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Stuhini Exploration — Management Reports 2021
Jun 29, 2021
47721_rns_2021-06-28_4895bc52-1baf-40d2-81c0-22b40eceaac5.pdf
Management Reports
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STUHINI EXPLORATION LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED FEBRUARY 28, 2021
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INTRODUCTION
The following Management Discussion and Analysis (“MD&A”) of Stuhini Exploration Ltd. (the “Company” or “Stuhini”), has been prepared by management, in accordance with the requirements of National Instrument 51-102 Continuous Disclosure Obligations , as of June 28, 2021, and should be read in conjunction with audited financial statements for year ended February 28, 2021, and the related notes contained therein which have been prepared under International Financial Reporting Standards (“IFRS”). The information contained herein is not a substitute for detailed investigation or analysis on any particular issue.
All financial information in this MD&A has been prepared in accordance with IFRS and all dollar amounts are quoted in Canadian dollars, the reporting and functional currency of the Company, unless specifically noted.
FORWARD-LOOKING STATEMENTS
This MD&A contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the management. When used in this document, the words “ anticipate ”, “ believe ”, “ estimate ”, “ expect ” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. This MD&A contains forward-looking statements relating to, among other things, regulatory compliance, the sufficiency of current working capital, and the estimated cost and availability of funding for the continued exploration and development of the Company’s exploration properties. Such statements reflect the current views of management with respect to future events and are subject to certain risks, uncertainties, and assumptions. Many factors could cause the actual results, performance, or the Company’s achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.
Risks related to the rapid expansion of the COVID-19 pandemic
In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which as of the date of this MD&A is not fully under control, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.
COMPANY OVERVIEW
Background
Stuhini is a Canadian mineral exploration company based in Vancouver, British Columbia (“BC”) and incorporated on July 7, 2017, under the Business Corporations Act (BC). The Company’s head office and registered records office is located at 1245 West Broadway, Unit 105, Vancouver, BC V6H 1G7. Effective May 23, 2019, the Company’s common shares (“Common Shares”) began trading on the TSX Venture Exchange (the “Exchange” or “TSX-V”) under the symbol “STU”.
The Company is engaged in the acquisition and exploration of mineral properties and as of the date of this MD&A holds options on two road accessible mineral properties: an option to acquire a 100% interest in the Ruby Creek Property located in northwestern BC approximately 20 kilometres (“km”) east of the town of Atlin, and an option to acquire a 100% interest in the Que Property located approximately 70 km north of Johnson’s Crossing in southcentral Yukon. In addition, in May of 2021, the Company acquired through staking seven mineral exploration licenses (“MEL”) approximately 35 km northwest of Grand Rapids, Manitoba. The Company does not have any assets or mineral properties that are in production.
Key Events for the Year Ended February 28, 2021
Que Property Option
On February 17, 2020, the Company entered into an option agreement (the "Initial Que Option Agreement") with arm’s length vendors, whereby the Company was granted a right to acquire a 100% interest in Que Property (the "Que Option")
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located in the southcentral Yukon, Canada. The Initial Que Option Agreement was further amended and restated on February 28, 2020 (the “Amended Que Option Agreement”).
The Amended Que Option Agreement was conditional on approval by the TSX-V, which was received on April 1, 2020 (the “Que Approval Date”). On the Que Approval Date, the Company issued the initial 200,000 Common Shares.
On October 26, 2020, the Company announced the 2[nd] amendment to the Que Option Agreement, which amended the option payment schedule by reducing the cash payment from initial $280,000 to $95,000 and by reducing the number of the Common Shares to be issued from 2,950,000 shares to 937,500 shares over a 5-year period (the “Que Option Agreement”). Under the Que Option Agreement, as amended, the issuance of 50,000 shares to the vendor on the Que Approval Date was the only committed payment; this payment was extended to June 22, 2021, on mutual agreement of the parties to the Que Option Agreement.
The Que Option Agreement does not contemplate any work commitments. The annual share issuances and the cash payments are all at the Company’s election should it wish to maintain the Que Option. Upon exercise of the Que Option, the Que Vendors (as further defined in the “ Que Property ” section of this MD&A) are entitled to a 1% net smelter returns royalty (“NSR”) on the Que Property.
The Que Property consists of 108 mineral claims and is 2,246 hectares in size. During the year ended February 28, 2021, the Company staked an additional 96 claims (1,996 hectares) bringing the entire Que Property claims package to 204 claims, approximately 4,243 hectares.
Investor Relations Services
On May 15, 2020, the Company engaged Nicosia Capital ("Nicosia") to provide investor relations services. Nicosia, a Vancouver-based investor relations firm specializing in the resource sector, assisted the Company in creating and implementing communication strategies that facilitated relationships with finance professionals, the investing community, and media contacts. The agreement was for an initial period of six months at $2,000 per month, and had an option to renew, which Company extended to May 15, 2021. In addition to cash compensation, the Company issued to Frank Lagiglia, managing Director of Nicosia, an option to acquire up to 50,000 Common Shares of the Company exercisable for a period of two years at $0.25 per share. Mr. Lagiglia exercised his option on May 3, 2021.
On February 23, 2021, the Company engaged Natrinova Capital Inc.(“Natrinova”) to provide investor relations services. Natrinova, a Vancouver-based investor relations firm specializing in the resource sector, will assist the Company in creating and implementing strategies that will facilitate relationships with finance professionals and the investing community as well as media contacts. The agreement is for a period of three months at $3,000 per month and can be renewed for further threemonth periods at the same monthly rate. In addition to the cash compensation, the Company agreed to issue 100,000 options exercisable for a period of two years priced at $0.60 per share as an incentive for providing ongoing investor relations services. The grant of options is conditional on approval by the TSX-V, which, as of the date of this MD&A had not been received.
Changes in Management and Board of Directors
On July 22, 2020, Gary Robert Thompson resigned from the Board of Directors.
On January 18, 2021, The Company’s Board of Directors appointed Ehsan Salmabadi, P. Geo., as the Company’s Vice President (“VP”) Exploration.
Mr. Salmabadi has worked in the mining industry since 2007 and has a broad base of previous experience in not only exploration but also mine development and operation. Mr. Salmabadi began his career working for exploration companies and decided to move to a mine setting to expand his breadth of knowledge. He served as an Underground Mine Geologist, then Senior Geologist at North American Tungsten Corp. at the Cantung Mine in the Northwest Territories, Canada where he was involved in increasing mineral resources, reserve development, and long-range planning. Since then, Mr. Salmabadi has taken his mining and exploration experience and applied it as a consultant to exploration projects in Canada and the United States. Mr. Salmabadi holds a B.Sc. in geology from the University of BC (“UBC”) and is registered as a Professional Geologist (“P.Geo.”) with the Engineers and Geoscientists of BC.
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Concurrently with appointment of Mr. Salmabadi, the Company’s Board of Directors appointed Paul Zyla and Bruce Ballantyne to the Advisory Board, and accepted the resignation of James Dawson, who has stepped down from the Advisory Board but has agreed to continue to assist the Company as a consultant on an as-needed basis.
Mr. Ballantyne has had a distinguished career of over 46 years starting in 1974, with the Geological Survey of Canada, as a well-known member of the Mineral Resources Division, where he specialized in Applied Exploration Geochemistry. In 1977 Mr. Ballantyne was responsible for the development and initiation of the National Geochemical Reconnaissance Stream Sediment surveys in the Canadian Cordillera and as a guest speaker has presented his research on a variety of deposits nationally and internationally. During follow-up Atlin based research work he advised all levels of exploration companies and individuals including Homestake Mining, Placer Dome, and the Hughes-Lang Group’s Cream Silver. In 1984 Mr. Ballantyne was invited to present results of his studies of the unique specialized granite (Surprise Lake Batholith) and related skarn “wrigglite” styles of mineralization at the United Nations sponsored International Tin Conference in the Peoples Republic of China. This geologic setting is directly relevant to Stuhini claim holdings. Since 1996 he has been a consultant to junior and mid-tier mineral exploration companies including Starfield Resources Inc. where he was an integral part of the successful exploration and development of resources at the Ferguson Lake copper-nickel-cobalt-platinum group metal deposit in Nunavut, Canada. Most recently, Mr. Ballantyne served as Project Manager for Jaxon Minerals Inc. as they advanced their Red Springs Project in northwestern BC. Mr. Ballantyne holds a B.Sc. from the University of Guelph, Ontario.
Mr. Zyla was born and raised in Toronto, Canada and holds a B.Sc. in Math, Physics and Chemistry from the University of Toronto. Upon graduation he was hired by IBM and trained in Systems Engineering. In the early 1980's Mr. Zyla became a director of a mineral exploration company whose board included David Bell who had just recently made the Hemlo gold discovery in northwestern Ontario. Over the ensuing years Mr. Zyla and David Bell worked on several projects in various parts of the world including Switzerland, the Republic of Cuba, Brazil, Peru, and, most recently, Ghana, West Africa. Mr. Zyla has served in capacities as Director, President and Chairman of public companies over the years. In 1992, he as Chairman and David Bell as President formed CaribGold Resources Inc. to explore for gold in the Republic of Cuba raising about $12-million and taking the company public on the Toronto Stock Exchange. In 2011 he was asked to become President of Xtra-Gold Resources Corp. which at the time traded on the US Pink Sheets. The objective was to list the company on a Canadian Exchange and Mr. Zyla accomplished getting the company financed and listed on the Toronto Stock Exchange where it currently trades under the symbol XTG.
Private Placement Financing
On August 14, 2020, the Company completed its non‑brokered private placement by issuing 1,000,000 Common Shares that qualify as “flow-through shares” for the purposes of the Income Tax Act (Canada) (“Flow-Through Shares”) at a price of $0.55 per Flow-Through Share and 2,000,000 Common Shares at a price of $0.40 per Common Share for aggregate gross proceeds to the Company of $1,350,000 (the “August Offering”). The proceeds from the Flow-Through portion of August Offering are intended to be used for exploration programs on the Ruby Creek and the proceeds from the remaining portion of the August Offering for exploration programs on the Ruby Creek and the Que Properties, and for general working capital purposes.
