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Tier One Silver Inc. Management Reports 2025
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TIER ONE
SILVER
(An exploration stage business)
TIER ONE SILVER INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2025
Dated: May 27, 2025
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
- HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND SUBSEQUENT EVENTS UP TO THE DATE OF FILING
1.1 Corporate Highlights
-
On January 3, 2025, Tier One Silver Inc. ("Tier One" or the "Company") closed a non-brokered private equity placement for total gross proceeds of $388,750 in which 5,183,333 units were issued at a price of $0.075 per unit ("January 2025 Placement"). Each offered unit consisted of one common share of the Company and one full common share purchase warrant of the Company. Each warrant entitles the holder thereof to purchase one common share of the Company at a price of $0.15 until January 3, 2028. The Company paid aggregate cash finders' fees of $12,825 and issued 171,000 finders' warrants, with each finder's warrant exercisable on the same terms as the unit warrants. The intended use of proceeds from the private placement is to fund general working capital.
-
DATE AND FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis ("MD&A") of Tier One has been prepared by management to assist the reader in assessing material changes in the condensed consolidated interim financial statements and results of operations of the Company as at March 31, 2025 (the "financial statements") and for the three months then ended.
This MD&A should be read in conjunction with the financial statements of the Company. All financial information has been prepared in accordance with IFRS accounting standards and all dollar amounts presented are Canadian dollars unless otherwise stated. United States readers should be aware that the Company uses mineral terminology based on the Canadian Institute of Mining and Metallurgy ("CIM"). Applicable CIM standards may not be the same as those accepted by the US Securities Exchange Commission for US domestic mining company disclosure. Further details of these differences can be found in our Annual Information Form filings.
The effective date of this MD&A is May 27, 2025.
2.1 Forward-looking statements and risk factors
Certain statements made in this MD&A contain forward-looking information within the meaning of applicable Canadian and United States securities laws ("forward-looking statements"). These forward-looking statements are presented for the purpose of assisting the Company's shareholders and prospective investors in understanding management's intentions and views regarding future outcomes and are inherently uncertain and therefore should not be heavily relied upon. When used in this MD&A, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company, identify such forward-looking statements. Specific forward-looking statements in this MD&A may include, but are not limited to: the Company's ability to execute on its exploration and financing plans, the likelihood of discovering resources; the potential for access to and exploration of the Company's projects, permitting timelines; government regulation of mining operations; environmental and climate-related risks; the possible impairment of mining interests; any objectives, expectations, intentions, plans, results, levels of activity, goals or achievements; the timing and amount of estimated exploration expenditures and capital raises for the Company; the liquidity of the common shares in the capital of the Company and other events or conditions that may occur in the future; the Company's intention to grow its business and its operations; the Company's competitive position; and changes to government regulation, in particular Peruvian.
The forward-looking statements contained in this MD&A represent the Company's views as of the date hereof. The assumptions related to these plans, estimates, projections, beliefs and opinions may change without notice and in unanticipated ways. Many assumptions may prove to be incorrect, including the Company's budgeting plans, expected costs, assumptions regarding market conditions and other factors upon which the Company has based its expenditure and funding expectations; the Company's ability to obtain or renew the licenses and permits necessary for exploration; the Company's ability to complete and successfully integrate acquisitions; the possible effects of climate change, extreme weather events, water scarcity, and seismic events, and the effectiveness of strategies to deal with these issues; the Company's expectations regarding the future demand for, and supply and price of, precious metals; the Company's ability to recruit and retain qualified personnel; the Company's ability to comply with current and future environmental, safety and other regulatory requirements and to obtain and maintain required regulatory approvals.
