AI assistant
Transition Metals Corp. — Management Reports 2023
Dec 18, 2023
46783_rns_2023-12-18_c411eb74-7c5a-4a58-af34-3f1571e43b49.pdf
Management Reports
Open in viewerOpens in your device viewer
. Transition Metals Corp Management Discussion & Analysis For the Year Ended August 31, 2023
INTRODUCTION
This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to Transition Metals Corp. (“we”, “our”, “us”, “Transition Metals”, “TMC”, “Transition” or the “Company”) as of August 31, 2023, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations for the year ended August 31, 2023, and should be read in conjunction with the financial statements for the year ended August 31, 2023, and for the year ended August 31, 2022. This MD&A was prepared as of December 14, 2023.
The financial statements and related notes of Transition Metals have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The Company’s reporting currency is the Canadian dollar, and all monetary amounts in this MD&A are expressed in Canadian dollars unless otherwise stated.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Except for statements of historical fact relating to Transition Metals certain information contained herein constitutes forward-looking information under Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the Company’s proposed acquisitions and strategy, development potential and timetable of the Company’s properties; the Company’s ability to raise required funds; future mineral prices; mineralization projections; conclusions of economic evaluation; the timing and amount of estimated future exploration and development; costs of development; capital expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Estimates regarding the anticipated timing, amount and cost of exploration activities are based on previous industry experience and regional political and economic stability. Capital and operating cost estimates are based on extensive research of the Company, recent estimates of exploration costs and other factors that are set out herein. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward- looking statements, including but not limited to risks related to: unexpected events and delays during exploration and development; acquisition risks; regulatory risks; revocation of government approvals; timing and availability of external financing on acceptable terms; actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of minerals; accidents, labour disputes and other risks of the mining industry. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward- looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward- looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.
Historical results of operations and trends that may be inferred from this MD&A may not necessarily indicate future results from current project properties. Please see Risk Factors section of this MD&A. In particular, the current state of the global securities markets may cause significant fluctuations and/or reductions in the price of the Company’s securities and render it difficult or impossible for the Company to raise the funds necessary to continue operations.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 1
DESCRIPTION OF THE BUSINESS &BUSINESS OVERVIEW
Transition Metals is a publicly traded mineral exploration company. The Company’s projects and their history are disclosed in press releases, technical reports and other continuous disclosure filings which may be viewed on the internet on the System for Electronic Document Analysis and Retrieval (SEDAR+) at www.sedarplus.ca and on the Company’s website at www.transitionmetalscorp.com.
Transition Metals Corp. is engaged in the acquisition and exploration of mineral exploration properties in Canada. The Company’s registered office is 100 King Street West, 1 First Canadian Place, Suite 6200, Toronto, Ontario, M5X 1B8.
Transition Metals (XTM-TSX.V) is a multi-commodity exploration company in Canada. It focuses on key, high quality exploration projects while maintaining a pipeline of projects across the country to advance in the future, option or sell. This approach maximizes shareholder exposure to discoveries and capital gain while minimizing shareholder equity dilution by selling interest in the projects rather than ownership in the Company. The Company has established funding partnerships with other companies that are earning an interest in Transition Metals property by providing a blend of cash, shares and royalties, and committing exploration expenditures to advance the projects. The Company has developed a portfolio of base and precious metals projects in Ontario, British Columbia, Nova Scotia, Yukon, Newfoundland & Labrador, and Saskatchewan with direct property ownership interest in approximately 740 km² mining land and share ownership interests in partner companies.
Key projects for the Company include: the Pike Warden Au-Ag-Cu project near Whitehorse, Yukon, the Maude Lake Nickel project near Schreiber, Ontario and the Sunday Lake PGM discovery near Thunder Bay held through a Joint Venture with Impala Platinum Holdings Limited (“Implats”) and Impala Canada Limited (“Impala Canada”). Key investments for the Company include the Company’s shareholdings in: SPC Nickel Corp. (SPC), a public company which is focused on advancing the West Graham Ni-Cu-PGM project in Sudbury and Canadian Gold Miner Corp. (CGM) a private company which is focused on advancing the South Kirkland gold project. In addition, the Company holds shares of publicly traded companies including Forum Energy Metals Corp., Nova Royalty Corp., Homerun Resources Inc., McFarlane Lake Mining Limited, Heritage Mining Limited and Class 1 Nickel and Technologies Limited. It also holds shares of two other private companies.
The business of exploration and mining involves a high degree of risk and there can be no assurance that the Company’s exploration programs will result in profitable mining operations. The Company’s business is dependent upon the discovery of economically recoverable mineral deposits, securing and maintaining title and beneficial interest in the properties, the ability to obtain the necessary financing to complete exploration, development and construction of a mine and processing facilities, obtaining certain government approvals to monetize its assets or generate profitable revenue from mining production. There can be no assurance that the Company will be able to raise sufficient funds as and when required.
The Company’s financial statements are prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of the Company’s business. The application of the Going Concern concept is dependent on the Company’s ability to obtain financing to continue its operations.
The Company presently has no known quantifiable mineral deposits that justify exploitation, and activities completed by the Company constitute exploratory searches for economic mineral deposits.
OUTLOOK
The Company will focus on its Pike Warden, Maude Lake, Sunday Lake and Saturday Night projects. The Company intends to continue to develop and advance its portfolio projects with the objective of attracting new funding partners to further leverage the Company’s exposure while retaining the upside value that can come from the discovery of new mineral deposits.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 2
Projects that the Company considers key to driving value into the next period include: the Maude Lake Ni-Cu- CoPGM project near Schreiber Ontario, the Pike Warden property in the Yukon, and the Sunday Lake PGM- Cu-Ni joint venture with Impala Platinum Holdings Limited (Implats) and Impala Canada Ltd. (“Impala Canada”) near Thunder Bay.
It is anticipated that CGM will complete a public transaction in 2024.
INTERNAL QUALIFIED PERSON AND QUALITY CONTROL/QUALITY ASSURANCE
Greg Collins, P.Geo., Chief Operating Officer of the Company, is a Qualified Person as defined under National Instrument 43-101 and has reviewed and approved the technical information contained in this MD&A.
MINERAL PROPERTIES, ACTIVITY AND PLANS
CORPORATE ACTIVITIES
During the reporting period the Company was actively engaged in project generative research, property acquisitions and sourcing partners for its projects.
On January 26, 2023, the Company announced it will hold the annual and special general meeting on Friday February 24, 2023 at 55 York Street, Suite 402 at 10am (Eastern Time).
On February 10, 2023, the Company announced that it had entered into an Option Agreement with Aurum Lake Mining Corporation (“Aurum”) whereby Aurum could earn 100% interest in the Homathko Gold Project (the “Property”), located in the Cariboo Region of the Province of British Columbia. In consideration of the grant of the Option, Aurum paid the Company $20,000 on signing the Agreement and will be required to pay an additional $450,000 over two years. Aurum is also required to incur work expenditures on the Property totaling $500,000 over the next two years and make a one-time $5,000,000 lump sum payment to the Company upon the commencement of commercial production. Upon earning its interest, Transition will be granted a net smelter return royalty of 2.0% on all mineral production on the Property. Portions of the property are also subject to an underlying net smelter royalty of 1.0% payable to Nova Royalty Corp. (see Company news release dated: October 5, 2020).
In addition, the Company announced that it had entered into a consulting agreement with Raven Waschilowski to carry out certain investor relations services that was subsequently terminated in the Spring of 2023.
On February 28, 2023, the Company announced the results of voting at its annual and special general meeting held on February 24, 2023. All four of the individuals nominated for the board of directors, namely Thomas Atkins, Jason Marks, Scott McLean and Brian Montgomery received the support of the Company's shareholders. Additionally, John Baird and William Pearson have retired from the board by not standing for election. The shareholders also voted in favor of ratifying the appointment of McGovern Hurley LLP as the auditors and ratifying the omnibus equity incentive compensation plan.
On April 19, 2023, the Company also announced that they engaged Mining Investor Resources Media Ltd., doing business as MiningIR.com ("MIR"), to provide the Company with media services through mining and resource news, lead generation services, social media services, and information company profile page for an initial period of 12 months beginning April 11, 2023. Pursuant to the terms of the MIR Agreement, MIR will be paid an aggregate cash amount of $39,000 for its services. Neither MIR nor its affiliates currently own any securities of the Company. MIR and the Company are unrelated and unaffiliated entities.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 3
On June 19, 2023 the Company announced that it had closed the previously mentioned non-brokered private placement. A total of 9,770,750 units were issued, for proceeds of $1,000,014 which included 1,897,000 units (the “Units”) at a price of $0.08 per Unit for gross proceeds of $151,760; 4,250,000 flow through units (the “FT Units”) at a price of $0.10 per FT Unit for aggregate proceeds of $425,000 and; 3,623,750 special flow through units in the capital of the Corporation (the “Special FT Units”) at a price of $0.1168 per Special FT Unit for aggregate proceeds of $423,254 (collectively, the “Private Placement”). Each Unit consists of a common share and half (1/2) common share purchase warrant. Each FT Unit and Special FT unit consists of a flow-through share and half (1/2) common share purchase warrant Each full warrant will entitle the holder to purchase one additional Common Share for a period of 24 months from closing at a price of $0.15. Finders fees paid in connection with the Offering to finders consisted of cash fees in the aggregate amount of $28,800, representing an aggregate commission of 6% of the Private Placement sold to investors introduced by Finders. In addition, a total of 324,750 broker warrants were issued to the Finders. Each broker warrant will entitle the holder to purchase a Common Share for a period of 24 months from closing at a price of $0.15. A flow-through premium of $218,354 was recorded in connection with this financing. Included in the private placement is 159,500 Units issued to a related party for $12,760.
EXPLORATION HIGHLIGHTS
On September 12, 2022, the Company announced channel results from its Maude Lake project including 17 metres grading 0.46 % Ni and 4.26 metres grading 1.27 % Ni.
On October 5, 2022 the Company reported sampling results from it summer program at Pike Warden. Results included Chip sampling at ERT Zone that returned a length weighted average of 42 metres grading 64.28 g/t Ag Eq, including 7.80 metres grading 170.63 g/t Ag Eq with higher grade intervals of 0.70 metres grading 539.72 g/t and 0.4 m grading 563.97 g/t Ag Eq.
On November 28, 2022, the Company announced drilling results from its Maude Lake project. The best intersection was 20.01 metres averaging 0.5 % Ni Eq, including 4.00 metres averaging 0.9 % Ni Eq.
On January 16, 2023, the Company announced drill results from its Pike Warden Au-Ag-Cu project in the Yukon, intersecting 16.76 metres grading 93.95 g/t Ag Eq including 1.5 metres grading 482.95 g/t Ag Eq in hole 22-PW01, 21.34 metres grading 104.64 g/t Ag Eq including 1.5 metres grading 399.10 g/t Ag Eq in hole 22-PW-02, and 12.19 metres grading 52.96 g/t Ag Eq including 1.5 metres grading 229.7 g/t Ag Eq in hole 22- PW-03.
On January 20, 2023, the Company held a live webcast to discuss a detailed analysis of the drill results from the Pike Warden Au-Ag-Cu Project.
On March 2, 2023 the Company provided an update on its Pike Warden Au-Ag-Cu Property. Highlights included the initiation of a mineralogical study, data interpretation, magnetic modeling, exploration permitting, and logistical planning.
On April 19, 2023, the Company announced that it has fulfilled its quartz class 1 notification for the Pike Warden project from the Yukon Government permitting the Company to execute exploration programs pursuant to Yukon Quartz Mining Act and Territorial Lands (Yukon) Act, which include prospecting, geological mapping, hand trenching, and percussion reverse circulation (RC) drilling across the property.
On April 24, 2023 the Company announced the results from borehole electromagnetic (BHEM) survey work completed on its Maude Lake Property ("the Property") near Schreiber, Ontario. In-loop BHEM surveys were completed in holes ML-22-01, ML-22-02, and ML-22-03. Results define multiple moderate strength, in-hole and off-hole conductors which are generally indicative of sulphide mineralization on the Property. Modeling of the data provides an interpretation of the potential size, depth, strike, dip, and location of conductors relative to the drill hole.
On June 6, 2023 the Company disclosed results from field work completed at the Company’s 100% owned and optioned Jolly Gold highlighting that it had identified a large and prospective gold exploration target. A soil survey consisting of 1,159 samples submitted for Mobile Metal Ion (MMI) analysis highlighted a 4-kilometer trend of elevated gold pathfinder elements in soil developed with gold values up to 50 times background.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 4
The Jolly property covers regionally significant structures and geology interpreted to be a western extension of the Beardmore-Geraldton greenstone belt.
