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Riverside Resources Inc. Management Reports 2025
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RIVERSIDE
RESOURCES INC
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED SEPTEMBER 30, 2024
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
INTRODUCTION
The management discussion and analysis of financial condition and results of operations ("MD&A") focuses upon the activities, results of operations, liquidity and capital resources of Riverside Resources Inc. (the "Company" or "Riverside") for the year ended September 30, 2024. In order to better understand the MD&A, it should be read in conjunction with the consolidated financial statements and related notes for the year ended September 30, 2024. The Company's financial statements are prepared in accordance with IFRS Accounting Standards ("IFRS") and filed with appropriate regulatory authorities in Canada.
This MD&A is current to January 28, 2025 and in Canadian dollars unless otherwise stated.
Additional information relating to the Company, including its Information Circular for the financial year ended September 30, 2024, is available under the Company's profile on SEDAR at www.sedarplus.ca.
Forward-Looking Statements
Information set forth in this MD&A may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein including, without limitation; statements about the size and timing of future exploration on and the development of the Company's properties are forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the need for additional financing; operational risks associated with mineral exploration; fluctuations in commodity prices; title matters; environmental liability claims and insurance; reliance on key personnel; the volatility of our common share price and volume and other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulations. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable securities laws. There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in the Company's documents filed from time to time via SEDAR with the Canadian regulatory agencies to whose policies the Company is bound. Investors are cautioned against attributing undue certainty to forward-looking statements.
The users of this information, including but not limited to investors and prospective investors, should read it in conjunction with all other disclosure documents provided including but not limited to all documents filed on www.sedarplus.ca.
CORPORATE OVERVIEW
The Company is a mineral exploration and evaluation company listed on the TSX Venture Exchange under the symbol "RRI" and is engaged in the acquisition, exploration and evaluation of exploration and evaluation assets in the Americas including Canada, the United States and Mexico where the technical team collectively has more than 100 years of exploration experience and has been part of more than five discoveries that have gone into production.
The Company combines the experience of mine discoverer John-Mark Staude (President, CEO, Director), Freeman Smith (Vice President Exploration), and with the finance and business management expertise of Rob Scott (CFO), Bryan Wilson (Director), James Clare (Director), Walter Henry (Director), and James Ladner (Director). Management has experience in developing significant shareholder value and they have assembled a team that can build a valuable and successful organization.
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
HIGHLIGHTS AND RECENT DEVELOPMENTS
Corporate and Financing
On January 8, 2024, 415,000 options expired unexercised.
On January 11, 2024, the Company amended the Option Agreement with Southern Empire Resources Corp. to revise the terms of the original agreement for the Suaqui Verde property, whereby the $50,000 cash originally due on December 24, 2023 was changed to March 31, 2024, and the common shares was due on or before February 2, 2024.
On January 17, 2024, the Company granted 1,725,000 incentive stock options (the “Options”) to certain directors, officers, and consultants of the Company. The Options are exercisable at $0.12 per share for a period of five years from the date of grant. Options granted to individuals in their capacity as a director vest in three equal instalments over 18 months and Options granted to officers and consultants vest in four equal instalments over 12 months. There were also 335,000 bonus shares issued at a fair value of $40,200 to certain executive officers and consultants on the same date.
On February 2, 2024, the Company received 575,000 shares of Southern Empire Resources Corp. with a fair market value of $25,875 as per the amended option agreement for the Suaqui Verde property.
On April 24, 2024, the Company received US$613,705 as exploration advances from Fortuna for the exploration activities of Cecilia project.
On May 10, 2024, Bryan Wilson was elected as director of the Company at the Annual General Meeting (“AGM”) and Wendy Chan did not stand for re-election, therefore she is no longer serving as director as of the AGM date.
On July 23, 2024, the Company signed an agreement to assign and transfer all its rights and concessions of La Silla project with payment terms subject to certain conditions. Upon execution of the agreement, the Company received US$100,000. While the remaining payments of US$150,000 and US$350,000, respectively, will only be received upon fulfillment of certain government regulatory approvals.
On August 7, 2024, the Company signed an option agreement wherein the Company may acquire up to 100% interest in the GQ property located in British Columbia, Canada. Upon signing of the agreement, the Company paid $15,000.
On August 9, 2024, the Company received another US$837,061 as exploration advances from Fortuna for the continuation of the exploration activities of Cecilia project.
On August 29, 2024, the Company signed an option agreement wherein the Company may acquire up to 100% interest in the Clist property located in Ontario, Canada. Upon signing of the agreement, the Company paid $25,000.
On September 4, 2024, the Company entered into a Letter of Intent with Questcorp Mining Inc. (“Questcorp”), whereby the Company will grant an option to Questcorp for the acquisition of a 100% interest in the La Union project located in Somora, Mexico. The Company will receive $100,000 and 19.9% in the ownership of Questcorp upon the latter investing $5,500,000 into the project over a period of four years from the date of completing the Definitive Agreement.
During the year ended September 30, 2024, 940,000 stock options were forfeited and 640,000 stock options were cancelled.
On November 14, 2024, the Company completed the transfer of three key Ontario gold properties; Pichette, Oakes, and Duc to its wholly owned subsidiary, Blue Jay Resources Corp. (“Blue Jay”), with the intention to spinout Blue Jay in 2025.
On December 18, 2024, the Company’s subsidiary, Blue Jay, completed a non-brokered private placement and issued 2,735,000 common shares at a price of $0.20 per share for gross proceeds of $547,000.
Page 3 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
On December 23, 2024, the Company’s subsidiary Blue Jay announced the change of name from Blue Jay Resources Corp. to Blue Jay Gold Corp.
On January 28, 2025, the Company announced the execution of a definitive arrangement agreement with Blue Jay in respect of the spin-out of its Pichette, Oakes and Duc projects, to its shareholders by way of a share capital reorganization effected through a statutory plan of arrangement. Under the Arrangement, the Company will distribute the common shares of Blue Jay to Riverside's shareholders. Riverside's current shareholders will receive Blue Jay Shares by way of a share exchange, pursuant to which each existing common share of Riverside will be exchanged for one new common share of Riverside and 1/5th of a Blue Jay share. The reorganization will be effected pursuant to s. 289 of the Act, and must be approved by the Supreme Court of British Columbia and by the affirmative vote of 66 2/3% of Riverside's shareholders in attendance at a shareholders' meeting to be held on March 31, 2025. Riverside will apply for a listing of the Blue Jay shares on the TSX Venture Exchange ("TSX-V"). Completion of the Arrangement is subject to a number of conditions, including the following:
(a) Riverside shareholder approval at the Meeting;
(b) the approval of the Supreme Court of British Columbia;
(c) TSX-V approval for the Arrangement by Riverside;
(d) TSX-V approval for the listing of the Blue Jay Shares upon completion of the Arrangement; and
(e) completion by Blue Jay of a private placement to raise gross proceeds of up to $4,000,000.
OPERATIONS
The Company’s exploration team remains active in Canada and Mexico. The Company continues to focus on Canadian exploration with its Ontario portfolio of gold and critical metals projects and expanding in British Columbia with Rare Earth Elements and gold projects that have good infrastructure and high potential for discovery. The Company is progressing exploration work in northwestern Mexico that focus on gold, silver, and copper.
Operational details during and subsequent to the year ended September 30, 2024
Canada
As of the year ended September 30, 2024, the Company held 100% interest in the Pichette, Oakes and Duc projects in northwestern Ontario, Canada. Pichette and Vincent had been combined as one project called Pichette as the overall consolidation continues in northern Ontario by the Company for large project potential.
On November 14, 2024, Riverside Resources announced that it completed the transfer of its Ontario gold projects, including Pichette, Oakes, and Duc, into a wholly owned subsidiary, paving the way for potential future transactions. The transfer is part of Riverside's strategy to unlock value from its Canadian assets while focusing on its core strengths in exploration and deal-making.
These properties, strategically located in Ontario near significant mining operations such as Equinox Gold's Greenstone Mine, are positioned for further development and exploration. Riverside retains a 2% NSR (Net Smelter Return) royalty on each project, ensuring future upside potential as exploration progresses.
Page 4 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Beardmore Geraldton Greenstone Belt Portfolio, Ontario (Pichette, Oakes)
Gold deposits in the BGGB district include the 4.6 Moz Hardrock deposit¹ near Geraldton which was acquired by Equinox Gold Corp. from Premier Gold Mines Limited and is now in operation. The deposits are considered classic examples of epigenetic non-stratiform BIF-hosted gold deposits and shear zone orogenic gold deposits. Other notable deposits within the BGGB include the Brookbank (0.6 Moz M&I)². Past production from the belt is estimated at 4.1M ounces which include the McCleod, Sand River and Leitch Mines (past production of 0.9 Moz)³, Northern Empire Mine and the Sturgeon River Mine.
The Oakes Project is 5,600 hectares and host to several gold bearing shear zones only one of which has now seen drilling and other exploration work by Riverside that has expanded the known gold zones and developed a series of large-scale targets including drilling on the HG zone setting the project up for further discovery expansion.