Mr. Eric Sprott, through 2176423 Ontario Ltd., a corporation beneficially owned by him, acquired 1,000,000 Common Shares in the Offering for total consideration of $400,000, which increased Mr. Sprott’s holdings to 12.53% of the outstanding Common Shares.
On June 17, 2021, the Company announced a $2,300,000 non-brokered private placement comprising of (i) 2,000,000 FlowThrough Shares at a price of $0.65 per Flow-Through Share for aggregate gross proceeds to the Company of up to $1,300,000 (the “Flow Through Offering”), and (ii) 2,000,000 Common Shares at a price of $0.50 per Common Share for aggregate gross proceeds to the Company of up to $1,000,000 (the “Non-FT Offering”).
The Flow Through Offering and Non-FT Offering (collectively, the “June Offering”) will provide aggregate gross proceeds to the Company of up to $2,300,000. The proceeds from the Flow-Through Offering will be used to incur “Canadian exploration expenses” which qualify as “flow-through mining expenditures” (within the meaning of the Income Tax Act (Canada)) (“Qualifying Expenditures”) to fund exploration programs on Stuhini’s Ruby Creek Property. The Company will renounce these expenses to the purchasers with an effective date of not later than December 31, 2021. The proceeds from the Non-FT Offering will be used for general and administrative expenses and to fund exploration programs on the
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Company’s mineral properties, including the Que Property and the South Thompson Nickel Property.
The Company may pay up to 6% cash finders’ fees to qualified finders. The Company’s management anticipates that certain directors, officers and other insiders of the Company will acquire Common Shares under the June Offering.
Sale of Metla Property
On August 24, 2020, the Company entered into a mineral claims purchase agreement (the “Metla Purchase Agreement”) for the sale of 100% of its interest in the Metla Property to Brixton Metals Corporation (“Brixton”). The Purchase Agreement was subject to Exchange acceptance for filing, which the Company received on October 1, 2020. Pursuant to the Purchase Agreement, Stuhini received 1,200,000 common shares of Brixton (the “Payment Shares”), which were initially valued at $408,000 (based on the fair market value of the Brixton shares on October 10, 2020, being $0.34 per share) and $42,000 in cash. The $42,000 cash was in lieu of the Metla reclamation bond which was required to be paid by the Company to conduct work on the Property, and this amount was refunded to Brixton once the Company received the Metla reclamation bond refund from the BC Ministry of Mines The Purchase Agreement transaction resulted in a loss of $1,243.
Following the sale, the Company retained a 1.0% NSR on the Metla Property.
Grant of Stock Options
On January 18, 2021, the Company granted stock options (the “Options”) for an aggregate of 625,000 Common Shares at an exercise price of $0.50 per share to the Company’s directors, officers, and consultants under its 10% rolling stock option plan. The Options expire on July 18, 2023, and vest in stages of 25% every three months.
EXPLORATION PROPERTIES
As of the date of this MD&A the Company's interests in exploration and evaluation assets consist of an option to acquire a 100% interest in the Ruby Creek Property, and an option to acquire a 100% interest in the Que Property. In addition, in May of 2021, the Company acquired through staking seven MEL approximately 35 km northwest of Grand Rapids, Manitoba. The Company does not have any assets or mineral properties that are in production.
METLA PROPERTY
On August 24, 2020, the Company entered into the Metla Purchase Agreement for the sale of 100% of its interest in the Metla Property to Brixton in exchange for 1,200,000 common shares of Brixton and $42,000 in cash. In addition, the Company retained a 1.0% NSR on the Metla Property. The Metla Purchase Agreement was subject to acceptance for filing by the Exchange which was received on October 1, 2020.
As at August 24, 2020, the Metla Property was carried at $409,134 on the Company’s statement of financial position, which was comprised of the following:
| As at August 24, 2020, the Metla Property was was comprised of the following: |
carried at $409,134 |
|---|---|
| August 24, 2020 | |
| Acquisition costs | $53,255 |
| Deferred exploration expenditures | |
| Assaying | 13,054 |
| Camp and travel | 104,608 |
| Equipment use/rental | 51,625 |
| Exploration tax credit | (53,007) |
| Geology | 239,599 |
| Sub-total,deferred exploration expenditures | 355,879 |
| Balance,August 24,2020 | $409,134 |
The Company agreed to refund Brixton the $42,000 cash portion of the Metla Purchase Agreement when a refund of the Metla Reclamation Bond was received by the Company. The Company received the refund of the Metla Reclamation Bond
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during the 4[th] quarter of its Fiscal 2021, at which time the Company refunded Brixton the cash component included as part of the Metla Purchase Agreement.
At closing of the sales transaction, the Company valued 1,200,000 shares it received from Brixton at $408,000 (based on the fair market value of the Brixton common shares on October 10, 2020, being $0.34 per common share). The Company recorded $8,917 in additional costs required to sell the Metla Property. In December of 2020, the Company received a total of $8,261 in BC Mining Exploration tax credits for the work carried out on the Metla Property during the Fiscal 2019, the refund was applied to the cost of the Metla Purchase Agreement, therefore the transaction resulted in a total loss of $1,790 as follows:
as follows: |
||
|---|---|---|
| Calculation of Loss on Metla Purchase Agreement | ||
| Acquisition costs | $ | 53,255 |
| Deferred exploration expenditures | 355,879 | |
| Metla reclamation bond | 42,000 | |
| Legal and other regulatory fees associated with the Metla Purchase Agreement | 8,917 | |
| BC MiningExploration tax credit for exploration expenditures | (8,261) | |
| Cost of Metla Property | 451,790 | |
| Less: | ||
| FMV of 1,200,000 common shares of Brixton (at $0.34/share) | 408,000 | |
| Cashpayment | 42,000 | |
| Consideration received | 450,000 | |
| Loss on transaction | $ | (1,790) |
RUBY CREEK PROPERTY
On July 30, 2019, the Company entered into an option agreement with Global Drilling Solutions Inc. (“Global Drilling”) (the “Ruby Creek Option Agreement”) whereby the Company was granted a right to acquire a 100% interest in the Ruby Creek Property (the “Ruby Creek Option”). The Ruby Creek Option Agreement was conditional on approval by the disinterested shareholders of the Company, which was received at the November 28, 2019, annual general meeting, and acceptance for filing of the Ruby Creek Option Agreement by the Exchange, which was received on December 31, 2019.
Based on the Ruby Creek Option Agreement, to fully exercise its Ruby Creek Option, the Company is required to issue a total of 7,300,000 Common Shares and make cash payments of $1,060,000 over a four-year term.
The following table shows the continuity of the Ruby Creek Option payments:
| Date | Shares | Cash | Payment | |||
|---|---|---|---|---|---|---|
| December | 31, | 2019 | (shares issued) | 800,000 | $ | - |
| December | 31, | 2020 | (shares issued) | 1,250,000 | - | |
| December | 31, | 2021 | 1,750,000 | 120,000 | ||
| December | 31, | 2022 | 1,750,000 | 300,000 | ||
| December | 31, | 2023 | 1,750,000 | 640,000 | ||
| Total | 7,300,000 | $ | 1,060,000 |
Upon exercise of the Ruby Creek Option, Global Drilling would be entitled to a 1% NSR on the Ruby Creek Property.
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Ruby Creek Property Acquisition and Exploration Costs
| February 28, 2021 | February 29, 2020 | February 29, 2020 | |
|---|---|---|---|
| Balance, beginning ofperiod | $259,195 | $ | - |
| Option payments | 512,500 | 248,000 | |
| Mineral tenure/lease payments | 53,908 | 8,085 | |
| Sub-total, acquisition costs | 566,408 | 256,085 | |
| Deferred exploration expenditures | |||
| Assaying | 100,933 | - | |
| Camp and travel | 67,685 | - | |
| Equipment use/rental | 154,082 | - | |
| Geology | 535,915 | 3,110 | |
| Sub-total, deferred exploration expenditures | 858,615 | 3,110 | |
| Exploration tax credit | (2,153) | - | |
| Balance, end ofperiod | $1,682,065 | $ | 259,195 |
Property Location and General Description
The Ruby Creek Property is 27,354 hectares in size, is road accessible and located within the Atlin Mining Division, 20 km from Atlin. The Ruby Creek Property consists of 50 contiguous mineral claims of which one is a mining lease. There are 48 different documented mineral occurrences on the Ruby Creek Property, of which 16 are gold-related, with five gold placer creeks, four of which were still actively being mined during the summer of 2019. The Company does not own or have an option on the placer rights for these placer streams on the tenures since in BC placer rights are a different tenure than hard rock mineral rights. However, the Company does have the hard rock rights which would be relevant should bedrock lode-gold or other minerals be discovered under the existing placer creeks or elsewhere on the Ruby Creek Property. The Ruby Creek Property also hosts the Ruby Creek Moly resource (also known as the Adanac molybdenum deposit or resource) which, using a 0.04% Molybdenum (“Mo”) cut-off grade, has a historic measured and indicated mineral resource of 275.4 million tonnes at 0.067% Mo containing 407.9 million lbs of Mo. The historic Ruby Creek Molybdenum resource estimate was prepared by K. Palmer of Golder Associates in a report dated May 28, 2009, titled Ruby Creek Molybdenum Project in Northern British Columbia, Canada. The resource estimate was established using 338 drill holes with a combined length of approximately 69,200 metres (“m”) and 21,651 assay samples. A Qualified Person as defined in National Instrument 43-101 (“QP”) has not done sufficient work to classify the historical estimate as a current mineral resource or mineral reserve. The Company has not verified the historical resource estimates and therefore is not treating nor relying on the historical estimates as a current mineral resource or mineral reserve. With the continued increase in the price of Mo to recent highs of US$20.03 per pound[1] , the Company believes that the economic outlook has improved sufficiently for the Company to explore updating the Mo resource to a current resource in accordance with the requirements of National Instrument 43-101 (“NI 43-101”). As of the date of this MD&A, the Company’s management continues to review the possibility of commencing this project.
