AI assistant
Rackla Metals Inc. Management Reports 2025
46955_rns_2025-04-29_9c6a36e2-2541-4843-872f-39bc981ed1ab.pdf
Management Reports
Open in viewerOpens in your device viewer
RACKLA METALS INC
(the "Company")
MANAGEMENT'S DISCUSSION AND ANALYSIS
Year End Report – December 31, 2024
General
This Management's Discussion and Analysis ("MD&A") supplements, but does not form part of, the audited financial statements of the Company for the year ended December 31, 2024. The following information, prepared as of April 29, 2025, should be read in conjunction with the December 31, 2024 financial statements. The Company reports its financial position, results of operations and cash flows in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All amounts are expressed in Canadian dollars unless otherwise indicated.
Additional information relevant to the Company's activities can be found on SEDAR+ at (www.sedarplus.ca).
Forward-looking Information
This MD&A contains certain statements which constitute forward-looking information within the meaning of applicable Canadian securities legislation ("Forward-looking Statements"). All statements included herein, other than statements of historical fact, are Forward-looking Statements and are subject to a variety of known and unknown risks and uncertainties which could cause actual events or results to differ materially from those reflected in the Forward-looking Statements. The Forward-looking Statements in this MD&A include, without limitation, statements relating to the Company's plans for exploration of its properties; the sufficiency of the Company's cash position; and its ability to raise equity capital or access debt facilities. Often, but not always, these Forward-looking Statements can be identified by the use of words such as "anticipates", "believes", "plans", "estimates", "expects", "forecasts", "scheduled", "targets", "possible", "strategy", "potential", "intends", "advance", "goal", "objective", "projects", "budget", "calculates" or statements that events, "will", "may", "could" or "should" occur or be achieved and similar expressions, including negative variations.
Forward-looking Statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any results, performance or achievements expressed or implied by the Forward-looking Statements. Such uncertainties and factors include, among others:
- risks associated with mineral exploration and development activities;
- due diligence investigations on potential investments not identifying all relevant facts;
- fluctuations in commodity prices, foreign exchange rates, and interest rates;
- credit and liquidity risks;
- changes in national and local government legislation, taxation, controls, regulations and political or economic developments in countries in which the Company does or may carry on business;
Management's Discussion and Analysis
Year ended December 31, 2024
- reliance on key personnel;
- property title matters and local community relationships;
- risks associated with potential legal claims generally or with respect to environmental matters;
- dilution from further equity financing;
- competition;
- uncertainties relating to general economic conditions; and
- risks relating to pandemics, epidemics and public health crises, and the impact they might have on the Company's business, operations, financial condition and share price;
as well as those factors referred to in the "Risks and Uncertainties" section in this MD&A.
Forward-looking Statements contained in this MD&A are based on the assumptions, beliefs, expectations and opinions of management, including but not limited to:
- all required third party contractual, regulatory and governmental approvals will be obtained for the exploration and development of the Company's properties;
- due diligence investigations on potential investments will reveal all relevant facts;
- there being no significant disruptions affecting operations, whether relating to labour, supply, power, damage to equipment or other matters;
- permitting, exploration and/or development activities proceeding on a basis consistent with the Company's current expectations;
- expected trends and specific assumptions regarding commodity prices and currency exchange rates; and
- prices for and availability of fuel, electricity, equipment and other key supplies remaining consistent with current levels.
These Forward-looking Statements are made as of the date hereof and the Company disclaims any obligation to update any Forward-looking Statements, whether as a result of new information, future events or results or otherwise, except as required by law. There can be no assurance that Forward-looking Statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on Forward-looking Statements.
Business of the Company
The Company is a Vancouver-based junior gold exploration company with projects in the Northwest Territories ("NWT") and Yukon, Canada. Since 2022, the Company has been consolidating an extensive land position in the eastern Tombstone Gold Belt, part of the Tintina Gold Province, that extends through the southeast Yukon and into the NWT.
Financings
In May and June 2024, the Company completed a non-brokered private placement financing to raise total gross proceeds of $4.65 million (the "2024 Offering"). The 2024 Offering was comprised of a hard-dollar unit offering at a price of $0.15 per unit, a flow-through unit offering at a price of $0.17 per unit, and a charity flow-through unit offering at a price of $0.21 per unit. Of the total proceeds raised, $3.76 million are flow-through funds. Each unit consists of one common share of the Company and one warrant entitling the holder to purchase one additional common share of the Company at a price of $0.20 for one year following the closing of the applicable Unit Offering.
In November 2024, the Company completed a non-brokered private placement of 10 million common shares at $0.12 each, raising hard dollar proceeds of $1.2 million.
On April 23, 2025, the Company closed a non-brokered private placement financing to raise total gross proceeds of $2.99 million (the "2025 Offering"). The 2025 Offering consisted of a $2,234,400 charity flow-through unit offering at a price of $0.21 per unit, and a $759,750 hard-dollar unit offering at a price of $0.15 per unit. Each unit consists of one common share of the Company and one-half of a warrant, with each whole warrant entitling the holder to
Rackla Metals Inc.
Page 2 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
purchase one additional common share of the Company at a price of $0.15 for one year following the closing of the 2025 Offering.
Management intends to use the proceeds from the above-noted financings for conducting exploration and drilling on the Company's Tombstone Gold Belt properties within the Selwyn Basin, for continuing investigations of additional mineral properties for acquisition, and for general working capital and corporate purposes.
Property Review
The Company's primary properties are set out in the following location map:
Following the significant intrusive-related gold discovery made by Snowline Gold Corp. at the Rogue project within the Tombstone Gold Belt, Yukon, the Company's team has used their historic experience in the district to identify similar geological settings 75 kilometres southeast at the Yukon-NWT border. As a result of this work, the Company has acquired interests in several gold properties located in the Tombstone Gold Belt which lies within the Selwyn Basin and is prospective for Reduced Intrusion-related Gold Systems ("RIRGS").
