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Red Pine Exploration Inc. Management Reports 2025
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Management Reports
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RED PINE EXPLORATION INC.
145 Wellington Street West, Suite 1001
Toronto, ON, M5J 1H8
Management’s Discussion and Analysis
For the Three and Six Months Ended January 31, 2025
(Expressed in Canadian Dollars)
(dated: March 7, 2025)
Red Pine Exploration Inc.
INTRODUCTION 3
BASIS OF PRESENTATION 3
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 3
CORPORATE PROFILE 4
UPDATED NATIONAL INSTRUMENT 43-101 TECHNICAL REPORT FOR THE WAWA GOLD PROJECT 4
PREVIOUSLY DISCLOSED ASSAY MANIPULATIONS 5
HIGHLIGHTS 6
OUTLOOK 9
LIQUIDITY AND CAPITAL RESOURCES MANAGEMENT 17
SHARE CAPITAL AS AT MARCH 7, 2024 18
RISK FACTORS 19
MATERIAL ACCOUNTING POLICIES 22
INTERNAL CONTROL OVER FINANCIAL REPORTING 22
Management's Discussion and Analysis
Red Pine Exploration Inc.
Red Pine Exploration Inc.
Management’s Discussion and Analysis
For the Three and Six Months Ended January 31, 2025
INTRODUCTION
The following management discussion and analysis (“MD&A”) is intended to help the reader understand Red Pine Exploration Inc.’s (the “Company”, “Red Pine”, “we” or “our”), operations, financial performance and present and future business environment. This MD&A should be read in conjunction with the Company’s Consolidated Interim Financial Statements and notes thereto as at and for the three and six months ended January 31, 2025 (the “Financial Statements”).
BASIS OF PRESENTATION
This MD&A should be read in conjunction with the Company’s Financial Statements which are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting as issued by the International Accounting Standards Board. As these Financial Statements do not contain all note disclosures required under International Financial Reporting Standards (“IFRS”), they should be read in conjunction with the Company’s annual audited financial statements and Management’s Discussion and Analysis for the year ended July 31, 2024. The following is intended to supplement and complement the financial statements and notes thereto of the Company. All dollar figures stated herein are expressed in Canadian dollars (“CAD” or “$”), except for per share or per ounce amounts or unless otherwise indicated. For the purposes of preparing our MD&A, we consider the materiality of information. We evaluate materiality with reference to all relevant circumstances, including potential market sensitivity. Information is considered material if: (i) it would significantly alter the total mix of information available to investors; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares.
This MD&A and the accompanying Financial Statements were approved by the Company’s Board of Directors (the “Board”) on March 7, 2025.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this document constitute “forward-looking information”. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “propose”, “anticipate”, “believe”, used by any of the Company’s management, are intended to identify forward-looking information. Such statements reflect the Company’s forecasts, estimates and expectations, as they relate to the Company’s current views based on their experience and expertise with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.
Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not intend, and does not assume any obligation, to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments unless required by law.
Management’s Discussion and Analysis
Red Pine Exploration Inc.
CORPORATE PROFILE
UPDATED NATIONAL INSTRUMENT 43-101 TECHNICAL REPORT FOR THE WAWA GOLD PROJECT
The Company announced an updated Mineral Resource Estimate (the "2024 MRE") for the Wawa Gold Project on August 28, 2024. On September 30, 2024, the Company filed a National Instrument 43-101 Technical Report dated September 30, 2024 (with a resource effective date of August 28, 2024) entitled "National Instrument 43-101 Technical Report for the Wawa Gold Project"¹ (the "2024 Technical Report") which supersedes the previously published National Instrument 43-101 Technical Report dated June 21, 2023 (with a resource effective date of May 31, 2019) entitled "National Instrument 43-101 Technical Report for the Wawa Gold Project"² (the "2019 MRE"). Readers are encouraged to review the 2024 MRE. The following summary is qualified in its entirety by the full text of the 2024 MRE, a copy of which can be found under the Company's profile on www.SEDARPLUS.ca.
The 2024 MRE has added significantly to the previously published 2019 MRE and comprises a small portion of the Company's land holdings. There remain numerous historic zones and high priority targets elsewhere on the Wawa Gold Project property.
The 2024 MRE discloses that the Wawa Gold Project contains an Indicated Mineral Resource of 14.7 million ("M") tonnes grading 1.8 grams per tonne gold ("g/t Au") containing 842,000 ounces of gold and an Inferred Mineral Resource of 16.2 M tonnes grading 1.6 g/t Au containing 843,000 ounces of gold, inclusive of both open pit and underground:
| Zone | Category | Resource | Tonnes | Grade (g/t Au) | Ounces Gold |
|---|---|---|---|---|---|
| Jubilee | Indicated | Open Pit | 14,354,000 | 1.72 | 794,000 |
| Jubilee | Inferred | Open Pit | 14,718,000 | 1.40 | 665,000 |
| Jubilee/Minto | Indicated | Underground | 299,000 | 4.99 | 48,000 |
| Jubilee/Minto | Inferred | Underground | 1,465,000 | 3.80 | 179,000 |
| Total | Indicated | Open Pit/Underground | 14,653,000 | 1.79 | 842,000 |
| Total | Inferred | Open Pit/Underground | 16,183,000 | 1.62 | 843,000 |
Notes:
- The 2024 MRE described above has been prepared in accordance with the CIM Standards (Canadian Institute of Mining, Metallurgy and Petroleum, 2014) and follows Best Practices outlined by the CIM (2019).
- Mineral resources that are not mineral reserves do not have demonstrated economic viability. There are no Mineral Reserves for the Wawa Gold Project.
- The "qualified person" (for purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101")) for the updated MRE is Brian Thomas, P.Geo., an employee of WSP and "independent" of the Company within the meaning of Section 1.5 of NI 43-101.
- The effective date of the updated MRE is August 28, 2024.
- A minimum thickness of 3 metres ("m") was used when interpreting the mineralized bodies.
- The updated MRE is based on sub-blocked models with a main block size of $3\mathrm{m} \times 3\mathrm{m} \times 3\mathrm{m}$.
Management's Discussion and Analysis
Red Pine Exploration Inc.
- The pit-constrained mineral resources are reported at a 0.40 g/t Au cut-off grade considering an Operating Expense ("OPEX") of CDN $28.95 / tonne ($2.70/t mining, $19.00/t processing, $3.10/t G&A, $3.80/t transport to mill, $0.35/t rehabilitation)
- The Jubilee underground constrained mineral resources are reported at a 2.00 g/t Au cut-off and a minimum of 2,000 tonnes of contiguous material contained within a 1.60 g/t envelope. The 2.0 g/t cut-off assumes underground long hole mining with an OPEX of CDN $146.65 / tonne ($90.00 mining, $37.50 milling, $15.00 G&A, $3.80/t transport to mill, $0.35/t rehabilitation).