On July 19, 2023 the Company announced that it had completed a fixed loop electromagnetic (EM) survey on its Maude Lake Property near Schreiber, Ontario and that it had received a $200,000 Ontario Junior Exploration Program (OJEP) grant from the Ontario Government towards ongoing exploration efforts on the project.
On July 24, 2023 the Company announced hyperspectral and LiDAR surveys on its Pike Warden project and mobilized crews to undertake a program of mapping and sampling on select targeted areas identified on the project.
On September 11, 2023 the Company announced that work from this program had identified 3 new showings with prospecting samples returning assays from grab samples up to 954 g/t Ag, 832 g/t Ag, and 347 g/t Ag and that the Company intended to complete additional sampling to follow up on these new areas.
On October 11, 2023, the Company updated that two new molybdenite occurrences in a previously unsurveyed portion of the property had been discovered and that an additional 376 ha was staked to secure favourable ground.
TRANSITION PROPERTY HOLDINGS
The Company owns properties in several jurisdictions in Canada and is currently registered to conduct business in Ontario, Newfoundland and Labrador, Nova Scotia, British Columbia, Yukon Territory, and Saskatchewan. As of August 31, 2023, the Company owned or held under option an ownership interest in mining properties totaling approximately 73,310 hectares (ha) (733 square kilometres) for purposes of conducting exploration and development activities. Individual projects expenditures for the period are summarized in the table at the end of this section.
Property Summary Table
| Projects | Properties Aug 31, 2023 |
Hectares Aug 31, 2023 |
Properties May 31, 2023 |
Hectares May 31, 2023 |
Properties February 28, 2023 |
Hectares February 28, 2023 |
Properties November 30, 2022 |
Hectares November 30, 2022 |
Properties August 31, 2022 |
|---|---|---|---|---|---|---|---|---|---|
| Pike Warden - Yukon | 185 | 3,790 |
185 |
3,790 |
185 |
3,790 |
185 |
3,790 |
185 |
| Thunder Bay- Ni-Cu-PGM's | 409 |
7,616 |
409 |
7,616 |
409 |
7,616 |
409 |
7,616 |
409 |
| Saskatchewan Copper | 11 | 13,703 |
11 |
13,703 |
16 |
15,566 |
16 |
15,566 |
17 |
| Abitibi Gold - Ontario | 762 | 12,115 |
762 |
12,115 |
762 |
12,115 |
762 |
12,115 |
762 |
| SudburyCu-Gold - Ontario | 125 | 3,255 |
135 |
3,491 |
183 |
4,549 |
183 |
4,549 |
190 |
| Other | 371 | 32,831 |
390 |
33,306 |
415 |
33,628 |
415 |
33,628 |
601 |
| Totals | 1,863 | 73,310 |
1,892 |
74,021 |
1,970 |
77,264 |
1,970 |
77,264 |
2,164 |
The number of properties listed in the tables above refers to the number of discrete mining titles that the Company holds an interest in and consists of a mix of individual mining claims, leases and patents. The Company’s properties have been grouped into the following major project categories based on factors including geographic location, commodity focus and partnership agreements. An overview of the projects is presented below.
OVERVIEW OF PROJECTS
The Company has developed a portfolio of gold, copper, nickel and PGM projects with ownership interest in approximately 733 km2 of property interest in 6 main focus areas as defined by region or commodity focus structure. These include: Yukon (Au-Ag-Cu), Thunder Bay (Ni-Cu-PGM’s); Saskatchewan (Cu); Abitibi (Au); and Sudbury Area (Cu-Au and W) and Other. The Company seeks to advance exploration work in these focus areas by attracting funding partners through the sale of project ownership, as opposed to share capital. The Company has been successful in attracting and creating a number of key partnerships through which the Company continues to advance its interests, some of which are highlighted below.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 5
YUKON AU-AG-CU PROJECT
PIKE WARDEN (GOLD AND SILVER) – YUKON TERRITORY – OTHER PROJECTS
On June 28, 2022, the Company announced that it had entered into an option agreement to acquire a 100% interest in the Pike Warden Au-Ag-Cu Property located approximately 65 kilometres southwest of Whitehorse. The property consists of 185 contiguous mining claims totaling approximately 37 km² and covers more than 20 historic and recently discovered high-grade polymetallic gold (Au), copper (Cu), and silver (Ag) epithermal showings that are potentially indicative of a large epithermal-porphyry system associated with the Bennett Lake caldera complex. Previous work by the Vendor outlined six undrilled high-grade showings where grab sample returned assay results up to 48.10 g/t Au, 11,270 g/t Ag and 7.49% Cu.
Pursuant to an option agreement with the Vendor, Transition retains the option to earn a 100% interest in the property by issuing $150,000 in cash ($55,000 paid) and 1,000,000 shares (350,000 issued) to the Vendor and completing an aggregate of $1,000,000 in work over a 4-year period. If the Company vests its interest, the Vendor will retain a 1% Net Smelter Return royalty (NSR) and a $1,500,000 Milestone Payment to be paid within 6 months following Commercial Production being achieve from the Property.
In July of 2022, the Company completed a field program to visit, sample and characterize mineralized occurrences discovered through the prospection efforts of the Vendor. This program resulted in the visitation, sampling and preliminary characterization of 10 of 18 known mineralized areas. Mineralized bedrock exposure returning significant values of gold, silver, copper and or lead were achieved at 6 showing locations: ERT, Silver Train, Lead-Gold Saddle, Boots, Bonanza and a new vein exposure dubbed ACPb Zone. In total, 104 rock samples were collected at showing areas on the property depicted in Figure 1, highlights of which are summarized below in Table 1 and discussed further below:
Table 1. Highlight Sampling Results from 2022 Program at Pike Warden
| Zone | **Sample Type ** | **Length/Sample ** | Gold(g/t) | Silver(g/t) | Copper % | Lead % |
|---|---|---|---|---|---|---|
| ERT | Chip | 42.00 | 0.12 | 53.40 | 0.00 | 0.02 |
| including | 23.10 | 0.18 | 77.68 | 0.00 | 0.03 | |
| including | 11.70 | 0.20 | 117.28 | 0.01 | 0.03 | |
| including | 7.80 | 0.21 | 151.53 | 0.01 | 0.03 | |
| including | 0.70 | 0.12 | 526.00 | 0.02 | 0.09 | |
| including | 0.40 | 1.47 | 433.00 | 0.02 | 0.25 | |
| ERT | OutcropGrab | E813078 | 1.73 | 1,215.00 | 0.07 | 0.32 |
| Silver Train | Scree Grab | E811544 | 0.02 | 180.00 | 2.32 | 0.01 |
| Silver Train | SubcropGrab | E813076 | 0.02 | 32.90 | 0.66 | 0.00 |
| Lead-Gold Saddle | Scree Grab | E813077 | 9.81 | 57.10 | 0.07 | 3.33 |
| Lead-Gold Saddle | Scree Grab | E811502 | 5.79 | 15.30 | 0.03 | 0.98 |
| Lead-Gold Saddle | Scree Grab | E811503 | 3.87 | 226.00 | 0.03 | 20.00 |
| Boots | OutcropGrab | E813080 | 0.03 | 51.10 | 5.11 | 0.00 |
| Bonanza | OutcropGrab | E813084 | 0.54 | 2.82 | 0.04 | 0.00 |
| Silver Scree | Scree Grab | E811560 | 0.66 | 457.00 | 0.23 | 1.22 |
| ACPb | OutcropGrab | E811555 | 4.49 | 11.30 | 0.06 | 0.42 |
| ACPb | OutcropGrab | E811556 | 11.80 | 28.90 | 0.05 | 4.58 |
| ACPb | OutcropGrab | E811559 | 2.06 | 2.88 | 0.01 | 0.24 |
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 6
On October 19, 2022, the Company announced that it had mobilized a RC drill to complete three holes to further evaluate the extent and vertical continuity of mineralization identified this summer at the ERT Zone.
On January 16, 2023, the Company disclosed assay result from this drilling reporting that it had intersected significant silver mineralization at ERT. Highlights from this drilling Included:
-
16.76 metres grading 88.01 g/t Aq including 1.5 metres grading 468.00 g/t Ag in hole 22-PW-01
-
21.34 metres grading 91.43 g/t Aq including 1.5 metres grading 362.00 g/t Ag in hole 22-PW-02
-
12.19 metres grading 46.20 g/t Aq including 1.5 metres grading 211.00 g/t Ag in hole 22-PW-03
All three holes intersected significant values of silver near surface with highlighted length weighted intervals presented in Table 2. Drill hole collar locations and orientation information are given in Table 3. Figure 2 is a plan map showing locations of the completed drill holes. Figure 3 is a cross section of the drilling with mineralized intervals, and interpreted geology.
The drilling was interpreted to have intersected two sub-parallel zones of high-grade silver mineralization which dip steeply to the south (070°/65°) and are hosted within a broad zone of altered brecciated and flow-banded felsic to intermediate volcaniclastic rocks associated with the Bennett Lake Volcanic Complex (BLVC). The mineralization consists of diffuse, fine-grained, black to sooty, replacement style silver-bearing sulphosalts and sulphides associated with shear zones within a larger pyritic envelope.
Table 2. Highlight Results from 2022 RC Drilling Program at ERT Zone, Pike Warden Property, Yukon
| Hole | From (m) | To (m) | Length (m) | Ag (g/t) | Au (g/t) |
|---|---|---|---|---|---|
| 22-PW-01 | 0.00 | 16.76 | 16.76 | 88.01 | 0.08 |
| incl. | 0.00 | 9.14 | 9.14 | 156.81 | 0.12 |
| incl. | 0.00 | 1.52 | 1.52 | 468.00 | 0.19 |
| 22-PW-02 | 1.52 | 22.86 | 21.34 | 91.43 | 0.17 |
| incl. | 21.34 | 22.86 | 1.52 | 362.00 | 0.47 |
| 22-PW-03 | 6.10 | 18.29 | 12.19 | 46.20 | 0.09 |
| incl. | 16.76 | 18.29 | 1.52 | 211.00 | 0.24 |
Table 3. Collar Locations and Orientations
| Hole | UTM Easting (m) |
UTM Northing (m) |
Elevation (m) |
Azimuth (deg) |
Dip – deg | Length (m) |
|---|---|---|---|---|---|---|
| 22-PW-01 | 479,086 | 6,658,501 | 1,961 | 150 | 70 | 88.4 |
| 22-PW-02 | 479,087 | 6,658,500 | 1,965 | 154 | 43 | 50.3 |
| 22-PW-03 | 479,069 | 6,658,523 | 1,956 | 150 | 45 | 65.5 |
| Totals | 204.2 |
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 7
Figure 1: Geology and location of the Pike Warden Property and outline of the Bennett Lake Caldera Complex
==> picture [459 x 295] intentionally omitted <==
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 8
Figure 2: Plan map with geology, location of surface sampling, trenches and vertically projected drill hole traces
==> picture [481 x 345] intentionally omitted <==
Figure 3: Schematic vertical cross section A – A’ looking southwest
==> picture [504 x 207] intentionally omitted <==
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 9
On March 2, 2023, the Company disclosed results from a mineral cluster analysis study and provided notice that it had renewed the option agreement in preparation for a summer 2023 work program. The cluster analysis study suggested the mineralizing system at Pike Warden is large and spans the entire sampled area.
On April 19, 2023, the Company announced that it had completed its Quartz Class 1 notification for the Pike Warden project from the Yukon Government allowing the Company to undertake exploration programs such as prospecting, geological mapping, hand trenching, and percussion reverse circulation (RC) drilling across the property in 2023. The Company disclosed its intent to complete a program of work over the summer consisting of systematic prospecting, mapping, and hand trenching to further define and discover additional structural trends, alteration footprints, and zones of mineralization, particularly in the underexplored northern claims which were not worked in 2022.
On July 24, 2023 the Company announced that it was planning to complete hyperspectral and LiDAR surveys over the project and to mobilize crews complete mapping and sampling on select targeted areas. This work has highlighted new zones of mineralization and prospective altered structures. Sampling in July returned assays from grab samples up to 954 g/t Ag, 832 g/t Ag, and 347 g/t Ag. On October 11, 2023, the Company updated that two new molybdenite occurrences in a previously unsurveyed portion of the property had been discovered and that an additional 376 ha were staked to secure favourable ground.
