Record Resources Inc. — Management Reports 2024

Feb 27, 2024

RECORD RESOURCES INC. (FORMERLY SILK ROAD ENERGY INC.) MANAGEMENT DISCUSSION AND ANALYSIS – ANNUAL HIGHLIGHTS For the twelve-month period ended September 30, 2023

This Management’s Discussion and Analysis – Quarterly Highlights (“MD&A”) for Record Resources Inc. (formerly Silk Road Energy Inc.) (“Record” or the “Company”) should be read in conjunction with: the audited financial statements for the year ended September 30, 2023 (the “Reporting Period”) and the notes thereto, prepared in accordance with International Financial Reporting Standards (“IFRS”); the MD&A for the period ended September 30, 2023.

The effective date of this MD&A is February 26, 2024.

OVERVIEW

Record is a publicly traded company that operates in the mining exploration and development as well as in the oil and gas industries. The Company’s primary listing exchange is the TSX Venture Exchange (TSXV: REC (formerly SLK)). The Company was subsequently moved the TSX Venture Exchange’s subset trading platform known as the NEX Exchange. On October 1, 2021, the Company received a dual revocation order from the ASC and the OSC. Subsequently, the NEX Exchange announced the resumption of the trading of common shares of the Company effective October 6, 2021.

On July 5, 2022, the Company received approval from the TSXV to have its shares reactivated as a Tier 2 Mining Issuer from a NEX Issuer. On July 7, 2022, the Company commenced trading under the symbol “SLK” on the TSXV. The Company has changed its name to Record Resources Inc. since April 4, 2023 and its trading symbol has been changed to “REC” on the TSXV.

Background

During the last half of the fiscal year ended September 30, 2021, the Company began its work towards the revocation of its cease-trade order issued jointly by the Alberta Securities Commission and the Ontario Securities Commission and its reinstatement for the re-listing of its common shares for trading on the TSX Venture Exchange. During the fiscal year, the Company applied to the Alberta Securities Commission for a partial revocation order. On October 24, 2019, the Alberta Securities Commission granted a partial revocation order to permit the Company to complete a private placement (the “Private Placement ” ) of units of the Issuer (“Units”), each Unit consisting of one Preferred Share and one Preferred Share purchase warrant, for gross proceeds of up to $185,000, to one or more subscribers, solely in order to cover all costs and fees (which includes audit fees, professional fees, late filing fees and any other applicable fees) that are related to the fulfillment by the Company of all of its disclosure obligations and in order to file all the financial statements and related certifications for all previously ended financial years and interim periods since the date of the cease-trade order as required by applicable law and to provide it with sufficient working capital to continue its operations until it can apply for and receive a full revocation of the cease-trade order.

During the year ended September 30, 2023, the Company began to seek exploration opportunities in the mineral sectors with concentration on gold and other precious metals.

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CORPORATE HIGHLIGHTS FOR THE REPORTING PERIOD

- During the twelve month period ended September 30, 2022, the Company announced the following developments.

On October 1, 2021, Record received a dual revocation order from the ASC and the OSC.

By bulletin, the NEX Exchange announced the resumption of the trading of common shares of Record effective October 6, 2021.

Record converted 6,580,000 Preferred Shares into common shares on October 7, 2021, resulting in no preferred shares outstanding and 18,592,788 common shares issued and outstanding.

On October 18, 2021, Record announced a private placement and amended the terms of this private placement on October 24, 2021 in which Units are being offered at $0.06 per Unit to raise gross proceeds of up to $700,000 (the "Offering"). Each Unit will consist of one common share of the Company (a "Common Share") and one Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to acquire a Common Share at $0.12 per Common Share for twelve (12) months following the issuance of Warrants.

On October 22, 2021, the Company filed a reactivation application with the TSX Venture Exchange for the purposes of graduating from the NEX Exchange.

On November 30, 2021, Record held its annual and special shareholders’ meeting.

The Company has also contemplated looking at opportunities in the gold exploration and mining business in parallel. In December 2021, the Company entered into an agreement to acquire from a company related by common directors’ 100 percent ownership of two mining concessions of gold and other precious metals claims located in the Kirkland Lake region of Ontario in return for 9 million shares of the Company at a price of $0.05 per share. The acquisition was completed on June 21, 2022 by issuing 8,999,983 common shares to the shareholders of the seller company.