In 2023, the Company completed exploration work, including a drill program, on its properties. The bulk of the 2023 program focused on the Astro Plutonic Complex which is comprised of the Astro West Project on the Yukon side of the border (formerly referred to as the HIT and SER properties) and the Astro East Project on the NWT side of the border (formerly referred to as the Astro property).
Rackla Metals Inc.
Page 3 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
During 2024, the Company completed further exploration and drilling of its properties, as set out below, and the focus for 2025 will be to drill-test defined targets at the Grad Property, NWT.
The Company's current property holdings are described below, and more detailed information is available on the Company's website.
Tombstone Gold Belt Projects – Eastern Yukon and Western NWT
Grad Property, NWT
In the summer of 2024, the Company staked the Grad Property in NWT, totalling five claims covering approximately 5,525 hectares. The Company has identified this area as prospective for RIRGS deposits. In 2024, the Company completed a limited 10-day program on the Grad Property consisting of prospecting, rock, stream sediment and talus-fine sampling, an airborne geophysical survey and a photogrammetry survey, with highly encouraging results.
The Grad Property is centered on the North Nahanni Pluton, a Cretaceous-aged, Mayo Suite felsic intrusion in the eastern Tombstone Gold Belt in the NWT. The pluton measures 1.9 by 2.2 kilometres with a sizable, intensely altered, contact aureole expressed as hornfelsed and iron-stained gossanous sediments surrounding the intrusion.
While conducting talus sampling at the southern margin of the pluton, the Company identified a broad alteration zone with intense quartz-tourmaline and quartz-sulfide veining within the intrusive, the intensity of the veining shattering the intrusive body to almost a schistose appearance. Results of the sampling returned significant gold grades, up to 92 g/t Au, with many samples returning multi-gram gold. The gold mineralization is associated with bismuth, tellurium +/- tungsten confirming that this is a RIRGS. The discovery was named the BiTe Zone.
Figure 1 – Photograph of the shattered North Nahanni Pluton:
The BiTe Zone is defined by a talus-fine sample line that returned 550 metres with an average gold concentration in the samples of 1.06 g/t Au. Within that interval is a central core of 180 metres that averaged 3.68 g/t Au. The intensity of the core alteration zone appears to extend up the face of the cliff to the ridge top which is 450 metres along strike and 350 metres vertically above the discovery. While no samples have been taken to date above the base of the cliff, a channel sample of 40 metres in length taken at the base of the cliff across the vein orientation returned 38 m grading 1.8 g/t Au. The concentration of bismuth and tellurium from rock samples collected on the
Rackla Metals Inc.
Page 4 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
Grad Property is in an order of magnitude higher than anything the Company has observed in the eastern part of the Tombstone Gold Belt during the Company's 2+ years of exploration in the region, hence the name of the zone (BiTe).
The geochemical signature of the BiTe Zone is indicative of a robust RIRGS. The Au-Bi-Te-W metal assemblage is an important characteristic of RIRGS deposits¹. The Bismuth concentration in rock samples is up to 2.17% from high-grade gold samples at BiTe (with 92.4 g/t Au, 1250 ppm Te, and 260 ppm W) and up to 2.98% from a sample collected 1.3 km north of BiTe (with 2.8 g/t Au, 23 ppm Te, and 0.66% W). The results show a strong correlation of gold to tellurium and bismuth with correlation coefficients of 0.878 and 0.578, respectively.
Figure 2 – Photograph of BiTe Zone with talus-fine, rock and channel sample gold results:
Rackla Metals Inc.
1 Hart, C.J.R., 2007, Reduced intrusion-related gold systems, in Goodfellow, W.D., ed., Mineral deposits of Canada: A Synthesis of Major Deposit Types, District Metallogeny, the Evolution of Geological Provinces, and Exploration Methods: Geological Association of Canada, Mineral Deposits Division, Special Publication No. 5, p. 95-112.
Management's Discussion and Analysis
Year ended December 31, 2024
Figure 3 – Plan view of the North Nahanni Pluton on the Grad Property with dimensions of the alteration and mineralizing system:
The cliff above BiTe is a steep face that rises 350 metres from the valley floor and exhibits many of the features observed at the BiTe Zone: abundant sheeted quartz-sulphide veining; intense fracture pattern; and strong iron oxide staining from the weathering of sulphide minerals. As mentioned above, the talus-fine anomaly at BiTe is 550 metres wide. The photogrammetry image shows that the alteration and mineralizing system strikes for 1.3 kilometres to the north, where prospecting has returned a sample with $2.8\mathrm{g / t}$ Au, $2.98\%$ Bi, $23~\mathrm{ppm}$ Te and $0.66\%$ W. Only a small portion of the Grad Property has been prospected, yet these results confirm the potential for significant extension to the mineralization identified at the BiTe Zone.
The Company's 2025 exploration program at the Grad property will focus on drilling at the discovery outcrop at the base of the cliff. The program will also involve sampling the upper reaches of the cliff face on both sides of the ridge using a mountaineering geological team, preparing drill pads along the ridge top and delineating the extent of the mineralized zone on the north side of the ridge with detailed structural mapping and channel sampling.
Ogre Property, NWT
In the summer of 2024, the Company staked the Ogre Property in NWT, totalling two claims covering approximately 2,000 hectares and located 6 kilometres from the Grad Property. The Company has identified this area as prospective for RIRGS deposits. The Ogre Property covers a portion of the southeastern extent of the O'Grady Pluton, a Cretaceous-aged, Tombstone Suite felsic intrusion in the eastern Tombstone Gold Belt in the NWT. The pluton measures 23 by 20 kilometres with a contact aureole of intensely altered and hornfelsed sediments.
