in significant additional taxes payable by the Company, which would have a negative impact on its financial results.
OUTSTANDING SHARE DATA
The Company's authorized capital consists of an unlimited number of common shares and an unlimited number of first and second preferred shares. As of the date of this MD&A, common shares totaling 55,998,695 were issued and outstanding. No Preferred Shares were issued as of the date of this MD&A.
As of the date of this MD&A, the Company has 3,180,000 stock options outstanding to directors, officers, employees and consultants of the Company with an exercise price ranging from $0.07 to $0.26 per share and expiring between January 8, 2026 and July 6, 2027.
As of the date of this MD&A, the Company has no warrants outstanding.
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ADDITIONAL INFORMATION
Additional Information concerning Q-Gold, including press releases, interim and annual financial statements, an Annual Information Form, an Information Circular and the NI 43-101 Report on the Company's Mine Centre Properties, has been filed electronically through the System for Document Analysis and Retrieval and is available online under its profile at www.sedar.ca
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in the MD&A constitute forward-looking statements. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions for the future. Such statements involve a number of known and unknown risks and uncertainties and other factors that may cause actual results, performance or developments to differ materially from those contained in or implied by such statements.
No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits may accrue to the Company.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements were made. In particular, the Company cautions that the completion of proposed acquisitions cannot be predicted with certainty and that there can be no assurance at this time that any proposed acquisitions will be completed in the manner expected or at all. These forward looking statements reflect management's current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause actual results to differ materially from those expressed or implied by the forward-looking statements, as well as other factors beyond the Company's control.
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements under Canadian securities legislation. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "budget", "forecast", "schedule", "continue", "estimate", "expect", "project", "predict", "potential", "target", "intend", "believe" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, "occur" or "be achieved". Such statements and assumptions also include those relating to guidance; proposed acquisitions; strategy; development potential and timetable for the Company's properties; the Company's ability to raise additional financing; results of operations and financial condition; commodity prices; mineralization projections; the timing and amount of estimated future exploration and development; the success of exploration activities; mining or processing issues; currency exchange rates; government regulation and permitting of mining operations; reliance on qualified personnel; competition; dependence on outside parties; and environmental risks. Forward-looking statements are based on the opinions and estimates of management and certain qualified persons as of the date such statements are made.
By their nature, forward-looking statements are subject to numerous known and unknown risks and uncertainties that could significantly affect anticipated results or the level of activity, performance or achievements in the future and, accordingly, actual results may differ materially from those expressed or implied by such forward-looking statements. The Company is exposed to numerous operational, technical, financial and regulatory risks and uncertainties, many of which are beyond its control and may significantly affect anticipated future results, including but not limited to risks related to: uncertainties inherent in estimating mineral resources and mineral reserves; lack of revenues; revocation of government approvals; corruption and uncertainty with court systems and the rule of law; availability of external financing on acceptable terms; actual results of current
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exploration activities; changes in project parameters as plans continue to be refined; future mineral prices; failure of equipment or processes to operate as anticipated; accidents, labour or community disputes; other risks of the mining industry; and other risk factors, including without limitation the risk factors described herein. Estimates regarding the anticipated timing, amount and cost of exploration activities are based on previous industry experience and regional political and economic stability. Capital and operating cost estimates are based on research of the Company or its consultants. Although management has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
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