In January 2022, the Company sold its petroleum and natural gas interests, its associated decommissioning liabilities and assigned its related accounts payable owing to the operator of the property to a company related by a common director of the Company for $10.

On April 13, 2022, the Company resumed trading of its common shares on the NEX Exchange.

On June 6, 2022, the Company held a special shareholder meeting in which the Company received approval by shareholders of the acquisition of the Amikougami and Otto properties in the Kirkland Lake area. Shareholders also approved the issuance of 8,999,983 shares at 5 cents per share to acquire these two Kirkland Lake properties. The shareholders also approved the disposition of the Company's interests in four natural gas properties, as well as approving a revised stock option plan.

On July 5, 2022, the Company received approval from the TSXV to have its shares reactivated as a Tier 2 Mining Issuer from a NEX Issuer.

On July 7, 2022, the Company commenced trading under the symbol “SLK” on the TSXV.

The Company announced changes to senior management and the Board of Directors as well as a rebranding of the business as a gold exploration company on July 12, 2022. Vladimir Katic resigned from the Board of

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Directors and as CEO of the Company. Michael Judson became the company's new Chief Executive Officer., Mr. Judson appointed Robert Kramberger as Vice-President Investor Relations, and Edward Procyshyn as Vice-President Exploration. Mr. David A. Johnson was appointed to the Board of Directors as the replacement for Vladimir Katic and Ms. Nathalie Kavanagh was also appointed to the Board of Directors.

On July 21, 2022, the Company has signed a letter of intent to acquire new gold exploration properties in the Kirkland Lake Mining camp in Ontario consisting of eleven claim cells known as Kenogami East (“Kenogami East Property”). Kenogami East Property is located at the eastern margin of the company's Grenfell-Four Nations gold property. The Company shall complete the acquisition by issuing 1,000,000 of its common shares and by agreeing to make a cash payment of $50,000 in twenty-four months from the date of the definitive agreement. The Company entered into a definitive agreement on January 18, 2023.

On August 30, 2022, the Company signed an option agreement (“Four Nations Agreement”) with two armslength private companies to earn in a 100% interest on the Four Nations property (“Four Nations Property”) which consists of three claim blocks comprising 5.2 square kilometres in the Grenfell Township by making cash payments of $50,000 ($5,000 already paid) and issuing 2,000,000 (1,000,000 common shares issued subsequent to year-end on December 19, 2022) common shares of the Company over three years. There is no work commitment required on these properties.

In August and September of 2022, the Company issued 1,483,333 units at $0.06 per unit for total proceeds of $89,000. Each unit consists of 1 common shares and 1 warrant to purchase an additional common share at an exercise price of $0.12 per share, expiring 12 months from the date of closing.

On September 7, 2022, the Company acquired an option agreement from Record Gold Corp. (“Record Gold’), a non-arms-length party, to earn in 80% interest in Grenfell Gold property (“Grenfell Gold Property”) from another publicly listed company, Pelangio Exploration Inc. (“Pelangio”). The Property is comprised of 38 mining cells and eight leased claims covering an area of approximately 6.7 square kilometres. As a result of acquiring this option agreement between Record Gold and Pelangio dated September 6, 2022 (“Pelangio Agreement”), the Company has the right to earn an undivided 80% interest in the Grenfell Gold Property by completing a total of $2,000,000 exploration expenditures to be incurred within five years and by making onetime cash payment to Pelangio. The Company shall pay to Pelangio a one-time $60,000 payment in twenty-four (24) months from the date of the Pelangio Agreement. The Grenfell Gold Property is subject to a 2.75% Net Smelter Royalty (NSR) on leased claims and a 0.75% Net Smelter Royalty (NSR) on staked claims from prior agreements entered into by Pelangio. In exchange for the acquisition of the Pelangio Agreement, the Company shall issue Record Gold 39,999,984 common shares at deemed price of $0.05. This transaction is still subject to the approval by TSX Venture Exchange.

- During the twelve month period ended September 30, 2023, the Company announced the following developments.