Rackla Metals Inc.
Management's Discussion and Analysis
Year ended December 31, 2024
Astro Plutonic Complex
During the summer of 2024, the Company conducted soil and talus-fine sampling, prospecting, rock sampling, a photogrammetry survey and a 4-hole, 959 metre diamond drill program on the Astro Plutonic Complex (Astro West and Astro East). Results from the drill program were announced in September 2024.
The Astro Plutonic Complex is located within the Tombstone Gold Belt at the Yukon-NWT border and is accessible from the North Canol road. The Complex includes three granodiorite to granite intrusions belonging to the Cretaceous-aged Tombstone & Tungsten Suites. Cretaceous intrusions in the Tombstone Gold Belt host significant Reduced Intrusion-Related Gold System (RIRGS) gold deposits such as the Fort Knox Mine in Alaska (12.1 Moz gold), the Eagle Mine in Yukon (7.8 Moz gold) and the newly discovered Valley gold occurrence belonging to Snowline Gold Corp. (7.31 Moz gold).
Astro East Project
The Company owns a 100% interest, subject to a 2.5% NSR royalty interest, in the Astro East gold project, a 288 square kilometre exploration property located in the NWT along the Yukon border, close to the Canol Road. The Project was generated from a two-year US$1.8 million regional alliance between Orogen Royalties Inc. (formerly Evrim Resources Corp.) and Newmont Mining Corporation that identified gold mineralization associated with an intrusive stock during a regional stream sampling survey. Their work on the property identified outcropping gold mineralization in a ten-kilometre-long structural corridor in the hornfelsed aureole flanking the Border Pluton, a Tombstone Suite quartz-monzonite intrusion. Gold mineralization consists of gold-arsenic-antimony bearing quartz veins, gold-bismuth skarn and gold associated with disseminated sulphides in siltstone.
The Astro East Property is centred around the Border Pluton, a granodiorite intrusion belonging to the Cretaceous-aged Tombstone Suite. The pluton measures 6.7 by 7.0 kilometres and has an intensely metasomatized contact aureole around its margins, typical of gold-bearing Tombstone Gold Belt occurrences. Prior exploration has identified five gold-bearing skarn occurrences along the margins of the intrusion in the hornfels contact aureole (the Radio, Ultraviolet, Microwave, Gamma and Infrared occurrences). Stream sediment, soil, talus and rock sampling on the property has returned numerous samples containing anomalous gold with a strong correlation with bismuth, tellurium, arsenic and tungsten. This chemical association has led the Company to believe that the mineralizing system at Astro East is related to a RIRGS.
In 2023, the Company conducted stream sediment, soil, talus and rock sampling, prospecting, geological mapping, airborne and ground geophysics and diamond drilling (12 holes, 2,041 metres). The highlights of this program were 0.26 g/t gold over 34.1 metres in hole AST-004, 0.49 g/t gold over 12.4 metres in hole AST-005 and 3.47 g/t gold over 3.1 metres in hole AST-007.
In 2024, the exploration program on Astro East was focused on the eastern portion of the Canol Trail Stock, in NWT. The program consisted of expanding the soil and talus fine sample grid eastwards, prospecting and rock sampling. The soil sample grid identified a strong, linear, coincident gold-antimony anomaly; however, prospecting, rock sampling and mapping was not able to identify what might be causing the anomaly.
Astro West Project
The Company owns a 100% interest, subject to a 2.5% NSR royalty, in the Hit claims and in a second claim group, the 376 SER claims, in the Mayo Mining District, Yukon, along the NWT border. Together, these two properties are now referred to as the Astro West Project. The Astro West Project is located adjacent to the Astro East Project but on the Yukon side of the border and surrounds portions of three Cretaceous felsic intrusions in the Tombstone Gold Belt, each with anomalous stream sediment geochemistry and magnetic low anomalies making the ground prospective for RIRGS.
The Astro West Property covers the western portion of the Astro Plutonic Complex in Yukon and includes the majority of the Canol Trail Stock and Kelvin Stock and a small portion of the Border Pluton.
Rackla Metals Inc.
Page 7 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
Canol Trail Stock is the most northerly intrusive body in the Astro Plutonic Complex and hosts the HIT Target. The Canol Trail Stock is a Tungsten Suite monzogranite that measures 2.5 kilometres in diameter. In 2024, the Company expanded on soil and talus-fine sampling that was initiated in 2023 and identified a 2.4 square kilometre Au-Bi-As anomaly. The Company drilled 604 metres in 2 holes at HIT to follow up on drill results from 2023 in holes HIT-003 and HIT-004 that intersected 129.8 metres grading 0.25 g/t gold and 45.5 metres grading 0.52 g/t gold, respectively. The 2024 holes were drilled to test the 2023 intercepts to the west, below and north. They encountered much less veining and sulphide mineralization and the best result was 6.1 metres grading 0.69 g/t gold in hole HIT-006.
The Kelvin Stock is the southernmost intrusive body in the Astro Plutonic Complex and is 10 kilometres south of the Canol Trail Stock. The Kelvin Stock measures 2.2 kilometres in diameter and is a Tombstone Suite granite intrusion. It hosts the Peak and Cirque targets. In 2024, the Company expanded the soil sample grid at Peak and conducted additional prospecting and rock sampling on the western edge of the intrusion. The Company also drilled 2 holes (355 metres) on the Peak Target to test gold-bearing quartz-arsenopyrite veins observed on surface. The drill holes failed to encounter any significant mineralization.