- The Minto underground constrained mineral resources are reported at a 2.40 g/t Au cut-off and a minimum of 2,000 tonnes of contiguous material contained within a 2.00 g/t envelope. The 2.40 g/t Au cut-off grade assumes underground long hole mining with an OPEX of CDN $176.65 / tonne ($120.00 mining, $37.50 milling, $15.00 G&A, $3.80/t transport to mill, $0.35/t rehabilitation).
- A bulk density factor of 2.77 tonnes per cubic m (t/m3) was applied for the MRE.
- A gold price of $CDN2,632 (US$1,950) per ounce as used, and a USD/CDN exchange rate of 1.35.
- Mill recovery of 90.3% was assumed.
- Royalty of 2.5% (reduced from 3.5% assuming expected re-purchasing of 1.5% of NSR from previous joint venture partner for $CDN1.75 million and option to purchase an additional royalty of 0.5% by Franco-Nevada upon completion of feasibility study).
- As required by reporting guidelines, rounding may result in apparent summation differences between tonnes, grade, and metal content.
The Jubilee deposit is highlighted by continuous gold mineralization starting from surface and extending up to 1,200 m down dip, providing optionality for potential future open pit and underground development scenarios. The 2024 MRE shows clear potential for expansion of higher-grade mineralization at depth and of lower grade mineralization located in the hanging wall of the Jubilee Shear. The extension potential of high-grade mineralization will be the focus of the near-term exploration program, specifically the down dip and down plunge extensions of the Jubilee and Minto deposits as part of an underground mining scenario.
PREVIOUSLY DISCLOSED ASSAY MANIPULATIONS
Following the discovery of a gold assay ("assay") reporting inconsistencies between a certified assay result received from Activation Laboratories Ltd. and the corresponding assay logged in the Company's drill hole database (the "database") in late April 2024, staff initiated a process to determine the impact of the inconsistencies ("Manipulated Assays"). The Company announced the completion of this process in its press release of June 24, 2024. Subsequently, the Company expanded the independent verification sampling and assaying of drill core performed by WSP Canada Inc., re-confirming the presence of significant gold mineralization on the Wawa Gold Project, as stated in Red Pine's press release of July 24, 2024. On September 30, 2024, the Company filed the 2024 Technical Report which supersedes the previously published 2019 MRE. Please see "Updated National Instrument 43-101 Technical Report For The Wawa Gold Project" above. Further information can be found in the Company's management discussion & analysis for the year ended July 31, 2024 which has been posted on its website and filed under the Company's profile on www.SEDARPLUS.ca.
On July 29, 2024, the Company commenced a claim against the former President & Chief Executive Officer of the Company (the "Former CEO") in the Ontario Superior Court of Justice seeking damages of an aggregate amount of approximately $9.4 million for, among other things, reimbursement of amounts paid to the Former CEO in connection with his termination of employment from the Company in early 2024 and general damages for breach of fiduciary, contractual and statutory duties owed to the Company. A
Management's Discussion and Analysis
Red Pine Exploration Inc.
Statement of Defence and Counterclaim (the "Counterclaim") was received by the Company on September 24, 2024. The Counterclaim seeks an aggregate amount of approximately $6.4 million from the Company for, among other things, loss of future income. The Company does not believe the Counterclaim has merit and intends to vigorously pursue its claim against the Former CEO and to vigorously defend the Counterclaim. On October 18, 2024, the Company filed a Reply and Statement of Defense to Counterclaim refuting any liability to the Former CEO for the matters alleged in the Counterclaim.
HIGHLIGHTS
Current Period Exploration Program
The new developments and the results from the on-going exploration program at the Wawa Gold Project for the three and six Months Ended January 31, 2025 are presented in the section below.
Drilling Program
Red Pine initiated, in November 2024, a fully funded 25,000 m drilling program at its Wawa Gold Project (see press release of November 12, 2024) consisting of significant step-outs away from existing zones of mineralization. The primary objective of the drilling program is to demonstrate that significant gold mineralization extends in the already sizeable gold system of the Wawa Gold Project beyond the 2024 MRE.
The areas of focus of the 2024-2025 drilling program are:
- the down-plunge, underground potential of the Jubilee Shear where limited drilling has returned results of up to 14.87 g/t Au over 5.20 m (core length), 8.89 g/t Au over 3.75 m (core length) and 120.88 g/t Au over 0.30 m (core length; Jubilee South);
- the down dip potential beneath the reported pit shell for the Jubilee Shear that remains untested (Jubilee Central);
- the northern extension of the Jubilee Shear in the Jubilee/Cooper area where the 2024 prospecting program has returned encouraging results (Jubilee North and Jubilee/Cooper)
- the recently discovered faulted extension of the Jubilee Shear on the southern side of the Parkhill Fault (Jubilee Ext.); and
- limited drilling will be designed to test some of the new conceptual targets and more regional targets discovered during the 2024 prospecting program.
In each of the target areas, numerous mineralized zones are planned to be concurrently tested with the Jubilee Shear. This will include some of the more regional targets identified based on the results of the 2024 prospecting program and the re-evaluation of exploration targets on the property. As of January 31, 2025, the results of this testing are pending and the Company's findings will continue to be updated over the course of the drilling program.
Prospecting program
To expand and refine its pipeline of exploration targets, Red Pine initiated in the summer of 2024 a property-wide prospecting program that targeted areas where historical mapping or prospecting had indicated a potential for gold mineralization. The highlights of the 2024 prospecting program were also received and reported during the period. The property-wide prospecting program targeted areas where historical mapping or prospecting had indicated a potential for gold mineralization.
Management's Discussion and Analysis
Red Pine Exploration Inc.
Highlights from the 2024 prospecting program
The 2024 prospecting program included the collection of grab samples, within the context of which, are defined as samples taken at a precise location and generally containing a mineral of interest. The reader is cautioned that grab samples are selective by nature and that the assay results from grab samples presented below are not representative of the actual gold grade of the mineralized zones.