During this exploration partnership, Riverside acted as exploration operator completing the field programs and coordinating the geochemistry, geophysics and sampling. During the agreement with iMetal, Riverside more than doubled the induced polarization survey (IP) grid as well as conducted geochemical soil and rock sampling and mapping program along the survey grid at the Oakes Gold Project. Riverside then proceeded during 2022 to drill two of the multiple targets and find gold as described below.
Oakes Gold Project, Ontario
On March 3, 2022, Riverside announced the start of drilling at the 100% owned Oakes Gold. The drill program primarily focused on evaluating the shallow parts of the HG Target (“HG” or “High Grade”) identified during the 2020-2021 Riverside exploration work programs. Additional holes to test parallel IP anomalies identified as the Crib and Brinklow targets to the south and west of HG. Prior exploration work at Oakes included induced polarization (IP) surveys, field mapping, magnetics, geochemical assay, sampling and trenching. Riverside during this year conducted extensive additional exploration and staked more ground expanding the project.
On April 5, 2022, the Company announced the expansion of its drilling program at the Oakes Project in Ontario, Canada to 1700 m across 12 drill holes and its summer exploration field plans that were later completed during 2022.
On June 15, 2022, the Company reported assay results for the first five drillholes from the Company’s twelve-hole, 1,700-meter diamond drill program. The drilling in the HG Target (“HG”) intersected gold in the anticipated target “zone” with the widest drilled interval so far being 5 m estimated true thickness with 2.1 g/t Au in hole DDH2022-02 and the highest assay value being 8.4 g/t over 1 m with visible gold. All 12 holes were drilled to between 126 m and 146 m total depth with one hole (DDH2022-08) being terminated at 115 m where it intersected a fault and could not continue. All samples comprised half-core, saw-cut samples with QA/QC described below and further at www.rivres.com.
Table 1: 2022 Drill Program Highlights at Oakes (first 5 holes)
| HOLE# | FROM (m) | TO (m) | INTERVAL (m) | GOLD (g/t) |
|---|---|---|---|---|
| DDH2022-01 | 95 | 96 | 1 | 1.7 |
| DDH2022-02 | 77 | 83 | 6 | 2.1 |
| including | 78 | 79 | 1 | 8.4 (VG) |
| DDH2022-03 | 73 | 74.5 | 1.5 | 4.0 |
| DDH2022-03 | 84 | 85 | 1 | 1.4 |
¹ G Mining Services Inc. (Louis-Pierre Gignac, P.Eng et el), December 2016: NI 43-101 Technical Report Hardrock Project, Ontario, Canada for Greenstone Gold Mines
² Micon International Inc. Alan J. San Martin, and Charley Murahwi, (2012). Technical report on the Mineral Resources Estimates for the Brookbank and Key Lake projects Trans-Canada Property Beardmore-Geraldton Area Northern Ontario Canada Dated December 14, 2012.
³ Mineral Deposit Inventory for Ontario, Ministry of Energy, Northern Development and Mines, Record: MDI52H09SE00004 (Leitch Mine).
Page 5 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
| DDH2022-03 | 105 | 106 | 1 | 3.6 |
|---|---|---|---|---|
| DDH2022-03 | 114.5 | 120.5 | 6 | 0.6 |
| DDH2022-04 | 83 | 96 | 13 | 0.2 |
| DDH2022-05 | 94 | 96.5 | 2.5 | 0.8 |
| DDH2022-05 | 102 | 103.5 | 1.5 | 1.5 |
On September 13, 2022, the company reported assay results for the remaining 7 drillholes of its twelve-hole diamond drill program. The 7 holes announced on this date intercepted favorable geology of metavolcanics, "greenstone", consistent with the geology noted in the earlier holes and further geological constraints for the mineralized zone and expands it. The best hole in the second batch of reporting was DDH-22-06 which returned 1.7 g/t over 4 m with one sample being almost 5 g/t gold. The best intercept in the 2022 program was 8.4 g/t over 1 m in Hole #2.
Table 1: 2022 Drill Program Highlights at Oakes (holes 6-12)
| HOLE# | FROM (m) | TO (m) | INTERVAL (m) | GOLD (g/t) |
|---|---|---|---|---|
| OAKES-22-06 | 72 | 76 | 4 | 1.7 |
| including | 72 | 73 | 1 | 4.9 |
| OAKES-22-06 | 85 | 88 | 3 | 1.0 |
| OAKES-22-07 | 98 | 100 | 2 | 0.9 |
| OAKES-22-08 | 9 | 10.5 | 1.5 | 0.4 |
| OAKES-22-09 | 18 | 18.5 | 0.5 | 1.0 |
| OAKES-22-11 | 22 | 23 | 1 | 2.2 |
| OAKES-22-11 | 96.5 | 98 | 1.5 | 1.0 |
| OAKES-22-11 | 113.5 | 115 | 1.5 | 1.1 |
| OAKES-22-11 | 125.5 | 127 | 1.5 | 2.3 |
| OAKES-22-11 | 151 | 152 | 1 | 0.9 |
| OAKES-22-12 | 106.5 | 108 | 1.5 | 2.4 |
| OAKES-22-12 | 130 | 131 | 1 | 0.4 |
Pichette Project, Ontario
The Pichette Project is 1,650 hectares and hosts gold in banded iron formation and metavolcanics. Historic drill intersections of 4.78 g/t gold over 0.65 m and historic surface grab sample highlights of 24.55 g/t gold, 21.42 g/t gold and 16.01 g/t gold. Source (PME) 1990 42E12NE0168. Riverside conducted generative exploration and progressed tenure consolidation during 2022 and early 2023.
On July 24, 2023, the Company announced its strategic acquisition of a portion of the P.A.T. Gold Mine within the larger Pichette Project, 60 kms west of Geraldton, Ontario. The P.A.T. gold mine project was drilled extensively in the 1950s and then had test mining conducted in the 1970s with an initial bulk sample extracted during that period. The historical work (non NI43-101) includes geophysics, geochemistry, geology, and drilling, which delivered strong gold intercepts at shallow depths including 16.65 g/t Au over 3.81m and 34.28 g/t Au over 1.1m both intervals at less than 80m depth (see Figure 1). This area of historical work at Pichette was located on recently reverted mineral leases that Riverside acquired through staking.
Highlights:
- 100% Riverside owned, no underlying royalty.
- More than 1 Oz/ton Au in historical core intercepts for 1m+ intervals at 30m depth, thus shallow and open at depth.
- Close to past producing 1M oz Au Leitch Mine with associated iron formation host rocks.
- Within Greenstone Gold Mines, Hard Rock deposit >10M Oz Au so far.
- Riverside magnetics survey has defined banded iron formation targets that fit with surface gold showings make this exciting and highly prospective for drilling gold.
Page 6 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
The Pichette Project is well located with road infrastructure immediately south of the Trans-Canada Highway with drive up targets within the Beardmore-Geraldton Greenstone Belt. The Pichette targets are underlain by the east-west trending Archean-aged metavolcanic and metasedimentary suite consisting of greywacke and iron formation, which is the same geologic sequence that hosts the <1M Oz Brookbank deposit north across the highway from the project.
Much of the historical exploration and mining work was conducted during the 1950s by Tombill Mines Ltd.. Tombill Mines also conducted VLF-EM geophysics and then a soil survey of the anomalous zones defining shallow drill targets. P.A.T. Mines completed thirty-two (32) shallow core drill holes that returned high grade intercepts at shallow depths, leaving the system open at depth and shown in table below.
Table 1: Some of the best intercepts from the historical drilling on the Pichette Project
| Drill Hole ID | From (m) | To (m) | Interval (m) | Grade Au g/t |
|---|---|---|---|---|
| 201 | 16.76 | 20.57 | 3.81 | 16.65 |
| 202 | 56.97 | 58.46 | 1.49 | 7.20 |
| 204 | 61.87 | 65.07 | 3.20 | 4.80 |
| 209 | 32.46 | 35.05 | 2.59 | 4.51 |
| 210 | 31.88 | 35.81 | 3.93 | 2.31 |
| 213 | 48.95 | 49.65 | 0.70 | 6.51 |
| 216 | 42.31 | 45.78 | 3.47 | 3.37 |
| 217 | 35.69 | 37.58 | 1.89 | 7.37 |
| 220 | 42.82 | 45.08 | 2.26 | 5.31 |
Note: P.A.T. Mines drilled 26 of 32 holes on the Pichette Project. The assay certificates are not available. The values here are extracted from drilling logs and subsequent reports. The work was conducted prior to the implementation of National Instrument 43-101 and as such should not be relied upon. Subsequent drilling in this area may not duplicate these results.
The grade of gold is commonly enriched in intensely altered rocks with quartz-carbonate veins and veinlets as found in orogenic gold deposits. Several of the holes show high grade intercepts similar to those documented at the Leitch Gold Mine to the north of Beardmore. The bulk of the historical information described above was recovered from the Ontario Geological Survey (OGS) databases and the provincial government's Mineral Deposit Inventory (MDI) records. These sites have been verified by government geologists and reviewed in the field by Riverside geologists and are believed to be reliable in their geological detail. However, the original assay certificates from the historical drilling are no longer available and therefore cannot be verified.
On February 29, 2024, the Company published a summary and update for the PAT target where the Company confirmed the target with surface samples of quartz-carbonate veins that returned of 13 grams per tonne (g/t) and 21 g/t gold within banded iron formation units. These high-grade veins are similar to those mined at the Leitch and Sand River mines, where the average grade was around one ounce per ton (oz/t) gold with silver.