On November 7, 2019, the Company filed a National Instrument 43-101 Technical Report entitled: "Technical Report on the Ruby Creek Property within the Atlin Gold camp British Columbia Canada" (the “Technical Report”). The Technical Report outlined a 2-stage exploration program for the Ruby Creek Property budgeted at $750,000.
2020 Exploration Activities
During the 2020 field season, exploration on the Ruby Creek Property consisted of a 975 line-km SkyTEM airborne geophysical survey that was flown in the spring of 2020 on selected portions of the Property. This was followed by a largescale exploration program that included property-wide reconnaissance prospecting, sampling, and mapping as well as more focussed exploration on selected targets identified in the historic data compilation completed over the winter of 2020 and the SkyTEM airborne geophysics. The crew varied over the field season and included 16 different geologists, prospectors,
1 Prices are taken from daily closing price website of the London Metals Exchange (“LME”) for LME Molybdenum (Platts), for Contracts Month 2 and out. While management believe these prices are reliable, we take no responsibility for the accuracy of the price.
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and contractors. The initial exploration occurred at lower elevations and moved to higher ground as the winter snowpack melted. A total of 1,186 rock samples and 850 soil samples were collected over the field season.
The Ruby Creek Property has been divided into different targets and the various targets are summarized below starting with the areas that were worked on first. Note that rock grab samples are selective by nature and values reported may not represent the true grade or style of mineralization.
Silver Diamond: The Silver Diamond is a skarn target with a strong airborne electromagnetic and magnetic signature. Channel sampling from the skarn included 22 metres of 34 grams per tonne (“g/t”) silver (“Ag”), 0.27 % copper (“Cu”), 1.88 % zinc (“Zn”), 0.17 % tungsten oxide (“WO3”) and included 3.5 m of 116.8 g/t silver, 11.55% zinc, 0.28% copper and 0.11% lead (“Pb”). Ten (10) metres west of the channel sample, additional skarn mineralization was identified with grab samples assaying up to 1.22 g/t gold, 0.46% copper, 64.1 g/t silver and 0.25% tungsten oxide.
Copper Valley: Ten (10) samples were taken from a skarn identified in Copper Valley, a tributary of Ruby Creek. Assays range from 1.9 to 154.5 g/t silver, 0.06 to 1.28 % copper, 7 to 5,244 parts per million (“ppm”) lead, 0.28 to 7.71 % zinc, and up to 0.38 % tungsten oxide.
Ruffner Target: The Ruffner area is located in the northwestern portion of the tenures immediately east and south of the past producing Atlin Ruffner silver mine. The mine is situated on crown grants not held by the Company.
The Atlin Ruffner silver mine was an intermittent producer from 1916 to 1981, with an average grade of 0.42 g/t gold, 267 g/t silver and 5% combined lead-zinc. Historic unclassified reserves from the two zones from which underground development and production took place are 113,638 tonnes grading 600 g/t silver and 5.0 % lead (MINFILE No. 104N 011 - assessment report 18646 dated July 1985). These are historical estimates for which a QP has not done sufficient work to classify as current mineral resources or mineral reserves. Mineralization from the historic Ruffner Silver Mine and the surrounding showings is composed of quartz-carbonate veins with galena, sphalerite, arsenopyrite and lesser pyrite and chalcopyrite. These mineralized structures are often associated with mafic dykes hosted within granodiorite and diorite of the Fourth of July Batholith.
The 2020 exploration program identified and confirmed numerous zones with Atlin Ruffner style mineralization to the south and east of the historic Atlin Ruffner mine including the Brenda, Wheelbarrow, Vulcan, Wolf, Wallis, and Hopeful prospects.
The highlights are summarized as follows:
-
119 rock samples collected with 46 samples assaying greater that 25 g/t silver;
-
13 samples assaying greater than 400 g/t silver;
-
2,370 g/t silver from sample #1893100;
-
10.0 g/t gold, 783 g/t silver and over 10% lead from sample #1869659;
-
5.8% copper, 422 g/t silver and 1.22 g/t gold from sample #1892686; and
-
14.8% zinc, 173 g/t silver and 2.6 g/t gold from sample #1997463.
A total of 119 outcrop and felsenmeer samples were collected from Ruffner Target. The table below summarizes some of the more noteworthy assays:
of the more |
noteworthy assays: |
|||||
|---|---|---|---|---|---|---|
| Sample | Sample Type | Ag (g/t) | Au (g/t) | Cu (%) | Pb (%) | Zn (%) |
| 1893100 | Felsenmeer | 2370 | 0.56 | 0.10 | 2.92 | 0.3 |
| 1997475 | Felsenmeer | 1558 | 1.15 | 0.05 | >10 | 5.43 |
| 1996081 | Felsenmeer | 1069 | 0.31 | 0.04 | >10 | 0.06 |
| 1869665 | Chip (historic trench) | 941 | 0.17 | 0.90 | 1.17 | 0.27 |
| 1996294 | Felsenmeer | 902 | 0.30 | 0.92 | 2.94 | 1.72 |
| 1996299 | Felsenmeer | 897 | 0.29 | 0.05 | 6.54 | 3.61 |
| 1869659 | Grab (historic trench) | 783 | 10.0 | 0.70 | >10 | 0.13 |
| 1996070 | Felsenmeer | 626 | 0.32 | 0.21 | 0.08 | 0.03 |
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| Sample | Sample Type | Ag (g/t) | Au (g/t) | Cu (%) | Pb (%) | Zn (%) |
|---|---|---|---|---|---|---|
| 1996090 | Felsenmeer | 492 | 0.32 | 1.42 | 0.77 | 0.68 |
| 1996295 | Felsenmeer | 488 | 0.08 | 2.00 | 0.23 | 0.04 |
| 1996270 | Felsenmeer | 484 | 2.46 | 0.13 | 5.4 | 1.12 |
| 1892686 | Grab (historic trench) | 422 | 1.22 | 5.83 | 1.47 | 0.06 |
| 1996293 | Felsenmeer | 407 | 0.30 | 0.43 | 0.09 | 0.01 |
| 1997463 | Felsenmeer | 173 | 2.60 | 0.12 | 1.94 | 14.76 |
The highest-grade silver sample (#1893100) was collected from a preferentially eroding E-NE trending structure, northeast of the Ruffner Silver Mine complex. The highest-grade gold sample (#1869569) assayed 10.0 g/t gold and 783 g/t silver. Sample #1996081 was collected approximately 750 metres (“m”) WSW of, and on strike with the historic Wheelbarrow showing. Results included assays of up to 5.8% copper, >10% lead and 14.76% zinc with 34 samples greater than 1,000 ppm copper, 55 samples greater than 1,000 ppm lead and 59 samples greater than 1,000 ppm zinc.
Adera Corridor: Multiple high-grade silver/lead showings were also identified along a 7.5km long trend that consists of a series NE-SW striking structures, and splays, that coincide with the contact of the Surprise Lake batholith (“SLB”) and the Fourth of July batholith. The mineralized trend is referred to as the “Adera Corridor.” The Corridor includes the past producing Brenda silver-lead-zinc mine, the Al showing and the Adanac historic drill hole AD-408, which had a 6.10 m intersection greater than the detection limit of 200 g/t silver.
A total of 134 rock samples and 54 infill soil samples were collected in the northeastern part of the target area. The soil samples, which followed up on results from a 2017 program, overlay the contact between SLB and the Cache Creek terrane with multiple samples returning anomalous silver, copper, lead, zinc, bismuth, antimony and weakly anomalous gold.
Mineralization is composed of quartz-carbonate veins and breccias with galena, sphalerite, arsenopyrite and lesser pyrite and chalcopyrite. The highest-grade silver sample (5,681 g/t silver) was collected from the Moly Lake area near the northwestern margin of the historic proposed Adanac molybdenum pit. The highest-grade gold sample (6.1 g/t gold, 227 g/t silver and 0.46% copper) was a chip sample from the Moly Lake area taken across a massive sulphide quartz vein hosted within diorite. Results also included assays of up to 7.31% copper, 12.4 % zinc, 3.75% tungsten and >10% lead with 11 samples assaying greater than 10% lead.
The table below summarizes some of the more noteworthy samples collected from the Adera Corridor.