Jubilee West Area (see the press release of December 17, 2024 for further details)
- Discovery of gold mineralization, approximately 500 m south and along strike from the previously known Hornblende Shear that is subparallel to, and approximately 350 m west of, the Jubilee Shear:
- grab samples grading up to 9.99 g/t Au were returned and have now extended the shear over at least 2.4 kilometres ("km") along strike
- Discovery of new networks of extensional veins up to 1.4 km west of the Jubilee Shear in the Wawa Creek area:
- grab samples from individual veins graded up to 31.30 g/t Au;
- quartz veining is similar to Minto-style high grade quartz veins forming vein networks or hosted in extensional shear zones
- Additional high-grade veins identified at the Wawa Goldfield South Zone:
- grab samples from individual veins grading up to 37.70 g/t Au
Jubilee North and Cooper areas (see the press release of October 17, 2024 for further details)
- Discovery of gold mineralization 1.75 km north of the Cooper Mine near the Wawa Goldfield South Zone showing – 2024 grab samples up to 21.20 g/t Au
- Additional sampling of the Cooper 11 Shear (originally discovered in 2019) with recent grab samples up to 47.80 g/t Au
- Resampling of the Mackey Point showing (historically known) – 2024 grab samples up to 7.65 g/t Au
- Additional sampling of the Cooper Shear (host to the historical Cooper Mine) with new grab samples up to 75.90 g/t Au
- Surface prospecting at the War Eagle Zone, combined with an updated geologic model, outlined a 200 m wide zone hosting several East-Northeast-oriented gold mineralized structures
War Eagle Area (see the press release of November 27, 2024 for further details)
The three mineralized trends identified south of the Parkhill Fault are
- War Eagle South Shear;
- Grab sample results from 2024 of up to 17.10 g/t Au and 8.61 g/t Au at two locations along the structure
- Complements previous grab sample results of up to 10.70 g/t Au and up to 18.40 g/t Au in close proximity along the structure (Source: the 2024 Technical Report)
- War Eagle North Shear;
- Grab sample results from 2024 of up to 12.90 g/t Au
- Complements previous grab sample results of up to 13.70 g/t Au close to the same location along the structure (Source: the 2024 Technical Report)
Management's Discussion and Analysis
Red Pine Exploration Inc.
- Villeneuve Shear
- Channel sampled by Red Pine in 2021 include 1.84 g/t Au over 4.70 m including 4.64 g/t Au over 1.00 m and 3.44 g/t Au over 0.70 m from channel WE-21-001-8 (Source: 2024 Technical Report)
- Drilling results from the 1990 included 6.31 g/t Au over 0.91 m (AN-90-01) and 1.08 g/t Au over 8.00 m (AN-90-04) – AFRI 41N15NE0019
Drill core relogging
Red Pine revisited in the Fall of 2024 various holes drilled between 2022 and 2024. In one of the relogged drill holes designed to test the faulted offset of the Jubilee Shear, significant gold mineralization was discovered. The results have confirmed that shallow, south-plunging gold mineralization of the Jubilee Shear in the north part of the property continues to the south in the faulted extension of the Jubilee Shear. The shear shifts approximately 800 m to the southeast along the later stage Parkhill Fault. The discovery of comparable gold mineralization in hole JS-22-392 to that contained in the northern segment of the Jubilee Shear, with additional drilling, could significantly add to the current mineral resource base.
Significant gold mineralization is also recorded in several of the other remaining holes of the exploration program being released. Results from these holes extended gold mineralization in the Jubilee Shear and other adjacent zones in the hanging wall of the shear.
Highlights of the relogging of historic core (see the press release of October 31, 2024 for further details)
Faulted offset of the Jubilee Shear south of the Parkhill Fault
- JS-22-392 intersected a vein network in the hanging wall of the Jubilee Shear assaying:
- 1.19 g/t Au over 6.48 m, including 5.32 g/t Au over 1.29 m
- JS-22-392 intersected the extensions of the Jubilee Shear, with visible gold noted, assaying:
- 5.53 g/t Au over 1.20 m
- 0.97 g/t Au over 11.83 m including 4.02 g/t Au over 1.26 m and 3.46 g/t Au over 1.00 m
- 2.75 g/t Au over 5.78 m including 7.03 g/t Au over 2.11 m
Hanging wall of the Jubilee Shear north of the Parkhill Fault
- 8.96 g/t Au over 1.32 m in SD-24-514 in a shear zone
- 22.40 g/t Au over 1.44 m in SD-24-514 within the Minto B Shear
Jubilee Shear North of the Parkhill Fault
- Main Deformation Domain
- 1.79 g/t Au over 13.23 m including 7.17 g/t Au over 1.06 m in SD-24-512
- Shears below the Main Deformation Domain
- 10.30 g/t Au over 1.35 m in SD-24-518
Jubilee Shear and Parallel Shoot at Depth (see the press release of February 19, 2025 for further details)
- Drilling results confirm extension of gold mineralization in both the Jubilee & Minto Shear considering large step out drilling of over 100 m
- Discovery of a new parallel shoot at depth in the Jubilee South area
Management's Discussion and Analysis
Red Pine Exploration Inc.
Jubilee Shear
- Intersection of 8.41 g/t Au over 1.67 m, including 14.90 g/t Au over 0.92 m in the Jubilee Shear, approximately 100 m up-plunge off the nearest drilling intersection
- Identification of a probable roll or shallowing in the dip of the Jubilee Shear
- Significant quartz veining observed 180 m down-dip of the intersection in SD-25-532 in SD-25-533, assays pending
Minto Shear
- Intersection of 4.77 g/t Au over 1.00 m approximately 370 m down-dip from the boundaries of the MRE in the Minto Deposit
- Opens a new and untested area in the Minto Mine Shear
- Shallow intersection of 2.77 g/t Au over 1.34 m down-plunge of the southernmost extension of the Minto Deposit opening the zone for additional exploration toward the historical Parkhill Mine
Testing the deep extension of the Jubilee shear beyond the 2024 MRE (see the press release of February 4, 2025 for further details)
- Three drill holes that tested the extensions of the Jubilee Shear at depth intersected quartz veins with visible gold approximately 170 m and 100 m away from the closest intersections, including in the deepest intersection ever completed in the Jubilee Shear
- Intersected the Minto Vein with visible gold more than 100 m away from previous drilling
- Relogged drill core found significant gold mineralization grading 5.81 g/t Au over 2.16 m at depth in the Jubilee Shear
OUTLOOK
The Company’s primary business objectives in FY2024-2025 include:
- Updating the mineral resource estimate and completing the Updated Technical Report, which was completed subsequent to the year ended July 31, 2024. Refer to the Company’s website and SEDAR+ under the Company’s profile
- Testing and evaluating the exploration potential of certain showings of the Wawa Gold Project through a surface exploration program
-
Testing the size potential of the gold system of the Wawa Gold Project by executing a 25,000 m drilling program
-
The primary objective of the drilling program is to extend the zones of gold mineralization in the already sizeable gold system of the Wawa Gold Project beyond the 2024 MRE by focusing on:
- The down-plunge and down dip potential beneath the reported pit shell for the Jubilee Shear that remains untested
- The northern extension of the Jubilee Shear in the Jubilee/Cooper area where recent prospecting has returned encouraging results
- The recently discovered faulted extension of the Jubilee Shear on the southern side of the Parkhill Fault
Subsequent to the quarter ended April 30, 2024, and after discovery of the Manipulated Assays, the Company proceeded to reduce costs by, among other things, cancelling all drilling activities in mid-May.
Management's Discussion and Analysis
Red Pine Exploration Inc.