Inherent in the forward-looking statements are known and unknown risks, uncertainties and other factors beyond the Company's ability to control or accurately predict, that may cause the actual results, performance or achievements of the Company, or developments in the Company's business or in its industry, to differ materially and adversely from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
statements. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements and information contained in this MD&A include, but are not limited to: risks in investigating, optioning or otherwise acquiring interests in mineral projects of merit followed by the high risk of exploration failure, risks in our ability to secure governmental permits and a social license to explore the projects, risks that the financial markets will lose their appetite to finance junior resources issuers; fluctuations in the current and projected prices for precious and base metals; technical risks and hazards associated with the mineral exploration including environmental hazards, potential unintended releases of contaminants, industrial accidents, unusual or unexpected geological or structural formations, pressures, cave-ins and flooding; the uncertainty in the process of estimation and valuation of any mineral resources that may be discovered, changes in Peruvian tax, title and mining laws and regulations impacting exploration activities; the risk of the Company's mineral properties being subject to unknown prior unregistered agreements, transfers or claims and other defects in title; general opposition to mining activities and attendant legal and litigation risks; statutory and regulatory compliance; insurance and uninsurable risks; the Company's limited business history and history of losses and negative cash flow, which will continue into the foreseeable future, and its inability to pay dividends; the continued involvement of the key management team and the Company's ability to secure the specialized skill and knowledge necessary to operate in the mining industry; relations with and potential demands and claims by local communities and non-governmental organizations, including indigenous populations and affected local communities with whom the Company is required to pursue local community surface access agreements in order to explore; the expenses and other requirements of being a public company; risks associated with the significant resources required to maintain regulatory compliance as a public company; the effectiveness of the Company's internal control over financial reporting; cybersecurity risks; risks relating to the Company's public perception; general business, economic, competitive, political and social uncertainties; and public health crises such as the COVID-19 pandemic and other uninsurable risks. While the Company has sought to provide a list of the principal risks, these are the known risks and hence cannot be an exhaustive list of the risks and other factors that may affect any of the Company's forward-looking statements as there are likely also unknown risks. Additional disclosure documents with information relating to the Company and its operations is available on SEDAR+ at www.sedarplus.ca and on the Company's website at www.tieronesilver.com. These documents are for supplemental information purposes only and not incorporated by reference in this MD&A.
The Company's management periodically reviews information reflected in forward-looking statements. The Company has and continues to disclose in its MD&A and other publicly filed documents, changes to material factors or assumptions underlying the forward-looking statements and to the validity of the statements themselves, in the period the changes occur. Historical results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate future results from operations.
3. DESCRIPTION OF THE BUSINESS
The Company is a junior resource exploration issuer seeking to create significant value for shareholders through the exploration for silver, gold and copper deposits in South America. The primary focus of the Company is on its $100\%$ owned Curibaya project, located in Southern Peru, which consists of approximately 17,000 hectares (ha) approximately $48~\mathrm{km}$ north-northeast of the provincial capital, Tacna, accessible by road. The Company is also actively reviewing other resource projects in South America with a longer-term goal of selectively rebuilding a pipeline of prospects for future exploration.
Figure 1 – Location of Tier One's Curibaya property within Peru.
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
Beyond having title to its mineral properties, the Company must secure environmental permits and local community access agreements in order to conduct its exploration activities. Therefore, building and maintaining relationships with its key stakeholders, namely governmental bodies and local communities, among others, is crucial to the Company's continued success. In this regard, the Company believes that it conducts itself to the highest standards around environmental and social responsibility and corporate governance.
As a normal part of the exploration process, Tier One enters into access and use agreements with the local communities. The process requires achieving local community consensus though positive dialogue with the communities. As at the date hereof, the Company has a community agreement which allows for surface work and drilling on the area of focus of the Curibaya project. The agreement is effective until June 11, 2025 and allows for an extension by an additional year through assembly approval (on which the Company is currently working with the community).
3.1 Peruvian projects
3.1.1 Curibaya Project
The Curibaya property is currently comprised of approximately 17,000 ha and is situated in a copper porphyry belt that hosts some of Peru's largest porphyry deposits. Tier One has a 100% interest in the Curibaya project, which is comprised of numerous concessions acquired through staking efforts, mostly by the Company's corporate predecessor, and the Sambalay and Salvador concessions, which were acquired in 2019. The Sambalay concessions are subject to a 1.5% net smelter return ("NSR") royalty in favor of each of Teck Peru, S.A.C. ("Teck") and Compañía de Exploraciones Orion S.A. One third or 0.5% of the Teck NSR royalty is buyable for US$1.0 million. The Salvador concessions are subject to a 2.0% NSR royalty and a US$2.0 million production payment, payable at the time a production decision is made, and to secure payment of such consideration, a legal mortgage in favor of Teck is recorded in the registry files of the Salvador concessions.
2025 Plans
Through the Company's work completed on the Curibaya project to date, including its most recent surface sampling conducted in 2024, the Company has identified 20 drill pad locations and anticipates that the next phase of drilling will comprise between 1,000 – 5,000 metres ("m"), from 5 of the identified drill pads, to follow-up on the high-grade silver-gold epithermal mineralization defined at surface. Despite having a drill plan in place, the Company will not be in a position to execute its second phase of drilling at the Curibaya project until it raises sufficient capital, at which point it will commence work to implement the required infrastructure and mobilize equipment to site, before resuming drilling activities.