On October 27, 2022, The Company closed a further private placement of $12,000 by issuing 200,000 units at $0.06 per unit. Each unit consists of 1 common shares and 1 warrant to purchase an additional common share at an exercise price of $0.12 per share, expiring 12 months from the date of closing.

On December 21, 2022, upon receipt of the approval by the TSX Venture Exchange, the Company issued 1,000,000 shares to the property owners in pursuance to the Four Nations Agreement.

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On December 17, 2022, the Company entered into an option agreement (“Doran Agreement”) with arms-length parties to acquire a 100 percent interest in the Doran Lithium Property consisting of 9 mining claims located approximately 200 kilometres east of Red Lake in north western Ontario. The Company is acquiring the property by issuing 900,000 shares and by making cash payments over the next three years for a total of $111,000. There are no work commitments on the properties. The agreement has been approved by the TSXV in February of 2023. The Company will act as sole operator of the project. The vendor will hold a 1.5% Net Smelter Royalty (NSR) on the property. One third of this NSR can be purchased by the Company for $600,000.

On February 22, 2023, The Company closed a further private placement of $39,779 by issuing 795,580 units at $0.05 per unit. Each unit consists of 1 common shares and ½ warrant to purchase an additional common share at an exercise price of $0.10 per share, expiring 24 months from the date of closing.

On January 9, 2023, the Company has entered into an option agreement (“Doran-South Agreement”) with arms-length parties to acquire a 100 percent interest in the Doran-South Lithium property (“Doran-South Lithium Property”) located approximately 200 km east of Red Lake in north western Ontario and contiguous with Doran Lithium Property it recently optioned. Doran-South Lithium Property consists of approximately 1,820 hectares. The Company is acquiring the Doran-South Lithium Property by issuing 1,000,000 shares, at deemed price of $0.06 per share, and by making cash payments over the next year of $50,000. There are no work commitments on the properties. The agreement has been approved by the TSXV in February of 2023. The Company will act as sole operator of the project. The vendor will hold a 1.5% Net Smelter Royalty (NSR) on the property that can be purchased by the Company for $3,000,000.

On April 4, 2023, the Company changed its name to Record Resources Inc. trading under the new symbol “REC” on the TSXV.

On May 2, 2023, the Company issued a total of 1,900,000 common shares of the Company in pursuant to the Doran Agreement and the Doran-South Agreement after these agreements have been approved by the TSXV.

On September 6, 2023, the Company issued 1,000,000 common shares of the Company in pursuant to the Kenogami property option agreement.

Subsequent events

The Company has entered into an option agreement with an arms-length, private, Ontario exploration company to acquire 100 percent interests in three of its lithium properties and one of the uranium properties in Western Ontario.

The Whitemud River lithium prospect consists of 111 claims and is approximately 200 kilometres east of Red Lake and approximately 125 kilometres northeast of Sioux Lookout. The Company has also optioned a uranium property in western Ontario consisting of 10 claims.

The uranium and lithium properties are part of a same agreement. The private exploration company, the Optionor, will receive 2,100,000 common shares of the Company, the Optionee, over three years (700,000 share per year) and a cash payment of $64,000 payable over three years. $24,000 payable in the first year and $20,000 in year two and $20,000 in year three.

The vendor holds net smelter royalty agreements on each of the properties under the following terms: upon the exercise of the Option, the Optionee will grant a Royalty to the Optionor. The Optionor will retain a 1.5% Royalty. The Optionee or its assigns shall have the right at any time to purchase from Optionor zero-point

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five percent (0.5%) Net Smelter Returns Production Royalty by way of a payment to the Optionor of the sum of $ 500,000. An additional zero-point five (0.5%) Net Smelter Returns Production Royalty can be purchased by the Optionee for $1 million. The final zero-point percent (0.5%) Net Smelter Returns Production Royalty can be purchased by the Optionee for $1.5 million.

The Company closed private placements of $33,500 and issued 957,122 units at $0.035 per unit. Each unit consists of one common share and one common share purchase warrant at exercise price of $0.06 per share for two years.

FINANCIAL HIGHLIGHTS FOR THE REPORTING PERIOD

The Company reported total assets of $3,502 as at September 30, 2023 (2022: $459,192), a significant decrease of $455,690 mainly due to impairment of all mineral properties.