Results from sampling completed in September 2023 are pending, and that the Company intended to complete additional sampling to follow up on these new areas.
THUNDER BAY NI-CU-PGM PROJECTS
The Company maintains an interest in 4 property groupings totaling 7,616 hectares consisting of the Sunday Lake (25% carried), Saturday Night (100%), Owl Lake (100%) and Maude Lake (100%) projects. The Owl Lake projects is subject to a 1.5% NSR held by Implats, Maude Lake is subject to two NSR royalties totaling 3% and Saturday Night is subject to a 1% NSR to Nova Royalties. During the reporting year, Heritage Mining Corp Ltd. exercised its option to earn 100% interest in the Nabish Lake project for $20,000 in cash, 100,000 common shares of Heritage valued at $17,500 on the date it was received, and the issuance of a 2.0% NSR. The Eva Kitto, Fraser Lake, Revell and Wagner properties were allowed to lapse.
MAUDE LAKE
The Company acquired certain claims in the Maude Lake property located in Ontario through an option agreement. The vendor retained a 2% NSR. TMC reserves the right to buy back 1.5% of the NSR at any time for $2,000,000.).
In October of 2020, the Company assigned a 1% NSR on the project to Nova Royalties Corp.
On March 9, 2022, the Company announced the completion of a 350-line kilometre airborne Mag-EM (VTEM) survey over the property, which was successful in highlighting large, untested conductive anomalies in close proximity to two known zones of mineralization. In July of 2022, the Company announced that it was mobilizing crews to refresh trail access and to conduct some mechanical stripping and sampling work at the Nicopar showing. On September 21,2022, the Company disclosed assay results from channel sampling including 17m averaging 0.46% Ni including 4.26m averaging 1.27% Ni, 0.84% Cu and 0.08% Co from channel 4, and 8.17m averaging 0.50 % Ni including 1.70m grading 1.61 % Ni from channel 7 and notified that it was mobilizing a drill to the property.
On November 28, 2022, the Company announced that drilling had intersected 20.01m averaging 0.33 % Ni and 0.28% Cu, including 4.00m averaging 0.61 % Ni and 0.53% Cu in hole ML-22-01, and 1.17m averaging 2.16 % Ni and 0.51% Cu in Hole ML- 22-02. Significant intervals of high tenor Ni-Cu-Co and PGM mineralization were intersected in all 3 holes with mineralization occurring near the base of a large mafic intrusion.
On April 24 2023, the Company disclosed that borehole conductivity surveys had detected a large off-hole conductive target down dip from hole ML-22-03 at a depth of 160 metres downhole. ML-22-03 is the furthest step-out hole drilled which evaluates the high tenor Ni-Cu mineralization exposed at surface. The conductivity target appears to increase in both size and strength with depth.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 10
During the summer the Company completed programs including line-cutting, a ground electromagnetic geophysical survey, prospecting, and mapping in preparation for drilling planned for Fall 2023.
Table 4: Hole coordinates and orientation information, Maude Lake Project
| Hole | Easting | Northing | Elevation | Azimuth | Dip | Length |
|---|---|---|---|---|---|---|
| ML-22-01 | 477,687 | 5,415,574 |
426 |
0 | -90 | 225 |
| ML-22-02 | 477,720 | 5,415,668 |
444 |
0 | -84 | 126 |
| ML-22-03 | 477,681 | 5,415,499 |
422 |
0 | -90 | 210 |
Coordinates in metres; UTM Zone Nad 83, Zone 16N
Table 5: 2022 Significant Drilling Results – Maude Lake Project
| Hole | From | To | Length | Ni (%) | Cu (%) | Co (%) | Pt (g/t) | Pd (g/t) | Au (g/t) | 3E PGM (g/t) |
|---|---|---|---|---|---|---|---|---|---|---|
| ML-22-01 | 99.99 | 120.00 | 20.01 | 0.33 | 0.28 | 0.01 | 0.03 | 0.08 | 0.02 | 0.13 |
| Including | 109.00 | 113.00 | 4.00 | 0.61 | 0.53 | 0.02 | 0.04 | 0.15 | 0.04 | 0.23 |
| ML-22-02 | 88.48 | 96.00 | 7.52 | 0.51 | 0.20 | 0.02 | 0.02 | 0.06 | 0.02 | 0.10 |
| Including | 93.92 | 95.09 | 1.17 | 2.16 | 0.52 | 0.06 | 0.06 | 0.19 | 0.02 | 0.27 |
| ML-22-03 | 151.96 | 156.00 | 4.04 | 0.17 | 0.16 | 0.01 | 0.02 | 0.04 | 0.01 | 0.07 |
Note: The reader is cautioned that the assays reported above may not be representative of mineralization across the entire Maude Lake Property. The length reported is the sample length and is not necessarily the true width of the mineralized zone.
Figure 4: Location of the Maude Lake Project
==> picture [344 x 342] intentionally omitted <==
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 11
Figure 5: Plan map of completed diamond drill holes and conductivity Target. The map shows the location of the cross section A-A’ in Figure 3
==> picture [464 x 338] intentionally omitted <==
Figure 6: Composite vertical cross section with trench sampling and drilling results. See Figure 2 for location of section.
==> picture [459 x 262] intentionally omitted <==
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 12
JOLLY GOLD – NORTHWEST ONTARIO
On November 24, 2020, the Company announced that it has entered into an option agreement to acquire a 100% interest in 9 contiguous mining claims 75 kilometres north of Thunder Bay and has additionally staked new claims to consolidate 4,560 hectares covering a significantly underexplored extension of the Beardmore-Geraldton Greenstone Belt. The property, known as the Jolly Gold project, encompasses a number of historic high-grade gold (Au) occurrences where grab samples collected by the Company in September 2020 returned assay values of 14.35 g/t Au with 0.7 g/t Ag at Trench 1, and 3.96 g/t Au, 7.9 g/t Ag and 0.64 % Cu at Trench 2. The two historic trenches lie along a northeast trend, approximately 1.3 km from each other.
The terms of the option agreement on the 9 claims grant the Company the option to earn a 100% interest in the optioned claims by issuing $175,000 in cash to the Vendors ($50,000 paid) and by completing an aggregate of $250,000 in work expenditures over a 4-year period. If the Company vests its interest, the Vendors will retain a 2% NSR with Transition retaining the right the right to buy back 1% NSR for $500,000 and the remaining 1% NSR for an additional $1.5 million.
On April 8, 2021, the Company announced that it had initiated a high-resolution airborne magnetic survey over its newly acquired Jolly Gold project. The results from this survey were under review in preparation for a planned program of prospecting, geological mapping, geochemical sampling, and trench mapping.
On October 19, 2021, the Company announced that in July, the Company completed a first pass mapping and prospecting program on Jolly Gold which included cutting and assaying of 114 channel samples on the historical Fat Beagle trench as well as collecting 82 prospecting grab samples across the 45.6 km2 property before work was halted due to local forest fire conditions. Channel sampling within the historic Fat Beagle trench returned very high-grade zones of gold mineralization, with assays of up to 146.5 g/t Au over 0.41 m, and 24.4 g/t Au over 0.61m. The best result from the 82 grab samples collected outside of the showing area returned was 1.35% Zn from an outcrop of sulphide facies collecting outside of the showing area returned was1.35% Zn from an outcrop of sulphide facies iron formation.
On November 2022, an amendment to the option agreement was made to issue $180,000 in cash to the vendors over a 5- year period.
On June 6, 2023, the Company disclosed results from field work completed at the Company’s 100% owned and optioned Jolly Gold highlighting that it had identified a large and prospective gold exploration target. A soil survey consisting of 1,159 samples submitted for Mobile Metal Ion (MMI) analysis highlighted a 4- kilometer trend of elevated gold pathfinder elements in soil developed with gold values up to 50 times background. The Jolly property covers regionally significant structures and geology interpreted to be a western extension of the Beardmore-Geraldton greenstone belt.
SUNDAY LAKE
The Sunday Lake platinum, palladium discovery is the successful outcome of a strategic alliance partnership between Transition and Implats. The property is located in northwestern Ontario, 25 km northeast of Thunder Bay and 25 km to the west of Clean Air Metals Inc., Thunder Bay North project (formerly known as Current Lake). It consists of 177 converted map-based claims and leased property totaling 3,042 ha covering a 3.5 km diameter circular magnetic anomaly associated with a large layered mafic-ultramafic intrusion. The intrusion host significant platinum group metal or PGM (platinum, palladium, and gold) mineralization as well as nickel and copper.
The Sunday Lake Project is currently subject to a Joint Venture agreement between the Company and Implats and Impala Canada. Under the terms of the agreement, Implats and Impala Canada collectively hold a 75% interest in the project and Transition holds a 25% free carried interest until the completion of a Feasibility Study at which time it will hold a 25% participating interest. Once a participating Joint venture is formed, a party’s interest would be diluted for non-participation in any program. If the Company dilutes to 10% its interest would be converted to a 1.5% net smelter return royalty.
To date a total of 37,018 metres of drilling have been completed on the property targeting sulphide mineralization associated with the basal Marginal Zone. The most recent drilling has returned values of up
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 13
to 41.2 metres grading 5.11 g/t combined PGM’s (Pt+Pd+Au) including 15.8 metres grading 9.11 g/t PGMs representing some of the best grades and thickness for a deposit of this type in the world. During the reporting period no work activity was carried out.
SATURDAY NIGHT
In 2015, the Company staked a magnetic target comparable to the magnetic signatures of other ‘Early Rift’ intrusions in this area located approximately 16 kilometres west of its Sunday Lake discovery near Thunder Bay, Ontario. This target, named “Saturday Night”, was highlighted by an airborne survey flown by the Ontario Geological Survey (OGS).
In November 2016, the Company completed one drill hole to test targets defined by the summer geophysical program. On January 23, 2017, the Company announced that it had intersected a platinum group element enriched mid-continental rift intrusion. Assays returned 6.25 metres averaging 1.07 g/t PGM’s including a higher-grade section of 4.0 g/t PGM and 0.56% Cu over a core length of 0.30 metres near the interpreted base of a greater than 200-metre-thick sequence of early-rift intrusive rocks.
The Company has covered the property with an AMT/MT ground geophysical survey, similar to the approach taken by Impala Canada (formerly North American Palladium) at the nearby Sunday Lake project, to better define the extent and morphology of the Saturday Night intrusion which indicates that the extent of the prospective intrusion is extensive. In October of 2020, the Company assigned 1% NSR on the project to Nova Royalties Corp. During the reporting period the Company applied for permits to resume drilling on the property and plans to complete an airborne AMT survey over the property as soon as possible. At the end of the reporting period, the Saturday Night project consisted of 63 mining claims for an estimated 1,081 hectares.
Figure 7 : Location of the Maude Lake Property and Transition Metals Ni-Cu-PGM Projects
==> picture [403 x 357] intentionally omitted <==
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 14
SEDIMENTARY COPPER - SASKATCHEWAN
WOLLASTON COPPER
On May 22, 2019, the Company announced that it had staked a 100% interest in approximately 15,144 hectares in the Wollaston Basin Copper Belt, northern Saskatchewan. The Fannon and Porcupine properties (now collectively referred to as the Wollaston Copper project) are located approximately 100 kilometres south of Key Lake and about 30 kilometres southwest along trend with the Janice Lake Property currently being explored by Forum Energy Metals. The Company holds a 1% net smelter return royalty on the Janice Lake Property. The Wollaston Copper claims were staked to cover known copper showings and on-strike equivalents that are interpreted to have potential to host sedimentary-hosted copper mineralization similar to that at Janice Lake. The property is located within the Wollaston Domain, a Proterozoic- aged, northeast trending package of tightly folded amphibolite grade metasediments.
On August 17, 2020 the Company reported initiating field work on the Wollaston Copper project. In October 2020, the Company assigned a 1% NSR on the project to Nova Royalties Corp.
On November 17, 2020 the Company reported results from grab samples collected from 4 of 9 known showings including:
-
0.47% at the Fannon Lake showing and 0.43% Cu at the Flag Lake showing 1.5 km north of Fannon
-
0.44% Cu at the Tosi showing located 25 km southwest of Fannon Lake
-
0.93% Zn from the Fable Lake showing located 5 km southwest of Tosi.