During the three months ended March 31, 2025, the Company incurred $125,963 of exploration and evaluation costs on Curibaya ($133,913 for the three months ended March 31, 2024).
3.1.2 Other Non-Material Projects
Corisur claims
The Corisur claims, covering approximately 1,300 ha, consisted of the Tacora, Tacora Sur and Andamarca concessions which are located in the Peru designated border zone, and as a result unconditional ownership could only be achieved in the future by obtaining a Supreme Decree.
During the three months ended March 31, 2024, the Company made the decision to relinquish the non-core Corisur project and recorded an impairment charge of $881,622 to write off all capitalized costs associated with these claims.
During the three months ended March 31, 2024, the Company reversed a provision and recorded an expense recovery in the amount of $162,473 (US$120,000). The provision had been recorded in 2021 in relation to anticipated final costs for the orderly closure of the Huilacollo option and permit, all of which have been completed. No further material costs are anticipated.
Coastal Batholith
Coastal Batholith is a wholly owned project on the Pacific Ocean coast of Peru acquired through staking and covers approximately 3,500 ha, after relinquishing many of the concessions in each of 2022 and 2023 to retain only what the Company considers the most prospective areas. All costs related to the staking of the Coastal Batholith project were impaired in 2023 as the plan for this early stage, non-core asset was uncertain then, and still is, and therefore, as at March 31, 2025, the balance remains $nil.
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
Exploration and evaluation costs incurred on other properties
During the three months ended March 31, 2025, the Company incurred $3,787 of exploration and evaluation expenses on the Coastal Batholith claims in relation to the accrual of 2025 concession fees (cost recovery of $95 during the three months ended March 31, 2024, resulting from the reversal of the previously accrued 2023 Corisur concession fees after the Company made the decision to relinquish these claims).
3.2 Qualified person and technical disclosures
Christian Rios, P.Geo., SVP of Exploration of the Company, is the Qualified Person with respect to the technical disclosures in this MD&A.
- DISCUSSION OF OPERATIONS
4.1 Three months ended March 31, 2025 and 2024 (Q1 2025 vs Q1 2024)
During the three months ended March 31, 2025, the Company reported a loss of $519,252 compared to a loss of $1,346,950 for the comparable period in 2024. Significant variances within operating expenses and other expenses, which in combination resulted in the $827,698 decrease in the current period's loss, are discussed as follows:
- Fees, salaries, and other employee benefits, legal and professional fees, marketing and investor relations, office and administration costs were all lower in Q1 2025 as the Company required fewer administrative, legal, and marketing support services and the Company continued to reduce expenditures while activity levels were low. In addition, the corporate team moved to remote working as a result of the sublease by UMS Canda of the shared office space in Q4 2024.
- Notwithstanding the general reduction in expenditures as discussed above, the primary driver of the lower loss reported for Q1 2025 is in relation to the mineral property impairment charge of $881,622 included in Q1 2024 after the decision was made to wind up the Corisur concessions. In addition, during Q1 2024, the Company reversed the provision and recorded an expense recovery of $162,473 (US$120,000) for final costs relating to the 2021 Huilacollo option and orderly closure of the related permit for which all requirements have been completed. There were no impairment charges or provision reversals in Q1 2025.
4.2 Summary of Quarterly Results
| Quarter ended | Interest income | Loss for the period | Comprehensive loss for the period | Net loss per share |
|---|---|---|---|---|
| March 31, 2025 | $ 1,845 | $ 519,252 | $ 519,532 | $ 0.00 |
| December 31, 2024 | 2,246 | 832,804 | 812,510 | 0.00 |
| September 30, 2024 | 10,527 | 840,323 | 845,237 | 0.00 |
| June 30, 2024 | 11,619 | 664,113 | 666,575 | 0.00 |
| March 31, 2024 | 8,207 | 1,346,950 | 1,326,548 | 0.01 |
| December 31, 2023 | 5,196 | 1,041,762 | 1,035,521 | 0.01 |
| September 30, 2023 | 11,238 | 1,601,030 | 1,598,427 | 0.01 |
| June 30, 2023 | 11,271 | 1,364,128 | 1,389,882 | 0.01 |
During the last eight quarters, the Company's net loss has ranged between $519,252 and $1,601,030. Quarterly losses are closely correlated to the level of exploration activity in any given quarter, which can fluctuate significantly. Additionally, the Company incurs expenditures on administrative activities, professional fees, corporate outreach and communications, and regulatory compliance, to support its exploration activities, public listings and to promote the Company's activities in the market. These expenses fluctuate to a significant degree depending on the funding opportunities available to the Company to pursue exploration.