The Company had intended to finance in May or June 2024 but was precluded from immediately doing so following the discovery, and prior to the resolution of, the Manipulated Assays.
The Company demonstrated strong capital markets support during the year ended July 31, 2024 with the success of the $5.24 million of gross proceeds raised from share issuances and the $6.75 million Net Smelter Return Royalty sale. The Company obtained additional funding by raising gross proceeds in the amount of $11 million on October 1, 2024 (refer to note 10 of the Financial Statements) through the sale of equity securities. As at January 31, 2025, the Company had cash resources of $7,465,188.
The Company may seek additional funding before July 31, 2025 to extend and/or expand the drilling campaign and analysis. Funding requirements also include payments under its First Nations Agreements. The success of any financing will be dependent on factors such as the drilling results from the continuing drill program and the prevailing market conditions for junior exploration companies. If the Company is unsuccessful in obtaining financing, or obtaining financing on acceptable terms, the Company would be required to cease drilling on the Wawa Project. There can be no assurances that the Company will be able to find additional financing on terms acceptable to the Company, or at all.
Qualified Person
Jean-Francois Montreuil, P.Geo., the Company's Vice-President of Exploration, is the Qualified Person, as defined by NI 43-101, who has reviewed and approved the technical information disclosed in this MD&A.
COMPANY OVERVIEW
Red Pine was founded in 1936 under the laws of Ontario, Canada for the acquisition, exploration, and development of mining properties. The Company's head office and primary location of its registered records is 145 Wellington Street West, Suite 1001, Toronto, Ontario, M5J 1H8.
The Company's common shares (the "Common Shares") are listed for trading on the TSX Venture Exchange ("TSXV") under the symbol "RPX" and on the OTCQB Marketplace under the symbol "RDEXF".
Red Pine is a Canadian junior precious metal exploration company engaged in the acquisition, exploration, and development of mineral properties with a particular focus on gold exploration projects located in northern Ontario. The Company's flagship asset is the Wawa Gold Project. (See "Wawa Gold Project" below)
The Company's mineral properties are currently in the exploration stage, and it does not operate any mines. The Company does not generate operating revenues, nor does it plan to pay dividends in the foreseeable future. Its continued operations are dependent upon the ability of the Company to obtain financing for the continued exploration of its mineral properties. The Company has not determined, through a feasibility study, whether the Wawa Gold Project, or any other mineral property, contains mineralization that is economically recoverable.
Overview of Projects
Wawa Gold Project
The Wawa Gold Project covers over 7,140 hectares ("ha"), including 307 claims covering 4,907 ha; 17 leases covering 790 ha; and 105 patents covering 1,443 ha. The Wawa Gold Project hosts several former smaller scale mining operations with a combined historic production of 419,560 tonnes with a recovered 120,093
Management's Discussion and Analysis
Red Pine Exploration Inc.
oz of gold at an average head grade of 9.04 g/t³ Au, is located approximately 2 km east of the Town of Wawa in northern Ontario.
On March 30, 2021, Red Pine completed a consolidation of the Wawa Gold Project through the payment of $11.3 million in cash, the granting of a 2% net smelter return royalty ("NSR") valued at $160,000 and the set-off of a $1.1 million payable to Red Pine by the vendors. 1.5% of the 2% NSR is subject to a buyback for a total cost of $1.75 million. On August 29, 2023, the Company entered into a royalty agreement with Franco-Nevada Corporation for the sale of a 1.5% NSR for C$6,750,000, less transaction costs (refer to note 8 of the Financial Statements).
On December 12, 2024, the Company acquired one patented mining and surface rights claim within the boundaries of the Wawa Gold Project for cash consideration of $57,285 and the granting of a 2% net smelter return royalty. Refer to note 8 of the Financial Statements for further details.
Other Properties
The Company holds claims in various other prospective mineral properties which have not been the focus of the Company's exploration programs in recent years. The other properties, each owned 100% by the Company, are summarized as follows:
| Number of Claims & Leases | Hectares | Northern Ontario Location | |
|---|---|---|---|
| Cayenne Property | 5 | 133 | Genoa Township, approximately 110 km southwest of Timmins, ON |
| Fern Elizabeth Property | 54 | 1,006 | 10 km northwest of Atikokan, ON |
| Rand Garrison Property | 22 | 277 | 50 km north of Kirkland Lake, ON |
| Totals | 81 | 1,416 |
The Company also holds NSR royalties on the following properties:
- a 1.5% NSR on approximately 75 square km of claims 20 km east of the Newmont Borden Gold mine near Chapleau, Ontario;
- a 1.5% NSR on approximately 70 square km of patents 100 km southwest of Timmins and 36 km south of Foleyet, Ontario.
SELECTED FINANCIAL INFORMATION AND RESULTS OF OPERATIONS
The Company, in accordance with TSXV policy 2.4, is a Tier 2 mining issuer. Accordingly, the Company has not recorded any revenues and depends upon sales of equity to fund its exploration and evaluation expenditures and administrative expenses.
During the three and six months ended January 31, 2025, the Company continued the process to advance its exploration and evaluation of its Wawa Gold Project. A summary of significant activities since July 31, 2024, is included above in the 'Highlights' section.
Management's Discussion and Analysis
Red Pine Exploration Inc.
The following table provides select financial information that should be read in conjunction with the Financial Statements for the years ended July 31, 2024 and 2023:
Selected items for the three-month period ended:
| January 31, 2025 | October 31, 2024 | July 31, 2024 | April 30, 2024 | |
|---|---|---|---|---|
| Results of Operations: | ||||
| Exploration expenditures | $ 1,653,739 | $ 1,120,218 | $ 1,698,179 | $ 4,132,193 |
| Loss and comprehensive loss | (2,258,605) | (1,563,906) | (2,192,454) | (4,737,123) |
| Basic and diluted loss per share | (0.01) | (0.01) | (0.01) | (0.02) |
| Financial Position: | ||||
| Cash and cash equivalents (2) | 7,465,188 | 9,630,707 | 1,434,594 | 3,531,555 |
| Working capital (deficit)(1) | 6,178,212 | 8,369,070 | 204,957 | 2,324,845 |
| Total assets | 8,425,519 | 10,521,481 | 2,129,143 | 4,537,373 |
| Total non-current liabilities | 99,575 | 20,030 | 49,626 | 78,695 |
| Shareholders’ equity (deficit) | $ 6,692,692 | $ 8,845,908 | $ 692,328 | $ 2,827,922 |
Selected items for the three-month period ended:
| January 31, 2024 | October 31, 2023 | July 31, 2023 | April 30, 2023 | |
|---|---|---|---|---|
| Results of Operations: | ||||
| Exploration expenditures | $ 2,784,064 | $ 2,920,357 | $ 2,786,388 | $ 1,666,924 |
| Exploration property (sale) and Acquisition | (6,330,964) | - | - | |
| Income (Loss) and comprehensive income (loss) | (2,863,685) | 3,288,330 | (3,017,062) | (2,262,332) |
| Basic and diluted income (loss) per share | (0.02) | 0.02 | (0.02) | (0.02) |
| Financial Position – Select Items: | ||||
| Cash and cash equivalents(2) | 7,745,642 | 6,195,238 | 3,382,626 | 319,099 |
| Working capital (deficit)(1) | 6,968,091 | 5,980,395 | 2,650,046 | (833,040) |
| Total assets | 8,794,780 | 7,232,722 | 4,173,794 | 1,182,658 |
| Total non-current liabilities | 107,243 | - | - | - |
| Shareholders’ equity | $ 7,487,812 | $ 6,398,028 | $ 3,102,867 | $ (291,391) |
(1) Refer to note 3 of the Financial Statements for a definition of Working Capital.