| Sample ID | Sample Type | Ag g/t | Au g/t | Pb % | Zn % | Cu % |
|---|---|---|---|---|---|---|
| 1996383 | Felsenmeer | 5681 | 0.39 | >10 | 0.58 | 0.35 |
| 1869950 | Felsenmeer | 4994 | 0.11 | 68.10 | 1.59 | 0.06 |
| 1478140 | Felsenmeer | 4229 | 0.20 | 61.26 | 0.02 | 0.04 |
| 1996275 | Felsenmeer | 3776 | 0.75 | 13.07 | 1.90 | 0.16 |
| 1478143 | Felsenmeer | 2833 | 0.27 | 43.66 | 0.35 | 0.08 |
| 1996256 | Subcrop | 2825 | 0.90 | 5.35 | 0.46 | 0.14 |
| 1478141 | Felsenmeer | 2777 | 0.36 | 34.65 | 0.12 | 0.07 |
| 1478144 | Felsenmeer | 2293 | 0.29 | 35.85 | 1.12 | 0.09 |
| 1996483 | Felsenmeer | 1991 | 0.18 | >10 | 0.64 | 0.09 |
| 1893419 | Felsenmeer | 1582 | 0.15 | 28.33 | 12.39 | 0.44 |
| 1478142 | Felsenmeer | 1359 | 0.16 | 24.20 | 0.26 | 0.08 |
| 1996487 | Subcrop | 1301 | 0.18 | 3.39 | 0.28 | 0.19 |
| 1996424 | Felsenmeer | 1111 | 2.37 | 7.75 | 7.53 | 0.22 |
| 1905365 | Felsenmeer | 808 | 1.71 | 3.32 | 0.10 | 3.18 |
| 1893436 | Felsenmeer | 740 | 0.20 | >10 | 11.76 | 0.28 |
| 1905380 | Subcrop | 722 | 0.79 | 1.00 | 0.02 | 0.03 |
| 1996265 | Subcrop | 646 | 0.10 | 5.56 | 0.06 | 0.07 |
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| Sample ID | Sample Type | Ag g/t | Au g/t | Pb % | Zn % | Cu % |
|---|---|---|---|---|---|---|
| 1893429 | Outcrop | 474 | 2.07 | 0.04 | 0.07 | 7.31 |
| 1996387 | Felsenmeer | 377 | 0.78 | 1.10 | 0.01 | 0.11 |
| 1996482 | Felsenmeer | 262 | 0.31 | 0.79 | 0.00 | 0.01 |
| 1905379 | Outcrop | 227 | 6.10 | 4.00 | 9.62 | 0.46 |
| 1996262 | Subcrop | 226 | 0.41 | 0.10 | 0.03 | 0.27 |
| 1869557 | Outcrop | 204 | 1.04 | 1.76 | 0.01 | 0.26 |
| 1996254 | Felsenmeer | 196 | 0.03 | 0.11 | 0.13 | 0.00 |
| 1893432 | Outcrop | 195 | 0.24 | 0.69 | 0.41 | 0.08 |
| 1996252 | Subcrop | 180 | 0.14 | 0.26 | 0.16 | 0.13 |
| 1869559 | Outcrop | 178 | 0.90 | 1.52 | 0.03 | 0.13 |
| 1996489 | Subcrop | 171 | 0.06 | 1.08 | 0.04 | 0.03 |
| 1893435 | Subcrop | 159 | 0.10 | 0.72 | 0.58 | 0.00 |
| 1892646 | Outcrop | 158 | 4.45 | 3.56 | 5.77 | 0.21 |
| 1869567 | Outcrop | 154 | 0.33 | 0.42 | 0.97 | 0.00 |
Northeastern Area: a new zone of copper mineralization was discovered proximal to the northeastern boundary of the tenures. On surface, the zone appears to cover an area of approximately 5 m by 10 m and is comprised of mineralized sheeted quartz vein stringers hosted in a gossanous, coarse-grained granite. The quartz vein stringers are <5milimetres (“mm”) in width and have weak to moderate sericitic alteration envelopes with minor chalcopyrite and tetrahedrite. Weak sericitic alteration is also observed outside the exposure and a small patch of potassic alteration was found north of the showing across the valley.
As the mineralization was nearing the Ruby Creek Property’s boundary, the Company staked additional claims covering a total of 619.38 hectares along the northeastern portion of the tenures increasing the size of the Ruby Creek Property from 26,735 hectares to 27,354 hectares.
Silver Surprise
During its 2020 exploration program the Company discovered a high-grade silver mineralization at the newly identified Silver Surprise Target (“Silver Surprise”). The discovery is approximately 5 km northeast, and on trend with the recently expanded Adera Corridor silver target and 3 km north of the Daybreak target.
The highlights of the discovery are as follows:
-
12 rock samples taken with assay results ranging up to 14,179 g/t Ag to 391 g/t Ag.
-
All 12 samples were taken over a surface trace of approximately 170 m and were of quartz vein material (“QV”).
The table below summarizes the Silver Surprise Samples:
| Sample ID | Sample Source |
Ag g/t | Au g/t |
Pb % |
|---|---|---|---|---|
| 1869568 | Subcrop (QV) | 14,179 | 1.49 |
4.18 |
| 1905499 | Felsenmeer (QV) | 8,748 | 0.53 | 2.66 |
| 1905491 | Felsenmeer (QV) | 7,532 | 0.28 | 1.87 |
| 1869569 | Subcrop (QV) | 6,885 | 0.60 | 3.4 |
| 1905492 | Felsenmeer (QV) | 6,509 | 0.29 | 1.89 |
| 1869949 | Felsenmeer (QV) | 5,969 | 0.29 | 1.28 |
| 1905493 | Felsenmeer (QV) | 5,927 | 0.47 | 1.99 |
| 1905500 | Felsenmeer (QV) | 3,588 | 0.21 | 0.98 |
| 1905496 | Felsenmeer (QV) | 2,629 | 0.17 | 0.83 |
| 1905490 | Felsenmeer (QV) | 2,246 | 0.09 | 1.19 |
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| Sample ID | Sample Source |
Ag g/t | Au g/t |
Pb % |
|---|---|---|---|---|
| 1905495 | Felsenmeer (QV) | 1,882 | 0.21 | 1.44 |
| 1905494 | Felsenmeer (QV) | 391 | 0.04 | 0.10 |
Mineralization consists of fine-grained sulfides and sulfosalts hosted in a quartz-carbonate vein. The outcropping vein strikes NE-SW and is steeply dipping. The exact thickness of the mineralized zone is unknown at this time, as most mineralization is observed as subcrop or felsenmeer, but it is estimated to be comparable to the widths reported at the AtlinRuffner silver mine, approximately 1 to 3 m wide. An additional 8 silver bearing rock samples were taken approximately 250 m south (6 samples) and 1200 m northwest (2 samples) of the high-grade assays. Samples assayed up to 208 g/t Ag and 13.73 % lead (“Pb”) indicating the presence of additional silver bearing structures within close proximity. Note that rock grab samples are selective by nature and values reported may not represent the true grade or style of mineralization across the property. The tables below summarize these additional samples.
Additional Samples 250 m south of Silver Surprise
| Sample ID | Sample Source | Ag g/t | Au g/t | Pb % |
|---|---|---|---|---|
| 1869570 | Outcrop (QV) | 208 | 0.003 | 13.73 |
| 1869573 | Subcrop (QV) | 166 | 0.062 | 4.39 |
| 1869571 | Outcrop (QV) | 39 | 0.001 | 0.30 |
| 1905497 | Felsenmeer (QV) | 23 | 0.005 | 0.04 |
| 1869572 | Outcrop (QV) | 19 | 0.013 | 0.14 |
| 1869574 | Felsenmeer (QV) | 13 | 0.001 | 0.28 |
Additional Samples 1200 m northwest of Silver Surprise
| Sample | Sample | Ag | Au | Pb |
|---|---|---|---|---|
| ID | Source | g/t | g/t | % |
| 1996094 | Felsenmeer | 33.6 | 0.16 | 0.30 |
| (QV) | ||||
| 1996095 | Felsenmeer | 11.4 | 0.10 | 0.04 |
| (QV) |
Daybreak Target: Following up on last year’s results, the exploration team were sent to further investigate the silver occurrences in this target area. Of the rock samples taken, 14 of 73 samples assayed greater than 25 g/t Ag with one quartz vein sample assaying 772 g/t of silver and 0.28 g/t gold. Five samples with notable silver are from the Daybreak skarn showing.
A summary of select rock sample assays results is listed in the table below:
| Sample ID | Sample Source |
Ag g/t | Au g/t | Cu % | Pb % | Zn % |
|---|---|---|---|---|---|---|
| 1893454 | Felsenmeer (QV) | 772 | 0.28 | 0.09 | 1.04 | 0.08 |
| 1893473 | Subcrop (QV) | 201 | 0.64 | 0.34 | 0.02 | 0.01 |
| 1869613 | Outcrop (QV) | 148 | 0.25 | 0.15 | 0.19 | 0.02 |
| 1996291 | Outcrop (skarn) | 137 | 0.15 | 1.17 | 0.02 | 0.16 |
| 1869612 | Outcrop (skarn) | 136 | 0.11 | 1.61 | 0.02 | 0.14 |
| 1996285 | Felsenmeer (skarn) | 82 | 0.02 | 1.72 | 0.00 | 2.04 |
On May 5, 2021, the Company announced further results of its 2020 field program focusing on areas where prospecting yielded significant gold grades.
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Highlights include the following grab samples:
-
121.34 g/t Au and 2093 g/t Ag at Boulder Creek
-
34.08 g/t Au and 494 g/t Ag at Lakeview
-
6.03 g/t Au and 51.6 g/t Ag at Birch Creek
-
10.00 g/t Au and 768 g/t Ag at Ruby Creek Gold
Southwest Property Targets: Birch Creek, Boulder Creek, and Lakeview
The southwest portion of the Property includes the Birch, Boulder and Lakeview targets. Both Birch and Boulder Creek were important placer creeks in the Atlin area with Boulder Creek being the third largest placer gold producer in the area. Mineralization occurs in quartz veins hosted within the Cache Creek complex.
Birch Creek Target
The Birch Creek target includes the historic Little Edna showing. Previous operators focused on the more prominent north striking and steeply dipping gossanous structure hosting polymetallic base metal sulfides and silver mineralization with no significant gold. During the 2020 field program, gold mineralization was discovered in separate quartz veins on the periphery of the main Little Edna structure. The gold mineralization is hosted within narrow, 5 to 20 centimetre (“cm”) wide, steeply dipping, northeast striking, en echelon quartz-carbonate veins that appear to widen towards Birch Creek. Birch Creek is interpreted to be a major fault and conduit for hydrothermal fluids responsible for the placer gold in the area. Anomalous gold values were encountered in 3 of the 4 vein samples. The samples were also anomalous in bismuth and tellurium and absent in base metal mineralization. The highest-grade samples taken 30 m south of the Little Edna structure returned values of 6.03 g/t Au and 51.6 g/t Ag. The table below summarizes the Little Edna samples.
Little Edna Assays (6 of 7 samples collected):
| Little Edna | Gold Veins | |||||
|---|---|---|---|---|---|---|
| Sample ID | Sample Source |
Au g/t | Ag g/t | Cu % | Pb % | Zn % |
| 1905464 | Outcrop | 6.03 | 51.6 | 0.00 | 0.08 | 0.00 |
| 1905461 | Outcrop | 0.55 | 31.0 | 0.01 | 0.01 | 0.00 |
| 1905463 | Subcrop | 0.23 | 1.3 | 0.02 | 0.00 | 0.01 |
| Little Edna | Polymetallic Silver | Structure | ||||
| 1905373 | Outcrop | 0.05 | 487 | 0.01 | 1.06 | 0.02 |
| 1905374 | Outcrop | 0.03 | 75.7 | 0.15 | 0.13 | 0.37 |
| 1905462 | Subcrop | 0.08 | 35.7 | **0.02 ** | 0.13 | 0.19 |
Boulder Creek Target
The Boulder Creek target is focused on gold mineralization in the vicinity of the historic Sunbeam showing on the west side of Boulder Creek. Mineralization is found within quartz vein material that is most likely hosted within the Cache Creek Complex. The Sunbeam showing is described in a Minister of Mines Annual Report in 1904, and the exact location is uncertain. To date, several angular proximal float boulders of gold-bearing quartz have been found in the area with grades as high as 121.34 g/t Au and 2,093 g/t Ag and the previously reported 78 g/t Au and 1,282 g/t Ag. Further work on this compelling target is planned for the upcoming field season.