Table 1: Selected prospecting samples from Riverside most recent field programs.
| Sample # | Au ppb | Sample type | Comments |
|---|---|---|---|
| 1192286 | 1500 | Grab | Cherty, Banded Iron Formation, magnetic |
| 1192287 | 200 | Grab | Rusty orange, quartz vein, with <1% pyrite in fractures |
| P2023-1 | 13400 | Chip | Rusty, quartz carbonate vein striking east-west |
| P2023-2 | 13 | Chip | Iron oxide-stained quartz vein material in road cut |
| 472703 | 21900 | Chip | Resampling the location of 13g/t sample, 1.75m shear zone with rusty quartz-carbonate striking at 070, dipping at 80 N |
Page 7 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
| 472704 | 22 | Chip | Metasediments, shear zone, 1.5m continuous sampling across, at the location of the 13 g/t. |
|---|---|---|---|
| 472705 | 22 | Chip | Quartz-carbonate vein, 12cm wide, no sulfides, following the structure to the west by the lake |
| 472706 | 553 | Chip | Fine grained Metaseds, sheared, siliceous, west of the 13g/t |
On April 17, 2024, the Company announced the expansion of the targeting area at the Pichette project. Structures associated with banded iron formation units were defined by a drone magnetic survey contracted by the Company. Working with this data along with field information, the Company was able to locate and sample key new outcrops of mineralized banded iron formation believed to be the PAT veins which have been drilled in the past.
Duc Project, Ontario
On January 23, 2023, Riverside announced that it had staked additional claims in northwestern Ontario and acquired the Duc Project ("the Project"), located south of the town of Kapuskasing, part of the Porcupine Mining District. The Project is roughly 600 hectares in size and located west of the past producing Agrium Ltd. carbonatite phosphate mine, within the Wawa Subprovince, which hosts several rare earth element occurrences and orogenic gold deposits.
On June 1, 2023, Riverside announced that it had completed an airborne geophysical helicopter magnetics survey on the Duc project. The magnetic results are interpreted to show two major parallel shears that extend north-easterly through the central part of the Duc Project with the magnetic high defining the mafic rocks which have iron that can be part of a catalyst for gold and critical metals deposition. The compilation of both magnetic data and existing geochemistry from past drilling and sampling demonstrates potential scale and prospectivity for near surface mineralization continuing downward and eastward. This new survey helps to refine areas for more detailed Induced Polarity (IP) geophysics surveys which will be evaluated during this upcoming field season. IP is an excellent method to delineate sulphide mineralization and help vector in on drill targets. Specifically, the survey focused on targeting boundary areas and favorable geological features.
On October 16, 2024, Riverside Resources announced the completion of a Light Detection and Ranging (LiDAR) survey at its Duc Project in Ontario. This survey was conducted as part of a successful summer exploration program, providing detailed geo-referenced 3D mapping and structural data that enhance targeting precision for gold exploration. The Duc Project is located in the Wawa Greenstone Belt, a highly prospective area known for significant gold resources, including the Hemlo Mining Camp, which has produced over 30 million ounces of gold.
The LiDAR survey, coupled with orthophotography and heli-magnetic data, has improved understanding of the area's structural geology, highlighting key fault structures and potential mineralization corridors. The data identified subtle features obscured by vegetation, such as old workings and diggings, which were previously unknown. Riverside plans to integrate these findings with a focus on advancing the Duc Project toward drill-ready targets. This work reflects Riverside's strategy of leveraging cutting-edge technology to maximize discovery potential in high-grade gold districts.
The Duc Project is underlain by an Archean-aged metavolcanic and metasedimentary suite consisting of greywacke, arkose, and iron formation similar to the Abitibi Province of Central Canada. To the west and north the terrain is underlain by east-west striking metasedimentary schists and mafic metavolcanic flows belonging to the Quetico Subprovince.
High Lake Greenstone Belt, Kenora, Northwestern Ontario
On October 28, 2021, the Company entered into a Definitive Option Agreement with Golden Retriever Minerals Ltd. ("Golden Retriever") whereby Golden Retriever could acquire a 100% interest in the High Lake Property, by paying $125,000 in cash while retaining a 2% NSR. The transaction details as below:
- $50,000 was paid to Riverside on closing date of October 28, 2021.
- $75,000 was paid to Riverside on September 14, 2022.
Page 8 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
- Riverside would be granted a 2% NSR on each of the Royal, Canoe and Electrum Projects. Each of the royalty granted on each project can be bought down to 1% for a total of $2,000,000 for a determined period of time.
Elly Project, Southern British Columbia
On May 3, 2023, the Company signed a Letter Agreement (LA) wherein the Company may acquire up to 100% interest in the Elly-Anika and Chilco projects located in British Columbia, Canada. Under the LA, the Company is granted a sole and exclusive right and option to acquire up to 100% interest in the said property by making the following cash payments and incurring the following exploration expenditures as follows:
| Due date | Cash | Exploration expenditures |
|---|---|---|
| Upon the date of LA (May 3, 2023) | $10,000 (paid) | - |
| On the first anniversary of the LA date (May 3, 2024) | $15,000 (cancelled) | 20,000 |
| On the second anniversary of the LA date (May 3, 2025) | $30,000 | 20,000 |
The Elly project is a series of mineral tenures that Riverside Resources (BC) Inc. staked and option agreement with private owners for mineral claims that the Company sees have gold potential and are around historic gold and base metal producers and many mineral prospects. At Elly, Riverside currently holds a total of 9,700 hectares area (97 km sq) in a number of claim blocks in the general region of Grand Forks and Greenwood BC.
On September 11, 2023, the Company announced the acquisition and expansion of the Elly gold project in the Greenwood Mining Area, targeting epithermal gold-silver mineralization. The Elly project in southern British Columbia expanded significantly, with Riverside staking prospective geology over 107 km². The project's positioning in the boundary district leverages historic gold camps in the region.
During the year ended September 30, 2024, the Company decided not to continue with further exploration of the project and chose to cancel the agreement and write off all costs incurred related to this project in the amount of $251,858.
Revel Project, Southern British Columbia
On October 24, 2023, the Company announced the acquisition of the Revel Carbonatite Rare Earth Element Project near Revelstoke, positioning the company in the critical metals' sector.
The Revel project is 100% owned by Riverside and acquired in mid-2023 through Riverside staking open ground with known carbonatite geology and some geochemistry for Rare Earth Elements (REE) and past work on REE’s and critical metals. Riverside’s work of compilation, geology, geochemistry and exploration continues, and the Company has mineral concessions covering approximately 10 km sq as 1,100 hectares in an area north of Revelstoke, British Columbia.
Deer Park Project, Southern British Columbia
On September 29, 2023, the Company signed a Letter Agreement (LA) wherein the Company may acquire up to 100% interest in the Deer Park and Sunrise projects located in British Columbia, Canada. Under the LA, the Company is granted a sole and exclusive right and option to acquire up to 100% interest in the said property by making the following cash payments and incurring the following exploration expenditures as follows:
| Due date | Cash | Exploration expenditures |
|---|---|---|
| Upon the date of LA (September 29, 2023) | $25,000 (paid) | - |
| On the first anniversary of the LA date (September 29, 2024) | $30,000 | 20,000 |
| On the second anniversary of the LA date (September 29, 2025) | $35,000 | 20,000 |
On January 22, 2024, the Company completed final agreement on Deer Park and summarized 2023 exploration progress on Deer Park including two new gold targets that have had small scale past mining at the Viking Horde, and Cougar Ridge targets. These targets have been defined through geochemical and geophysical surveys showing trends of greater than >1.2 km in
Page 9 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
length. 55 rock samples were collected this fall returning assays of up to 7.07 and 3.92 g/t Au, in the Viking and Cougar targets respectively.
Historically, Deer Park has had small mining scattered through out the area, with many prospecting pits and test adits. Several small exploration pits, with unknown production, occur along a mineralized structural zones. One vertical shaft has been developed on a pyrrhotite-chalcopyrite vein on the eastern side of the claim showing alteration styles similar to that found in Rossland and Kettle River Mining Camps. Previous work includes geological mapping and sampling, AeroTEM Electromagnetic & Magnetic Survey (2007), soil geochemistry, trenching and 570m of diamond drilling (2010). This work has been compiled by Riverside and now being used to work-up targets for potential drill testing in future.
Deer Park Project Targets of the Cougar Ridge and Viking showings and a new area TK Hill have positive results including the sampling summarized in table below.
| Sample | Au (g/t) | Zone | Comments |
|---|---|---|---|
| RRI-14997 | 7.07 | Viking Horde | Mesothermal mineralization with chalcopyrite, pyrrhotite, and pyrite hosted along the contact. Historic gold data indicates 2.9 g/t, 36.4 g/t, and 1.5 g/t Au in surface samples (Kootenay Gold, 2008) |
| DP-05-23 | 2.69 | Viking Horde | |
| DP-06-23 | 0.80 | Viking Horde | |
| RRI-14837 | 0.29 | Viking Horde | |
| RRI-14989 | 3.12 | Cougar Ridge | The quartz and sulphide mineralogy shows mesothermal characteristics; crystalline quartz and high pyrrhotite content. |
| DC19-12 | 3.92 | TK Hill | Series of milky to crystalline quartz veins in foliated gabbro with iron staining -100/75 |
| DC19-15 | 2.06 | TK Hill | Zone of vuggy quartz veining with actinolite and iron stained. |
| RRI-14845 | 0.24 | Cougar Ridge | N-NW quartz vein with quartz, pyrrhotite, and pyrite with silica alteration. |
The Viking Target: This target is a shear-related gold bearing quartz vein with gold and a strong Cu-As chemical signature. Showings demonstrate a 600-700-meter strike and the geophysical response spans at least 1300 meters along strike. Kootenay Gold sampled outcrops from this area that returned values up to 36.4 g/tonne gold (Hoy, 2009).