Black and Flat Claims, NWT
The Company owns 100% of two claim blocks known as the Black Claims and Flat Claims totalling nine claims covering approximately 9,500 hectares in the Tungsten District of the Tombstone Gold Belt, NWT. The Company has identified this area as prospective for RIRGS deposits in the vicinity of the Cantung Mine.
The Company completed a short program of stream sediment sampling and prospecting and flew an airborne geophysical survey in the summer of 2023. Over the winter of 2023-24, the Company compiled historic work on the properties and identified significant gold anomalies from rock and trench sampling on the Black property. Thirty-seven of 77 (48%) of surface rock and trench samples returned >0.5 g/t Au, with a peak value of 27.5 g/t Au from quartz-arsenopyrite veins.
In 2024, the Company carried out an extensive soil sampling and prospecting program on its Black property. The Company was awarded $110,368 in financial assistance from the NWT Mineral Incentive Program (MIP) for the work at the Black and Flat properties in 2024.
The soil sample grid on the Black property defined an arsenic-in-soil anomaly that measures 1.8 kilometres by 500 metres with values up to 19,190 ppm arsenic and a coincident gold anomaly with values up to 0.51 ppm gold. Prospecting and rock sampling at Black returned 3 grab samples from quartz-arsenopyrite veins containing 1.11, 1.37 and 2.86 g/t gold.
The program on the Flat property consisted of stream sediment sampling and prospecting and failed to return any significant values.
RAK Main and Jos Projects, NWT
The Company owns 100% of the RAK Main and Jos claim groups targeting gold mineralization within the extension of the Tombstone Gold Belt in the Northwest Territories. The two properties comprise 13 claims covering approximately 10,100 hectares and are located 11 to 26 kilometres east of the Canol Road and Macmillan Pass airstrip, providing access to the properties.
Multiple intrusive bodies belonging to the Cretaceous-age Tombstone, Tungsten and Mayo plutonic suites have intruded the Selwyn basin sediments within the Company's claims. Several large, polyphase plutons to 10 kilometres in diameter are accompanied by smaller stocks with surface exposures less than a kilometre. Conspicuous zones of contact metasomatism surround most of the intrusions within the area of the claims.
Rackla Metals Inc.
Page 8 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
Previous work by operators in the Yukon side of the divide has recorded significant stream sediment gold anomalous that appears to be draining several of the intrusive bodies within the NWT. Recent mapping has identified stockwork veining within these intrusive bodies, especially so in the recessive valleys.
The intrusive bodies and gossanous contacts within the Company's claims are relatively unexplored. The Company did not do any work on the claims in 2024.
Other Projects
Gossan Property, Yukon
The Company owns a 100% interest in 36 quartz claims covering approximately 7.5 square kilometres or 753 hectares in the Dawson Range Belt, Yukon. These claims are known as the Gossan Property and are located 100 kilometres west of Carmacks or 235 kilometres northwest of Whitehorse.
The Dawson Range Belt hosts the world class Casino porphyry copper-gold-molybdenum deposit, the Freegold Mountain porphyry-epithermal deposits, the Klaza epithermal deposit and numerous other porphyry-epithermal mineral occurrences. These deposits are associated with late-Cretaceous intrusions of the Casino Suite.
The Gossan property covers a large (1.8 x 1.0 km) orange-red, gossanous, colour anomaly. Regional geochemical sample data from government sources have returned moderately anomalous values for copper, molybdenum and gold from streams draining the southern edge of the gossan. Enhanced interpretation of the Weighted Sums Model for Porphyry Copper Deposits indicates that these samples are within the 90-95th percentile for the porphyry copper-molybdenum deposit type.
Surprisingly, there is no record of any assessment work having been undertaken on the property. Preliminary observations on the ground have identified intense silica-pyrite alteration of the underlying volcanic rocks with disseminated pyrite content greater than 5%. The Company believes the intense orange-red gossan and silica-pyrite alteration is indicative of a porphyry-related hydrothermal alteration system at depth.
The Company completed an early summer program on the property in 2023 which consisted of stream sediment sampling, soil sampling and prospecting to evaluate the target for porphyry and/or epithermal copper-gold potential.
Analytical Procedure
The drill program in 2024 was done with NQ2-sized equipment. Drill core was systematically logged for geological attributes, photographed and sample intervals identified by a geologist at the Company's field camp. Samples were generally at 1.5 metre intervals, but occasionally shorter intervals were sampled to isolate features of interest. Samples were collected by cutting the core in half along the axis of the core. Field duplicates were collected at regular intervals by cutting the half core to be sent to the lab into two ¼ core samples, each with unique sample numbers leaving a consistent record of half core material in the core box. Standard reference materials were inserted by Company personnel at regular intervals into the sample stream. Samples were delivered by expeditor to ALS Global preparatory facility in Whitehorse, Yukon. Sample preparation was completed in Whitehorse, with analyses completed in North Vancouver, BC. ALS Global is an accredited ISO/IEC 17025 and ISO9001 laboratory for quality management.
At the lab, drill core and rock samples were crushed by ALS to >75% passing below 2 mm and split using a riffle splitter. 250 g splits were pulverized to >85% passing below 75 microns. 0.5 g of the sample pulps were digested with aqua regia and analyzed by an inductively coupled plasma mass spectroscopy and inductively coupled plasma atomic absorption spectroscopy (ICP-MS+ICP-AES) finish for 51-element analysis (ALS code: ME-MS41). All samples were analysed for gold content by fire assay with a gravimetric finish on 50 g samples (ALS code: Au-GRA22).
For the purposes of this MD&A, mineralized intervals are defined as runs of mineralization >0.1 g/t Au.
Rackla Metals Inc.