Shareholders’ deficiency was $281,524 as at September 30, 2023 (2022: shareholders’ equity of $203,921), a significant decrease of $485,445 which was mainly as a result of impairing all mineral properties to $1.

For the twelve-month period ended September 30, 2023, the Company had working capital deficit of $281,525 (2022 – $89,335) comprised of cash or cash equivalents, short term payable ,accounts payable and accrued liabilities and due to related party. The Company reported a net loss of $773,524 in the reporting period (2022 – net income of $293,975), an increase of $1,067,499 in net loss mainly resulted from significant impairment of mineral properties. For the three-month period ended September 30, 2023, the Company reported a net loss of $699,155 (2022 – net income of $306,700), an increase of $1,005,855 mainly resulted from significant impairment of mineral properties.

OUTLOOK

The Company is transforming itself to seek potential asset acquisitions in the mineral resources sector and to become a junior mineral exploration company. It has begun acquiring as previously stated. The Company seeks to enlarge its property base of gold exploration properties situated in Ontario. With accumulated deficit of $2,650,436 as at the end of the reporting period indicates the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. Additionally, the Company will continue to seek opportunities in the resources sectors, including additional asset acquisitions of or joint venture in opportunities in the mining and exploration sectors.

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RESULTS FROM OPERATIONS THREE YEARS ANNUAL FINANCIAL INFORMATION

	September 30,	September 30,	September 30,
	2023	2022	2021
	$	$	$
Total Assets	3,502	459,192	10,302
Total Liabilities	285,026	255,271	639,355
Total Shareholders’ Equity (Deficiencies)	(281,524)	203,921	(629,053)
	September 30,	September 30,	September 30,
	2023	2022	2021
	$	$	$
Revenue	-	-	13,352
Operating expenses	-	-	(13,357)
General and administrative expenses	(98,547)	(80,137)	(92,267)
Depletion, impairment and accretion	-	-	(8,332)
expenses
Other items	(674,977)	374,112	240,792
Net (loss) income	(773,524)	293,975	140,188
Income (loss) per share – basic and diluted	(0.025)	0.014 & 0.013	0.003&0.008

RESULTS FROM OPERATIONS

During the twelve-month period ended September 30, 2023, the Company incurred general and administration expenses of $98,547 (2022 - $80,137) and also recognized a gain on settlement of debts of $Nil (2022 - $385,542). The Company recognized impairment on mineral properties of $674,977 (2022 - $Nil).

SUMMARY OF QUARTERLY RESULTS

Reporting Period	Gross	Net Income	Basic $	Diluted $
	Revenue $	(Loss) $
Q4 ended September 30, 2023	-	(699,155)	(0.021)	(0.021)
Q3 ended June 30, 2023	-	(15,187)	(0.0005)	(0.0005)
Q2 ended March 31, 2023	-	(30,223)	(0.001)	(0.001)
Q1 ended December 31, 2022	-	(28,959)	(0.001)	(0.001)
Q4 ended September 30, 2022	-	306,700	0.011	0.011
Q3 ended June 30, 2022	-	(3,060)	(0.0001)	(0.0001)
Q2 ended March 31, 2022	-	(1,576)	(0.0001)	(0.0001)
Q1 ended December 31, 2021	-	(8,089)	(0.0005)	(0.0005)

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Q4 ended September 30, 2021

12,357

204,637

0.02

0.02

FINANCIAL POSITION

At September 30, 2023, the Company had working capital deficit of $281,525 (2022 – $89,335) comprised of cash or cash equivalents, prepaid expense, accounts payable and accrued liabilities, short term payable and due to related party.

Liquidity

The Company’s working capital deficiency consists largely of unpaid salaries and professional fees. The parties involved have all agreed to forebear and work with the Company over time towards their settlement.

The immediate capital requirements that the Company faces in the near term is for accounting, audit and regulatory fees. The Company will continue to complete equity offering to cover these obligations. There is a risk related to capital market conditions that could prevent this from occurring.

Capital Resources

The Company has capital expenditure requirements presently on several mineral properties option agreements. The Company currently no longer owns any oil & gas interests but own certain mineral properties recently acquired from Record Gold and properties optioned from other companies. The Company is continuously seeking other opportunities in acquiring properties or interests and/or optioning other properties in the mineral resource sectors.