The Cougar Ridge Target: This target is a pyrrhotite-chalcopyrite massive sulphide vein system and breccia with gold being associated with Pb-Zn-Ag. The pit at Cougar Ridge was sampled by Kootenay Gold in 2009 and returned values up to 23.2 g/tonne gold. Here, mineralized quartz veinlets trend more westerly suggesting that they may be extensional veins developed in response to right-lateral motion on the shears. In 2009, Kootenay Gold took 31 samples from this area with the best sample assayed at 10.68 g/t Au and 15.32 g/t Ag (Hoy, 2009). Riverside using XRF and full assay geochemistry confirmed the presence and extends the scale as the target is worked up toward a drill target.
TK Hill: This new area is to the east of the Viking Horde and a contact zone between sediments and intrusive rock but is not skarn. The veins here are similar to those noted elsewhere and are believed to be the same mineralizing event but will require more work to confirm. Samples from this area show elevated copper, arsenic and lead.
The veins found in the Deer Park Project have similarities to the massive sulphide veins that form the "Main" veins of the Rossland gold-copper camp. Both are associated with or occur within mafic phases of the Nelson plutonic suite and comprise massive pyrrhotite and chalcopyrite. Mineralization is structurally controlled and occurs between two major units. It is believed these are a product of Mid-Jurassic intrusion of the Nelson Pluton. Possibly like the 163 Ma Monzonite observed in the Rossland Deposit 40km to the south where the presence of gold occurrence seems to be intricately linked to sulphides within breccias and veins over 500 meters.
Page 10 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Taft Project, Southern British Columbia
On December 9, 2024, Riverside announced the acquisition of the Taft Project, located in the Revelstoke Carbonatite Belt of British Columbia. This property, spanning 3,000 hectares, is strategically positioned for rare earth elements (REE) and gold exploration, aligning with Riverside's strategy of targeting critical mineral assets in favorable jurisdictions. The project acquisition reflects growing demand for REEs in renewable energy, electric vehicles, and advanced technologies.
The option agreement allows Riverside to earn a 100% interest in the Taft Project through staged cash payments totaling CAD $125,000 over five years and a commitment to spend CAD $320,000 on exploration. The agreement does not include royalties, maintaining Riverside's royalty-free project portfolio. Exploration efforts this fall included stream geochemistry, soil sampling, and geological mapping to delineate REE and gold mineralization targets. This addition strengthens Riverside's portfolio and supports its long-term exploration goals in critical minerals.
The Taft Project presents a high-potential opportunity to discover critical mineral resources essential to the increasing demand for renewable energy, technology, and advanced materials. Its favorable geological setting and strategic location within a supportive jurisdiction highlight its importance in Riverside's portfolio. Geological mapping of the REE-rich terrane has identified promising areas along the belt, supported by favorable geochemistry and indicator minerals. Current sampling and exploration efforts, in collaboration with local prospectors, aim to refine targets through access, sampling, and mapping. These activities are paving the way for a focused exploration program in 2025, targeting both REE and gold zones.
Mexico
Union Gold Project, Sonora, Mexico
On October 6, 2021, the Company announced high-grade gold samples from initial field work and the mineral tenure consolidation and expansion of La Union Polymetallic Project in Sonora, Mexico. The acquisition of these additional concessions provides Riverside with an expanded land position and further control of the historical mines and old workings across the district. The consolidation through the acquisition of small internal concessions provides Riverside an option on the high-grade, previous small scale mine properties, internal to the larger surrounding 100% Riverside owned mineral concessions and increases the property total area to over 26 km² (2,604 hectares).
Riverside's initial field work included selective rock sampling from abandoned mine workings and dumps with results returning up to 59.4 g/t Au and 833 g/t Ag (see Table below).
Table 1: Sample Results from La Union Polymetallic Project
| Sample ID | Au(g/t) | Ag (g/t) | Pb (%) | Zn (%) | Cu (%) | Type | Description |
|---|---|---|---|---|---|---|---|
| RRI7891 | 59.4 | 833 | 5.76 | 4.16 | 0.3 | rock chip | massive sulfide - dolomitic breccia |
| RRI7895 | 40 | 3.3 | 0.13 | mine dump | massive sulfide and jasperoid | ||
| RRI7894 | 8.3 | 239 | 0.17 | mine dump | jasperoid | ||
| RRI7890 | 1.367 | 50 | 1.63 | 1.43 | mine dump | sulfide-oxide bearing breccia | |
| RRI7893 | 0.473 | 12.4 | rock chip | brecciated contact - dolomite/quartzite | |||
| RRI7889 | 0.072 | 76.4 | rock chip | brecciated contact - dolomite/limestone |
Note: Six of the higher-grade due diligence samples are shown in Table above.
Transaction Details for the Acquisition:
Riverside has optioned, over a 5-year term, two properties with staged cash payments without any retained NSR. The terms for each respective property (La Famosa and Plomito) are presented below:
| YEAR | PAYMENTS | LA FAMOSA | PLOMITO |
|---|---|---|---|
| 0 | August 31, 2021 | $ - | $ - |
| 1 | August 31, 2022 | $ 10,000 (paid) | $ 10,000 (paid) |
Page 11 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
| 2 | August 31, 2023 | $ | 15,000 (paid) | $ | 15,000* |
|---|---|---|---|---|---|
| 3 | August 31, 2024 | $ | 25,000 (paid) | $ | 25,000 |
| 4 | August 31, 2025 | $ | 50,000 | $ | 40,000 |
| 5 | August 31, 2026 | $ | 75,000 | $ | 75,000 |
| TOTAL | $ | 175,000 | $ | 165,000 |
On January 5, 2022, the Company reported high grade surface sample assay results from its most recent field exploration program at La Union Project in Sonora, Mexico. After completing a claim consolidation in September, Riverside conducted a follow up field mapping and sampling program of 103 samples with the best sample returning 83.2 g/t (2.6 oz/t) gold and 4,816 g/t (150 oz/t) silver. The work further enhanced Riverside's understanding of the structural and lithological context by link.
- On September 27, 2023, the Company cancelled the option for Plomito property.
For Union highlights included high grade polymetallic samples up to 30% Zn, 83.2 g/t Au, 4,816 g/t Ag, 10.3% Pb (see Table below). Of the 103 samples assay value ranged from 83.3 g/t gold to non-detectable with about 30% of the samples returning significant values in gold, silver, lead and/or zinc the best being.
- Au – high: 83.2 g/t; low cut-off: 0.5 g/t
- Ag – high: 4,816 g/t; low cut-off: 300 g/t
- Pb – high: 10.3%; low cut-off: 0.1%
- Zn – high: 30%*; low cut-off: 0.1%
*30% Zn is the upper detection limit in analysis method performed
Table: Assays from La Union Polymetallic Project.
| Sample ID | Au(g/t) | Ag (g/t) | Pb (%) | Zn (%) | Sample Type | Width m | Description |
|---|---|---|---|---|---|---|---|
| RRI-10180 | 83.2 | 1.1 | - | - | chips | oxide veining | |
| RRI-10178 | 22.6 | 20.3 | - | - | dump | oxide veining | |
| RRI-7814 | 0.3 | 4816 | 10.3 | 3.5 | chips | oxide veining | |
| RRI-10155 | 0.0 | 14.7 | 1.1 | 30 | dump | hanging wall copper oxides | |
| RRI-10156 | 0.0 | 8.2 | 2 | 21.4 | chips | gossan | |
| RRI-10157 | 0.1 | 176 | 3.8 | 19.8 | chips | carbonate replacement | |
| RRI-10865 | 9.4 | 107.6 | 0.06 | 1.6 | chip channel | 0.8 | oxides |
| RRI-10866 | 9.9 | 53.6 | 0.01 | 2.5 | chip channel | 1.6 | brecciation with oxides |
| RRI-10888 | 3.6 | 373 | 7.3 | 7.3 | chip channel | 0.6 | manto with copper oxides |
| RRI-10889 | 2.6 | 169.7 | 0.7 | 6.6 | chip channel | 1.5 | brecciation with oxides |
| RRI-10869 | 4.2 | 42 | 2.3 | 3.5 | dump | brecciation with oxides | |
| RRI-10189 | 6.1 | 23.4 | 8.2 | 0.06 | chips | oxide veining | |
| RRI-7808 | 8.8 | 183.2 | 3.9 | 3.4 | chips | oxide veining |
Note: Best 13 assays from 103 samples collected.