Lakeview Target
The historic Lakeview showing consists of gold bearing quartz veins hosted in intermediate to mafic volcanic rocks of the Cache Creek Complex. The target has not received any significant exploration since 1987. Samples in the 2020 program are from steeply dipping north-northeast trending quartz-carbonate veins and assayed as high as 34.08 g/t Au and 494 g/t Ag. The table below summarizes the Lakeview assays.
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Lakeview Assays (19 of 34 samples collected):
| Sample ID | Sample Source | Au g/t | Ag g/t | Cu % | Pb % | Zn % |
|---|---|---|---|---|---|---|
| 1905471 | Subcrop | 34.08 | 494 | 0.00 | 0.03 | 0.01 |
| 1996438 | Subcrop | 25.95 | 420 | 0.00 | 0.03 | 0.01 |
| 1905472 | Subcrop | 19.8 | 238 | 0.00 | 0.01 | 0.01 |
| 1478133 | Outcrop | 15.44 | 303 | 0.00 | 0.57 | 0.07 |
| 1905473 | Subcrop | 14.61 | 187 | 0.00 | 0.00 | 0.01 |
| 1905468 | Subcrop | 13.27 | 167 | 0.00 | 0.10 | 0.01 |
| 1905469 | Subcrop | 10.06 | 189 | 0.00 | 0.33 | 0.01 |
| 1478134 | Outcrop | 8.92 | 197 | 0.00 | 0.01 | 0.01 |
| 1905470 | Subcrop | 7.14 | 191 | 0.00 | 0.41 | 0.00 |
| 1478132 | Outcrop | 6.15 | 167 | 0.00 | 0.25 | 0.07 |
| 1905467 | Subcrop | 2.54 | 40 | 0.00 | 0.04 | 0.00 |
| 1905478 | Subcrop | 0.76 | 26 | 0.00 | 0.06 | 0.00 |
| 1478128 | Outcrop | 0.36 | 0.5 | 0.00 | 0.00 | 0.00 |
| 1905304 | Subcrop | 0.35 | 5.3 | 0.00 | 0.00 | 0.00 |
| 1905480 | Subcrop | 0.33 | 2.1 | 0.00 | 0.00 | 0.00 |
| 1905466 | Subcrop | 0.27 | 102 | 0.00 | 1.00 | 0.00 |
| 1478127 | Outcrop | 0.22 | 6.0 | 0.00 | 0.02 | 0.00 |
| 1905231 | Subcrop | 0.12 | 0.2 | 0.00 | 0.00 | 0.01 |
| 1905465 | Subcrop | 0.11 | 1.8 | 0.00 | 0.00 | 0.01 |
Ruby Creek Gold Target
The Ruby Creek Gold target area begins approximately half a km east of the historic Adanac molybdenum resource and extends into upper Ruby Creek. Ruby Creek was the fourth highest gold producing creek in the Atlin Placer Camp.
Mineralization consists of gold, silver, lead, copper and tungsten in quartz veins, quartz vein stockwork, and breccias hosted within the SLB. Assays of up to 10 g/t Au were returned from the 2020 program. The target area also encloses two historic diamond drill holes from 2008. The two holes were part of the condemnation drilling for the proposed Adanac open-pit molybdenum mine. The holes are more than 950 m apart and intersected 76.2 m averaging 0.15 g/t Au and 73.2 m averaging 0.21 g/t Au respectively, including a 3 m sample assaying 0.6 g/t Au. Both holes were drilled within the SLB.
Ruby Creek Gold Target Assays (18 of 46 samples):
| Sample ID | Sample Source | Ag g/t | Au g/t | % Cu | % Pb | % Zn | % Mo | % WO3 |
|---|---|---|---|---|---|---|---|---|
| 1869576 | Felsenmeer | 768 | 10.0 | 1.06 | 0.99 | 0.04 | 0.001 | 1.59 |
| 1996460 | Outcrop | 17.4 | 7.82 | 0.04 | 0.10 | 0.01 | 0.001 | 0.04 |
| 1905043 | Felsenmeer | 305 | 3.97 | 0.06 | 2.73 | 0.03 | 0.008 | 0.00 |
| 1905037 | Outcrop | 290 | 3.84 | 0.12 | 5.17 | 0.04 | 0.062 | 0.00 |
| 1478184 | Outcrop | 296 | 3.19 | 0.10 | 1.02 | 0.04 | 0.000 | 17.09 |
| 1905050 | Felsenmeer | 28.8 | 2.73 | 0.14 | 0.05 | 0.00 | 0.001 | 0.04 |
| 1905032 | Felsenmeer | 39.1 | 1.74 | 0.08 | 0.08 | 0.00 | 0.002 | 0.71 |
| 1996473 | Subcrop | 4.8 | 1.53 | 0.23 | 0.01 | 0.00 | 0.006 | 0.44 |
| 1905036 | Subcrop | 96 | 1.19 | 0.10 | 1.93 | 0.24 | 0.018 | 0.26 |
| 1869599 | Felsenmeer | 31.0 | 0.86 | 0.02 | 0.09 | 0.01 | 0.000 | 0.02 |
| 1905038 | Outcrop | 571 | 0.71 | 0.04 | 2.86 | 0.00 | 0.004 | 0.03 |
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| Sample ID | Sample Source | Ag g/t | Au g/t | % Cu | % Pb | % Zn | % Mo | % WO3 |
|---|---|---|---|---|---|---|---|---|
| 1905045 | Subcrop | 18.4 | 0.56 | 0.08 | 0.07 | 0.01 | 0.002 | 0.15 |
| 1996472 | Felsenmeer | 225 | 0.48 | 0.26 | 0.44 | 0.00 | 0.007 | 0.32 |
| 1905049 | Outcrop | 13.7 | 0.36 | 0.12 | 0.01 | 0.02 | 0.001 | 0.03 |
| 1905047 | Subcrop | 25.5 | 0.30 | 0.11 | 0.01 | 0.00 | 0.000 | 0.05 |
| 1905041 | Outcrop | 4.6 | 0.30 | 0.00 | 0.02 | 0.00 | 0.013 | 0.01 |
| 1996451 | Outcrop | 15.6 | 0.24 | 0.02 | 0.12 | 0.00 | 0.001 | 0.09 |
| 1905039 | Outcrop | 4.7 | 0.11 | **0.01 ** | 0.05 | **0.01 ** | 0.370 | 0.03 |
| Condemnation Drill Holes with Anomalous Gold Values (Adanac | Condemnation Drill Holes with Anomalous Gold Values (Adanac | Condemnation Drill Holes with Anomalous Gold Values (Adanac | 2008) | ||
|---|---|---|---|---|---|
| Drill Hole ID | From (m) | To (m) | Interval (m) | Au (ppm) | Ag (ppm) |
| AD-390 | 22.9 | 99.1 | 76.2 | 0.15 | 0.42 |
| Including | 53.3 | 74.7 | 21.3 | 0.21 | 0.11 |
| AD-393 | 184.4 | 257.6 | 73.2 | 0.21 | 0.28 |
Ruby Creek Property Commitments
The Ruby Creek Property consists of 50 mineral claims (excluding the mineral lease that comprises part of the Ruby Creek Property) which were staked at different times resulting in different work commitments for each claim. As of the date of the filing of this MD&A, the mineral claims that comprise the Ruby Creek Property are in good standing. Based on the date the claims were staked and their respective sizes, the total annual work commitment for Ruby Creek Property is approximately $332,924. Based on the most recent assessment reports filed with the BC Ministry of Mines, the Project good-till date has been extended to Oct 31, 2023.
In addition to the work commitments required on the mineral claims, the mineral lease included as part of the Ruby Creek Property is subject to an annual flat fee lease payment of $49,300 with no work requirement, which the Company paid in March of 2021, renewing the lease until March 27, 2022.
In order to obtain a 5-year drill permit for the Ruby Creek Property, during the year ended February 28, 2021, the Company was required to purchase a $25,000 reclamation bond in connection with the Ruby Creek Property.
QUE PROPERTY
On February 17, 2020, the Company entered into an option agreement (the "Que Option Agreement) with arms-length vendors, whereby the Company was granted the right to acquire a 100% interest in the Que Property (the "Que Option") located in south-central Yukon. The Que Option Agreement was amended and restated on February 28, 2020 (the “Amended Que Option Agreement”), with the vendors, Nokuyukon Holdings Ltd., Mark Lindsay, Glacier Drilling Ltd., Mike Mickey, and Joanne MacDougall (jointly, the “Que Vendors”), and was conditional on acceptance for filing by the Exchange, which was received on April 1, 2020 (the “Que Approval Date”).
Based on the Amended Que Option Agreement, to fully exercise its Que Option, the Company was required to issue a total of 2,950,000 Common Shares and make cash payments for a total of $380,000 over a four-year term to the Que Vendors. Upon receipt of assays showing no significant mineralization in a shallow early stage 2-hole drill program, the Company commenced renegotiating the Amended Que Option Agreement. The further amended and restated option agreement (“Que Amendment 2”) was announced on October 26, 2020. The table below compares the initial Amended Que Option Agreement schedule of the Option payments and the renegotiated terms under the Que Amendment 2:
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| Date | Amended Que Option Agreement Que Amendment 2 |
Amended Que Option Agreement Que Amendment 2 |
|---|---|---|
| Common Cash |
Common Cash |
|
| Shares Payment Shares Payment |
||
| Que Approval Date (shares issued) | 200,000 $ - 200,000 $ - |
|
1st Option payment (shares issued)(1) |
300,000 - |
50,000 - |
| 2nd Anniversary of Approval | 450,000 - 75,000 - |
|
3rd Anniversary of Approval |
500,000 140,000 |
112,500 - |
| 4th Anniversary of Approval | 1,500,000 240,000 125,000 35,000 |
|
5th Anniversary of Approval |
- - |
375,000 60,000 |
| Total | 2,950,000 $ 380,000 937,500 $ 95,000 |
(1) On June 22, 2021, the Company entered into the 3[rd] Que Option Amendment, extending the 1st Option payment being issuance of 50,000 Common Shares of the Company, to June 22, 2021, on mutual agreement of the parties to the Que Option Agreement. In addition, the 3[rd] Que Option Amendment specified all option payments as well as the NSR to be apportioned to the Que Vendors as to 80% to Mr. Lindsay and 20% to Ms. MacDougall.