Page 9 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
Technical Information
Qualified Person: Scott Casselman, B.Sc., P.Geo., Vice-President Exploration of the Company, is a member of the Association of Professional Engineers and Geoscientists of British Columbia and is the Company's Qualified Person as defined by National Instrument 43-101. Mr. Casselman is responsible for the accuracy of and has approved the technical information in this MD&A.
Selected Financial Information
The following table provides financial results for the years ended December 31, 2024, 2023 and 2022:
| 2024 ($) | 2023 ($) | 2022 ($) | |
|---|---|---|---|
| Exploration expenditures | 2,882,594 | 4,197,695 | 94,622 |
| General and administrative expenses | 947,810 | 1,631,407 | 301,165 |
| Net loss | 3,168,399 | 4,849,033 | 1,678,387 |
| Basic and diluted loss per share | 0.04 | 0.08 | 0.04 |
| Total assets | 4,524,346 | 2,724,419 | 4,662,131 |
| Total liabilities | 497,298 | 500,261 | 1,253,257 |
| Shareholders' equity | 4,027,048 | 2,224,158 | 3,408,874 |
Exploration expenses, general and administrative expenses, and net loss have all risen since the 2022 fiscal year due to exploration and corporate activity significantly increasing with the optioning and acquisition of several Tombstone Gold Belt properties. Total asset amounts were higher for the 2024 and 2022 fiscal years due to the raising of capital by way of issuing shares, the gross proceeds of which were in excess of $5.0 million in each of those years, compared to equity capital of less than $3.0 million raised in the 2023 fiscal year. The net loss for the 2022 fiscal year was significantly impacted by a $1,213,404 write-off of deferred mineral property acquisition costs relating to a foreign property acquisition that did not materialize. Total liabilities for the 2022 fiscal year are significantly higher than the other two years presented due to a liability of $966,025 which is the premium on a 2022 flow-through equity financing. Total liabilities for the 2024 and 2023 fiscal years include a flow-through liability of $196,828 and $71,649, respectively.
Quarterly Information
The following table provides quarterly information for the eight fiscal quarters ended December 31, 2024:
| Quarter Ended | Dec. 31, 2024 ($) | Sep. 30, 2024 ($) | Jun. 30, 2024 ($) | Mar. 31, 2024 ($) | Dec. 31, 2023 ($) | Sep. 30, 2023 ($) | Jun. 30, 2023 ($) | Mar. 31, 2023 ($) |
|---|---|---|---|---|---|---|---|---|
| Exploration expenditures | 222,886 | 1,829,297 | 652,213 | 178,198 | 471,215 | 3,077,660 | 544,589 | 104,231 |
| General and administrative expenses | 259,253 | 182,994 | 236,275 | 269,288 | 262,048 | 205,174 | 154,421 | 1,009,764 |
| Net loss | (453,726) | (1,481,087) | (810,982) | (422,604) | (825,028) | (2,466,092) | (505,154) | (1,052,759) |
| Basic and diluted loss per share | (0.00) | (0.02) | (0.01) | (0.01) | (0.01) | (0.04) | (0.01) | (0.02) |
Exploration expenditures for all quarters presented are related to activity on property holdings in the Yukon and NWT that were acquired since the latter part of the 2022 fiscal year. The net losses for the quarters ended September 30, 2024 and 2023 were significantly higher than the other quarters presented due to their respective level of exploration expenditures and the seasonal nature of when most exploration activity in the Yukon and NWT can take place. The net loss for the quarter ended December 31, 2023 included a Part XII.6 tax of $59,867 relating to a 2022 flow-through equity financing and a write-off of $88,556 in exploration and evaluation asset acquisition costs. The
Rackla Metals Inc.
Page 10 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
general and administrative expense and net loss for the quarter ended March 31, 2023 were significantly impacted by a share-based payments expense of $806,319 that was related to the granting of stock options.
Results of Operations
Quarter ended December 31, 2024
The quarter ended December 31, 2024 had a net loss of $453,726, compared to $825,028 for the quarter ended December 31, 2023, a decrease of $371,302. This decrease is due in part to the current quarter recording a Part XII.6 tax of $10,587 and write-off of $15,464 in exploration and evaluation assets costs compared to a Part XII.6 tax of $59,867 and a write-off of $88,556 in exploration and evaluation asset acquisition costs for the comparative quarter. Part XII.6 tax is related to flow-through equity financings and the use of the look-back rule to renounce a portion of the flow-through eligible expenditures. The current quarter net loss was reduced by interest income totalling $23,514 compared to interest income of $14,051 for the comparative quarter.
Exploration expenditures during the current quarter totaled $222,886 compared to $471,215 during the comparative quarter, a decrease of $248,329. Exploration costs for both the current and comparative quarters were primarily related to flow-through eligible activities on the Company's Yukon and NWT properties. The decrease in expenditures for the current quarter was partly due to the 2024 exploration season experiencing more unfavourable weather conditions than the 2023 exploration season.
General and administrative expenses for the current quarter totaled $259,253 compared to $262,048 in the comparative quarter, a decrease of $2,795. Notable cost decreases were in consulting fees and shareholder communications. Consulting fees were $26,425 higher in the comparative quarter due to a financial advisory services agreement that was in place during that period and ended prior to the current quarter. Shareholder communication costs were $22,610 higher in the comparative quarter due to more investor relations services. Notable cost increases for the current quarter were in office and administration, salaries and benefits, and travel costs. Office and administration costs were $11,784 higher due primarily to the Company moving its corporate office to a new location. Salaries and benefits costs were $12,323 higher due to an increased requirement for shared personnel resources for administrative and promotional purposes. Travel costs were $18,382 higher due to corporate business development and promotional activities.