On May 5, 2022, the Company entered into an Exploration Earn-In Agreement (the "Agreement") with Minera Hochschild Mexico, S.A. de C.V. ("Hochschild"), a wholly-owned subsidiary of Hochschild Mining PLC where Hochschild could earn up to a 75% interest in Riverside's 100% owned La Union Gold Project (the "Project").
On July 18, 2022, Hochschild terminated the Exploration Earn-In Agreement for the La Union project, by undertaking the costs of reclamation works and the federal annual concession maintenance fees due prior to October 16, 2022. As of October 3, 2022, the Company had been reimbursed for past taxes and fees and the property had more than USD$500,000 of new mineral exploration and consolidation work completed to-date under the agreement with Hochschild.
On March 1, 2023, the Company signed an option agreement to acquire a 100% interest in the Union Mine in Mexico's Sonora region. The mine historically produced gold, silver and zinc from carbonate replacement deposits. The Company agreed to pay US$170,000 for the right, with the option to complete the earn-in by making a second payment of US$100,000 within 60
Page 12 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
months of signing the agreement. Once the earn-in is complete, a 1.25% net smelter royalty will be retained by the underlying owner. The deal consolidated Riverside's Union Project, which includes infrastructure and surface access.
On September 6, 2024, Riverside Resources announced a Letter of Intent (LOI) with Questcorp Mining Inc. for an option agreement to acquire a 100% interest in the La Union Project, located in Sonora, Mexico. Under the agreement, Questcorp will invest a total of $5,500,000 in exploration expenditures over four years, along with cash payments totaling $100,000 and the issuance of up to 19.9% ownership in Questcorp's common shares. Riverside will retain a 2.5% net smelter returns (NSR) royalty on future production and serve as the project operator during the option period. If the LOI date passes, then this expires.
Cecilia Gold Project, Sonora
The Cecilia project is well located with good access, safe working and strong local ranch support. The project is a low sulphidation epithermal Au-Ag rhyolite flow dome complex and is 6,900 ha (69 km²) in size. Riverside geologic team has completed drilling of less than a quarter of the targets.
On April 27, 2021, Riverside released the assay results from holes 6 and 7 the best results are tabulated below.
Summary of intercepts for hole CED21-006 and CED21-007
| Hole_ID | From (m) | To (m) | Down hole width (m) | Grade (g/t Au) |
|---|---|---|---|---|
| CED21-006 | 34.50 | 40.15 | 5.65 | 0.39 |
| including | 34.50 | 36.50 | 2 | 0.78 |
| CED21-006 | 47.50 | 49.00 | 1.5 | 0.60 |
| CED21-006 | 70.20 | 70.70 | 0.5 | 0.20 |
| CED21-006 | 106.70 | 110.00 | 3.3 (True width) | 3.70 |
| including | 106.70 | 108.00 | 1.3 (True width) | 8.82 |
| CED21-007 | 35.35 | 37.65 | 2.3 | 0.19 |
| CED21-007 | 45.75 | 48.90 | 3.15 | 0.31 |
| CED21-007 | 60.75 | 63.80 | 3.05 (True width) | 0.67 |
| including | 62.3 | 63.8 | 1.5 (True width) | 1.18 |
On December 20, 2023, the Company announced sampling 7.30 g/t Au from rock samples along a 0.8 km transect expanding target zone at Cecilia. The results fit within the larger context of a district scale gold-silver composite dome system with superimposed gold-rich veins. Past drilling by Riverside intercepted high-grade gold in 4 of the 7 holes and this sampling over new areas, doubles the strike of the defined mineralization footprint on Cerro Magallanes. This large footprint is consistent with other rhyolite dome gold systems including those in New Mexico like Mogollon and in Sonora like at La India mine of Agnico Eagle.
On March 14, 2024, the Company announced an Option Agreement where Fortuna Silver can invest an initial US$3,750,000 in work and pay Riverside a series of payments plus covering all costs related to the project to earn an initial 51% interest into the property with Riverside acting as the exploration operator. The initial program of US$500,000 of work and plans to potentially drill in this 2024 calendar year deep targets on Cerro Magallanes and lateral district targets. The agreement is signed with Fortuna Silver Mines Inc.'s Mexico subsidiary, Compania Minera Cuzcatlan (CMC) and will immediately progress the exploration on Cecilia project. The highlights of the agreement are summarized below:
- Fortuna Silver option of Riverside's Cecilia project with commitment of work, including an initial planned minimum 1,000-metre drilling campaign;
- Work expenditures of US$500,000 per year for the first four years and US$1,750,000 in final year;
- An initial payment of US$50,000 to Riverside upon signing and then US$25,000 each year for a total of US$150,000;
- Total work spends of US$3,750,000 for an initial 51% interest and second option total spending of US$6,000,000 to earn 80% interest.
Page 13 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Option agreement terms are as follows:
- First option: Five years to earn 51% by spending US$3,750,000 in work and paying US$150,000 in cash payments to Riverside with required work of at least US$500,000 in the first year for the option and Riverside has the drill permits in hand. Fortuna had paid Riverside the initial US$25,000 on signing and pays US$25,000 more on filing the agreement in Mexico. Then pays Riverside US$25,000 each year plus Riverside acts as operator for the program with a 10% management fee on top of the work spending commitments each year.
- Second option: Upon completion of first option, Fortuna may elect to progress with a second option to earn 80% by spending an additional US$2,250,000 in work over three additional years.
- Third option: After completing second option, Fortuna may elect within 120 days to pay Riverside US$5,000,000 cash and grant Riverside a 2% Net Smelter Return (NSR) where 1% NSR may be purchased before commercial production for US$3,000,000, thereby Fortuna earning 100% interest in the project.
Riverside will be reimbursed for all annual concession maintenance fees, property taxes, access fees and any other payments required to maintain the project. As operator, Riverside will manage the exploration programs and be entitled to collect administration fees of 10% on the work programs.
On August 7, 2024, Riverside announced the completion of a detailed magnetic susceptibility data acquisition for the entire project area and the identification of a new magnetic anomaly area of 6 x 2 km² in the southwest part of the project. The Company believes this area displays many classic structural controls similar to the mineralization found at the main Cerro Magallanes target area of the project and can become an additional focus of the upcoming exploration activities as well as the already permitted and planned upcoming drill program that is fully funded and scheduled to start in early Q4, 2024.
The work completed for evaluating and improving drill targets included geophysics, geochemistry and geology being integrated. The Company completed the acquisition of aeromagnetic data expanding on an earlier and more focused survey where Riverside drilled and intersected gold mineralization. The new UAV magnetic data now covers the entire Cecilia project area of 60 km² with Riverside having full access to the entire property featuring a total flying of 658-line kilometers.
On September 10, 2024, the Company announced the commencement of a 2,500-meter drill program at the Cecilia Project in Sonora, Mexico, in partnership with Fortuna Mining. The program consists of eight drill holes targeting three key areas: the Agua Prieta Breccia on the Magallanes Dome's east side, the East Target with quartz veins containing high silver grades, and the Myra vein system. Additional targets, including the Mesa Fault zone, may also be tested if the program's scope allows. The exploration is supported by a budget of USD$800,000 fully funded by Fortuna Mining.
Ariel Copper-Gold Project, Sonora
The Ariel property was staked by Riverside in 2015 and developed out of a partner funded reconnaissance regional prospecting program in the area. Access to the Property is good with 30 km on dirt roads from paved highways where power grid and other infrastructure are in place servicing the nearby La Caridad mine and mill complex which is the 2nd largest copper producer in Mexico with production by Grupo Mexico Mining.
In April 2018 a reconnaissance exploration program performed by Riverside outlined alteration zones potentially related to porphyry copper mineral systems with drill target areas defined. Some 293 rock samples were collected and analyzed for trace metal contents using a portable X-ray fluorescence instrument as well as a mineral analyzer that employs near infra-red spectrometry to identify minerals typically formed by hydrothermal processes. An additional 120 samples were analyzed using only the spectral analyzer (see press release April 5, 2018).
On June 17, 2024, Riverside announced the completed acquisition and title transfer of the Maria Luisa copper property immediately north of Riverside's Ariel Property thus consolidating another 30% and direct drill target for the full Ariel project. With this acquisition Riverside has now fully consolidated the highly prospective Laramide age porphyry (Cu, Au, Mo) (copper, gold, molybdenum) district and now controls an area of 16 square kilometres.
Page 14 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Concessions and Transaction
The Ariel project is now consolidated into five concessions that in total cover an area of 1,640 hectares (16 sq km).
| CONCESSION | OWNER | TITLE | HAS | VALIDITY | |
|---|---|---|---|---|---|
| ARIEL | RRM Exploracion SAPI de CV | 245325 | 1,241.98 | 23/11/2016 | 22/11/2066 |
| MARIA LUISA | RRM Exploracion SAPI de CV | 237383 | 100.00 | 09/12/2010 | 08/12/2060 |
| MARIA LUISA | RRM Exploracion SAPI de CV | 237384 | 99.49 | 09/12/2010 | 08/12/2060 |
| MARIA LUISA | RRM Exploracion SAPI de CV | 237385 | 99.63 | 09/12/2010 | 08/12/2060 |
| MARIA LUISA | RRM Exploracion SAPI de CV | 237386 | 99.63 | 09/12/2010 | 08/12/2060 |
The transaction was finalized and was officially registered with the Mexican Direction of Mines and titles transferred to Riverside. The title registration was completed in May 2024, under Riverside SAPI, the company based in Mexico is now the full title holder of the Maria Luisa concessions. Riverside resolved outstanding tax issues for the previously private owner, completed required filings and then reimbursed the property owner minus those costs with a total transaction of $200,000 (U.S.) with no royalty or retained interest, giving Riverside 100% control.