(2) Includes cash committed under flow-through financing commitments which have prescribed periods within which to spend these funds.
Management's Discussion and Analysis
Red Pine Exploration Inc.
The Company's exploration expenditures in the three and six months ended January 31, 2025 were $1,653,739 and $2,773,957 compared to the three and six months ended January 31, 2024 of $2,784,064 and $5,704,421, respectively. Refer to the discussion of exploration expenditures further in this MD&A for more information.
On May 8, 2023 the Company closed a private placement financing, including the full exercise of the Agents' option, comprised of (i) 5,675,000 units of the Company ("Units") at a price of C$0.20 per Unit (the "Issue Price"), (ii) 11,538,230 tranche 1 flow-through units of the Company (the "Tranche 1 FT Units") at a price of C$0.235 per Tranche 1 FT Unit, and (iii) 13,679,000 tranche 2 flow-through units of the Company (the "Tranche 2 FT Units") at a price of C$0.285 per Tranche 2 FT Unit for aggregate gross proceeds to the Company of C$7,744,999.00. Each Unit, Tranche 1 FT Unit and Tranche 2 FT Unit comprises one Common Share of the Company and one half of one Common Share purchase warrant of the Company.
On August 29, 2023, the Company entered into a net smelter return royalty agreement (the "Royalty Agreement") with Franco-Nevada Corporation ("Franco-Nevada") for the sale of a 1.5% net smelter return royalty (the "Royalty") on its Wawa Gold Project located in Ontario for immediate cash proceeds to the Company of C$6,750,000, less transaction costs of $419,036.
On December 7, 2023, the Company closed a "bought deal" private placement for gross proceeds of $5,235,693 including partial exercise of Underwriters' option. The Offering consisted of i) 18,182,000 tranche 1 flow-through shares (the "Tranche 1 FT Shares") of the Company at a price of C$0.22 per Tranche 1 FT Share (the "Tranche 1 FT Issue Price"), and (ii) 3,704,000 tranche 2 flow-through shares (the "Tranche 2 FT Shares" and together with the Tranche 1 FT Shares, the "Offered FT Shares") of the Company at a price of C$0.27 per Tranche 2 FT Share (the "Tranche 2 FT Issue Price"). The Underwriters were granted an option ("Underwriters' Option") to purchase up to an additional 15% of the Offering in any combination of (i) Tranche 1 FT Shares at the Tranche 1 FT Issue Price, and (ii) Tranche 2 FT Shares at the Tranche 2 FT Issue Price. The Underwriters exercised their option and purchased an additional 1,070,785 Tranche 1 FT Shares at the Tranche 1 FT Issue Price. Each Tranche 1 FT Share and Tranche 2 FT Share comprises one common share of the Company.
On October 1, 2024, the Company closed a "bought deal" private placement for gross proceeds of $11,000,358 including the exercise, in full, of Underwriters' option. The Offering consisted of (i) 33,336,000 common shares (the "Non-FT Shares") of the Company at a price of C$0.09 per Non-FT Share, ii) 28,572,000 tranche 1 flow-through shares (the "Tranche 1 FT Shares") of the Company at a price of C$0.105 per Tranche 1 FT Share (the "Tranche 1 FT Issue Price"), and (iii) 39,683,000 tranche 2 flow-through shares (the "Tranche 2 FT Shares" and together with the Tranche 1 FT Shares, the "Offered FT Shares") of the Company at a price of C$0.126 per Tranche 2 FT Share (the "Tranche 2 FT Issue Price"). Each Non-FT Share, Tranche 1 FT Share and Tranche 2 FT Share comprises one common share of the Company.
Management's Discussion and Analysis
Page 13
Red Pine Exploration Inc.
The following table summarizes the cumulative exploration and evaluation expenditures the Company has incurred on its mineral properties. Wawa expenditures include all amounts incurred prior to any prorated recovery from the previous joint-venture partner.
| Wawa Gold Project | Other Properties | Total Properties | |
|---|---|---|---|
| Balance, July 31, 2023 | $ 79,221,609 | $ 13,569,860 | $ 92,791,469 |
| Exploration expenditures | 11,534,793 | - | 11,534,793 |
| Balance, July 31, 2024 | $ 90,756,402 | $ 13,569,860 | $ 104,326,262 |
| Exploration expenditures | 2,773,957 | - | 2,773,957 |
| Balance, October 31, 2024 | $ 93,530,359 | $ 13,569,860 | $ 107,100,219 |
The following table summarizes the Wawa Gold Project exploration expenditures:
| Exploration expenditures | Three months ended January 31 | Six months ended January 31 | ||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Camp costs | $ 76,967 | $ 275,063 | $ 166,791 | $ 583,872 |
| Compensation | 548,409 | 642,892 | 1,086,973 | 1,213,790 |
| Drilling, assays and analysis | 821,506 | 1,514,046 | 1,063,719 | 3,454,786 |
| First Nations Community | ||||
| Consultations | 36,852 | - | 70,852 | - |
| Equipment costs | 88,063 | 87,435 | 145,767 | 167,721 |
| Geophysical Survey | - | 142,926 | - | 142,926 |
| Resource estimate costs | - | - | 75,633 | - |
| Land management | 24,657 | 121,702 | 106,937 | 141,326 |
| Claim Acquisition | 57,285 | - | 57,285 | - |
| Exploration Expenditures | $ 1,653,739 | $ 2,784,064 | $ 2,773,957 | $ 5,704,421 |
The average cost of the drilling, assays and analysis was $184.48 per metre drilled in the six months ended January 31, 2025 ($1,063,719/5,766 m) (six months ended January 31, 2024 - $189.16 per metre drilled ($3,454,786/18,264 m)), excluding the cost of the Company's staff, camp and other expenses. The variance in the average per metre drilling cost was due to the temporary suspension of drilling in May of 2024 as a result of the Assay Manipulations referred to earlier in this MD&A, until its resumption the second quarter of this year. Drilling commenced in November 2024 on a fully funded 25,000 m program which is anticipated to extend to the end of the current fiscal year. The primary objective of the drilling program is to extend the known zones of gold mineralization beyond the 2024 Mineral Resource Estimate, as announced in the Company's press release of November 12, 2024. The primary reason for the $2,391,067 reduction in Drilling, assay and analysis costs is due to no drilling occurring in the first quarter of the current year and minimal drilling costs in the second quarter of the current year, as the Company phased in its drilling program, beginning with one drill in November 2024 and adding the second in December 2024. By comparison, two drills were operating during the comparative six months ended January 31, 2024, and generating a higher number of assay samples.