Upon exercise of the Que Option (as amended), the Que Vendors would jointly be entitled to a 1% NSR on the Que Property.
Que Property Acquisition and Exploration Costs
| Que Property Acquisition and Exploration Costs | ||
|---|---|---|
| February 28, 2021 | ||
| Balance, beginning of period | $ | - |
| Option payments | 28,000 | |
| Professional fees | 6,165 | |
| Sub-total, acquisition costs | 34,165 | |
| Deferred exploration expenditures | ||
| Assaying | 16,555 | |
| Camp and travel | 3,013 | |
| Drilling | 47,000 | |
| Equipment use/rental | 1,470 | |
| Geology | 113,500 | |
| Sub-total, deferred exploration expenditures | 181,538 | |
| Balance, end of period | $ | 215,703 |
Property Location and General Description
The Que Property is road accessible and located just off the Canol Road, Yukon Highway #6, 70 km north of Johnson’s Crossing which is located on the Alaska Highway. The Que Property consists of 108 mineral claims and is 2,246 hectares in size. The Company staked an additional 96 claims (1,996 hectares) bringing the entire claims package to 204 claims, approximately 4,243 hectares.
The Que Property was first staked in the mid 1960’s after the discovery of several large rusty, intensely gossanous zones. The Que Property has been privately held by the Que Vendors since that time. Small-scale exploration programs have been conducted since the original staking during which gold bearing veins and a gold bearing felsic horizon on Kingdome Ridge were discovered. Soil sampling also identified gold anomalies in soil.
In the 2019 field season, the Company’s geologists spent an afternoon on the Que Property conducting due diligence, which confirmed the presence of the gossanous kill zones and the occurrence of gold mineralization within quartz veins in outcroppings. A grab sample collected during this visit assayed 11.7 g/t gold.
2020 Exploration Activities
In May and June 2020, the Company conducted a SkyTEM airborne geophysical program on selected portions of the Que Property. The survey consisted of approximately 425 line-km. Company consulting geophysicist Todd Ballantyne has
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reviewed and compiled results from the geophysical survey and a detailed report on this program was received from SkyTEM in mid-July 2020. Based on the preliminary findings, the Company carried out an inexpensive shallow 2-hole diamond drill program at its Camp Gossan target on the Que Property. The drill targets were chosen due to road accessibility and based upon geophysical anomalies generated from preliminary data interpretation of the SkyTEM geophysical program. The drill program was completed and the results from Bureau Veritas assay lab in Richmond, BC were received and showed no significant mineralization.
Que Property Commitments
In the Yukon, quartz (hard-rock) claims must be maintained in good standing with the Department of Energy, Mines and Resources. Quartz claims expire one year after the recording date. To keep a claim in good standing, the Company is required to carry out an assessment work (also known as “representation work”) for a minimum of $100 per claim. The assessment work must be applied to the quartz claim in the year it is completed by filing the assessment work report before the claim’s anniversary of the recording date. In case where the assessment work will result in more than $100 spent, the remaining value can be applied to the future years (not to exceed five years). If the representation work on a claim is not done, the Company can choose to pay a fee of $105 per claim instead.
The Que Property consists of 204 mineral claims which were staked at different times resulting in different expiry dates for some claims. The total annual work commitment for the Que Property is approximately $20,400.
Based upon the exploration funds spent on the SkyTEM airborne geophysical survey and the early stage small-scale drill program conducted on the Que Property during the summer 2020 program, the Company has filed an assesment report with the Yukon Mines Ministry and has received confirmation that the next renewal date for all claims comprising the Que Property has been extended to March 7, 2026.
MANITOBA NICKEL PROPERTY
On May 27, 2021, the Company announced that it has acquired through staking seven MEL covering 47,509 hectares along the southern extent of the Thompson Nickel Belt, approximately 35 km northwest of Grand Rapids, Manitoba. The five separate MEL blocks (T1, T2, T3, T4, and T5) cover prospective ground that hosts relatively untested target horizons and covers parts of the Winnipegosis Komatiite Belt.
Sporadic drilling in the 1980s and 1990s encountered anomalous nickel (“Ni”) grades such as 0.37 % Ni over 45.7 m, along with 0.52 % Ni over 4 m (diamond drill hole GR-1-83, T1 block). Nickel depletion within dunites and komatiites ranging from 167 ppm to 850 ppm Ni over 194 m (diamond drill hole RP91-1A, T5 block) is interpreted to represent nickel dropping out of the magma and settling to form a sulfide body. Furthermore, T2 to T5 blocks have not had any modern deeppenetrating airborne electromagnetic geophysical surveys flown over them and have only been surveyed using older systems from the 1990s. The T1 block has received partial coverage by a VTEM[TM] survey in 2007. The results of the 2007 survey generated coincident electromagnetic/magnetic anomalies referred to as the TEX 1 target. This target has not been drilled. Previously in 1997, Falconbridge had drilled a single hole (DDH WL97-183), which intersected the southern edge of the TEX 1 electromagnetic anomaly, and encountered 27.85 m of 0.32% Ni starting at a depth of 118.15 m.
QA/QC Protocol
Rock material from the 2020/21 exploration program on the Ruby Creek and Que Properties was collected in poly bags and then transported to the Bureau Veritas sample preparation facility located in Whitehorse, Yukon. Samples were crushed, and then pulps were sent to the Bureau Veritas lab in Richmond, BC for assay. Four acid digestion and Ultratrace ICP-MS analysis for 59 elements and fire assay for gold, platinum and palladium were performed on all samples. Overlimit copper, lead, zinc, and silver samples were analyzed by multi-acid digestion and ICP-ES (MA370). Conversion to WO3 % = W % x 1.2616. All results noted in the MD&A have passed the QA/QC screening by the lab.
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2021/22 Exploration Activities
Exploration plans for 2021/22 include, but are not limited to, additional SkyTEM airborne geophysical survey coverage on selected portions of the Ruby Creek Property. The program will target key portions of the tenures that have not been surveyed during the Company’s 2020/21 program.
The SkyTEM geophysical survey represented the first component of the planned exploration program for the 2021/22 year, which will include a ground program that started in early June 2021, IP geophysics on select targets, and an initial drill program that is potentially scheduled for fall of 2021, however, drilling is subject to exploration results, weather, and availability of financial resources to fund the 2021/22 program.
No firm exploration plans have been made with respect to the Que Property for the summer 2021 due to the potential for regulatory changes in COVID-19 restrictions and quarantine requirements for working in the Yukon. The situation in the Yukon will be monitored closely by the Company and should the COVID-19 restrictions not create an operational impediment to the Company during 2021 summer season, the Company may consider a small geochemical sampling program.
Pending available financing, the Company plans to also fly a SkyTEM airborne geophysical survey over portions of its Manitoba nickel properties in late 2021.
Qualified Person
Ehsan Salmabadi B.Sc., P.Geo., is the Qualified Person as defined by NI 43-101 and has approved all technical information contained herein.
SELECTED ANNUAL INFORMATION
| Year ended | Year ended | Year ended | ||||
|---|---|---|---|---|---|---|
| February 28, 2021 | February 29, 2020 |
February 28, 2019 | ||||
| Net and comprehensive loss | $ | 295,920 |
$ |
431,487 | $ | 179,313 |
| Loss per share–basic and diluted | $ | 0.02 |
$ | 0.04 | $ | 0.03 |
| Total assets | $ | 3,315,578 |
$ |
1,699,948 | $ | 492,694 |
RESULTS OF OPERATIONS
During the year ended February 28, 2021, the Company recorded a net loss and comprehensive loss of $295,920 as compared to net loss and comprehensive loss of $431,487 for the year ended February 29, 2020.
Increased operating activities, share-based compensation associated with vesting of options to acquire Common Shares the Company granted to its management and consultants, advertising and promotional expenses, consulting fees, as well as office expenses had the largest contribution to overall increases in the business expenses the Company incurred during the year ended February 28, 2021, as opposed to the comparative period ended February 29, 2020.
The largest expense item that contributed to the net loss was associated with $121,898 in share-based compensation, representing an increase of $41,760, as compared to $80,138 the Company recorded for the year ended February 29, 2020. The share-based compensation related to vesting of options to acquire Common Shares the Company granted to its management and consultants during the Company’s fiscal 2019, 2020, and 2021 years. In addition, the Company incurred $60,991 in advertising and promotion expenses, which increased by $28,355 from $32,636 the Company incurred during the year ended February 29, 2020. The increase in advertising and promotion fees was associated with the Company’s efforts to increase shareholder awareness through exhibiting at the Prospectors and Developers Association of Canada Conference in Toronto (“PDAC”), paying for news release dissemination services, printing materials to be used in the Company’s investor outreach programs, and paying a consultant for investor relation services.
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The Company’s office expenses and consulting fees increased by $5,056 and $4,869 to $13,314 and $45,149, respectively. During the comparative year ended February 29, 2020, the Company incurred $8,258 and $40,280 in office expenses and consulting fees, respectively.
The increases in operating expenses noted above were offset by a $73,063 decrease in project investigation costs, which, for the year ended February 28, 2021, were $24,833 and were associated with the Que Property costs incurred prior to the Company receiving TSX-V acceptance, as well as the costs associated with investigation of other claims with potential interest to the Company; during the year ended February 29, 2020, the Company incurred $97,896 in property investigation costs. The Company’s professional fees, which include legal, audit, and accounting services, decreased by $50,385 to $74,613 for the year ended February 28, 2021, as compared to $124,998 the Company incurred during the year ended February 29, 2020.