Los Cuarentas Gold Project, Sonora
On July 29, 2021, the Company announced drill results from the Cuarentas Santa Rosalia Sur intermediate sulfidation vein system which is interpreted as potentially the upper extent for a untested porphyry Cu and vein system. The drill results intersected gold of 3.15m @ 0.36 g/t Au including 0.7m @ 0.88 g/t Au. 1.55m at 0.58 g/t Au was the second intercept in the same drill hole both occurring in the upper 70m of the less than 120m total depth single drill hole and the targets remain open along strike and down dip. This pilot hole proves the structure and opens up project for further drilling.
Highlights from the hole LC20-010 discovering a new drilled vein system:
- 3.15 m at 0.36 g/t Au including 0.7 m at 0.88 g/t Au
- 1.55 m at 0.58 g/t Au including 0.65 m at 1.05 g/t Au
Tajitos Gold Project, Sonora
Located in north-western Sonora State, Mexico, the Tajitos Gold Project is a significant project for Fresnillo along the trend with its large operating complex of La Herradura Mine and Noche Buena Mine. Tajitos of Fresnillo has had over 600 drill holes and Riverside's tenure inside of Fresnillo's ground is a central land holding that Fresnillo has now purchased from Riverside.
On November 30, 2022, the Company signed a definitive sale and royalty agreement (the "Definitive Agreement") with Minera Fresnillo, S.A. de C.V. ("Fresnillo") a wholly owned subsidiary of Fresnillo PLC for the sale of the Tajitos Gold Project ("Tajitos") located in Sonora, Mexico. The Company received a US$2,500,000 cash payment and retains a 2.0% NSR ("Royalty").
Details of the Definitive Agreement:
- The Company received a payment of US$2,500,000 from Fresnillo and retains a 2.0% NSR.
- Fresnillo will have, for a four-year term, the option to buy back half of the 2.0% NSR for a payment of US$1,500,000.
- If enacted, then Fresnillo would have an additional three years to buy back the remaining 1% NSR for another US$1,500,000.
- If Fresnillo does not exercise its first buy back option during the first four-year term, the Royalty will no longer be subject to any buy back provisions.
Page 15 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
- The NSR covers the entire Riverside land package and a full NSR Agreement has been agreed upon and included in the signed contract between the companies.
- If Fresnillo wishes to reduce mineral claims, then the Company has the first right to retain those mineral tenures before they are dropped.
La Silla Gold-Silver Project, Sinaloa
In December 2023, the Company decided to focus on other projects of higher prospectivity and the related investment was fully written-off. However, the Company still maintained its rights to these concessions which were then in 2024 made into a sales transaction described below.
In July 2024, the Company signed an agreement to assign and transfer all its rights and concessions of La Silla project with payment terms subject to certain conditions. Upon execution of the agreement, the Company received US$100,000. While the remaining payments of US$150,000 and US$350,000, respectively, will only be received upon fulfillment of certain government regulatory approvals for a total of US$500,000.
Australia (Sandy) Gold Project, Sonora
The Australia Project is located in NW Sonora along the extensive series of shears and high grade samples combined with placer and lode gold occurrences are some of the features making this property one of interest. Riverside received title through staking and since has completed field work, targeting, mapping, and studied the past mine workings. Riverside has published results from its work and can envision potential for possible open-pit gold targets on the 100% owned property.
Suaqui Verde and Suaqui Grande, Sonora
Riverside developed copper targets on both the Suaqui Verde and Suaqui Grande properties which are near each other and both have copper potential in the copper belt of central Sonora, Mexico. The Company conducted site work and progressed discussions for the district play. Copper growth areas were reviewed, and further work progressed.
On June 30, 2021, the Company completed further exploration prospecting, geologic mapping, geochemical vectoring for porphyry copper targets. The Riverside property is immediately adjacent to known copper resource areas and former mines for which Riverside may have the structural continuation and exploration work has been progressing on these themes.
On December 24, 2021, the Company entered into a Definitive Option Agreement with Southern Empire Resource Corp. ("Southern Empire") whereby Southern Empire could acquire a 100% interest in the Suaqui Verde Property, by paying $112,500 in cash, issuing 1,625,000 common shares while retaining a 2.5% NSR on precious metal products and 1.75% NSR on base metal products. The transaction details as below:
| Due date | Cash | Common shares |
|---|---|---|
| Upon the closing date (December 24, 2021) | $25,000 (received) | 500,000 (received) |
| On or before the first anniversary of the closing date (December 24, 2022) | $37,500 (received) | 550,000 (received) |
| On or before the second anniversary of the closing date (March 31, 2024 amended) | $50,000 | 575,000 (received) |
On January 11, 2024, the Company amended the Option Agreement with Southern Empire Resources Corp. to revise the terms of the original agreement for the Suaqui Verde property, whereby the $50,000 cash originally due on December 24, 2023, will be due on or before March 31, 2024, and the common shares will be due on or before February 2, 2024.
On February 2, 2024, the Company received 575,000 shares of Southern Empire Resources Corp. with a fair market value of $25,875 as per the amended option agreement for the Suaqui Verde property.
During the year ended September 30, 2024, the Company did not receive the cash payment of $50,000.
Page 16 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Pima Project, Sonora
On February 24, 2022, Riverside reported a signed agreement with Agnico Eagle Mines Limited (TSX:AEM) for the sale of the Pima Property located in Sonora, Mexico. The transaction was closed and Riverside received cash payment in consideration for the sale.
Strategic Funding Agreement with BHP in Sonora, Mexico
On May 15, 2019, the Company entered into an Exploration Financing Agreement ("EFA") with BHP Exploration Chile SpA ("BHP"), (amended on August 9, 2022), for funding of generative exploration in the copper producing belt of Mexico (the "EFA Program"). The EFA Program is structured such that Riverside can retain up to 20% and BHP can earn up to 80% in each Project that BHP funds through the initial $5,000,000 of spending on each property. If the spending milestones are not completed the property ownership can be 100% retained by Riverside at its election.
On September 6, 2022, the Company extended the EFA with BHP into a fourth year for a total allocated budget of US$1,600,000 for exploration work and ongoing High Value Work programs on the five copper projects, collectively called the "Sonora Projects", in Sonora Mexico.
On December 5, 2023, the Company signed a Termination Agreement with BHP wherein BHP agreed to make a final payment of US$366,441 for the cost and expenses incurred by the Company in relation to the termination activities. Subsequently, on December 14, 2023, the Company received payment of US$366,441 from BHP. The projects now convert 100% to Riverside free of royalty or any other interests for BHP. These copper projects become part of the larger Riverside Mexico assets portfolio for 2024.
Llano De Nogal, Sonora Mexico part of the EFA
On April 11, 2022, the Company signed an option agreement with Orogen Royalties Corp. ("Orogen") to acquire 100% interest in the Llano de Nogal copper project (the "Project") in Sonora, Mexico as a property acquisition within the BHP-Riverside Sonora Mexico EFA that BHP funds 100% for the current stage of work.
On April 12, 2022, the Company received US$1,193,736 as exploration advances from BHP for the Llano de Nogal Project for the exploration activities from April 2022 to March 2023.
On May 31, 2023, the Company was notified that BHP will no longer continue the EFA program. Subsequently, the Company formally notified Orogen regarding the non-renewal and terminated the Llano de Nogal option agreement with Orogen.
For Canada:
The scientific and technical data contained in the property descriptions pertaining to the Company's portfolio were reviewed by Freeman Smith, P.Geo. who is responsible for ensuring that the geologic information provided in this section of the Management Discussion and Analysis is accurate and acts as a "qualified person" under National Instrument 43-101 Standards of Disclosure for Mineral Project. The assay information in this disclosure has followed the QA-QC Procedures of the Company.
Rock samples from the exploration program discussed above for Ontario were driven from site to Activation Laboratories in Thunder Bay for analysis. Analysis was completed using total digestion and multielement analysis (40 elements) via inductively coupled plasma atomic emission spectrometry and fire assay for gold. The quality assurance/quality control (QA/QC) program implemented as part of the sampling procedures included inserting one standard and one blank inserted by Riverside every 20 batch of samples. Activation Laboratories is an ISO/IEC accredited laboratory.
Rock samples from the exploration program discussed above were driven to the Bureau Veritas Laboratories in Hermosillo, Mexico, for fire assaying for gold. The rejects remained with Bureau Veritas in Mexico while the pulps were transported to Bureau Veritas laboratory in Vancouver, B.C., Canada, for 45-element inductively coupled plasma mass spectrometry analysis. A quality assurance/quality control program was implemented as part of the sampling procedures for the exploration program. Standard samples were randomly inserted into the sample stream prior to being sent to the laboratory.