Management's Discussion and Analysis
Red Pine Exploration Inc.
First Nations Community Consultations costs are incurred as a result of agreements signed in prior years with First Nations on whose traditional lands the Company conducts exploration activities. These costs require reconciliation with government approved expenditures before they can be finalized and invoiced from the respective Communities. The amounts have been accrued in the three and six months ended January 31, 2025 and are recorded as a current liability as at January 31, 2025.
Camp costs were lower in the three and six months ended January 31, 2025, compared to the three and six months ended January 31, 2024 due to lower food expenditures, reflecting the cancellation of drilling operations in May 2024 as well as other cost saving measures incurred in the calendar year 2024 which are anticipated to carry forward.
Compensation costs in the three and six months ended January 31, 2025 were lower than the three and six months ended January 31, 2024 as a result of a small amount of attrition before the start of the current year. The Company anticipates Compensation costs to increase slightly in future quarters as these roles are replaced.
Equipment costs on site were lower in the six months ended January 31, 2025 due to lower software and equipment rental costs as the impact of the temporary suspension of drilling activities in May 2024, cascaded further across the Camp. In turn, this reduction was partially offset by slightly higher maintenance costs due to the resumption of drilling. These costs are anticipated to partially reverse in the future as a result of the new drilling program which began in November, 2024.
Resource estimate costs began to be incurred during the last three months of the year ended July 31, 2024 in preparation of the Company's release of its first mineral resource update since 2019, and associated NI 43-101 report. The costs of $75,633 reflected amounts paid to complete these reports, which were released on August 28, 2024 and September 30, 2024, respectively.
Land management costs decreased due to timing of certain municipal tax bills. The Company did not receive some if its tax bills in respect of the 2023 calendar year until January 2024. As these municipal tax bills are now being received on a timelier basis, the variance in expenses has narrowed. In addition, the Company incurred approximately $30,000 in restoration costs pertaining to crown pillar studies in the three months ended October 31, 2024 related to historically mined areas of the Wawa Gold Project. These costs were incurred to maintain ongoing compliance with closure plan regulations in the province of Ontario. No further restoration costs were estimated in the three and six months ended January 31, 2025 (three and six months ended January 31, 2024 - $nil), resulting in the asset retirement obligation at January 31, 2025 to be $nil (July 31, 2024 - $nil).
On December 12, 2024, the Company acquired one patented mining and surface rights claim within the boundaries of the Wawa Gold Project for cash consideration of $57,285 and the granting of a 2% net smelter return royalty. Refer to note 8 of the Financial Statements for further details.
Management's Discussion and Analysis
Red Pine Exploration Inc.
Operating Expense Discussion (excluding exploration):
| Three months ended January 31 | Six months ended January 31 | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Expenses | ||||
| Exploration expenditures | $ 1,653,739 | $ 2,784,064 | $ 2,773,957 | $ 5,704,421 |
| Gain on sale of NSR | - | - | - | (6,330,964) |
| Amortization | 54,813 | 43,091 | 94,942 | 109,058 |
| Foreign exchange loss (gain) | (59) | 159 | (84) | (267) |
| General and administrative | 166,323 | 200,123 | 318,524 | 363,454 |
| Interest expense (income) | (20,647) | (61,549) | (73,870) | (118,014) |
| Lease accretion | 4,277 | 2,662 | 6,890 | 2,662 |
| Payroll and professional fees | 373,592 | 234,307 | 649,638 | 479,562 |
| Share-based compensation | 105,389 | 7,197 | 181,653 | 14,028 |
| Total (Income) Expenses | $ 2,337,427 | $ 3,210,054 | $ 3,951,650 | $ 223,940 |
Amortization expenses increased slightly in the three months ended January 31, 2025 as a result of the addition of an equipment lease at the start of the second quarter (refer to note 7 of the Financial Statements). The impact of this equipment lease in the six months ended January 31, 2025 was to mitigate the reduction in Amortization as the majority of assets became fully amortized in the previous quarter.
General and administrative costs were lower in the three and six months ended January 31, 2025 due mainly to lower Investor Relations costs. Please refer to the discussion of Investor Relations costs below.
Interest income in the three and six months ended January 31, 2025 was below the comparative periods due to lower average cash balances and lower interest rates.
Payroll and professional fees increased by $139,285 and $170,076, respectively, in the three and six months ended January 31, 2025 primarily due to higher professional fees stemming from the Assay Manipulations, referred to above and, to a smaller extent, professional fees associated with the Claim Acquisition referred to in the discussion regarding Exploration Expenditures as well as a small amount of one-time payroll related items.
Share based compensation expense amounted to $105,389 and $181,653 in the three and six months ended January 31, 2025, respectively (three and six months ended January 31, 2024 - $7,197 and $14,028). The increase was due to a higher number of options being amortizable over the current quarter and year-to-date periods, due to a higher number of recent grants, relative to the comparative periods. This impact was partially mitigated by a decrease in the associated Black Scholes values.
Management's Discussion and Analysis
Red Pine Exploration Inc.
General and administrative expenses comprise of the following:
| Three months ended January 31 | Six months ended January 31 | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| General & Administrative Expenses | ||||
| Insurance | $ 30,737 | $ 27,004 | $ 61,464 | $ 49,878 |
| Investor relations | 68,926 | 119,687 | 157,095 | 238,007 |
| Office and IT | 34,115 | 34,361 | 51,628 | 37,311 |
| Regulatory fees | 32,524 | 18,316 | 47,828 | 36,703 |
| Travel | 21 | 755 | 509 | 1,555 |
| Total General & Administrative | $ 166,323 | $ 200,123 | $ 318,524 | $ 363,454 |
Insurance costs in the three and six months ended January 31, 2025 were higher in comparison to the prior periods as a result of premium increases reflecting increased equipment coverage.
Investor relations expenses decreased by $50,761 and $80,912 in the three and six months ended January 31, 2025, respectively, compared to the three and six months ended January 31, 2024, reflecting a reduction in marketing activities during the current period.
Office and IT expenses were on par and $14,317 higher for the three and six months ended January 31, 2025, due to a one-time credit in the first three months of the comparative year which did not re-occur.