On January 18, 2021 the Company disclosed results from a property-wide, helicopter-supported, tree-top, biogeochemical survey which outlined several large and continuous zones exhibiting enriched copper signatures in vegetation on both the Fannon and Porcupine blocks associated with favourable rock types and structures for sediment hosted copper.
During the reporting period, five claims associated with the Fannon Lake claim group were allowed to lapse. As at the end of the reporting period the Wollaston Copper project consists of 11 mining claims for approximately 13,703 hectares.
In September 2021, the Company completed a program of mapping and sampling designed to follow-up base metal geochemical anomalies identified in 2020.
ABITIBI GOLD, ONTARIO
Transition Metals directly holds interest in mining lands in the Abitibi Greenstone belt of Ontario totaling approximately 12,115 hectares that are considered prospective for hosting deposits of gold. These projects include: 1) Gowganda Gold, 2) Cryderman, and 3) Pipestone (60% Gowest and 40% Transition Joint Venture) . Details of each project area are provided below.
GOWGANDA GOLD PROJECT
The Gowganda Gold Project is located adjacent to the town of Gowganda, Ontario in Nicol, Haultain, and Van Hise townships, in the Larder Lake Mining District. The center of the project is located approximately 34 kms west of Elk Lake (population 350) and 33 kms southwest of Matachewan (population 450).
Since the discovery in 2010 of multiple high grade gold occurrences over a 2 km long structural corridor by the Company, work on the property has included the completion of: Induced Polarization (IP) geophysical surveys, soil sampling, geological mapping, 10 mechanically stripped trenches, channel sampling, and 21 shallow diamond drill holes for a total of 2,258m. Significant drill intercepts from work by Transition include 2.37 g/t Au over 7.06 metres, up to 82.5 g/t Au over 0.4 metres (see Transition Metals news release of December 1, 2011) and 1.63 g/t Au over 11.52 m (see Transition Metals news release of April 6, 2017). In addition to the prospective gold mineralization, cobalt-silver mineralization occurs across the property within the overlying Cobalt Embayment rocks.
On March 12, 2019, the Company announced that it had executed an option and joint venture agreement with Battery Minerals Resources Limited (“Battery”) whereby Battery could earn a up to an 80% interest in the Gowganda Gold project located 75 km southwest of Kirkland Lake. To earn a 60% interest, Battery was
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 15
to provide option payments totaling $600,000 over 3 years that included a $75,000 payment upon execution of the Agreement and $25,000 that was received earlier by the Company upon execution of a binding term sheet. In addition, Battery was to complete $3.4 million of exploration expenditures over 3 years including a commitment of $400,000 during the first year to vest a 60% Interest. Upon vesting a 60% interest, Battery had the right to increase its interest to 80% by delivering a Feasibility Study within three years subject to certain time extension provisions. After earning its 60% or 80% interest in the Property as the case may be, a Joint Venture would be formed, with each party funding its proportionate share of future work programs or suffering dilution of interest.
On March 1, 2021 the agreement was amended whereby by the 2[nd] years expenditure requirement was waived and total expenditures to earn 60% were reduced to $2,400,000 in exchange for a cash payment of $150,000 (received) and the transfer of all gold claims owned by Transition under the option agreement and those held solely by Battery to the Company (see figure on next page). In addition, the requirement for Battery to expend 25% of Exploration expenditures under the option was removed.
The portion of the property that remained under option to Battery is depicted in orange on the following Figure 8. The portion of the optioned property returned from option to Transition is depicted in red. The claims assigned by Battery subject to the March 24, 2021 amendment are outlined in black and are subject to a 1% net smelter return royalty held by Battery.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 16
Figure 8; Gowganda Gold Property
==> picture [445 x 583] intentionally omitted <==
On October 4, 2021, the Company announced that its grab samples returned high-grade, gold analyses of 18.6-269.0 g/t gold (Au) from one showing and the discovery of four new copper (Cu) showings ranging from 0.24-2.30% Cu on a portion of the assigned property.
In March 2022, BMR opted out of its interest in the remaining portions of the property held under option and returned the property to Transition Metals. Transition Metals now holds a 100% interest in the combined land package depicted in the figure above which consists of 519 claims for 8,655 hectares.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 17
CRYDERMAN GOLD
On April 18, 2019, the Company acquired certain claims in the Cryderman Lake property located near Shining Tree, Ontario through an option agreement. The Vendor retained a 1.5% NSR. TMC reserves the right to buy back 0.5% of the NSR at any time for $1,000,000.The property consists of 6 contiguous mining leases covering a historical high-grade lode gold showing where grab samples collected by the Company in 2018 returned values from trace up to 34.5 g Au/t.
On November 27, 2019 the Company disclosed assay results from channel sampling completed on veining exposed by trenching completed on the Cryderman Gold property. Samples of quartz vein returned up to 15.70 g/t Au over 0.5 metres along 100 metres of the newly exposed Queen Elizabeth Vein. Sampling of peripheral zones of alteration and quartz stringers returned up to 3.44 g/t Au over 1.63 metres and two additional undocumented veins located to the north of a historical shaft were identified returning up to 3.05 g/t Au over 0.88 metres and 4.11 g/t Au over 0.61 metres.
On May 11, 2021 the Company announced that it had negotiated an accelerated earn-in with the Vendor and fully vested a 100% interest in the property in exchange for a lump sum payment of $25,000 in cash (paid) and the issuance of 250,000 shares (issued). In addition, the parties amended the terms of the NSR agreement such that the maximum NSR encumbrance is reduced from 2.0% to 1.5% with Transition retaining the right to buy down 0.5% for $1.0 million at any time. On November 18, 2021 the Company completed the lease transfer process and announced the discovery of a new mineralized vein structure located 500m northeast of the Elizabeth Vein.
PIPESTONE PROJECT – (40% TRANSITION METALS CORP)
The Pipestone Project consists of 237 converted map-based mining claims (approximately 3,363 ha) located in Wark, Prosser, Gowan, Little and Evelyn townships, Porcupine Mining District, near Timmins, Ontario. The claims were acquired to cover approximately 13 km of the interpreted strike extension of the Pipestone structure. The Pipestone structure is an under-explored gold-bearing regional fault in the Timmins Gold camp that runs sub-parallel to the Destor-Porcupine fault (>60 million oz of historic production – Ontario Geological Survey - Gold production in the Timmins Regional Resident Geologist’s District to the end of 2006) . The Destor-Porcupine fault bounds the Porcupine sedimentary basin to the south while the Pipestone fault bounds the basin to the north. Previous work has identified gold mineralization in basal till samples in the section of the fault covered by the Company’s claims as well as in core samples located near the property.
On April 27, 2011 and as amended February 3, 2014, the Company entered into an option and joint venture agreement with Gowest Gold Ltd. (“Gowest”) that provided Gowest with the option to acquire a 60% interest or 75% interest in the Pipestone Property. To earn a 60% in the Pipestone Property, Gowest would be required to make cash payments of $100,000 ($100,000 received), issue 500,000 common shares of Gowest to the Company (500,000 issued) and incur exploration expenditures of $1,000,000 by the fourthyear anniversary of the agreement. Furthermore, Gowest retained the one-time option upon vesting its 60% interest to increase its ownership to 75% by issuing an additional 150,000 Gowest common shares to the Company and incurring an additional $2,000,000 in exploration expenditures within two years.
On April 25, 2016, Gowest vested its initial 60% interest in the property and notified the Company that it would not be increasing its interest to 75%. In 2017, the Company declined its right to maintain its 40% participating right in the project and may have its interest diluted accordingly.
- SUDBURY AREA (COPPER GOLD)
AYLMER IOCG
On May 11, 2020, the Company entered into an agreement to option the Aylmer IOCG property from a group of Sudbury area Vendors. Under the terms of the agreement, Transition has the right to earn a 100% interest in the Aylmer IOCG property by making aggregate cash payments of $102,000 ($37,000 paid); issuing an aggregate total of 625,000 common shares (225,500 issued); and incurring exploration work expenditures totaling $900,000 by May 4, 2024. If the Company exercises its option, the Vendors will retain a 2.0% Net Smelter Return Royalty (NSR) from any Commercial Production from the property for which Transition may
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023 Page 18
purchase 1.0% of the NSR for $1,000,000 at any time.
The property lies within a north-trending, regional structural zone interpreted to be 14 to 15 kilometres wide associated with widespread soda-altered rocks and occurrences of copper-bearing quartz veins. Grab samples collected at outcropping exposures of quartz veining, quartz and or carbonate breccia's hosting variable amounts of disseminated sulphides returned copper values ranging from <0.05 ppm Cu to 5.93% Cu representing an average of 0.4% Cu from 19 samples.
On November 2, 2020, the Company announced it was undertaking a high resolution, deep seeking airborne magnetotelluric (MT) survey over an approximate 35 square kilometre portion of the project with the intention of highlighting focused systems of alteration and mineralization at depth in connection with the hydrothermal breccia zones exposed at surface. The survey outlined zones of reduced resistivity, interpreted to be associated with hydrothermal breccia zones exposed at surface, which appear to extend to depths greater than 1 kilometre. Work initiated during the fourth quarter of 2021 included trenching, mapping, and geochemical sampling to further qualify the structural and alteration characteristics of these breccia zones to further assess the potential of these targets in preparation for drilling. On August 17, 2022 the Company announced that it had initiated diamond drilling on the property. In total, 3 holes for 1,040 metres were completed. Broad intervals of brecciated and altered core were intersected but no assay values of economic consequence were returned from the sampling.
During the reporting period, an amendment to the option agreement was made to defer 2023 payments and share issuances for one year for a one time cash payment of $2,500. In addition, a reduction in some of the peripheral claims was permitted, reducing the property to 71 staked and optioned claims for a total of 2,073 hectares.
FOSTUNG (TUNGSTEN– CU-AU-AG)
On November 14, 2019 the Company announced that it has acquired a 100% interest in the Fostung Property located near the town of Espanola, approximately 70 kilometres southwest of Sudbury, Ontario.
The Fostung property hosts an historic tungsten trioxide (WO3) skarn resource completed by Golden Predator Mine Inc. in 2007 which was stated to contain an Inferred Mineral Resource of 12.4 million tonnes (Mt) grading 0.213 wt. % WO3 (Tungsten Trioxide) based on information from 44 drill holes totaling 9,185 metres completed from 1966 to 1986. The Company informs that a qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves, and that the Company is not treating the historical estimate as current mineral resources or mineral reserve.
In June of 2019 Transition staked 690 hectares of crownland that covered a portion of the former Fostung leases. Two additional groups of claims (the CJP Exploration claims and the Daxl claims), representing the remaining Fostung leases, were acquired via two purchase agreements summarized below.
CJP Exploration Purchase – 16 mining claims for 356 hectares
Transition has purchased a 100% interest in the property by issuing $25,000 in cash (Paid) and $25,000 in shares (issued) to the Vendor. The Vendor retains a 1% Net Smelter Return royalty (NSR) on the property with Transition retaining the right to buy back 0.5% NSR for $500,000.
Daxl Purchase – 3 mining claims for 67 hectares
Transition has purchased a 100% interest in the property by issuing $5,000 in cash to the Vendor.
On August 10, 2020 the Company announced that it had entered into an Option and Joint Venture Agreement with 1930153 ON Ltd. (“1930153 ON”) whereby 1930153 ON can earn up to a 100% interest in the Fostung Property. To earn a 50% interest, 1930153 ON must provide option payments totaling $120,000 over 4 years that includes a $15,000 payment upon execution of the Agreement. All option payments will be doubled if the project attracts at least $2,000,000 of financing during the 5-year Option Period. Additionally, 1930153 ON must complete $500,000 of exploration expenditures over 5 years. 1930153 ON may increase its interest in the Fostung Property to 80% by providing Transition with a further $500,000 in cash and completing an additional $1,500,000 worth of work over 2 years. 1930153 ON may further increase its interest to 100% by making an additional cash payment of $4,500,000 to the Company, subject to a 2.0% NSR royalty.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 19
The Company has been working with the Optionor to operate programs of work including a diamond drill program with objectives towards updating the resource at Fostung and to obtain material to facilitate metallurgical testing. As of the effective date of this report the agreement with 1950153 ON remains in good standing.
DOHERTY LAKE PROPERTY – GOLD AND BASE METALS – ONTARIO
During the reporting period, portions of the Doherty Lake property were allowed to lapse. The Property ended reporting period consisting of 4 converted map-based mining claims for 72 hectares located in central Demorest Township, Sudbury Mining District, Ontario. The property is located approximately 65 km northeast of the town of Capreol. The property hosts occurrences of elevated Au-Ag-Cu-Pb mineralization associated with a flat lying shear zone occurring within a Nipissing Gabbro sill. The Company owns a 100% interest in the property subject to a 1% NSR, which can be purchased at any time for $500,000.