OFF-BALANCE SHEET ARRANGEMENTS

The Company did not have any off-balance sheet transactions as at September 30, 2023.

RELATED PARTIES TRANSACTIONS

The Company’s related parties include the CEO, CFO, the directors and family members of these parties. Unless otherwise stated, none of the transactions incorporates special terms and conditions and no guarantees were given or received. Transactions with related parties for the twelve-month periods ended September 30, 2023 and September 30, 2022 were as illustrated in the table below.

Remuneration of Directors and key management of the Corporation:

	2023	2022
Share-based payment	$ -	$ -
Key management compensation – CEO	$ 11,899	$ 13,000

As at September 30, 2023, there was $Nil (2022 - $Nil) included as accounts payable and accruals to prior management. However, $125,000 (2022 - $125,000) was included as short term and long term payable to prior management respectively. On June 6, 2022, two former directors of the Company agreed to settle the accounts payable and accruals owing to them with the old liability balance of $500,355 being extinguished and replaced with a new liability of $125,000. As a result of the settlement, the Company recorded a debt

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settlement gain of $375,355 in the year ended September 30, 2022. The $125,000 is interest free and repayable in 18 months from June 6, 2022, the settlement date.

As at September 30, 2023, there was $9,564 (2022 - $5,361) included as due to related parties to current management.

The Company also repaid to a company related by common directors in the amount of $420 during the year ended September 30, 2023 (September 30, 2022 – received advances of $72,596). A loan in the amount of $ 64,578 owing to this related party was waived by this company on June 20, 2022 as part of the acquisition of the Kirkland property claims. As of September 30, 2023, the total amount outstanding owing to this company was $7,598 (2022 - $8,018). This is a non-interest bearing, non-secured loan with no fixed terms of repayment.

STOCK OPTION PLAN

The purpose of the Stock Option Plan (the “Plan”) is to serve as an incentive for the directors, officers, employees, and service providers who will be motivated by the Company’s success, as well as to promote ownership of common shares of the Company by these people. There is no objective attached to the Plan and no relationship to manage the Company’s risks. A description of Record’s stock option transactions can be found in Note 6 of Record’s audited financial statements for the twelve-month period ended September 30, 2023.

At September 30, 2023, the Company had nil options issued and outstanding.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

The preparation of the audited financial statements in conformity with IFRS requires management to make estimates and assumptions that affect amounts reported in financial statements and accompanying notes. There is a full description and a detailed presentation of the Company’s significant accounting policies, accounting judgements and uncertainties relative to significant estimates in the audited financial statements as at September 30, 2023 (Note 3).

OUTSTANDING SHARE DATA

As at the date of this MD&A, the Company has 35,414,520 common shares issued and outstanding and no preferred shares outstanding with 611,790 warrants outstanding.

RISK FACTORS

For a detailed list of risks and uncertainties related to the business of Record, please consult the Company’s audited financial statements for the period ended September 30, 2023.

CAUTIONARY STATEMENT

This Management and Discussion Analysis may contain forward-looking information within the meaning of applicable securities legislation, which reflects the Company's current expectations regarding future events. Forward-looking information is based on several assumptions and is subject to several risks and uncertainties, many of which are beyond the Company's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information.

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Readers should not place undue reliance on forward- looking statements and forward-looking information and are cautioned that reliance on such information may not be appropriate for other purposes.

The Company does not undertake any obligation to update such forward-looking information, whether because of new information, future events or otherwise, except as expressly required by applicable law. These risks and uncertainties include, but are not limited to, those described under the headings “Financial Instruments & Risk Management” and “Inherent Risk Factors” in this MD&A and could cause actual events or results to differ materially from those projected in any forward-looking statements. The Company does not intend, nor does it undertake any obligation, to update or revise any forward-looking statements contained in this MD&A to reflect subsequent information, events, or circumstances or otherwise, except if required by applicable law.

ADDITIONAL INFORMATION

Additional disclosures pertaining to the Company’s material change reports, press releases and other information are available on the SEDAR website at www.sedar.com.

On behalf of the Board of Directors, we thank our shareholders for their continued support.

“Michael C. Judson”

Michael C. Judson Chief Executive Officer

February 26, 2024

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