During the year ended February 28, 2021, the Company recorded $35,531 in regulatory and filing fees, which remained comparable to the fees the Company incurred during the year ended February 29, 2020, being $35,659.
Other items that effected the net and comprehensive loss for the year ended February 28, 2021, included $1,243 in Part XII.6 tax payable on the proceeds from the Flow-Through shares financing the Company closed on December 20, 2019, which were used under the look-back rule; a $1,790 loss on sale of Metla Property, which was in part affected by decrease in fair market value of 1,200,000 Brixton common shares the Company received as consideration for the Metla Property from $0.36 on the date of the signing of the Metla Purchase Agreement to $0.34 on October 10, 2020, the Effective Date of the Metla Agreement; and by $114,000 loss on equity investments as the fair market value of Brixton common shares decreased to $0.245 at February 28, 2021.
The net and comprehensive losses were reduced by $35,000 reversal of flow-through share premium liability the Company recognized in its fiscal 2020 which associated with the Flow-Through share financing the Company closed on December 20, 2019, and by $150,000 reversal of flow-through share premium liability associated with the FlowThrough share financing the Company closed on August 14, 2020. In addition, the Company recognized $15,000 gain on forgiveness of debt with a related party.
The Company’s total assets increased by $1,615,630, or 95%, which resulted from $1,229,439 increase in exploration and evaluation assets as a result of the acquisition of the Que Property, and the 2020/21 summer exploration programs on the Ruby Creek and the Que Properties, and $294,000 the Company recognized as fair market value of its marketable securities represented by 1,200,000 Brixton common shares. $152,623 increase in prepaid expenses, of which $147,798 represented prepaid exploration expenses, as well as $46,711 increase in GST receivable further contributed to increase in total assets. These increases were in part offset by the $89,680 decrease in cash balances, as the Company used the funds to fund its 2020/21 exploration programs, and, to a minor extent, by $17,000 decrease in reclamation bond, following the sale of the Metla Property.
SUMMARY OF QUARTERLY RESULTS
Results for the most recently completed financial quarters are summarized in the table below:
| Net and | Income/(loss) per | ||
|---|---|---|---|
| comprehensive | share; basic and | ||
| Period ended: | income/(loss) | diluted | |
| February 28, 2021 | $ | 24,130 | $ 0.00 |
| November 30, 2020 | $ | (113,897) | $ (0.01) |
| August 31, 2020 | $ | (100,946) | $ (0.01) |
| May 31, 2020 | $ | (105,207) | $ (0.01) |
| February 29, 2020 | $ | (133,379) | $ (0.01) |
| November 30, 2019 | $ | (158,531) | $ (0.01) |
| August 31, 2019 | $ | (98,497) | $ (0.01) |
| May 31, 2019 | $ | (41,080) | $ (0.01) |
During the quarter ended February 28, 2021, the Company recorded a net income of $24,130, which was comprised of: $10,834 in share-based compensation associated with vested portion of the options granted to the Company’s officers,
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directors and consultants to acquire up to 1,650,000 Common Shares (these options were granted during fiscal 2019, 2020, and 2021 years); $25,843 in professional fees; $18,174 in advertising and promotion expenses mainly associated with the Company’s efforts to raise awareness about the Company and its operations; $14,716 in consulting fees; $6,165 in regulatory and filing fees; and $4,900 the Company incurred in project investigation costs which were mainly associated with consulting fees associated with exploration and project investigation, and exploratory work done on other prospective claims. During the quarter ended February 28, 2021, the Company’s net and comprehensive loss was further increased by $48,000 unrealized loss the Company recognized on revaluation of its investment in Brixton common shares. The Company’s net and comprehensive loss was in part decreased by $8,261 adjustment to a loss on the sale of its Metla Property, as during the quarter ended February 28, 2021, the Company received the BC Mining Exploration tax credit for exploration work carried out on Metla Property during the Company’s fiscal 2020. The Company’s net loss was in part decreased by $150,000 reversal of a flow-through share premium liability the Company recognized on the FlowThrough Common Shares issued on August 14, 2020.
During the quarter ended November 30, 2020, the Company recorded a net loss of $113,897, which was comprised of: $5,726 in share-based compensation associated with vested portion of the options granted to the Company’s officers, directors and consultants to acquire up to 1,025,000 Common Shares; $2,110 the Company incurred in project investigation costs which were mainly associated with consulting fees associated with exploration and project investigation, and exploratory work done on other prospective claims; $21,243 in professional fees; $9,112 in consulting fees; $3,155 in regulatory and filing fees; and $9,113 in advertising and promotion expenses mainly associated with the Company’s efforts to raise awareness about the Company and its operations. The Company’s net loss was in part decreased by $15,000 gain on forgiveness of debt associated with project management fees the Company recorded as due to a related party. During the quarter ended November 30, 2020, the Company recognized a $10,051 loss on the sale of its Metla Property, and $66,000 unrealized loss on revaluation of the Company’s investment in Brixton common shares.
During the quarter ended August 31, 2020, the Company recorded a net loss of $100,946, which was comprised of: $54,652 in share-based compensation associated with vested portion of the options granted to the Company’s officers, directors and consultants to acquire up to 1,025,000 Common Shares; $8,823 the Company incurred in project investigation costs which were mainly associated with consulting fees associated with exploration and project investigation, and exploratory work done on other prospective claims; $12,809 in professional fees; $12,390 in consulting fees; $15,164 in regulatory and filing fees; and $11,569 in advertising and promotion expenses mainly associated with the Company’s efforts to raise awareness about the Company and its operations. The Company’s net loss was in part decreased by $19,856 reversal of a flow-through share premium the Company recognized on the Flow-Through Common Shares issued on December 20, 2019.
During the quarter ended May 31, 2020, the Company recorded a net loss of $105,207, which was comprised of: $50,686 in share-based compensation associated with vested portion of the options granted to the Company’s officers, directors and consultants to acquire up to 1,025,000 Common Shares; $9,000 the Company incurred in project investigation costs which were in part associated with the Option Agreements to acquire the Que Property; $8,931 in consulting fees; $11,047 in regulatory and filing fees; and $22,135 in advertising and promotion expenses mainly associated with the Company’s efforts to raise awareness about the Company and its operations. Of the total amount recorded as advertising expense, $6,523 was associated with fair market value of an option to acquire up to 50,000 Common Shares the Company granted to Mr. Lagiglia, managing Director of Nicosia, an entity the Company engaged in May of 2020 to provide investor relations services. The Company’s net loss was in part decreased by $15,144 reversal of a flow-through share premium the Company recognized on the Flow-Through Common Shares issued on December 20, 2019.
During the quarter ended February 29, 2020, the Company recorded a net loss of $133,379. The largest expense items that contributed to the net loss related to $46,632 the Company incurred in professional fees, $24,471 in share-based compensation associated with vested portion of the options granted to the Company’s officers, directors and consultants to acquire up to 1,025,000Common Shares, and $18,938 the Company incurred in project investigation costs which were in part associated with the Option Agreements to acquire the Ruby Creek Property and the Que Property, and in part with investigating other potential property acquisitions. During the same period, the Company incurred $9,661 in consulting fees, $10,270 in regulatory and filing fees, and $17,025 in advertising and promotion expenses mainly associated with the cost of issuing news releases to fulfill regulatory and Exchange requirements and also to raise awareness about the Company and its operations.
During the quarter ended November 30, 2019, the Company recorded a net loss of $158,531. The largest expense items that contributed to the net loss related to $50,016 the Company incurred in professional fees, $39,744 in share-based
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compensation associated with vested portion of the options granted to the Company’s officers, directors and consultants to acquire up to 600,000 Common Shares, and $39,709 the Company incurred in project investigation costs which were in part associated with the Option Agreement to acquire the Ruby Creek Property, and in part with investigating other potential property acquisitions. During the same period, the Company incurred $16,954 in consulting fees, and $7,449 in regulatory and filing fees.
During the quarter ended August 31, 2019, the Company recorded a net loss of $98,497. The largest expense item that contributed to the net loss related to $38,539 the Company incurred in project investigation costs which were in part associated with the Option Agreement to acquire the Ruby Creek Property, and in part with investigating other potential property acquisitions. During the same period, the Company incurred $13,447 in regulatory and filing fees associated with the filing of the Company’s year-end financial statements as well as other regulatory filing requirements, $13,522 in sharebased compensation associated with vested portion of the options to acquire Common Shares, and $12,761 in professional fees. In addition, the Company recorded $12,211 in consulting fees incurred with the Company’s CEO and Corporate Secretary, both of whose billable services commenced upon completion of the IPO.
During the quarter ended May 31, 2019, the Company recorded a net loss of $41,080. The largest expense item that contributed to the net loss related to $15,589 that the Company incurred in professional fees associated with the IPO and TSX-V listing process. During the same period, the Company incurred $8,674 in advertising and promotion expenses mainly associated with the Company exhibiting at PDAC, and $4,493 in regulatory fees.
LIQUIDITY AND CAPITAL RESOURCES
| February 28, 2021 | February 29, 2020 | |||
|---|---|---|---|---|
| Working capital | $ | 1,308,647 | $ | 871,799 |
| Deficit | $ | 953,991 | $ | 658,071 |
As at February 28, 2021, the Company had $867,423 in cash (2020 - $957,103), current assets of $1,392,432 (2020 - $988,778) and current liabilities of $83,785 (2020 - $116,979), with working capital of $1,308,647 (2020 –$871,799). Other current assets consisted of GST receivable totalling $68,931 (2020 - $22,220), $162,078 in prepaid expenses, of which $147,798 were associated with prepaid exploration expenses (2020 - $9,455), and $294,000 in marketable securities (2020 – $Nil).