OTHER PROJECTS
Transition has a number of other exploration projects in the Canadian provinces of Ontario, Nova Scotia, British Columbia, and Newfoundland & Labrador. Targets are mainly gold and copper. Descriptions of these projects are as follows:
HIGHLAND GOLD - GOLD – CAPE BRETON, NOVA SCOTIA
On August 20, 2018, the Company announced that it had entered into an option agreement to acquire a 100% interest in the >45 km[2 ] Highland Gold property located in the Cape Breton Highlands. On September 27, 2018, the Company announced that it had staked additional claims and initiated a high resolution airborne geophysical survey assisting in preparation for a program of reverse circulation (RC) drilling.
On January 14, 2019, the Company announced that this drilling had intersected 9.14 metres grading 23.22 g/t Au including 3.05 metres grading 49.54 g/t Au.
On June 5, 2019, the Company announced that it had resumed exploration on the property with plans to complete approximate 1,000 metres of percussion Reverse Circulation (RC) drilling to test a cluster of highgrade showings within a roughly 5 square kilometer portion of the property to follow up on targets highlighted by previous work. Results from this program confirmed strike and dip extensions to mineralization identified at Zone 6A and indicate significant grades and thicknesses of gold at Zone 6B which is located approximately 250 metres southwest of Zone 6A. Testing Zone 6B, hole 19-TMC-RC-11 intersected 9.0 metres grading 6.14 g/t Au including 2.0 metres grading 25.46 g/t Au. Zones 6A and 6B are respectively located approximately 2 kilometres east of Main Zone where RAB drilling completed by the Company in late 2018 returned a 9.14 metre interval grading 23.22 g/t Au. In total, 28 holes for 568 metres were completed; the results of which are summarized in the table below.
==> picture [238 x 190] intentionally omitted <==
----- Start of picture text -----
From To Length
(m) (m) (m) Au (g/t) Zone
Hole
19-TMC-RC-01 10.00 19.00 9.00 6.88 6A
including 10.00 14.00 4.00 16.44 6A
19-TMC-RC-02 3.00 4.00 1.00 0.80 6A
and 11.00 15.00 4.00 2.03 6A
including 12.00 14.00 2.00 3.57 6A
19-TMC-RC-03 5.00 7.00 2.00 1.54 6A
19-TMC-RC-04 1.00 6.00 5.00 1.61 6A
including 2.00 4.00 2.00 3.75 6A
19-TMC-RC-05 No sig. results
19-TMC-RC-06 18.00 23.00 5.00 2.61 6A
including 22.00 23.00 1.00 7.39 6A
19-TMC-RC-07 16.00 24.00 8.00 1.31 6A
including 18.00 19.00 1.00 4.92 6A
19-TMC-RC-08 No sig. results
19-TMC-RC-09 3.00 4.00 1.00 1.09 6A
19-TMC-RC-10 0.00 6.50 6.50 1.01 6B
including 0.00 1.50 1.50 3.32 6B
19-TMC-RC-11 0.00 9.00 9.00 6.14 6B
including 0.00 2.00 2.00 25.46 6B
----- End of picture text -----
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 20
| 19-TMC-RC-12 | No sig. results | No sig. results | |||
|---|---|---|---|---|---|
| 19-TMC-RC-13 | 6.00 | 9.00 | 3.00 | 0.90 | 6B |
| 19-TMC-RC-14 | 13.00 | 19.00 | 6.00 | **6.17 ** | 6B |
| including | 13.00 | 15.00 | 2.00 | 11.53 | 6B |
| 19-TMC-RC-15 | 7.00 | 12.00 | 5.00 | **2.62 ** | 6B |
| including | 11.00 | 12.00 | 1.00 | **4.30 ** | 6B |
| 19-TMC-RC-16 | 17.00 | 27.00 | 10.00 | **2.58 ** | 6B |
| including | 17.00 | 20.00 | 3.00 | **5.67 ** | 6B |
| 19-TMC-RC-17 | No sig. results | Other | |||
| 19-TMC-RC-18 | No sig. results | Other | |||
| 19-TMC-RC-19 | No sig. results | Other | |||
| 19-TMC-RC-20 | Did not reach target | depth | Main | ||
| 19-TMC-RC-21 | 14.00 | 15.00 | 1.00 | 1.97 | Main |
| 19-TMC-RC-22 | Did not reach target | depth | Main | ||
| 19-TMC-RC-23 | Did not reach target | depth | Main | ||
| 19-TMC-RC-24 | No sig. results | Other | |||
| 19-TMC-RC-25 | No sig. results | 6C | |||
| 19-TMC-RC-26 | No sig. results | 6C | |||
| 19-TMC-RC-27 | No sig. results | Other | |||
| 19-TMC-RC-28 | No sig. results | Other |
On February 28, 2020, the Company was informed by the Department of Energy and Mines Nova Scotia that it had initiated a process in response to concerns raised by the Mi’kmaq Assembly of Chiefs regarding the issuance of mining and exploration permits in the Cape Breton Highlands. The government of Nova Scotia has indicated that it must discharge its duty to consult with the Mi’kmaq of Nova Scotia before approvals granting access to Crown Land and authorizations for drilling and excavation to carry out exploration activities in the Highlands will be issued. The Company continues to engage with the Department of Mines and Energy towards clarity and updates regarding this process.
On July 29, 2020, the option agreement was amended such that all future requirements under the option agreement were suspended until all permits to continue exploration have been received by the Company. The Company will make cash payment of $7,500 (to be credited towards the cash portion of the option agreement consideration) on or before April 1 each year during the suspension.
On August 17, 2023, the Company declared Force Majeure due to its inability to receive an exploration permit.
To earn a 100% interest, the Company is required to make cash payments of $170,000 over four years ($65,000 paid), issue $175,000 worth of common shares of the Company (241,325 common shares issued based on VWAP pricing estimated to be worth $65,000 at the time of issuance) over four years and incur exploration expenditures of $1,500,000 over five years.
The agreement also provides for a milestone payment by the Company of $500,000 in cash or shares within 90 days after a commercial production decision. If by the 8th anniversary of the agreement no production decision has been made, a milestone prepayment of $25,000 per year to the optionee capped at $500,000. Upon exercise of the option the property is subject to a 1.0% NSR of which the Company can purchase 1.0% of the NSR for $1,250,000. The optionee has been granted a 1.0% NSR on the adjacent company staked claims.
The Company retains the right to purchase from the optionee the Company granted 1.0% NSR on the adjacent properties for $500,000.
BANCROFT (NI-CU-PGM’s)
The Bancroft project is a greenfield exploration project that has seen the benefit of approximately $5.0 million in historic exploration expenditures. The property consists of approximately 3,833 hectares of mining claims located in the Southern Ontario Mining District near Bancroft, Ontario. In 2009, First Nickel announced the discovery of a new zone of PGM mineralization called ML North located in northeastern Raglan Township upon intersecting 5.05 metres grading 0.762 g/t Pt and 1.216 g/t Pd. In 2020, the Company completed an orientation biochemical survey over the ML-North PGM showing and other areas with similar magnetic features and completed a thorough review of the available geophysical results. This work has highlighted several prospective Ni-Cu-PGM targets.
In October 2020, the Company assigned a 1% NSR on the project to Nova Royalties Corp.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 21
ISLAND COPPER
The Island Copper property is located in Aweres Township of the Sault Ste. Marie Mining District was staked to cover the historic Island Copper showings. The property is interpreted to have high potential for IOCGstyle Cu- Au mineralization. The Island Copper mineralization is hosted in an albite-rich granite breccia that is situated at the intersection of major crustal faults thought to represent the terrain boundary between Archean and Proterozoic rocks, along the margins of a major paleo-rift setting. Copper and Au enrichment occurs within a hydrothermal Fe-oxide (hematite) chlorite and amphibolite matrix that cements fragmented and altered granite breccia. Historic drilling completed by Kennco Exploration in 1965 reported 11.59m @ 3.4% Cu and 0.9g/t Au at the main showing.
On January 25, 2021, the Company announced that it had granted an option on its Island Copper project to Rich Copper Exploration Corp (“Rich Cu”), a private corporation. Under the terms of the Agreement, Rich Cu could vest a 100% interest in the Property by providing Transition with $150,000 cash over 3 years ($25,000 received), 500,000 shares (received) on signing and an additional $475,000 worth of shares over the following 3 years as well as completion of $750,000 in exploration expenditures. Transition would have receive a 2.5% Net Smelter Return royalty on any future production from the Property and within a 5 kilometre area of interest. In addition, Transition was entitled to milestone payments of $1,000,000 upon Rich Cu or its assigns completing a Feasibility Study and an additional payment of $5,000,000 within 12 months of commencement of Commercial Production. Rich Cu could have purchase 1% of the NSR for $1,000,000 anytime prior to commercial production.
The property was returned to the Company and the Option Agreement with Rich Copper was terminated on January 6, 2022.
HOMATHKO PROPERTY – GOLD – BRITISH COLUMBIA
The Homathko Property consists of 3 claims totaling 202 hectares located in the Caribou Regional District, British Columbia, approximately 200 km west of Williams Lake in the western portion of the Chilcotin region. The properties were staked to secure a land package around a high-grade gold showing discovered by Falconbridge in the 1960’s, which returned assays up to 342 g/t Au.
On December 10, 2020, the Company entered into an agreement to grant an option of a 100% interest in the property to Homerun Resources Inc. Under the terms of the agreement, Homerun could have earned a 100% interest in the property by issuing 700,000 shares followed by additional share issuances totaling $100,000 worth of common shares over 2 years and by completing $550,000 worth of exploration expenditures by December 2022. Once vested, Transition would have retained a 1.0% Net Smelter Royalty on all mineral production, 0.5% of which could have been purchased by the Company for $1,000,000.
The Homathko property is subject to a pre-existing 1.0% royalty sold by the Company to Nova Royalty Corp.
On January 27, 2022, the agreement with Homerun was amended. Under the terms of the amendment, the area of interest was expanded from 2 kilometres from the outer property boundary to 25 kilometres. In addition, the royalty was increased from 1.0% NSR (with a buy back option for Homerun of 0.5% NSR for $1,000,000) to 1.5% NSR (with a buy back option for Homerun of 0.75% NSR for $1,000,000). In September of 2022, the property was returned to Transition by Homerun along with some additionally staked property having been covered by an airborne Mag survey. In November, the Company staked some additional claims to further consolidate the property. As at the date of this report the Homathko property now consists of 11 claims for 9,586 hectares.
On December 19, 2022, the Company entered into an option agreement with Aurum Lake Mining (Aurum). Under the terms of the agreement, Aurum must pay a total of $470,000 in optional cash payments over two years; $20,000 (received) on signing; additional $100,000 following exchange acceptance (the Effective Date); $150,000 on the first anniversary of the Effective Date; and $200,000 on the second anniversary of the Effective Date. In addition, Aurum must incur work expenditures on the Property totaling $500,000 over two years and make a one-time $5,000,000 lump sum payment to the Optionor upon the commencement of commercial production. Upon vesting an interest in the property, Transition will be granted a 2.0% NSR.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 22
THOMPSON GOLD – BRITISH COLUMBIA
On March 29, 2021 the Company announced that it had entered into a letter of intent with Underhill Exploration Ltd. to acquire a 100% interest in claims hosting the Blackhawk Gold Prospect near the eastern margin of the prolific Quesnel Trough, close to Vernon, British Columbia. The Blackhawk Prospect which encompasses the historic East Showing (historic channel sample: 11.3 g/t gold and 12.1 g/t silver across 2.2 metres), the West Showing (historic chip sample; 16.0 g/t gold across 1.2 metres) and the Quartz Showing (historic channel sample: 4.6 g/t gold over 2 metres). On July 31, 2021 the Company executed a formal option agreement to allow the Company to earn a 100% interest in West and Musgrave claims from Underhill in exchange for $100,000 cash over 3 years ($10,000 paid), 250,000 shares and by incurring $450,000 in work expenditures on the Property by the third anniversary of the agreement. Upon earning its interest, the Vendors would be granted a 1.5% NSR of which 0.5% can be repurchased by the Company at any time for $1,000,000. The Company has completed additional staking around the Underhill ground to consolidate a 4,306-hectare land position. In 2021, the Company was able to complete a high-resolution airborne LIDAR survey and an orientation soil survey over portions of the property. The Company has applied for permits to complete additional programs of work on the property including additional soil sampling, trenching and RC Drilling which have not yet been received.