Page 17 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
SELECTED ANNUAL INFORMATION
The following table sets forth selected consolidated information of the Company at September 30, 2024 and for each of the prior two fiscal years prepared in accordance with IFRS. The selected consolidated financial information should be read in conjunction with the audited consolidated financial statements of the Company.
| Canadian Dollars | 2024 | 2023 | 2022 |
|---|---|---|---|
| Finance, property, and other income | $ 558,591 | $ 423,797 | $ 212,035 |
| Net income (loss) | (1,595,109) | (395,191) | (207,586) |
| Net income (loss) per share, basic and fully diluted | 0.02 | 0.01 | 0.00 |
| Cash and cash equivalent and short-term investments | 5,621,201 | 7,412,222 | 7,053,405 |
| Total assets | 13,830,252 | 15,323,834 | 16,322,790 |
REVIEW OF OPERATIONS AND FINANCIAL RESULTS
For the three months ended September 30, 2024 and 2023
The Company had a net loss of $761,971 for the three months ended September 30, 2024 (“Q4-2024”) ($0.01 per share) as compared to the three months ended September 30, 2023 (“Q4-2023”) of $94,514 ($0.00 per share). The main contributors for this variance are as follows:
- The loss in Q4-2024 was mainly coming from the write-off of IVA receivable of $296,865 (Q4-2023 – $nil) since it had prescribed over five years and loss of $466,786 (Q4-2023 – gain of $100,421) in foreign exchange transactions.
- Professional fees expense decreased by $94,994 and consulting fees is lower by $26,300 in comparison to Q4-2023 due to lesser corporate activities.
- Share-based compensation increased by $19,327 in comparison to Q4-2023 due to the vesting of options granted in January 2024.
For the year ended September 30, 2024 and 2023
The Company had a net loss of $1,595,109 for the year ended September 30, 2024 (“Q4-2024 YTD”) ($0.02 per share) as compared to the year ended September 30, 2023 (“Q4-2023 YTD”) of $395,191 ($0.01 per share). The main contributors for this variance are as follows:
- The loss in Q4-2024 YTD was mainly due to the write-down of E&E assets of $878,387 and the realized loss of $11,555 from sale of short-term investment in comparison to realized gain of $3,795 in Q4-2023 YTD.
- Professional fees expense decreased by $206,362 in comparison to Q4-2023 YTD due to lesser consultation with legal counsel from last year’s sale of Tajitos property.
- Share-based compensation increased by $89,599 in comparison to Q4-2023 YTD due to the issuance of bonus shares and vesting of options granted in January 2024.
- The Company recognized a gain from disposal of asset of $20,644 which is mainly sale of vehicle, as compared to Q4-2024 YTD of $661,223, which mainly consist of sale of Tajitos property.
Page 18 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Exploration and evaluation assets
The Company capitalizes all exploration costs relating to its resource interests whereas pre-exploration costs are expensed as incurred.
The Company’s exploration and evaluation asset activities totaled as follows:
| September 30, 2024 | September 30, 2023 | |||
|---|---|---|---|---|
| Mexico $ | Canada $ | Mexico $ | Canada $ | |
| Acquisition | 682,783 | 49,107 | 537,159 | 55,630 |
| Exploration | 568,006 | 648,786 | 392,959 | 477,905 |
| Professional & others | 113,153 | 50,979 | 123,486 | 31,808 |
| Write-off | (925,256) | (262,058) | - | - |
| Recoveries | 309,902 | - | (142,500) | - |
| FX movement | (414,527) | - | 335,206 | - |
| 334,061 | 486,814 | 1,246,310 | 565,343 | |
| Beginning balance | 4,261,235 | 2,222,279 | 3,014,925 | 1,656,936 |
| Ending balance | 4,595,296 | 2,709,093 | 4,261,235 | 2,222,279 |
RISKS AND UNCERTAINTIES
In conducting its business, the Company faces a number of risks and uncertainties related to the mineral exploration industry. Some of these risk factors include risks associated with land titles, exploration and development, government and environmental regulations, permits and licenses, competition, dependence on key personnel, fluctuating mineral and metal prices, the requirement and ability to raise additional capital through future financings and price volatility of publicly traded securities.
Property Risks
Title to exploration and evaluation asset interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history of many mineral claims. The Company has investigated title to all of its exploration and evaluation asset interests and, to the best of its knowledge, title to all of its interests are in good standing. The exploration and evaluation asset interests in which the Company has committed to earn an interest are located in Canada, Mexico and the United States.
Title Risks
Although the Company has exercised due diligence with respect to determining title to the properties in which it has a material interest, there is no guarantee that title to such properties will not be challenged or impugned. Third parties may have valid claims underlying portions of the Company’s interests, and the permits or tenures may be subject to prior unregistered agreements or transfers or native land claims and title may be affected by undetected defects. If a title defect exists, it is possible that the Company may lose all or part of its interest in the properties to which such defects relate.
Exploration and Development
Resource exploration and development is a highly speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production. Substantial expenses are required to establish reserves by drilling, sampling and other techniques and to design and construct mining and processing facilities. Whether a mineral deposit will be commercially viable depends on a number of factors, including the particular attributes of the deposit (i.e. size, grade, access and proximity to infrastructure), financing costs, the cyclical nature of commodity prices and government regulations (including those relating to prices, taxes, currency controls, royalties, land tenure, land use, importing and exporting of minerals, and environmental protection). The effect of these factors or a combination thereof cannot be accurately predicted but could have an adverse impact on the Company.
Page 19 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Environmental Regulations Permits and Licenses
The Company’s operations may be subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas that would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner that means standards are stricter, and enforcement, fines and penalties for noncompliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations. We intend to comply fully with all environmental regulations.
The current or future operations of the Company, including development activities and commencement of production on our properties, require permits from various federal, state or territorial and local governmental authorities, and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Such operations and exploration activities are also subject to substantial regulation under applicable laws by governmental agencies that may require that we obtain permits from various governmental agencies. There can be no assurance, however, that all permits that the Company may require for the operations and exploration activities will be obtainable on reasonable terms or on a timely basis or that such laws and regulations will not have an adverse effect on any mining project which the Company might undertake.
Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.
Competition
The mining industry is intensely competitive in all its phases, and the Company competes with other companies that have greater financial and technical resources. Competition could adversely affect the Company’s ability to acquire suitable properties or prospects in the future.
Dependence on Key Personnel
The success of the Company is currently largely dependent on the performance of the directors and officers. There is no assurance that the Company will be able to maintain the services of the directors and officers, or other qualified personnel required to operate its business. The loss of the services of these persons could have a material adverse effect on the Company and the prospects.
Fluctuating Mineral and Metal Prices
Factors beyond our control may affect the marketability of metals discovered, if any. Metal prices have fluctuated widely, particularly in recent years. The effect of these factors on the exploration activities cannot be predicted. For example, gold prices are affected by numerous factors beyond the Company’s control, including central bank sales, producer hedging activities, the relative exchange rate of the U.S. dollar with other major currencies, global and regional demand and political and economic conditions. Worldwide gold production levels also affect gold prices. In addition, the price of gold has on occasion been subject to rapid short-term changes due to speculative activities.
Future Financings
The Company’s continued operation will be dependent upon the ability to generate operating revenues and to procure additional financing. There can be no assurance that any such revenues can be generated or that other financing can be obtained on
Page 20 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
acceptable terms. Failure to obtain additional financing on a timely basis may cause the Company to postpone development plans, forfeit rights in some or all of the properties or joint ventures or reduce or terminate some or all of the operations.
Price Volatility of Publicly Traded Securities
In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market prices of securities of many companies have experienced wide fluctuations in price that have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that continual fluctuations in price will not occur. It may be anticipated that any quoted market for the Common Shares will be subject to market trends and conditions generally, notwithstanding any potential success of the Corporation in creating revenues, cash flows or earnings. The value of securities distributed hereunder will be affected by market volatility.
SUMMARY OF QUARTERLY RESULTS
The following table sets forth selected quarterly consolidated financial information for each of the last eight quarters with the figures for each quarter in Canadian dollars.
| Quarter end | Finance income | Property and other income/(loss) | Unrealized gain/(loss) on short-term investments | Net income (loss) | Earnings (Loss) per share (basic & fully diluted) |
|---|---|---|---|---|---|
| 30-Sep-24 | 60,451 | 228,462 | (24,368) | (761,971) | (0.01) |
| 30-Jun-24 | 72,719 | (138,791) | 11,172 | (247,082) | (0.00) |
| 31-Mar-24 | 81,085 | 25,875 | 28,848 | (199,156) | (0.00) |
| 31-Dec-23 | 88,382 | (561,209) | (22,894) | (386,900) | (0.01) |
| 30-Sep-23 | 93,675 | 415,327 | 40,481 | (94,514) | (0.00) |
| 30-Jun-23 | 69,694 | 22,300 | (35,318) | (260,447) | (0.00) |
| 31-Mar-23 | 56,580 | 101,814 | (68,594) | (107,715) | (0.00) |
| 31-Dec-22 | 53,570 | 431,144 | 35,832 | 67,485 | 0.00 |
During the three months ended September 30, 2024, net loss was mainly coming from write-off of IVA receivable of $296,865 since it had prescribed over five years and loss of $466,786 in foreign exchanges transactions.