In addition to the quarterly loss trends discussed above, the Company also recognized impairment charges in Q2 2023 upon dropping additional Coastal Batholith claims, in Q3 2023 as related to the termination of the Hurricane option, in Q4 2023 in relation to its investment in UMS Peru, in Q1 2024 after the decision was made to relinquish the remaining Corisur claims, and again in Q4 2024 in relation to its decommissioning of equipment. Beyond the fluctuations driven by activity levels, the impairment charges resulted in increased losses during those periods.
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
4.3 Summary of Project Costs
During the three months ended March 31, 2025, the Company incurred $129,750 in exploration and evaluation costs on its projects.
| Mineral property interests | Curibaya | Other | Total |
|---|---|---|---|
| Balance as at December 31, 2023 | $ 1,376,162 | $ 861,211 | $ 2,237,373 |
| Mineral property impairment | - | (881,622) | (881,622) |
| Recognition of provision for site reclamation and closure | (2,969) | - | (2,969) |
| Currency translation adjustment | 75,419 | 20,411 | 95,830 |
| Balance as at December 31, 2024 | $ 1,448,612 | $ - | $ 1,448,612 |
| Currency translation adjustment | (840) | - | (840) |
| Balance as at March 31, 2025 | $ 1,447,772 | $ - | $ 1,447,772 |
| Exploration and evaluation costs | Curibaya | Other | Total |
| --- | --- | --- | --- |
| Surface exploration | $ 23,420 | $ - | $ 23,420 |
| Camp and project support | 20,119 | - | 20,119 |
| Concession holding | 17,512 | 3,787 | 21,299 |
| Permitting, environmental and community | 64,243 | - | 64,243 |
| Share-based payments | 669 | - | 669 |
| Total for the period ended March 31, 2025 | $ 125,963 | $ 3,787 | $ 129,750 |
4.4 Future Operations
Resources have been and will continue to be primarily directed at continuing progress at Curibaya. The Curibaya project is drill ready and once sufficient capital has been raised, the Company plans to initiate drilling activity. Initial work will be comprised of construction of access roads and drill platforms. The Company's second drill program is expected to consist of between 1,000 - 5,000m to test the Cambaya target area. The Company estimates that this work would cost between $1.3 - $6.0 million.
While the Company believes there are multiple opportunities at the significantly unexplored Curibaya project, having relinquished its non-core properties, the Company is also actively reviewing other resource projects for acquisition in order to rebuild a portfolio of projects for future exploration.
On January 3, 2025, the Company closed the January 2025 Placement, raising $388,750 by issuing 5,183,333 units at $0.075 per unit. While the Company has been successful in raising capital in the past, its ability to pay government concession fees to maintain its current mineral properties, including approximately $196,039 due in June 2025, and to fund Curibaya drilling and other work programs, including potential future project acquisitions, will depend on raising additional funds through the sale of common shares. There can be no assurance that the Company will be able to raise sufficient funds to finance its future plans, including the retention of its principal concessions.
5. FINANCIAL POSITION, LIQUIDITY, AND CAPITAL RESOURCES
5.1 Financial position and liquidity
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Cash | $ 222,459 | $ 171,294 |
| Amounts receivable | 5,035 | 31,562 |
| Current other assets | 140,466 | 206,945 |
| Non-current other assets | 99,926 | 100,588 |
| Mineral property interests | 1,447,772 | 1,448,612 |
| Current liabilities | (1,192,556) | (955,829) |
| Non-current liabilities | (529,910) | (500,193) |
As at March 31, 2025, the Company had cash of $222,459 (December 31, 2024, $171,294) and a working capital deficit of $824,596 (December 31, 2024 - $546,028). None of the Company's cash is restricted.