Year ended December 31, 2024
The year ended December 31, 2024 had a net loss of $3,168,399, compared to $4,849,033 for the year ended December 31, 2023, a decrease of $1,680,634. Both the current and comparative years net losses were partially offset by a recovery on flow-through liability of $611,433 and $1,038,601, respectively. This recovery relates to the reduction of the Company's flow-through liability as flow-through eligible exploration expenditures are incurred. Both the current and comparative year results also included the same Part XII.6 tax expense and write-down of exploration and evaluation asset cost amounts as in the quarterly comparison. The current year net loss was reduced by interest income totalling $76,623 compared to $89,891 for the comparative year.
Exploration expenditures during the current year totaled $2,882,594 compared to $4,197,695 during the comparative year, a decrease of $1,315,101. As with the quarterly comparison, exploration costs for both the current and comparative years were primarily related to flow-through eligible activities on the Company's Yukon and NWT properties and were less for the current year for the same reason.
General and administrative expenses for the current year totaled $947,810 compared to $1,631,407 in the comparative year, a decrease of $683,597. This decrease is due to the comparative year recording a share-based payment expense of $806,319 compared to $13,691 for the current year, a difference of $792,628. The current year share-based payment expense relates to options that were granted and fully vested. The share-based payments expense for both the current and comparative years relate to the fair value of stock options that were granted and became fully vested during those periods. Excluding the share-based payments expense, general and administrative expenses for the current year are $109,031 higher than the comparative year. Notable cost increases for the current
Rackla Metals Inc.
Page 11 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
year were in shareholder communications, salaries and benefits, travel and accommodation, office and administration, and amortization expense. Shareholder communication costs were $50,053 higher for the current year due to more investor relations services and promotional activities. As with the quarterly comparison, salaries and benefits, travel and accommodation, and office and administration costs were higher in the current year by $28,535, $16,431, and $15,725, respectively and for the same reasons. Amortization expense for the current year was $12,272 higher due to a vehicle being purchased and the Company entering into an office lease agreement that was capitalized as part of property and equipment during the current year. A notable cost decrease in the current year was $11,748 in consulting fees which largely related to a financial advisory services agreement that commenced in the comparative year and ended during the current year. All other general and administrative expenses were fairly consistent between the current and comparative years.
For both the current and comparative quarterly and annual periods, office and administration costs relate mostly to an administrative cost sharing agreement with Gold Group Management Inc. ("Gold Group"), a private company controlled by Simon Ridgway, the CEO of the Company, which is reimbursed by the Company for certain shared office and other corporate expenses paid by Gold Group on behalf of the Company. Salaries and benefits costs relate primarily to Gold Group which provides administrative personnel, including the Company's Chief Financial Officer, Corporate Secretary, and former Vice President of Corporate Development throughout the current and comparative three-month and annual periods.
Liquidity and Capital Resources
The Company is in the exploration stage and therefore has no cash flow from operations.
In September 2023, the Company received flow-through proceeds of $1,586,475 and non-flow-through proceeds of $1,200,000 from a brokered equity financing. The flow-through funds had to be incurred on eligible flow-through activities by December 31, 2024. As of December 31, 2024, the Company has incurred all of its flow-through commitment for this financing.
In May and June 2024, the Company raised total gross proceeds of $4,656,184 by way of the 2024 Offering, consisting of $894,980 in non-flow-through funds and $3,761,204 in flow-through funds. The flow-through funds from the financing must be spent on flow-through eligible exploration expenditures by December 31, 2025. If the Company does not spend the remaining funds in compliance with the Government of Canada flow-through regulations, it may be subject to indemnification or other claims by the flow-through subscribers. As of December 31, 2024, the Company has incurred $2,088,170 of its flow-through commitment for these financings, leaving a balance of $1,673,034 yet to be incurred.
In November 2024, the Company closed a non-brokered private placement financing of 10,000,000 shares at $0.12 per share to raise gross proceeds of $1,200,000.
Subsequently in April 2025, the Company raised total gross proceeds of $2,994,150 by way of the 2025 Offering. The financing consists of a $2,234,400 charity flow-through unit offering at a price of $0.21 per unit and a $759,750 hard-dollar unit offering at a price of $0.15 per unit. The flow-through funds from this equity financing must be spent on flow-through eligible expenditures by December 31, 2026.
The non-flow-through funds from the above equity financings are being used for mineral property acquisitions, non-flow-through eligible exploration expenditures, and general working capital purposes.
As at December 31, 2024, current assets were $3,337,018 and current liabilities were $415,977, resulting in working capital of $2,921,041. Current assets include cash of $3,264,346, of which $1,673,034 is reserved for flow-through eligible exploration activities during the 2025 fiscal year. Current liabilities include a flow-through share liability of $196,828 which is the result of flow-through shares having a price exceeding a non-flow-through share price. The flow-through share liability is settled as eligible flow-through expenditures are incurred with the offset being recorded as a recovery on flow-through share liability on the comprehensive statement of profit or loss.
Rackla Metals Inc.
Page 12 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
With the recently completed equity financing, the Company expects its current capital resources to be sufficient to cover its planned exploration activity, including its existing flow-through expenditure commitment, and corporate operating costs through the next twelve months. Actual funding requirements may vary from those planned due to a number of factors, including the level of exploration activity and possible property acquisition opportunities.
Commitment
During the year ended December 31, 2024, the Company entered into a shared operating lease agreement with two other related publicly listed companies (the "Lessees") for its office premises and each paid a security deposit of $3,907. The term of the lease is five years, commencing January 1, 2025 and includes an early termination option whereby the Lessees can terminate the lease upon the third anniversary date with a payment equal to two months gross rent. The Company's portion of annual commitments under the lease, if the early termination option is not exercised, are as follows:
| 2025 | $ 40,798 |
|---|---|
| 2026 | 40,798 |
| 2027 | 43,759 |
| 2028 | 41,612 |
| 2029 | 44,648 |
| $ 211,615 |
Financial Instruments and Risk Management
The Company is exposed to the following financial risks:
- Market Risk
- Credit Risk
- Liquidity Risk
In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout the Company's financial statements.