During the three months ended June 30, 2024, the net loss was mainly coming from the write-down of E&E assets of $251,858, offset by the recognition of operational fee recovery of $62,391 as a result of the administrative fee earned in relation to managing projects, $50,676 tax refund received from the government in relation to F2023 income tax filing and the gain of $112,013 in foreign exchange transactions.
During the three months ended March 31, 2024, the net loss was mainly due to increase in share-based compensation recognized during the period as a result of options granted and issuance of performance bonus shares. In addition, there were no operational fee recovery recognized this period as compared to same period last year.
During the three months ended December 31, 2023, the net loss was mainly due to the write-off of La Silla property historical cost of $748,174, partly offset by the gain on foreign exchange of $355,309 and other income of $179,403.
During the three months ended September 30, 2023, net loss was mainly coming from higher consulting fees of $32,665 and professional fees of $68,775 compared to same period last year.
During the three months ended June 30, 2023, net loss was mainly due to the foreign exchange loss of $34,918, offset by the decrease in investor relations of $77,009 and professional fees of $16,898 due to the reduced corporate activities during the three months period ended.
During the three months ended March 31, 2023, net loss was mainly due to the unrealized loss on short-term investments of 68,594 as a result of the decreases in fair market value of short-term investment and the increases in general and administration
Page 21 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
of $62,111, investor relations of $101,833 and higher professional fees of $61,286. The increase in cost was partly offset by the higher interest income received from cash in short-term placement.
During the three months ended December 31, 2022, net income was mainly due to sale of Tajitos property resulting in a gain on disposal of asset for $661,223 partly offset by higher professional fees of $112,649.
LIQUIDITY AND CAPITAL RESOURCES
The Company relies on equity financings and exploration alliances for its working capital requirements and to fund its planned exploration and development activities. Management ensures the Company has sufficient cash in its treasury to maintain underlying option payments and keep claims in good standing.
During the year ended September 30, 2024, net cash used in operating activities was $555,528 (2023 – $592,781).
During the year ended September 30, 2024, total cash used in investing activities was $1,178,403 (2023 – $546,080).
During the year ended September 30, 2024, there were no financing activities occurred (2023 – $nil).
As at September 30, 2024, the Company had working capital of $4,047,137 (2023 – $6,119,449). The Company has sufficient funds to meet ongoing corporate activities and planned exploration programs for the ensuing year.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no undisclosed off-balance sheet arrangements or off-balance sheet financing structures in place.
RELATED PARTIES TRANSACTIONS
Related party transactions are in the normal course of operations and are recorded at their exchange amount which is the price agreed to between the Company and the directors and officers.
The Company had the following transactions with related parties:
| Payee / Payer | Nature of transactions | Period ending September 30, | Fees ($) | Amount payable at period end ($) |
|---|---|---|---|---|
| Arriva Management Inc. | Management and consulting fees (i) | 2024 | 244,997 | $12,160 |
| 2023 | 225,000 | $33,720 | ||
| GSBC Financial Management Inc. | Management and consulting fees (i) | 2024 | 96,000 | Nil |
| 2023 | 96,000 | $8,400 | ||
| FT Management Inc. | Management and consulting fees (i) and Rent (ii) | 2024 | 177,600 | Nil |
| 2023 | 177,600 | $17,055 | ||
| Omni Resource Consulting Ltd. | Consulting fees (i) | 2024 | 120,000 | Nil |
| 2023 | 104,500 | $29,424 | ||
| Bryan Wilson* | Director fees | 2024 | 4,710 | Nil |
| 2023 | n/a | n/a | ||
| James Ladner | Director fees | 2024 | 12,000 | Nil |
| 2023 | 6,130 | Nil | ||
| Walter Henry | Director fees | 2024 | 12,000 | $2,333 |
| 2023 | 12,000 | Nil | ||
| Wendy Chan* | Director fees | 2024 | 7,322 | Nil |
| 2023 | 12,000 | Nil |
Page 22 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
| Brian Groves** | Director fees | 2024 | n/a | n/a |
|---|---|---|---|---|
| 2023 | 1,000 | Nil |
The remuneration of related parties during the year ended September 30, 2024, and 2023 are as follows:
| 2024 | 2023 | |
|---|---|---|
| Directors’ fees | $ 36,032 | $ 31,130 |
| Management and consulting fees (i) | 638,597 | 603,100 |
| Share-based payments | 98,688 | 44,503 |
| $ 773,317 | $ 678,733 |
- On May 10, 2024, Bryan Wilson was elected as director of the Company at the AGM and Wendy Chan did not stand for re-election.
** Deceased on October 24, 2022.
(i) Management and consulting fees of the key management personnel for the year ended September 30, 2024, were allocated as follows: $227,400 (2023 - $227,400) expensed to consulting fees, $320,597 (2023 - $242,000) capitalized to exploration and evaluation assets and $32,400 (2023 - $75,500) capitalized to exploration work performed for alliances that will be reimbursed.
(ii) During the year ended September 30, 2024, the Company incurred rent expense of $58,200 (2023 - $58,200) for shared office spaces with FT Management Inc., a company controlled by spouses of officers of the Company.
PROPOSED TRANSACTIONS
At the present time, there are no proposed transactions that should be disclosed.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s accounting policies are described in Note 3 to the consolidated financial statements for the year ended September 30, 2024. Management considers the following to be the most critical in understanding the judgments that are involved in preparing the Company’s financial statements and the uncertainties that could impact its results of operations, financial condition and future cash flow.
Financial instruments
Financial assets
The Company classifies its financial assets in the following categories: at fair value through profit or loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”) or at amortized cost. The determination of the classification of financial assets is made at initial recognition. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL; for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI.
The Company’s accounting policy for each of the categories is as follows:
Financial assets at FVTPL: Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed as incurred. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets held at FVTPL are recognized in profit or loss.
Financial assets at amortized cost: A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.
Page 23 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
Impairment of financial assets at amortized cost: The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date, with the risk of default as at the date of initial recognition, based on all information available, and reasonable and supportive forward-looking information.
Financial liabilities
The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Company's accounting policy for each category is as follows:
Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in profit or loss.
Other financial liabilities - This category comprises liabilities initially recognized at fair value less directly attributable transaction costs. Subsequently, they are measured at amortized cost using the effective interest method.
Financial instruments
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.
The fair value of the Company's cash and cash equivalents, receivables, accounts payable, and government loan approximate carrying value, which is the amount recorded on the statements of financial position. The fair value of the Company's public company short-term investments is based on level 1 quoted prices in active markets for identical assets and liabilities. Financial instruments valued at level 3 inputs consist of the Company's private company short-term investments. The key assumptions driving the valuation of the private company short-term investments include but are not limited to the value of completed financings by the investee.
The Company's risk exposures and the impact on the Company's financial instruments are summarized below:
Credit risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The Company's cash and cash equivalents are held with major financial institutions in Canada and Mexico which management believes the risk of loss to be remote. Receivables consist of tax refunds from the Federal Government of Canada and Mexico, in which regular collection occurs. The Company believes its credit risk is equal to the carrying value of this balance.
Liquidity risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at September 30, 2024, the Company had cash and cash equivalents of $5,502,507 to settle current liabilities of $1,955,563. The Company believes it has sufficient funds to meet its current liabilities as they become due.
Interest rate risk
The Company has interest-bearing cash balances. The interest earned on cash balances approximates fair value rates, and the Company is not at a significant risk to fluctuating interest rates. The Company's current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the
Page 24 of 25
RIVERSIDE RESOURCES INC.
(An Exploration Stage Enterprise)
Management Discussion and Analysis
For the year ended September 30, 2024
investments it makes and is satisfied with the credit ratings of its banks. As of September 30, 2024, the Company had investments in short-term deposit certificates of $23,000.
Price risk
The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on profit or loss and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices of gold, silver and copper, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.
The Company currently maintains short-term investments, which include marketable securities. There can be no assurance that the Company can exit these positions if required, resulting in proceeds approximating the carrying value of these securities.
Foreign currency risk
The Company is exposed to foreign currency risk on fluctuations related to cash and cash equivalents, receivables, and accounts payable and accrued liabilities that are denominated in US dollars (US) and Mexican pesos.
Sensitivity analysis
The Company operates in Mexico and is exposed to risk from changes in the US dollar and the Mexican peso. A simultaneous 10% fluctuation in the US dollar and Mexican peso against the Canadian dollar would affect loss for the year by $424,107.
The Company holds marketable securities and is exposed to risk from changes in the share price of the marketable securities. A simultaneous 5% fluctuation in share prices would affect short-term investments and loss for the period by approximately $5,935.
OUTSTANDING SHARE DATA
The authorized capital of the Company consists of an unlimited number of common shares and an unlimited number of preferred shares. No preferred shares have been issued to date.
As at the date of this MD&A, the Company has the following capital structure.
| Volume of Shares | Exercise Prices | Expiry Dates | |
|---|---|---|---|
| Shares issued and outstanding | 74,783,464 | ||
| Stock options | 360,000 | $ 0.30 | October 19, 2025 |
| Stock options | 650,000 | $ 0.16 | November 17, 2026 |
| Stock options | 660,000 | $ 0.13 | September 2, 2027 |
| Stock options | 1,455,000 | $ 0.12 | January 17, 2029 |
| Warrants | - | ||
| Fully diluted | 77,914,464 |
Page 25 of 25