As at March 31, 2025, the Company had current liabilities, due to be paid within 12 months, consisting of accounts payable and accrued liabilities totaling $1,192,556 which include 2024 Curibaya government concession fees and 2023 penalty
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
fees, due by June 30, 2025, totaling $196,039. Penalties are legislated fees payable to the government, in the event that the Company does not expend the government mandated minimum investment amount on exploration properties. In the case that adequate amounts are expended on the exploration properties and the minimum investment is met, penalty fees are eliminated. In each of 2023 and 2024; the Company did not meet the minimum investment expenditures in three of its concessions and therefore, penalties have been accrued in relation to those concessions in those years.
The Company has non-current accrued liabilities related to 2024 concession penalty fees associated with its Curibaya project totaling $130,644 which are due by June 30, 2026. In addition, the Company has a non-current reclamation and closure provision of $399,266 and certain commitments in relation to its share of the UMS Canada lease obligation as disclosed in Note 5 of the financial statements.
During the three months ended March 31, 2025, the Company used cash of $157,775 in operating activities compared to $317,922 during the comparative period in 2024. The lower cash outflow during 2025 was primarily the result of the lower activity level and cost reduction efforts, as discussed above.
During the three months ended March 31, 2025, the Company generated cash from investing activities of $1,845 compared to $8,207 during the comparative period in 2024. The cash inflow in both periods was related to interest earned on cash balances.
During the three months ended March 31, 2025, cash provided by financing activities was $207,139 related to the January 2025 Private Placement compared to $nil during the comparable period in 2024.
Capital markets have been challenging in recent years for junior exploration companies hence during this time the Company has made significant efforts to minimize and contain expenditures. As of the date of this MD&A, the Company currently projects to require $1.3 million annually to cover corporate compliance and overhead costs, including corporate communications and marketing, and $0.7 million for project related costs to maintain its Curibaya project, permits and community relationships in good standing. The estimated annual cash requirements outlined above, do not include the funds required to undertake exploration activities, the amount of which is dependent on the size and extent of the planned program(s).
Despite having some ability to limit and contain its expenditures, the Company has incurred operating losses to date and does not generate operating revenue to support its activities. With no source of operating revenue, there can be no assurance that sufficient funding will be available to conduct further exploration of its mineral properties. The ability to continue as a going concern remains dependent upon the Company's ability to obtain the financing necessary to continue to fund its mineral properties and exploration programs, the realization of future profitable production, proceeds from the disposition of its mineral interests, and/or other sources. These conditions create a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern and expose the Company to liquidity risk, being the risk that it will have difficulty in meeting obligations associated with its financial liabilities. While the Company has been successful in completing financings in the past, as at March 31, 2025, the Company did not have sufficient cash on hand to discharge its financial liabilities as they become due and will require additional funding to continue operations for the current year.
5.2 Capital Resources
On January 3, 2025, Tier One completed the January 2025 Placement for gross proceeds of $388,750. The intended use of proceeds from the January 2025 Placement was to fund general working capital. A reconciliation of the net proceeds and a summary of how the funds have been used as of March 31, 2025, is as follows:
| Number of common shares | Proceeds | |
|---|---|---|
| Units issued at $0.075 per unit | 5,183,333 | $ 388,750 |
| Share issuance costs | (24,304) | |
| Net proceeds | $ 364,446 | |
| Actual use of proceeds – 2025 | ||
| Expenditures on the Curibaya project | (20,955) | |
| General working capital | (87,312) | |
| Expenditures on project investigation | (33,720) | |
| Proceeds remaining at March 31, 2025 | $ 222,459 |
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
On April 30, 2024, Tier One completed the April 2024 Placement for gross proceeds of $1,484,504. The intended use of proceeds from the April 2024 Placement was to fund general working capital. A reconciliation of the net proceeds and a summary of how the funds have been used as of March 31, 2025, is as follows:
| Number of common shares | Proceeds | |
|---|---|---|
| Units issued at $0.14 per unit | 10,603,600 | $ 1,484,504 |
| Share issuance costs | (93,870) | |
| Net proceeds | $ 1,390,634 | |
| Actual use of proceeds – 2024 | ||
| Expenditures on the Curibaya project | (682,519) | |
| General working capital | (622,621) | |
| Expenditures on other projects and project investigation | (77,784) | |
| Proceeds remaining at December 31, 2024 | $ 7,710 | |
| Actual use of proceeds – 2025 | ||
| General working capital | (7,710) | |
| Proceeds remaining at March 31, 2025 | $ - |
6. OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have off-balance sheet arrangements. Earn-in arrangements are not viewed as off-balance sheet arrangements, and there are no other commitments held by the Company at the balance sheet date other than as disclosed in Note 5 to the financial statements in respect of future lease payments on the UMS Canada shared office.