General Objectives, Policies and Processes
The Board of Directors has overall responsibility for the determination of the Company's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's management. The Board of Directors receives periodic reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below.
(a) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market prices affecting the Company are comprised of the following types of risk: interest rate risk and equity price risk. The Company is currently not exposed to the risk related to the fluctuation of foreign currency rates.
Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company does not have any borrowings. Interest rate risk is limited to potential decreases on the interest rate offered
Rackla Metals Inc.
Page 13 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
on cash held with chartered Canadian financial institutions. The Company considers this risk to not be significant.
Equity Price Risk
Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The Company's equity investments are exposed to equity price risk due to the potentially volatile and speculative nature of the businesses in which the equity investments are held. The common shares held in Bronco and Voyager are monitored by management with decisions on sale taken at Board level. A 10% change in fair value of the shares would result in a $244 increase or decrease in comprehensive loss.
(b) Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its cash and equity investments. The Company limits exposure to credit risk by maintaining its cash with chartered Canadian financial institutions. The Company does not have cash or equity investments that are invested in asset-based commercial paper.
(c) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities. At December 31, 2024, the Company had working capital of $2,921,041 (2023: $1,136,087). All of the Company's financial liabilities, with the exception of a flow-through and Part XII.6 tax liabilities and lease liabilities, have contractual maturities of less than 45 days and are subject to normal trade terms.
Related Party Transactions
The Company had transactions during the years ended December 31, 2024 and 2023 with related parties who consisted of directors, officers, and the following companies with common directors:
| Related party | Nature of transactions |
|---|---|
| Gold Group Management Inc. ("Gold Group") | Shared office and administrative related charges |
| Radius Gold Inc. ("Radius") | Shared office lease |
| Volcanic Gold Mines Inc. ("Volcanic") | Shared office lease |
| Mill Street Services Ltd. ("Mill Street") | Management services |
| Hephaestus Consulting Services Inc. ("Hephaestus") | Directors' fees |
During the years ended December 31, 2024 and 2023, the Company reimbursed Gold Group for the following costs:
| Three months ended December 31, | Year ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| General and administrative expenses: | ||||
| Office and administration | $ 19,644 | $ 17,496 | $ 82,796 | $ 81,760 |
| Salaries and benefits | 58,478 | 46,169 | 219,294 | 191,218 |
| Shareholder communications | 3,207 | 12,086 | 20,091 | 38,497 |
| Transfer agent and regulatory fees | 167 | 1,045 | 2,436 | 4,978 |
| Travel and accommodation | 21,750 | 4,912 | 45,720 | 35,930 |
| $ 103,246 | $ 81,708 | $ 370,337 | $ 352,383 | |
| Exploration expenditures | $ 50,815 | $ 60,681 | $ 254,161 | $ 152,550 |
| Exploration and evaluation asset acquisition costs | $ - | $ - | $ - | $ 2,390 |
Rackla Metals Inc.
Page 14 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
Gold Group is owned by the Chief Executive Officer of the Company and is reimbursed by the Company for certain shared costs and other business-related expenses paid by Gold Group on behalf of the Company. Salaries and benefits costs paid to Gold Group include those for the Chief Financial Officer and Corporate Secretary, and the former Vice President Corporate Development.
During the year ended December 31, 2024, a total of $27,500 (2023: $30,000) in Directors' fees was paid to four Directors of the Company.
Prepaid expenses as of December 31, 2024 include $Nil (2023: $5,005) paid to Gold Group.
Deposits as of December 31, 2024 consist of $61,000 (2023: $61,000) paid to Gold Group and are related to the shared office and administrative services agreement with Gold Group. Upon termination of the agreement, the deposits, less any outstanding amounts owing to Gold Group, are to be refunded to the Company.
Amounts due to related parties as of December 31, 2024 consist of $38,747 (2023: $47,863) due to Gold Group and a total of $2,500 (2023: $Nil) due to a Director of the Company for directors' fees. The balance due to Gold Group is collateralized by a deposit and the balance due to others were unsecured, non-interest bearing and due on demand.
Key management compensation
Key management personnel are persons responsible for planning, directing and controlling the activities of an entity, and include certain directors and officers. Key management compensation comprises:
| Three months ended December 31, | Year ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Exploration expenditures: | ||||
| Geological fees | $ - | $ - | $ - | $ 1,800 |
| Salaries and benefits | 48,000 | 48,000 | 192,000 | 181,169 |
| General and administrative expenses: | ||||
| Management fees | 10,500 | 10,500 | 42,000 | 44,700 |
| Salaries and benefits* | 19,897 | 20,816 | 85,884 | 91,745 |
| Share-based payments (value of stock options granted and vested) | - | - | - | 462,840 |
| $ 78,397 | $ 79,316 | $ 319,884 | $ 782,254 |
*Key management administrative salaries and benefits are included in the salaries and benefits reimbursed to Gold Group.
Other Data
Additional information related to the Company is available for viewing at www.sedarplus.ca.
Share Position and Outstanding Warrants, Compensation Options, and Options
As at the date of this MD&A, the Company had 123,266,166 common shares issued and outstanding and the following share purchase warrants, compensation options, and incentive stock options are currently outstanding:
| No. of warrants | Exercise price | Expiry date |
|---|---|---|
| 8,333,333 | $0.20 | May 30, 2025 |
| 18,342,392 | $0.20 | June 11, 2025 |
| 10,569,000 | $0.40 | September 19, 2025 |
| 8,092,251 | $0.15 | April 23, 2026 |
| 45,336,976 |
Rackla Metals Inc.