During the year ended February 28, 2021, the Company’s operations were supported by $1,328,702 cash the Company received on closing of its August Offering, and $85,532 received on exercise of options and warrants to acquire the Company’s Common Shares. The Company’s related party payables increased by $22,877, as certain reimbursable expenses and consulting fees incurred by the Company’s directors and officers were paid subsequent to February 28, 2021.
The Company did not generate sufficient cash flows from its operating activities to satisfy its cash requirements for the year ended February 28, 2021. The cash that the Company has generated since its inception on July 7, 2017, to February 28, 2021, has been generated from the sales of Common Shares and from bridge loans from its related parties, which loans the Company repaid, including interest thereon, in June of 2019.
The Company’s original planned $674,000 Metla Property exploration program consisting of a $229,000 Phase 1 Program followed by a $445,000 Phase 2 Program was cancelled with the sale of the Metla Property to Brixton. The cash paid to acquire the Que Property, the annual mineral tenure payment for the mineral claim included in the Ruby Creek Property, and the initial phases of exploration programs on the Ruby Creek Property and the Que Property, which were carried out during the summer and fall of 2020, resulted in total expenditures of $1,098,729.
Based upon the current plans, the Company has enough cash resources to support the Company’s operations during the next 12 months and to continue to carry out exploration programs at the Ruby Creek Property and the Que Property. In order to continue its operations and exploration programs on the Ruby Creek, Que and Manitoba Nickel Properties beyond the 12month period, the Company will be required to raise additional financing, which may be done through private loans, sale of marketable securities, where permissible, and/or through possible joint ventures. Although the Company has succeeded in raising funds as needed, this trend is not guaranteed to continue into the future. Many factors, including, but not limited to, issues related to the current COVID-19 pandemic, downturn of the economy, or a significant decrease in the price of minerals, could affect the willingness of potential investors to invest in grass-roots exploration projects. If the Company is
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unable to generate sufficient cash flow as and when needed, the Company may be required to curtail, or even to cease, its operations.
TRANSACTIONS WITH RELATED PARTIES
Related parties include the Board of Directors, officers, key management personnel, close family members and enterprises that are controlled by these individuals. Key management personnel are those having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole.
During the years ended February 28, 2021, and February 29, 2020, the Company had the following transactions with related parties:
| February 28, | February 28, | February 29, | February 29, | |
|---|---|---|---|---|
| 2021 | 2020 | |||
| Consulting fees paid or accrued to the Company’s CEO | $ | 24,000 | $ | 18,710 |
| Accounting fees paid or accrued to the Company’s CFO | 8,500 | 6,000 | ||
| Consulting fees and fees for assistance with mineral exploration activities | ||||
| paid to the Company’s Corporate Secretary | 21,485 | 14,423 | ||
| Consulting fees paid to an entity controlled by a director | - | 6,000 | ||
| Mineral exploration fees paid to an entity controlled by a director | - | 6,000 | ||
| Project management and mineral exploration fees paid or accrued to an | ||||
| entity controlled by the common-law spouse of the Company’s co-founder | ||||
| and majority shareholder | 35,775 | 18,710 | ||
| Mineral exploration and general business consulting fees paid or accrued to | ||||
| an entity controlled by the VP of Exploration | 13,548 | - | ||
| Share-based compensation foroptions grantedto directorsand officers | 95,153 | 63,632 | ||
| Total related party transactions | $ | 198,461 | $ | 133,475 |
In addition to the above transactions, on November 30, 2020, Ms. Janet Miller, the common-law spouse of the Company’s co-founder and majority shareholder, forgave $15,000 the Company owed to her on account of project management fees. The Company recognized $15,000 as gain on forgiveness of debt included in the statement of net and comprehensive loss.
On November 30, 2020, Global Drilling forgave $11,589 the Company accrued as payable on account of patent fees associated with the mining claim included as part of the Ruby Creek Property. The Company recognized $11,589 as part of retained earnings included in the statement of shareholders equity.
Amounts due to related parties consist of amounts owed directly to the officers and directors of the Company, or to the companies controlled by them, for the professional services or for the expenses incurred on behalf of the Company. These amounts are unsecured, non-interest bearing, and due on demand. At February 28, 2021, the Company owed a total of $45,129 (February 29, 2020 - $48,841) to its related parties.
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OUTSTANDING SHARE DATA
| OUTSTANDING SHARE DATA | OUTSTANDING SHARE DATA | OUTSTANDING SHARE DATA |
|---|---|---|
| As at the date of this MD&A, the following securities were outstanding: | ||
| Type | Amount | Conditions |
| Common Shares | 20,113,840 | Issued and outstanding. |
| Stock options | 535,000 | Exercisable into 535,000 Common Shares at a price of $0.20 per share expiring on August 6, 2024. All these options are fully vested and are exercisable |
| assuming holders remain eligible per the terms of the Company’s option plan. | ||
| Stock options | 380,000 | Exercisable into 380,000 Common Shares at a price of $0.25 per share expiring on February 28, 2025. All these options are fully vested and are exercisable assuming holders remain eligible per the terms of the Company’s option plan. |
| Stock options | 625,000 | Exercisable into 625,000 Common Shares at a price of $0.50 per share expiring on July 18, 2023. The options vest quarterly beginning on April 18, 2021, in |
| equal portions per each holder’s grant. As of the date of this MD&A, 156,250 | ||
| options have vested, and 468,750 options remain to be vested assuming the | ||
| holders remain eligible per the terms of the Company’s option plan on such | ||
| date. | ||
| 21,653,840 | Total shares outstanding (fully diluted). |
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
ACCOUNTING STANDARDS AND INTERPRETATIONS
Certain new accounting standards and interpretations have been published and are fully disclosed in Note 3 of the audited financial statements for the year ended February 28, 2021. Management is assessing the impact of these new standards on the Company’s accounting policies and financial statement presentation.
RISKS AND UNCERTAINTIES
The Company’s activity of natural resource exploration is considered to be very high risk. Companies in this industry are subject to many and varied kinds of risks, including, but not limited to, environmental, commodity prices, political and economic, with some of the most significant risks and uncertainties affecting the Company being the following in addition to other risks disclosed in this MD&A:
-
Substantial expenditures are required to explore for mineral reserves and the chances of identifying economical reserves are extremely small;
-
The Company expects to continue to incur losses from operations unless and until such time as any of its mineral properties enter into commercial production and generate sufficient revenues to fund its continuing operations;
-
The Company’s mineral exploration programs are weather-dependent and unusual conditions, such as unexpected levels of snow cover on the Company’s Que and Ruby Creek Properties, may lead to delays in all or a portion of the planned exploration program. The Company may mitigate this by moving and rescheduling personnel and work, however no guarantee that these measures may be sufficient enough to allow field exploration programs to continue as planned;
-
The junior resource market, where the Company raises funds, is extremely volatile and there is no guarantee that the Company will be able to raise funds as and when required;
-
Although the Company has taken steps to verify title to the mineral properties in which it has an interest, there is no guarantee that such properties will not be subject to title disputes or undetected defects;
-
The Company is subject to the laws and regulations relating to environmental matters, including provisions relating to reclamation, discharge of hazardous material and other matters. The Company conducts its exploration activities in compliance with applicable environmental protection legislation and is not aware of any existing environmental problems related to its properties that may cause material liability to the Company; and
-
The Company is cognizant of the rapid expansion of the COVID-19 pandemic and the resulting global implications. To date, there have been no significant disruptions to the Company’s day-to-day operations, although the SkyTEM
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geophysical survey in 2020 was delayed by several weeks and the Company’s 2020 field season was delayed by a similar number of weeks. Along with its regular safety and environmental program, the Company has implemented a Covid-19 Response Plan and is monitoring the situation. However, the Company cautions that the potential future impact of any restrictions on the Company’s operations is currently unknown but could be significant.
FINANCIAL INSTRUMENTS
Fair Value
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 cash is measured based on Level 1 inputs of the fair value hierarchy.
The estimated fair value of financial liabilities approximates their carrying values due to the short-term nature of these instruments.
Capital Management
The Company manages its capital to safeguard the Company’s ability to continue as a going concern, to ensure future benefits to stakeholders, and to have sufficient funds on hand for business opportunities as they arise.
The Company considers the items included in share capital as capital. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through short-term prospectuses, private placements, sell assets, incur debt, or return capital to shareholders. As at the date of this MD&A, the Company does not have any debt that is subject to externally imposed capital requirements.
The Company is exposed to various financial instrument risks and assesses the impact and likelihood of this exposure. These risks include liquidity risk, credit risk, and market risk. Where material, these risks are reviewed and monitored by the Board of Directors.
a) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due or can only do so at excessive cost. The Company maintains sufficient cash balances to meet current working capital requirements. The Company is considered to be in the exploration stage; thus, it is dependent on obtaining regular financings in order to continue its exploration and evaluation programs. Despite previous success in acquiring these financings, there is no guarantee of obtaining future financings. The Company’s cash is deposited in business accounts with quality financial institutions, is available on demand for the Company’s programs, and is not invested in any asset backed commercial paper.
b) Credit risk
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash, prepaid expenses, and GST receivable. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash and other assets with high-credit quality financial institutions.
c) Market risk
Market risk is the risk of loss that may arise from changes in market factors such as foreign exchange rates, interest rates, and commodity and equity prices.
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i.Currency risk
The Company’s functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars. The Company is not exposed to foreign currency risk.
ii.Interest rate risk
The Company’s exposure to interest rate risk arises from the interest rate impact on its cash. In order to maintain liquidity, the Company plans to invest its cash at floating rates of interest in cash equivalents. There is a minimal risk that the Company would recognize a loss as a result of a decrease in the fair value of any guaranteed bank investment certificates included in cash, restricted cash and reclamation bond as they are generally held with large financial institutions.
iii.Price risk
Equity price risk is the risk that the fair value of equities decreases as a result of changes in the levels of equity indices and the value of individual stocks. The Company is exposed to equity price risk as a result of its investment in marketable securities following the sale of the Metla Property in exchange for common shares of Brixton.
CONTINGENCIES
The Company has no contingent liabilities.
ADDITIONAL INFORMATION
Additional information concerning the Company and its operations is available on SEDAR at www.sedar.com.
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