7. RELATED PARTY TRANSACTIONS
Related party transactions, as defined by IFRS, are those with entities over which the Company has control or significant influence and with key management personnel, being persons having the authority and responsibility for planning, directing, and controlling the Company. Due to the Company having a 25% and 50% ownership interest in UMS Canada and UMS Peru, respectively, they are classified as related parties. For avoidance of doubt the following are not "related party transactions" as defined by the Canadian Securities laws in relation to protection of minority shareholders (Multi-lateral Instrument 61-101).
7.1 Universal Mineral Services Canada and Universal Mineral Services Peru
Universal Mineral Services Ltd. ("UMS Canada") is a shared service provider company in which the Company holds a 25% equity interest which it acquired for nominal consideration, with the remaining 75% balance being shared equally by three other non-related junior resource explorers certain of which have some directors in common. UMS Canada provides administrative, geological, accounting, and other advisory services to the Company on a cost recovery basis.
Universal Mineral Services Peru S.A.C. ("UMS Peru") is a company incorporated under Peruvian law, which in the past provided administrative and geological services to Corisur S.A.C and Magma Minerals S.A.C. and to the Peruvian subsidiary of a non-related company. In order to comply with Peruvian transfer pricing rules, UMS Peru charges its services at cost plus a markup of 5% for administrative services and 7% for geological services. During Q4 2023, UMS Peru stopped providing services to the Company and is now in the process of being wound up.
All transactions have occurred in the normal course of operations. All amounts are unsecured, non-interest bearing and have no specific terms of settlement, unless otherwise noted.
| Three months ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Exploration and evaluation | $ (10,072) | $ (670) |
| General and administration | 86,183 | 97,699 |
| Project investigation | 6,418 | 1,033 |
| Total transactions for the period | $ 82,529 | $ 98,062 |
As at March 31, 2025, $195,593 (December 31, 2024 - $157,109) was included in accounts payable and accrued liabilities and $58,835 (December 31, 2024 - $65,237) in prepaid expenses, deposits and other relating to transactions with UMS Canada. Including the initial deposit of $150,000 advanced to UMS Canada for working capital purposes, the Company had a net deposit balance of $13,242 with UMS Canada as at March 31, 2025, which is below the deposit required by the UMS service agreement of up to three months expected expenditures, currently set for the Company at $73,806.
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
As at March 31, 2025, the Company had a working capital deposit with UMS Peru in the amount of $67,855 (US$47,200). The full amount had been written down to $nil as at December 31, 2023, as it was not expected to be recovered, however, $35,940 (US$25,000) of the working capital deposit has been reinstated and included on the statement of financial position as at March 31, 2025, based on the funds available in UMS Peru after the wind-up process had been substantially completed. These funds were repaid to the Company in April 2025.
7.2 Key management compensation
In addition to the transactions disclosed above, the Company provided or accrued the following compensation to key management members, being its three executives, of which one is a Board Director, and five (six until August 7, 2024) non-executive independent directors:
| Three months ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Salary and benefits provided to executives | $ 149,751 | $ 152,535 |
| Non-executive directors’ fees | 40,245 | 48,238 |
| Share-based payments | 3,588 | 37,964 |
| Total for the period | $ 193,584 | $ 238,737 |
The Company's Chief Financial Officer provides services, on a less than full-time basis, under a secondment employment arrangement between the Company and UMS Canada. As at March 31, 2025, the Company had an accounts payable balance with all key management personnel of $369,614 ($242,752 as at December 31, 2024), of which $37,500 was paid on April 30, 2025.
The Company grants options to certain UMS employees, including key management personnel of the Company. The Company recognized share-based payments of $1,311 for the three months ended March 31, 2025, in respect of share options granted to UMS employees ($14,290 for the three months ended March 31, 2024).
8. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
The preparation of the financial statements in conformity with IFRS accounting standards requires management to select accounting policies and make estimates and judgments that may have a significant impact on the financial statements. Estimates are continuously evaluated and are based on management's experience and expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from these estimates.
In preparing the Company's financial statements, the Company applied the significant accounting estimates and judgments disclosed in Note 3 of the audited consolidated financial statements for the year ended December 31, 2024.
9. CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
The accounting policies followed in the financial statements are the same as those applied in the Company's most recent audited annual consolidated financial statements for the year ended December 31, 2024, as disclosed in Note 3 therein, with the exception of those new and amended standards discussed below.
Application of new and amended accounting standards
The Company adopted the following amendments to accounting standards, effective January 1, 2025:
On August 14, 2023, the IASB issued amendments to IAS 21 "Lack of Exchangeability" which contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. The amendments to IAS 21 are effective for annual periods beginning on or after January 1, 2025. The adoption of the new standard did not have an impact on the financial statements of the Company.
Standards issued but not yet effective
On April 9, 2024, the IASB issued a new standard, IFRS 18 Presentation and Disclosure in Financial Statements, to improve the reporting of financial performance. IFRS 18 introduces categories and defined subtotals in the statement of profit or loss, disclosures on management-defined performance measures, and requirements to improve the aggregation and disaggregation of information in the financial statements. As a result of IFRS 18, amendments to IAS 7 were also issued to require that entities use the operating profit subtotal as the starting point for the indirect method of reporting cash flows from operating activities and also to remove presentation alternatives for interest and dividends paid and
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
received. IFRS 18 replaces IAS 1 Presentation of Financial Statements and will be effective for annual reporting periods beginning on or after 1 January 2027, and is to be applied retrospectively, with early adoption permitted. The Company is in the process of assessing the impact of this new accounting standard on the consolidated financial statements.
On May 30, 2024, the IASB issued Amendments IFRS 9 and IFRS 7 which clarify the date of initial recognition or derecognition of financial liabilities, including financial liabilities that are settled in cash using an electronic payment system. The amendments also introduce additional disclosure requirements to enhance transparency regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features. These amendments are effective for annual periods beginning on or after January 1, 2026, with early adoption permitted. The Company is currently assessing the impact, if any, of the amendments on the consolidated financial statements.
10. FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
As at March 31, 2025, the Company's financial instruments consist of cash, amounts receivable, deposits, as well as accounts payable and accrued liabilities, which are classified as and measured at amortized cost. The fair values of the current financial instruments approximate their carrying values due to their short-term nature. The Company's financial instruments are exposed to certain financial risks including credit risk, liquidity risk and currency risk. Details of the primary risks that the Company is exposed to are further laid out in Note 11 to the Company's financial statements.
11. OTHER REQUIRED DISCLOSURES
11.1 Proposed transactions
As at March 31, 2025, and as at the date of this MD&A, the Company had no material proposed or pending transactions, notwithstanding, the Company is actively reviewing other resource projects in South America with a longer-term goal of selectively rebuilding a pipeline of prospects for future exploration.
11.2 Capital structure
The capital structure of the Company consists of:
Authorized: Unlimited number of common shares.
The following common shares, share options and share purchase warrants were outstanding as at March 31, 2025, and at the date of this MD&A:
| As at March 31, 2025 | As at date of M&DA | |
|---|---|---|
| Common shares | 176,232,856 | 176,232,856 |
| Share options | 9,895,000 | 9,895,000 |
| Share purchase warrants | 50,905,730 | 29,139,599 |
11.3 Disclosure controls and procedures
As defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, disclosure controls and procedures require that controls and other procedures be designed to provide reasonable assurance that material information required to be disclosed is duly gathered and reported to senior management in order to permit timely decisions and timely and accurate public disclosure.
Management is responsible for the establishment and maintenance of a system of internal control over financial reporting. This system has been designed to provide reasonable assurance that assets are safeguarded and that the financial reporting is accurate and reliable. The consolidated financial statements have been prepared by management in accordance with IFRS and in accordance with accounting policies set out therein.
Management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, have evaluated the design of the Company's disclosure controls and procedures and the design of internal controls over financial reporting as required by Canadian securities laws, and have concluded that such procedures are adequate to ensure accurate and complete disclosures in public filings.
There are inherent limitations in all control systems and no disclosure controls and procedures can provide complete assurance that no future errors or fraud will occur. An economically feasible control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
11
Tier One Silver Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the three months ended March 31, 2025 (In Canadian dollars, unless otherwise noted)
Additional disclosures pertaining to the Company's management information circulars, material change reports, press releases and other information are available on the SEDAR+ website at www.sedarplus.ca under Tier One Silver Inc.'s profile.
On behalf of the Board of Directors,
"Peter Dembicki"
Peter Dembicki
President, Chief Executive Officer and Director
May 27, 2025