Page 15 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
COMPENSATION OPTIONS
| No. of options | Exercise price | Expiry date |
|---|---|---|
| 456,140 | $0.25 | September 19, 2025 |
STOCK OPTIONS
| No. of options | Exercise price | Expiry date |
|---|---|---|
| 385,000 | $0.10 | May 2, 2029 |
| 25,000 | $0.14 | May 27, 2030 |
| 1,940,000 | $0.365 | January 9, 2033 |
| 100,000 | $0.15 | March 4, 2034 |
| 890,000 | $0.20 | April 3, 2035 |
| 1,000,000 | $0.25 | April 16, 2035 |
| 4,340,000 |
Accounting Policies and Basis of Presentation
The Company's material accounting policies and future changes in accounting policies are presented in the audited financial statements for the year ended December 31, 2024.
Future Changes in Accounting Policies
The Company will be required to adopt the following standards and amendments issued by the IASB as described below:
IFRS 18, Presentation and Disclosure in Financial Statements
IFRS 18 is a new standard that will replace IAS 1 Presentation of Financial Statements, setting out a new presentation requirement for the statement of profit or loss, and providing new definitions and disclosures related to non-IFRS performance measures.
This standard will be effective for the Company's annual period beginning January 1, 2027 with early application permitted. The Company is currently assessing the impact of IFRS 18 on its financial statements.
Risks and Uncertainties
Mineral Property Exploration and Mining Risks
The business of mineral deposit exploration and extraction involves a high degree of risk. Few properties that are explored ultimately become producing mines. At present, none of the Company's properties has a known commercial ore deposit. The main operating risks include: securing adequate funding to maintain and advance exploration properties; ensuring ownership of and access to mineral properties by confirmation that option agreements, claims and leases are in good standing; and obtaining permits for drilling and other exploration activities.
Joint Venture Funding Risk
The Company's strategy includes seeking partners when appropriate through joint ventures to fund exploration and project development. The main risk of this strategy is that funding partners may not be able to raise sufficient capital in order to satisfy exploration and other expenditure terms in a particular joint venture agreement. As a result, exploration and development of one or more of the Company's property interests may be delayed depending on
Rackla Metals Inc.
Page 16 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
whether the Company can find another partner or has enough capital resources to fund the exploration and development on its own.
Commodity Price Risk
The Company is exposed to commodity price risk. Declines in the market price of precious and base metals and other minerals may adversely affect the Company's ability to raise capital or attract joint venture partners in order to fund its ongoing operations. Commodity price declines could also reduce the amount the Company would receive on the disposition of one of its mineral properties to a third party.
Financing and Share Price Fluctuation Risks
The Company has limited financial resources, has no source of operating cash flow and has no assurance that additional funding will be available to it for further exploration and development of its projects. Further exploration and development of one or more of the Company's projects may be dependent upon the Company's ability to obtain financing through equity or debt financing or other means. Failure to obtain this financing could result in delay or indefinite postponement of further exploration and development of its projects which could result in the loss of one or more of its property interests.
Securities markets have at times in the past experienced a high degree of price and volume volatility, and the market price of securities of many companies, particularly those considered to be exploration stage companies such as the Company, have experienced wide fluctuations in share prices which have not necessarily been related to their operating performance, underlying asset values or prospects. There can be no assurance that these kinds of share price fluctuations will not occur in the future, and if they do occur, how severe the impact may be on the Company's ability to raise additional funds through equity issues.
Political and Regulatory Risks
The Company is currently operating in Canada which has a stable political and regulatory environment. However, changing political aspects may affect the regulatory environment in which the Company operates, and no assurances can be given that the Company's plans and operations will not be adversely affected by future developments. Any property interests held and any proposed exploration or development activities by the Company may be subject to political, economic, and other uncertainties, including the risk of expropriation, nationalization, renegotiation or nullification of existing contracts, mining licenses and permits or other agreements, and changes in laws or taxation policies.
Insured and Uninsured Risks
In the course of exploration, development and production of mineral properties, the Company is subject to a number of hazards and risks in general, including adverse environmental conditions, operational accidents, labor disputes, unusual or unexpected geological conditions, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, and earthquakes. Such occurrences could result in damage to the Company's properties or facilities and equipment, personal injury or death, environmental damage to properties of the Company or others, delays, monetary losses, and possible legal liability.
Although the Company may maintain insurance to protect against certain risks in such amounts as it considers reasonable, its insurance may not cover all the potential risks associated with its operations. The Company may also be unable to maintain insurance to cover these risks at economically feasible premiums or for other reasons. Should such liabilities arise, they could reduce or eliminate future profitability and result in increased costs, have a material adverse effect on the Company's results and a decline in the value of the securities of the Company.
Environmental and Social Risks
The activities of the Company are subject to environmental regulations issued and enforced by government agencies. Environmental legislation is evolving in a manner that will require stricter standards and enforcement and involve increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors, and employees. There
Rackla Metals Inc.
Page 17 of 18
Management's Discussion and Analysis
Year ended December 31, 2024
can be no assurance that future changes in environmental regulation, if any, will not adversely affect the Company's operations. Environmental hazards may exist on properties in which the Company holds interests which are unknown to the Company at present. The activities of the Company may be subject to negotiations with local landowners or First Nations communities for access to conduct exploration and development work programs. The Company's operations could be significantly disrupted or suspended by activities such as protests or blockades that may be undertaken by individuals or groups within the community.
Competition
The Company will compete with many companies and individuals that have substantially greater financial and technical resources than the Company for the acquisition and development of its projects as well as for the recruitment and retention of qualified employees.
Rackla Metals Inc.
Page 18 of 18