PORTERVILLE AND LEWISPORTE – GOLD – NEWFOUNDLAND
During the reporting period the Porterville and Lewisport Properties were allowed to lapse.
DUNTARA COPPER – NEWFOUNDLAND
On May 28, 2019, the Company announced that it had staked a new copper project known as the Duntara Copper Property covering 2,440 hectares along the northwestern tip of the Bonavista Peninsula in Eastern Newfoundland. The new claims were staked to cover a series of known copper showings including the Blue Point Prospect where shallow drilling completed by Noranda Inc. in 2001 returned 1.0 % Cu and 12.1 g/t Ag over 14.25 metres including 1.98 % Cu and 23.10 g/t Ag over 6.0 metres. The showings occur within the Crown Hill Formation of the Neoproterozoic Musgravetown Group that has been shown to have excellent potential to host sedimentary-hosted copper mineralization.
The Company has completed a high-resolution airborne mag/EM survey over this property with an objective to highlight magnetic and conductivity features considered prospective indicators for targeting large deposits of sediment-hosted copper under cover.
NUNAVUT RESOURCES CORPORATION STRATEGIC ALLIANCE
On March 5, 2012, the Company and Nunavut Resources Corp ("NRC") executed a strategic alliance agreement (“Alliance”) to jointly generate and explore mineral properties in the Kitikmeot Region of Nunavut.
On August 12, 2019, the NRC Alliance was terminated, and all projects generated under the Alliance were assigned to West Kitikmeot Gold, (“WKG”) a private subsidiary of Nunavut Resources Corporation. The Company converted its interest in the projects for 1,000,000 shares of WKG that represents 10% of the seed shares of WKG. During the year August 31, 2023, the Company received shares of 1,000,000 and it was valued at $200,000.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 23
| **Cumulative exploration expenditures as at August 31, 2023 ** | **Cumulative exploration expenditures as at August 31, 2023 ** | |||
|---|---|---|---|---|
| Project Generation Gowganda Janice Lake Saturday Night $ $ $ $ |
Sunday Lake Hele Pike Warden Highland Gold Maude Lake Cryderman Fostung Alymer Dundonald Wolleston Other Former projects $ $ $ $ $ $ $ $ $ $ $ $ |
Total $ |
||
| Opening balance, August 31, 2021 |
||||
| 3,930,999 234,410 (1,182,427 ) 97,141 |
2,501,679 1,182,504 - 430,381 4,699 215,542 48,123 197,528 (235,806 ) 185,908 1,157,870 6,857,625 |
15,626,176 | ||
| Acquisition costs Camps, accommodations, meals, travel Sale of Property interest (including NSR) Geophysical, geochemical and geological Assay, core logging and sampling Recoveries |
- - - - 62,070 - 435 1,118 - - - - - - - - 2,030 - - - - - - - |
- - 15,000 7,500 - - 1,500 28,000 - - 50,000 - 1,180 - 64,855 9,535 232,137 17,141 1,432 186,927 1,118 203,753 438,364 - - - - - - - - - - (631,735 ) - - - 1,029 - 500 - - 5,445 - - 5,902 - - - 16,125 - 14,457 3,520 52,000 3,081 - 16,551 147,905 - - - - - - - (35,000 ) - - - - - |
102,000 1,220,065 (631,735 ) 12,876 255,669 (35,000 ) |
|
| Balance, August 31, 2022 |
3,995,099 234,410 (1,181,992) 98,259 |
2,502,859 1,182,504 97,009 447,416 251,793 236,203 68,055 420,981 (234,688) 406,212 1,168,306 6,857,625 |
||
| 16,550,051 | ||||
| Acquisition costs Camps, accommodations, meals, travel Sale of Property interest (including NSR) Assay, core logging and sampling Geophysical, geochemical and geological Drilling and Trenching Recoveries |
- - - - 10,873 - - 1,160 - - - - 2,403 - - - 47,662 - - 4,268 60 - - - - - - - |
- - 78,500 - - - 3,000 2,500 - - - - 3,825 - 76,086 3,335 210,739 838 145 28,405 - 7,909 49,458 - - - - - - - - - - - - - - - 50,523 - 13,158 - - 11,025 - - 10,515 - 3,280 - 121,382 - 26,845 - - 4,072 - - 7,913 - - - 102,776 - 142,974 - - - - - - - - - (50,000 ) - - - - (144,141 ) - - (35,000 ) - |
84,000 392,773 - 87,624 215,422 245,810 (229,141 ) |
|
| Balance, August 31, 2023 |
4,056,097 234,410 (1,181,992) 103,687 |
2,509,964 1,182,504 476,276 450,751 645,509 237,041 71,200 322,842 (234,688) 414,121 1,201,192 6,857,625 |
||
| 17,346,539 |
* The Company has reclassified the Duntara and Eva Kitto properties to be included in other category and reclassified the Pike Warden property to be presented as a distinct property in order to reflect the Company’s current exploration focus.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 24
INVESTMENT IN ASSOCIATE COMPANIES
CANADIAN GOLD MINER CORP.
As at August 31, 2023, the Company owns 15,000,100 common shares in Canadian Gold Miner Corp. (“CGM”) being approximately 20% of the issued and outstanding shares. CGM is a private corporation exploring for gold in the Larder Lake Mining District near Kirkland Lake. The Company has assembled an exceptional land position totaling approximately 320 km2 around the Cadillac Larder, Lincoln-Nipissing and Ridout structures in the southwestern part of the prolific Abitibi Greenstone belt in Ontario and is planning to go public. However, the Company is currently monitoring the market to determine the best timing. See the below table for the share of CGM’s loss recognized under TMC.
Additional information regarding CGM can be obtained at www.canadiangoldminer.com.
SPC NICKEL CORP.
SPC Nickel Corp (“SPC”) is a company spun out by Transition that is focused on discovering Class 1 Nickel in the prolific Sudbury mining camp to discover new sources of metals in support of clean energy initiatives.
As at August 31, 2023, the Company owns 9,321,866 common shares in SPC being approximately 6.2% of the issued and outstanding shares.
SPC is traded on the TSX Venture Exchange under the ticker symbol SPC.V. Additional information regarding SPC can be obtained at www.spcnickel.com.
INVESTMENTS
A continuity of investment balances, and the resultant income statement impact, for the year ended August 31, 2023, is as follows:
Continuity:
| tinuity: | ||||
|---|---|---|---|---|
| For the Year Ended August 31, 2023 | Equity Investment in SPC |
Equity Investment in CGM |
Marketable securities |
Total |
| Balance as at August 31, 2022 | $605,921 | $679,928 | $1,754,416 | $3,040,265 |
| Share of loss for theperiod | (311,090) | (97,070) | - | (408,160) |
| Gain on dilution | 62,748 | - | - | 62,748 |
| Mark to market adjustments | - | - | (342,408) | (342,408) |
| Shares received frompropertysales | 17,500 | 17,500 | ||
| Realizedgains/(loss)on investments | - | - | 91,016 | 91,016 |
| Proceeds on sale of investments | - | - | (615,992) | (615,992) |
| Balance as at August 31, 2023, | $357,579 | $582,858 | $904,532 | $1,844,969 |
Income statement impact:
| me statement impact: | ||||
|---|---|---|---|---|
| For the year ended August 31, 2023 | Realized gain on disposition |
Equity accounting pick up |
Unrealized loss | Total |
| Equity (loss) pick up | - | (408,160) | - | (408,160) |
| Gain on dilution | 62,748 | 62,748 | ||
| Mark to market adjustments | - | - | (342,408) | (342,408) |
| Original cost on securities sold | (524,976) | - | - | (524,976) |
| Adjusted for: | ||||
| Proceeds on sales | 615,992 | - | - | 615,992 |
| Total | $91,016 | $(345,412) | $(342,408) | $(596,804) |
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 25
Discussion of Operations
THREE MONTHS ENDED AUGUST 31, 2023, COMPARED TO THREE MONTHS ENDED AUGUST 31, 2022
During the three months ended August 31,2023 the Company had a net loss of $392,394 compared to net loss of $1,272,277 in the comparative period. The change is mainly due to the following:
-
For the three months ended August 31, 2023, the share of loss from equity investments was $135,472 compared to $148,197 for the three months ended August 31, 2022.
-
During the three months ended August 31, 2023, the Company recorded a gain/(loss) on dilution of $62,748 compared to loss of $18,035 for the three months ended August 31, 2022.
-
Unrealized gain and realized gain on marketable securities for the period were $150,341 and $53,972 respectively, compared to unrealized loss of $199,311 and realized loss of $38,355 in the prior period. The change in the realized and unrealized gain on marketable securities is due to changes in the underlying market price of the common shares.
-
Operating expenditures for the three months ended August 31, 2023, were $579,152 compared to $954,018 for the three months ended August 31, 2022. The changes are due to:
-
i. Total exploration expenditures for the three months ended was $327,723 compared to exploration expenditures of $820,172 in the comparative period. During the three months ended August 31, 2023, the Company spent $327,772 on property expenses compared to $652,672 in the comparative period.
-
ii. During the three months ended August 31, 2023, the Company received option payments, and other recoveries in the amount of $49. During the three months ended August 31, 2022, the Company made adjustment to the fair value of shares received for sold royalties on certain properties, received option payments, and other recoveries in the amount of $167,500. See exploration section for more details:
Quarterly Project Expenditures and Recoveries
| Project Name | For the three months ended August 31, 2023 |
For the three months ended August 31, 2023 |
For the three months ended August 31, 2022 |
For the three months ended August 31, 2022 |
|---|---|---|---|---|
| Additions Recoveries | Total | Additions Recoveries |
Total | |
| Project Generation Expenditures Janice Lake Saturday Night Sunday Lake Pike Warden Highland Gold Maude Lake Cryderman Fostung Alymer Wolleston Other** |
$ 18,161 $ - - - 4,320 - 725 - 161,873 - 3,335 - 124,665 - 77 - 1,500 - 3,010 (49) 1,239 - 8,867 - |
$ 18,161 - 4,320 725 161,873 3,335 124,665 77 1,500 2,961 1,239 8,867 |
$ 5,101 $ - 435 - 580 - 91 - 90,800 - 7,790 64,307 - 366 - (29,329) - 146,146 - 2,610 - 363,775 167,500 |
$5,101 435 580 91 90,800 7,790 64,307 366 (29,329) 146,146 2,610 531,275 |
| Total | $ 327,772 $(49) | $ 327,723 | $ 652,672 $ 167,500 |
$820,172 |
* The Company has reclassified the Duntara and Eva Kitto properties to be included in other category and reclassified the Pike Warden property to be presented as a distinct property in order to reflect the Company’s current exploration focus.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 26
YEAR ENDED AUGUST 31, 2023, COMPARED TO YEAR ENDED AUGUST 31, 2022
During the year ended August 31, 2023, the Company had a net loss of $2,281,481 compared to net loss of $4,482,505 in the comparative year. The change is mainly due to the following:
-
For the year ended August 31, 2023, the share of loss from equity investments was $408,160 compared to $518,608 for the year ended August 31, 2022.
-
For the year ended August 31, 2023, the Company recorded a gain on dilution of $62,748 compared to $28,457 in the prior year.
-
The Company had an unrealized loss of $342,408 and a realized gain $91,016 on marketable securities, compared to unrealized loss of 2,040,128 and realized gain of $64,585 in the prior year. The change in the realized and unrealized gain on marketable securities is due to changes in the underlying market price of the common shares, and number of shares sold.
-
Operating expenditures for the year ended August 31, 2023, were $1,767,042 compared to $1,802,136 for the year ended August 31, 2022. The changes in the operating expenditures are mainly due to:
-
i. Total exploration expenditures for the year ended was $796,488 compared to exploration expenditures of $923,875 in the comparative period. During the year ended August 31, 2023, the Company spent $1,025,559 on property expenses compared to $1,590,640 in the comparative year. During the year ended August 31, 2023, the Company sold royalties on certain properties, received option payments, and other recoveries in the amount of $229,071 (August 31, 2022 – $666,765). See exploration section for more details.