Regulatory fees were higher in the three and six months ended January 31, 2025 due to timing of the Company's annual general meeting. In the comparative fiscal year, the Company's annual general meeting was held in the third quarter as opposed to the second quarter of the current fiscal period.
LIQUIDITY AND CAPITAL RESOURCES MANAGEMENT
The Company manages capital through its financial and operational forecasting processes. The Company's capital management objectives, policies and processes remained unchanged from the year ended July 31, 2024.
As at January 31, 2025, the Company had cash and cash equivalents, inclusive of funds committed to be spent under the terms of its flow-through equity financings of $7,465,188 (July 31, 2024: $1,434,594 of cash and cash equivalents and $nil funds committed under the terms of its flow-through equity financings) and for the six months ended January 31, 2025 used net cash in operating activities of $3,942,468 (six months ended January 31, 2024: $6,622,349). During the six months ended January 31, 2025, the Company incurred $2,773,957 in exploration expenditures. Comparatively, in the six months ended January 31, 2024, the Company incurred $5,704,421 in exploration expenditures.
On October 1, 2024, the Company closed a "bought deal" private placement for gross proceeds of $11,000,358 including the exercise, in full, of Underwriters' option. The Offering consisted of (i) 33,336,000 common shares (the "Non-FT Shares") of the Company at a price of C$0.09 per Non-FT Share, ii) 28,572,000 tranche 1 flow-through shares (the "Tranche 1 FT Shares") of the Company at a price of C$0.105 per Tranche 1 FT Share (the "Tranche 1 FT Issue Price"), and (iii) 39,683,000 tranche 2 flow-through shares (the "Tranche 2 FT Shares" and together with the Tranche 1 FT Shares, the "Offered FT Shares") of the Company at a price of C$0.126 per Tranche 2 FT Share (the "Tranche 2 FT Issue Price"). Each Non-FT Share, Tranche 1 FT Share and Tranche 2 FT Share comprises one common share of the Company.
Management's Discussion and Analysis
Red Pine Exploration Inc.
On December 7, 2023, the Company closed a bought deal private placement for gross proceeds of $5,235,000 including partial exercise of Underwriters’ option. The Offering consisted of i) 18,182,000 tranche 1 flow-through shares (the “Tranche 1 FT Shares”) of the Company at a price of C$0.22 per Tranche 1 FT Share (the “Tranche 1 FT Issue Price”), and (ii) 3,704,000 tranche 2 flow-through shares (the “Tranche 2 FT Shares” and together with the Tranche 1 FT Shares, the “Offered FT Shares”) of the Company at a price of C$0.27 per Tranche 2 FT Share (the “Tranche 2 FT Issue Price”). The Underwriters were granted an option (Underwriters’ Option) to purchase up to an additional 15% of the Offering in any combination of (i) Tranche 1 FT Shares at the Tranche 1 FT Issue Price, and (ii) Tranche 2 FT Shares at the Tranche 2 FT Issue Price. The Underwriters exercised their option and purchased an additional 1,070,785 Tranche 1 FT Shares at the Tranche 1 FT Issue Price. Each Tranche 1 FT Share and Tranche 2 FT Share comprises one common share of the Company.
On August 29, 2023, the Company entered into a net smelter return royalty agreement (the “Royalty Agreement”) with Franco-Nevada Corporation (“Franco-Nevada”) for the sale of a 1.5% net smelter return royalty (the “Royalty”) on its Wawa Gold Project located in Ontario for immediate cash proceeds to the Company of $6,750,000, less transaction costs of $419,036.
On May 8, 2023 the Company closed a private placement financing, including the full exercise of the Agents’ option, comprised of (i) 5,675,000 units of the Company (“Units”) at a price of C$0.20 per Unit (the “Issue Price”), (ii) 11,538,230 tranche 1 flow-through units of the Company (the “Tranche 1 FT Units”) at a price of C$0.235 per Tranche 1 FT Unit, and (iii) 13,679,000 tranche 2 flow-through units of the Company (the “Tranche 2 FT Units”) at a price of C$0.285 per Tranche 2 FT Unit for aggregate gross proceeds to the Company of C$7,745,000. Each Unit, Tranche 1 FT Unit and Tranche 2 FT Unit comprises one common share of the Company and one half of one common share purchase warrant of the Company.
SHARE CAPITAL AS AT MARCH 7, 2025
The Company’s issued and outstanding shares increased to 292,302,334 shares as at January 31, 2025, as a result of the financing completed on October 1, 2024. The issued and outstanding Common Shares status is summarized below:
| As at | Common Shares | |
|---|---|---|
| Issued and outstanding as at | July 31, 2024 | 190,711,334 |
| Issued and outstanding as at | January 31, 2025 | 292,302,334 |
| Issued and outstanding as at | March 7, 2025 | 292,302,334 |
Management's Discussion and Analysis
Red Pine Exploration Inc.
The Company's outstanding warrants increased from July 31, 2024 as a result of the financing completed on October 1, 2024, partially offset by expiries during the six months ended January 31, 2025. The issued and outstanding warrant status is summarized below:
| Warrants Outstanding | Weighted Average Exercise Price | |
|---|---|---|
| Warrants expiring on September 29, 2024 | 1,165,175 | 0.26 |
| Warrants expiring on May 8, 2025 | 1,853,533 | 0.20 |
| Warrants expiring on December 7, 2025 | 1,377,407 | 0.22 |
| Balance, July 31, 2024 | 4,396,115 | $0.22 |
| Warrants expired on September 29, 2024 | (1,165,175) | 0.26 |
| Warrants issued on October 1, 2024: | ||
| expiring on October 1, 2026 | 6,095,460 | 0.09 |
| Balance at January 31, and March 7, 2025 | 9,326,400 | $0.13 |
MARKET TRENDS
The Company's future financial performance is dependent on many external factors including the markets for precious metals. The markets for these commodities are volatile and difficult to predict as they are impacted by many factors including international political, social and economic conditions. These conditions, combined with volatility in the capital markets, could materially affect the future financial performance of the Company.
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
The Company does not have any off-balance sheet arrangements, including any arrangements that would affect the liquidity, capital resources, market and credit risk support or other benefits.
RISK FACTORS
The Company's principal activity of mineral exploration and development is considered to be very high risk and the mining industry, in general, is intensely competitive in all its phases. Companies involved in this industry are subject to many and varied types of risks including, but not limited to, lack of capital, availability of manpower and equipment, climate, environmental, commodity prices, and political and economic risks. Additional capital will be required to fund continuing operations and advance the exploration and development activities at the Wawa Gold Project and for other prospective properties.
The Company's risk factors are consistent with those disclosed and referred to in the Company's Short Form Prospectus dated September 20, 2022; and the MD&A for the year ended July 31, 2024 dated October 9, 2024. Each of these documents are available at SEDAR+ under the Company's profile.