Year ended Project Expenditures and Recoveries
| Project Name | August 31, 2023 | August 31, 2023 | August 31 2022 | August 31 2022 | |
|---|---|---|---|---|---|
| Additions | Recoveries | Total | Additions Recoveries |
Total | |
| Project Generation Expenditures Janice Lake Saturday Night Sunday Lake Pike Warden Highland Gold Maude Lake Cryderman Fostung Aylmer Dundonald Wolleston *Other *** |
$ 60,998 - 5,428 7,105 429,267 3,335 393,716 838 3,145 46,002 - 7,909 67,886 |
$ - - - - (50,000) - - - - (144,141) - - (35,000) |
$ 60,998 - 5,428 7,105 379,267 3,335 393,716 838 3,145 (98,139) - 7,909 32,886 |
$ 64,100 $ - 435 - 1,118 - 1,180 - 97,009 - 17,035 - 247,094 - 20,664 - 54,932 (35,000) 223,453 - 1,118 - 220,304 - 642,198 (631,765) |
$ 64,100 435 1,118 1,180 97,009 17,035 247,094 20,664 19,932 223,453 1,118 220,304 10,433 |
| $1,025,629 | $(229,141) | $ **796,488 ** |
$ 1,590,640 $(666,765) |
$ 923,875 |
- The Company has reclassified the Duntara and Eva Kitto properties to be included in other category and reclassified the Pike Warden property to be presented as a distinct property in order to reflect the Company’s current exploration focus.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 27
QUARTERLY INFORMATION
A summary of selected financial information for the past eight quarters is presented below:
| For the three months ended and as at: |
August 31, 2023 (1) |
May 31, 2023(2) |
May 31, 2023(2) |
February 28, 2023(3) |
February 28, 2023(3) |
November 30, 2022(4) |
|
|---|---|---|---|---|---|---|---|
| Operating (expenses)recoveries | $(579,152) | $(202,826) | $(422,822) | $(562,242) | |||
| Net(loss)income for theperiod | (392,394) | (291,153) | (455,404) | (1,142,529) | |||
| (Loss) income per share – basic and fullydiluted |
(0.00) | (0.01) | (0.01) | (0.02) | |||
| Total Assets | 3,429,814 | 2,844,393 |
3,163,597 | 3,662,096 | |||
| Total Liabilities | 384,930 | 160,000 |
188,323 | 246,918 | |||
| For the three months ended and as at: |
August 31, 2022(5) |
May 30, 2022(6) |
February 28, 2022(7) |
November 30, 2021(8) |
|||
| Operatingrecoveries(expenses) | $(954,018) | $(349,061) | $166,821 | $(665,878) | |||
| Net income(loss)for theperiod | (1,272,277) | (1,530,756) | 705,702 | 2,385,174) |
|||
| Income (Loss) per share – basic and fully diluted |
(0.02) | (0.03) | 0.01 | (0.04) |
|||
| Total Assets | 4,835,055 | 5,989,259 | 7,507,759 | 6,830,539 | |||
| Total Liabilities | 376,134 | 258,061 | 258,805 | 287.287 |
-
1) Net loss of $392,394 consisted mainly of: (i) operating expenses of $579,152, which included share based compensation of $129 and exploration and evaluation expenditures of $327,723; (ii) equity loss from associates of $135,472; (iii) gain on sale of marketable securities of $53,972; (iv) unrealized loss on investments of $150,341; (vi) recovery of flow-through of $52,358.
-
2) Net loss of $291,153 consisted mainly of: (i) operating expenses of $202,826, which included share based compensation of $269 and exploration and evaluation expenditures of $18,771; (ii) equity loss from associates of $112,373; (iii) gain on sale of marketable securities of $72,949; (iv) unrealized loss on investments of $49,255.
-
3) Net loss of 455,404 consisted mainly of: (i) operating expenses of $422,822, which included share based compensation of $500 and exploration and evaluation expenditures of $144,540; (ii) equity loss from associates of $56,801; (iii) loss on sale of marketable securities of $24,524; (iv) unrealized loss on investments of $48,282.
-
4) Net loss of $1,142,529 consisted mainly of: (i) operating expenses of $562,242, which included share based compensation of $85,286 and exploration and evaluation expenditures of $305,454; (ii) equity loss from associates of $103,514; (iii) loss on sale of marketable securities of $11,381; (iv) unrealized loss on investments of $491,776.
-
5) Net loss of $1,272,277 consisted mainly of: (i) operating expenses of $954,018, which included exploration and evaluation expenditures of $820,172; (ii) equity loss from associates of $148,197; (iii) loss on sale of marketable securities of $38,355; (iv) unrealized gain on investments of $199,311; (v) gain on dilution of $18,035; (vi) impairment of investment of $267,965.
-
6) Net loss of $1,530,756 consisted mainly of: (i) operating expenses of $349,061, which included exploration and evaluation expenditures of $116,853; (ii) equity loss from associates of $132,355; (iii) loss on sale of marketable securities of $8,565; (iv) unrealized gain on investments of $1,146,017; (v) gain on dilution of $40,977.
-
7) Net loss of $705,702 consisted mainly of: (i) operating expenses of $166,821, which included exploration and evaluation expenditures of $449,469; (ii) equity loss from associates of $90,526; (iii) gain on sale of marketable securities of $63,150; (iv) unrealized loss on investments of $535,530; (v) gain on dilution of $2,220.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 28
- 8) Net loss of $2,385,174 consisted mainly of: (i) operating expenses of $665,878, which included exploration and evaluation recoveries of $436,319; (ii) equity loss from associates of $147,530; (iii) gain on sale of marketable securities of $48,355; (iv unrealized loss on investments of $1,628,952; (v)gain on dilution of $3,295.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Operating activities were affected by net loss of $2,281,481, non-cash adjustments of $655,064 and non-cash working capital items of $9,408.
Non-cash adjustments consisted of: shares issued of $28,500, depreciation of $13,434, unrealized loss on fair value adjustment on investment of $342,408, share-based compensation of $86,184, share of loss from equity investments of $408,160, offset by property option payments received in shares of $17,500, a realized gain on investments of $91,016, gain on dilution of $62,748, and a flow-through premium of $52,358.
Non-cash working capital balances consisted of: a decrease in accounts payable and other liabilities of $157,200, an increase in restricted cash of $795, offset by a decrease in prepaid expenses and other deposits of $76,265 and a decrease in other receivable of $91,138.
Cash flows from investing activities of $615,292 was due from the sale of marketable securities of $615,992, purchase of short-term investment of $15,000, proceed from short-term investment of $15,000 and, purchase of equipment of $700. Cash flow from financing activities of $971,114 was affected by proceeds $1,000,014 from units and flow-through units financing and offset by $28,900 share issue costs.
On August 31, 2023, the Company had cash of $1,323,719 (August 31, 2022 - $1,354,322). In addition, it had investments with a fair market value of $904,532 (August 31, 2022 - $1,754,416). The Company’s working capital (based on current assets minus current liabilities) was $2,014,528 on August 31, 2023 (August 31, 2022- $3,070,419). TMC will continue to focus on optioning numerous projects in 2023 and anticipate new revenues from option payments. Currently, TMC has one property option agreement in place which is estimated to generate gross option payments of $120,000 in fiscal 2023. These payments are subject to the optionee having sufficient funds available to meet the obligations and option terms of potential new options being approved. Transition monitors the outstanding amounts on an ongoing basis. The Company continues to negotiate option agreements and the potential sale of properties. The Company believes that based on the current cash and working capital position and its access to liquidity sources, it has sufficient resources readily available to meet its current exploration and corporate and administrative requirements for the next twelve months. See “Cautionary Note Regarding Forward-Looking Statements”.
In addition, the Company's estimated exploration budget is between $1 to $2 million, which will be spent or deferred. Further financing will be required from related party loans or an equity issue to continue corporate and exploration activities. There can be no assurance that additional funding from related parties or others will be available on terms acceptable to the Company. For these reasons, management considers it to be in the best interests of the Company and its shareholders to afford management a reasonable degree of flexibility as to how the funds are employed, or for other purposes, as needs arise.
The Company does not have any long-term debt or similar contractual commitments. See “Risk Factors” in this MD&A.
DISCLOSURE OF OUTSTANDING SHARE DATA (AS AT DECEMBER 14, 2023)
The capital structure of Transition Metals is as follows:
| Common Shares Issued | 67,327,139 |
|---|---|
| Options | 4,445,000 |
| Warrants | 5,210,125 |
| Fullydiluted | 76,982,264 |
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 29
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
Cash and Cash Equivalents
The Company considers all highly liquid short-term investments with a maturity of three months or less to be cash equivalents. As of August 31, 2023, the Company had $1,323,719 in cash and $50,751 in restricted cash (August 31, 2022 - $1,354,322 in cash and $49,956 in cash equivalents).
Financial Instruments
==> picture [483 x 132] intentionally omitted <==
In connection with the disposition of securities of the above-noted companies, the Company realized gain on sale of marketable securities during the current fiscal period of $91,016 (August 31, 2022 – realized gain of $64,585).
The Company incurred unrealized loss on marketable securities during the current fiscal year of $342,408 (August 31, 2022 – $2,040,128). Unrealized gains or losses are recorded in the statement of loss and comprehensive loss. All financial instruments are initially recognized at fair value on the statements of financial position. The Company has classified each financial instrument into one of the following categories:
(1) financial assets or liabilities at fair value through profit or loss (“FVTPL”), (2) loans and receivables, (3) financial assets available-for-sale, (4) financial assets held-to-maturity, and (5) other financial liabilities. Subsequent measurement of financial instruments is based on their classification.
Financial assets and liabilities at FVTPL are subsequently measured at fair value with changes in those fair values recognized in net earnings. Financial assets “available-for-sale” are subsequently measured at fair value with changes in fair value recognized in other comprehensive income (loss), net of tax.
Financial assets “held-to-maturity”, “loans and receivables”, and “other financial liabilities” are subsequently measured at amortized cost using the effective interest method.
The Company’s financial assets and liabilities are recorded and measured as follows:
| Asset or Liability | Category | Measurement |
|---|---|---|
| Restricted cash | Held for trading | Fair value |
| Cash equivalent | Held for trading | Fair value |
| Short-term investments | Held for trading | Fair value |
| Investments | Held for trading | Fair value |
| Other receivable | Loans and receivables | Amortized cost |
| Accounts payables & accrued liabilities Other liabilities | Amortized cost | |
| Due to related parties | Other liabilities | Amortized cost |
The Company classifies the fair value of financial instruments according to the following hierarchy based on the number of observable inputs used to value the instrument.
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 30
pricing information on an ongoing basis.
Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace.
Level 3 – Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.
The following table illustrates the classification of the Company’s financial instruments, measured at fair value in the statements of financial position as of August 31, 2023 and August 31, 2022 categorized into the levels of the fair value hierarchy.
| August 31, 2022 | Level 1 | Level 2 | Level 3 | Aggregate Fair Value |
|---|---|---|---|---|
| Marketable securities | $1,754,416 | $ - | $ - | $1,754,416 |
| Restricted cash equivalents | - | 49,956 | - | 49,956 |
| Short term investments | - | 15,000 | - | 15,000 |
| Total | $1,754,416 | $64,956 | - | $1,819,372 |
| August 31, 2023 | ||||
| Marketable securities | $804,532 | $ - | $ - | $804,532 |
| Private investments, included | 100,000 | 100,000 | ||
| in marketable securities | ||||
| Restricted cash equivalents | - | 50,751 | - | 50,751 |
| Short term investments | - | 15,000 | - | 15,000 |
| Total | $804,532 | $65,751 | $100,000 | $970,283 |
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities or derivative financial obligations.
TRANSACTIONS WITH RELATED PARTIES
Related party transactions conducted in the normal course of operations are measured at the exchange value (the amount established and agreed to by the related parties). The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, to similar transactions to non-key management personnel related entities on an arm’s length basis.
Related parties include the Board of Directors, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions. The Company entered into the following transactions with related parties:
In accordance with IAS 24, key management personnel are those having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.
The remuneration of directors and key management of the Company for the years ended August 31, 2023, and 2022 was as follows:
| 2023 | 2022 | |||||
|---|---|---|---|---|---|---|
| Short term benefits (i) | $ | 424,076 $ | 449,038 | |||
| Share based payments | 63,222 | - | ||||
| Accountingfees | 39,677 | 48,405 | ||||
| $ | $ | 526,975 | $ | 497,443 |
Short term benefits are included in consultant fees and exploration and evaluation expenditures.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 31
On September 29, 2022, the Company granted 1,100,000 incentive stock options to directors, and management of the Company, exercisable at $0.07 per share for a period of 5 years.