The Company has not entered into any specialized financial arrangements to minimize its investment risk, currency risk or commodity risk.
An investment in the Common Shares is highly speculative and subject to risks and uncertainties. The occurrence of any one or more of these risks or uncertainties could have a material adverse effect on the value of any investment in the Company and its business, prospects, financial position or operating results. Prospective investors should carefully consider the risk factors detailed below when contemplating a purchase of the Common Shares. Although the Company has attempted to ensure the list is as
Management's Discussion and Analysis
Red Pine Exploration Inc.
comprehensive as possible, prospective investors should note the list cannot be exhaustive of all possible risk factors associated with an investment in the Common Shares or in connection with its operations. Such risks relate to, among others:
- Litigation and Legal;
- Regulatory;
- The Company’s ability to continue as a going concern;
- Additional Capital Requirements;
- Uncertainty Relating to Mineral Resources;
- Exploration Stage Corporation;
- Exploration, Mining Operations and Insurance;
- Commodity Prices;
- Availability and increased cost of parts, equipment and skilled labour;
- Aboriginal Land Claims;
- Government Regulation, Permits and Licenses;
- Environmental Risks and Hazards and Permitting;
- Title to Property;
- Price Volatility;
- Competition;
- Information Technology and Social Media;
- Military Conflict in Ukraine and the Middle East;
- Climate Change;
- Legal and Accounting Requirements and Risk of Non-Compliance;
- Expense of Compliance with Changing Corporate Governance Regulations;
- Reliance on Management and Consultants;
- Dependence on Good Relations with Employees;
- Conflicts of Interest; and
- Accounting Policies and Internal Controls.
Should one or more of the foregoing risks or uncertainties, or a risk or event not contemplated by or known to the Company at this time, materialize, or should the underlying assumptions of the Company’s business prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
The risk factors are described more fully in the MD&A for the year ending July 31, 2024 and not repeated in detail in this document. The most significant risk factors include the following:
Litigation and Legal
Litigation and legal risks are the risk of loss due to legal action taken by a third party to seek financial or other compensation from the Company. In addition to the litigation and legal risks set out in the MD&A for the year ending July 31, 2023, the Manipulated Assays may expose the Company to additional litigation risk including, for example, litigation commenced by a third party with whom contractual relations were entered into where such contracts referenced the accuracy of the public record. These contractual relations include financings, sales of royalty interests and mineral property sales. Other legal risks include the risk of class-action or other lawsuits from investors who purchased or sold securities during any time the Company’s public record may have included material misrepresentations. Securities legislation in Canada includes provisions relating to secondary market liability which provide a mechanism for investors to recover damages from an issuer whose public record includes misrepresentations at the time such
Management's Discussion and Analysis
Red Pine Exploration Inc.
investors purchased or sold securities. The Company may be exposed to litigation risk if investors are able to successfully establish that there were misrepresentations in the Company's public record.
On July 29, 2024, the Company commenced a claim against the Former CEO in the Ontario Superior Court of Justice seeking damages of an aggregate amount of approximately $9.4 million for, among other things, reimbursement of amounts paid to the Former CEO in connection with his termination of employment from the Company in early 2024 and general damages for breach of fiduciary, contractual and statutory duties owed to the Company. The Counterclaim was received by the Company on September 24, 2024. The Counterclaim seeks an aggregate amount of approximately $6.4 million from the Company for, among other things, loss of future income. The Company does not believe the Counterclaim has merit and intends to vigorously pursue its claim against the Former CEO and to vigorously defend the Counterclaim. On October 18, 2024, the Company filed a Reply and Statement of Defense to Counterclaim refuting any liability to the Former CEO for the matters alleged in the Counterclaim. In the event that there is an adverse finding against the Company in respect of the Counterclaim, despite the Company's evaluation that the Counterclaim is without merit, the Company may be subject to significant payment obligations which would negatively affect its operations.
Regulatory
As a reporting issuer in certain jurisdictions in Canada, the Company is required to publicly disclose certain information regarding its business and operations. Such disclosure must not contain any misrepresentations, as that term is defined under applicable securities legislation. In the event that a securities regulatory authority determines that the Manipulated Assays constituted a breach of applicable securities legislation and determines to launch an enforcement action, the results of any such action may result in material unfavourable consequences for the Company.
The Company's Ability to Continue as a Going Concern
The independent auditor's report on the Financial Statements and the notes thereto and the auditors' report thereon for the financial year ended July 31, 2024 contains explanatory language that substantial doubt exists about the Company's ability to continue as a going concern. Due to the Company's lack of operating history and present inability to generate revenues, it has sustained operating losses since its inception. If the Company is unable to obtain sufficient financing as required, or achieve profitability, then it would, in all likelihood, experience severe liquidity problems and may have to curtail or terminate its operations. If the Company curtails its operations, it may be placed into bankruptcy or undergo liquidation or sale, the result of which will adversely affect the value of the Common Shares.
Additional Capital Requirements
The Company paused its drilling campaign in mid-May and has implemented other cost reduction measures as it was unable to finance its operations, as planned, in light of the Manipulated Assays. While the Company has the funds required to continue to explore its mineral properties for the short to medium term as a result of the closing of a financing subsequent to the year ended July 31, 2024, the failure to obtain additional financing will result in a delay or indefinite postponement of further exploration following the depletion of the funds currently on hand or, potentially, a loss of a property interest. Although the Company has been successful in obtaining the necessary financing to date, additional financing may not be available when needed or, if available, the terms of such financing might not be favourable to the Company and might involve substantial dilution to existing shareholders. Failure to raise capital when needed would have a material adverse effect on the Company's business, financial condition and results of operations.
Management's Discussion and Analysis
Red Pine Exploration Inc.
Uncertainty Relating to Mineral Resources
The Company currently has only established mineral resources relating to the Wawa Gold Project. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. Due to the uncertainty which may be attached to inferred mineral resources, there is no assurance that inferred mineral resources will be upgraded to measured or indicated mineral resources or ultimately mineral reserves as a result of continued exploration.
MATERIAL ACCOUNTING POLICIES
The Company’s material accounting policies are included in Note 2 of the Company’s Condensed Interim Consolidated Financial Statements for the three and six months ended January 31, 2025 and the Consolidated Financial Statements for the years ended July 31, 2024 and July 31, 2023.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for designing internal controls over financial reporting, or supervising their design, in order to provide reasonable assurance regarding the reliability of financial reporting and preparation of consolidated financial statements for reporting purposes in accordance with IFRS.
There was no change in the Company’s internal controls over financial reporting that occurred during the three and six months ended January 31, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Based on a review of its internal control procedures at the end of the period covered by this MD&A, the conclusion of management is that the internal control over financial reporting is appropriately designed and operating effectively as of January 31, 2025.
Management’s Discussion and Analysis
Page 22