Included in accounts payable and accrued liabilities as of August 31, 2023 is $49,820 (August 31, 2022 - $54,456) owing to officers and management of TMC. The amounts are unsecured, non-interest bearing, and are due on demand.
During the year ended August 31, 2023, the Company paid professional fees of $39,677 (August 31, 2022 - $48,405), to Marrelli Support, a Company controlled by the Chief Financial Officer of the Company. These services were incurred in the normal course of operations for general accounting and financial reporting matters. As at August 31, 2023, Marrelli Support was owed $7,500 (August 31, 2022 -$nil) with respect to services provided. The amounts are unsecured, non-interest bearing, and are due on demand.
On June 19, 2023, the Company closed a private placement and a related party subscribed to 159,500 units for proceeds of $ 12,760.
COMMITMENTS AND CONTINGENCIES
Environmental Contingencies
The Company’s exploration activities are subject to various federal, state, provincial, and international laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.
Flow-through Expenditures
From time-to time, the Company and its associates enter into flow-through financings and indemnify the subscribers of flow-through shares for any tax related amounts that become payable by the subscriber. In the ordinary course of business, the Company is subject to ongoing audits by tax authorities. There are many transactions and calculations for which the ultimate tax determination is uncertain. While the Company believes that its tax filing positions are appropriate and supportable, from time to time, certain matters are reviewed and challenged by the tax authorities. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities.
RISK FACTORS
The operations of the Company are speculative due to the high-risk nature of its business, which involves the acquisition, financing, exploration, and development of mining properties. These risk factors could materially affect the Company’s future operating results and could cause actual events to differ materially from those described in forward–looking information relating to the Company.
Liquidity Concerns and Future Financings
The Company will require significant capital and operating expenditures in connection with the development of its properties. There can be no assurance that the Company will be successful in obtaining required financing as and when needed. Volatile markets may make it difficult or impossible for the Company to obtain debt financing or equity financing on favorable terms, if at all. Failure to obtain additional financing on a timely basis may cause the Company to postpone or slow down its development plans, forfeit rights in some or all its properties or reduce or terminate some or all of its activities.
Nature of Mining, Mineral Exploration and Development Projects
Mining operations generally involve a high degree of risk. The Company’s operations are subject to the hazards and risks normally encountered in the mineral exploration, development and production, including environmental hazards, explosions, unusual or unexpected geological formations or pressures and periodic interruptions in both production and transportation due to inclement or hazardous weather conditions. Such risks could result in damage to, or destruction of, mineral properties or producing facilities, personal injury, environmental damage, delays in mining, monetary losses and possible legal liability.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 32
Mineral exploration is highly speculative in nature. There is no assurance that exploration efforts will be successful. Even when mineralization is discovered, it may take several years until production is possible, during which time the economic feasibility of production may change. Substantial expenditures are require to establish proven and probable mineral reserves through drilling. Because of these uncertainties, no assurance can be given that exploration programs will result in the establishment or expansion of mineral resources or mineral reserves. There is no certainty that the expenditures made by the Company towards the search and evaluation of mineral deposits will result in discoveries or development of commercial quantities of ore.
Development projects have no operating history upon which to base estimates of future cash operating costs. For development projects, reserve and resource estimates and estimates of cash operating costs are, to a large extent, based upon the interpretation of geologic data obtained from drill holes and other sampling techniques, and feasibility studies, which derive estimates of cash operating costs based upon anticipated tonnage and grades of ore to be mined and processed, ground conditions, the configuration of the ore body, expected recovery rates of minerals from the ore, estimated operating costs, anticipated climatic conditions and other factors. As a result, actual production, cash operating costs and economic returns could differ significantly from those estimated. Current market conditions are forcing many mining operations to increase capital and operating cost estimates. Indeed, there have been a number of mining operations that have ceased or been suspended or delayed because operation costs are estimated to be greater than projected prices of product. It is not unusual for new mining operations to experience problems during the start-up phase, and delays in the commencement of production often can occur.
No Revenues from Project Generation Activities
To date the Company has recorded no revenues from exploration operations and the Company has not commenced commercial production or development on any property. There can be no assurance that significant losses will not occur in the near future or that the Company will be profitable in the future. The Company’s operating expenses and capital expenditures may increase in subsequent years in relation to the engagement of consultants, personnel and equipment associated with advancing exploration, development, and commercial production of the Company’s properties. The development of the Company’s properties will require the commitment of substantial resources to conduct time-consuming exploration. There can be no assurance that the Company will generate any revenues or achieve profitability.
Licenses and Permits, Laws and Regulations
The Company’s exploration and development activities, including mine, mill, road, rail and other transportation facilities, require permits and approvals from various government authorities and are subject to extensive federal, provincial, state and local laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational health and safety, mine safety and other matters. Such laws and regulations are subject to change, can become more stringent and compliance can therefore become more costly. In addition, the Company may be required to compensate those suffering loss or damage by reason of its activities. There can be no guarantee that Transition Metals will be able to maintain or obtain all necessary licenses, permits and approvals that may be required to explore and develop its properties, commence construction or operation of mining facilities.
Mineral Commodity Prices
The value of the Company’s properties will be dependent upon the market price of mineral commodities. Mineral prices fluctuate widely and are affected by numerous factors beyond the control of the Company. The level of interest rates, the rate of inflation, the world supply of mineral commodities and the stability of exchange rates can all cause significant fluctuations in prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The price of mineral commodities has fluctuated widely in recent years, and future price declines could cause commercial production to be impracticable, thereby having a material adverse effect on the Company’s business, financial condition and result of operations.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 33
Investment price risk
Investment price risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices. The Company is subject to price risk due to changes in the fair value of the common shares it holds in various companies as well as SPC and CGM.
Environmental
The Company’s activities are subject to extensive federal, provincial state and local laws and regulations governing environmental protection and employee health and safety. Environmental legislation is evolving in a manner that is creating stricter standards, while enforcement, fines and penalties for non-compliance are also increasingly stringent. The cost of compliance with changes in governmental regulations has the potential to reduce the value of its properties. Further, any failure by the Company to comply fully with all applicable laws and regulations could have significant adverse effects on the Company, including the suspension or cessation of operations.
Title to Properties
The acquisition of title to resource properties is a very detailed and time-consuming process. The Company holds its interest in certain of its properties through mining claims. Title to, and the area of, the mining claims may be disputed. There is no guarantee that such title will not be challenged or impaired. There may be challenges to the title of the properties in which the Company may have an interest, which, if successful, could result in the loss or reduction of the Company’s interest in the properties.
Uninsured Risks
The Company maintains insurance to cover normal business risks. In the course of exploration and development of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions including explosions, rock bursts, cave-ins, fire and earthquakes may occur. It is not always possible to fully insure against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could result in significant liabilities to the Company and increase costs of projects.
Competition
Transition Metals competes with many other mining companies that have substantially greater resources than the Company. Such competition may result in the Company being unable to acquire desired properties, recruit or retain qualified employees or acquire the capital necessary to fund its operations and develop its properties. The Company’s inability to compete with other mining companies for these resources would have a material adverse effect on the Company’s results of operation and business.
Dependence on Outside Parties
Transition Metals has relied upon consultants, engineers and others and intends to rely on these parties for development, construction and operating expertise. Substantial expenditures are required to establish mineral reserves through drilling, to carry out environmental and social impact assessments, to develop processes to extract the commodity from the ore. If such parties’ work is deficient or negligent or is not completed in a timely manner, it could have a material adverse effect on Transition Metals.
Conflicts of Interest
Certain of the Company’s directors and officers serve or may agree to serve as directors or officers of other companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of Transition Metals may have a conflict of interest in negotiating and concluding terms respecting such participation.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 34
Litigation
Transition Metals has entered into legally binding agreements with various third parties on a consulting and partnership basis. The interpretation of the rights and obligations that arise from such agreements is open to interpretation and Transition Metals may disagree with the position taken by the various other parties resulting in a dispute that could potentially initiate litigation and cause Transition Metals to incur legal costs in the future. Given the speculative and unpredictable nature of litigation, the outcome of any such disputes could have a material adverse effect on Transition Metals.
Dependence on Key Employees
The Company’s business and operations are dependent on retaining the services of a small number of key employees. The success of the Company is, and will continue to be, to a significant extent, dependent on the expertise and experience of these employees. The loss of one or more of these employees could have a materially adverse effect on the Company. The Company does not maintain insurance on any of its key employees.
Potential Dilution
The issue of shares upon the exercise of stock options and warrants will dilute the ownership interest of the Company’s current shareholders. The Company may also issue additional options and warrants or additional shares from time to time in the future. If it does so, the ownership interest of the Company’s then current shareholders could also be diluted.
Extreme volatility
The extreme volatility occurring in the financial markets is a significant risk for the Company. As a result of the market turmoil, investors have been moving away from assets they perceive as risky to those they perceive as less so. Companies like Transition Metals are considered risk assets and as mentioned above are highly speculative. The volatility in the markets and investor sentiment may make it difficult for Transition Metals to access the capital markets to raise the capital it will need to fund its current level of expenditures.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the year of the change, if the change affects that year only, or in the year of the change and future years, if the change affects both.
RECENT ACCOUNTING PRONOUNCEMENTS
Future accounting policies
In February 2021, the IASB issued ‘Disclosure of Accounting Policies’ with amendments that are intended to help preparers in deciding which accounting policies to disclose in their financial statements. The amendments are effective for year ends beginning on or after January 1, 2023.
IAS 8 – In February 2021, the IASB issued ‘Definition of Accounting Estimates’ to help entities distinguish between accounting policies and accounting estimates. The amendments are effective for year ends beginning on or after January 1, 2023.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 35
IAS 12 – In May 2021, the IASB issued ‘Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction’ that clarifies how entities account for deferred tax on transactions such as leases and decommissioning obligations. The amendments are effective for year ends beginning on or after January 1, 2023.
IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. The amendments are effective for annual periods beginning on January 1, 2023.
IFRS 10 – Consolidated Financial Statements (“IFRS 10”) and IAS 28 – Investments in Associates and Joint Ventures (“IAS 28”) were amended in September 2014 to address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The effective date of these amendments is yet to be determined; however early adoption is permitted.
New Standards adopted
The Company adopted the following new IFRS standards, interpretations, amendments and improvements of existing standards. The new standards and changes did not have any material impact on the Company's financial statements ae described as follows:
IAS 16 – Property, Plant and Equipment (“IAS 16”) was amended. The amendments introduce new guidance, such that the proceeds from selling items before the related property, plant and equipment is available for its intended use can no longer be deducted from the cost. Instead, such proceeds are to be recognized in profit or loss, together with the costs of producing those items. The company adopted these amendments on September 1, 2022. The amendments had no impact on the unaudited condensed interim financial statement.
IAS 37 – Provisions, Contingent Liabilities, and Contingent Assets (“IAS 37”) was amended. The amendments clarify that when assessing if a contract is onerous, the cost of fulfilling the contract includes all costs that relate directly to the contract – i.e. a full-cost approach. Such costs include both the incremental costs of the contract (i.e. costs a company would avoid if it did not have the contract) and an allocation of other direct costs incurred on activities required to fulfill the contract – e.g. contract management and supervision, or depreciation of equipment used in fulfilling the contract. The company adopted these amendments on September 1, 2022. The amendments had no impact on the unaudited condensed interim financial statement.
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The information provided in this report, including information from the related audited financial statements, is the responsibility of management. In the preparation of these statements, estimates are sometimes necessary to decide of future values for certain assets or liabilities. Management believes such estimates have been based on careful judgements and have been properly reflected in the financial statements.
As part of the oversight role of the Board of Directors to ensure the Company’s disclosures contain no misrepresentations, the Audit Committee reviews the interim and annual financial statements and MD&A prepared by management, and the preparation process. The Audit Committee, once satisfied, recommends the statements and MD&A to the Board of Directors for approval. The Board considers the financial statements and MD&A before approving them for filing in the prescribed manner.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 36
INTERNAL CONTROLS
Management has established processes to provide them sufficient knowledge to support management representations that they have exercised reasonable diligence that (a) the unaudited condensed interim financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the unaudited condensed interim financial statements and (b) the unaudited condensed interim financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented by the financial statements.
-
i. controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
-
ii. a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.
Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Transition Metals Corp. – Management discussion and analysis – year ended August 31, 2023
Page 37