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Windfall Geotek Inc. — Management Reports 2025
Jul 29, 2025
44910_rns_2025-07-28_633230ad-fc13-4eed-8e1a-916d85e517a4.pdf
Management Reports
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South Atlantic
GOLD
Management Discussion and Analysis
For the Three Months Ended May 31, 2025
The following management's discussion and analysis ("MD&A") has been prepared as of July 28, 2025 and should be read in conjunction with the un-audited condensed consolidated interim financial statements for the three months ended May 31, 2025, and comparative period May 31, 2024, and related notes which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. References throughout the report we refer to South Atlantic, the "Company", "we", "us", "our" or "its". All these terms are used in respect of South Atlantic Gold Inc. and/or its wholly owned subsidiaries. Further information on the Company is available on SEDAR at www.sedarplus.ca. Information is also available on the Company's website at www.southatlanticgold.com. Information on risks associated with investing in the Company's securities is contained in this MD&A.
All amounts stated are in Canadian dollars unless otherwise stated.
Cautionary Statement on Forward-Looking Information
This report contains "forward-looking statements", including, the Company's expectations as to but not limited to, comments regarding the timing and content of upcoming work programs and exploration budgets, geological interpretations, receipt of property titles, and potential mineral recovery processes. Forward-looking statements express, as at the date of this report, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results. The material factors and assumptions used to develop the forward-looking statements and forward-looking information contained in this MD&A include without limitation the following: assumptions, risks and uncertainties associated with general economic conditions; adverse industry events; our approved budgets, exploration and assay results, results of the Company's planned exploration expenditure programs, estimated drilling success rates and other prospects. Due to the nature of the mineral resource industry, budgets are regularly reviewed in light of the success of the expenditures and other opportunities that may become available to the Company. Accordingly, while the Company anticipates that it will have the ability to spend the funds available to it, there may be circumstances where, for sound business reasons, a reallocation of funds may be prudent.
Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and South Atlantic assumes no obligation to update forward-looking information in light of actual events or results.
Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, factors associated with fluctuations in the market price of minerals, mining industry risks and hazards, environmental risks and hazards, economic and political events affecting metal supply and demand, uncertainty as to calculation of mineral reserves and resources, requirement of additional financing, and other risks. Actual results may differ materially from those currently anticipated in such statements.
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Readers are cautioned that the foregoing list of important factors and assumptions is not exhaustive. Forward-looking statements are not guarantees of future performance. Events or circumstances could cause the Company's actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of factors, whether as a result of new information or future events or otherwise, except as may be required under applicable laws.
Overview Performance and Operations
South Atlantic Gold Inc. (the "Company") was incorporated on October 17, 2006 under the laws of British Columbia, Canada under the laws of British Columbia, Canada. On November 19, 2020, the Company changed its name from Jiulian Resources Inc. to South Atlantic Gold Inc. Effective November 24, 2020, the Company commenced trading on the TSX Venture Exchange (the "Exchange") under the new symbol "SAO" as a Tier 2 issuer on November 24, 2020.
The Company's registered office is located at 301 – 1665 Ellis St, Kelowna, BC V1Y 2B3.
As at the date of this report South Atlantic Gold has the following wholly owned subsidiaries:
| Name of Subsidiary | Jurisdiction |
|---|---|
| SOUTH ATLANTIC GOLD BRASIL EXPLORACAO MINERAL LTDA (“SAG”) | Brazil |
CORPORATE
On June 27, 2025, the Company's shareholders did not approve its previously announced amalgamation (the Transaction") with ValOre Metals Corp. ("Valore") at the Company's shareholder meeting held on June 27, 2025 (the "Meeting"). Following the Meeting, Valore and the Company mutually agreed to terminate the amalgamation agreement and consequently the Transaction did not proceed. South Atlantic will continue to evaluate and review alternative opportunities to enhance shareholder value.
PROJECTS AND EXPLORATION
The Company is primarily engaged in the acquisition, exploration and development of mineral properties located in Brazil. To date, the Company has not earned significant revenues and is considered to be in the exploration stage. The Company's current properties include a 100% interest in the Pedra Branca project in Brazil.
Qualified Persons
The scientific and technical information that forms the basis for parts of this MD&A with respect to the Pedra Branca project was reviewed and approved by Marcelo Antonio Batelochi (P.Geo.), MAUSIMM (CP), the Company's Exploration Manager who is a Qualified Person as defined by National Instrument 43-101 ("QP").
Pedra Branca - Brazil
Pursuant to an option agreement the Company acquired a 100% interest (subject to certain underlying royalties to the original vendors) in the Pedra Branca Property by completing exploration expenditures totaling a minimum of US$1 million and by delivering a National Instrument ("NI") 43-101 technical report dated April 25, 2021 and entitled "Mineral Resource Estimation for the Pedra Branca Gold Project Ceará State – Brazil" authored by Rodrigo Mello, FAusIMM of RBM Consultoria Mineral Belo Horizonte, Brazil (the "2021 – NI 43-101 Report") which is filed under the Company's profile on the SEDAR website at www.sedarplus.ca that outlined the Company's maiden inferred resource.
The inferred resource outlined in the 2021- NI 43-101 Report was completed by the consolidation of historical drilling and Phase 1 Reverse Circulation (“RC”) drilling results with an average depth of 41.2 meters (“m”).
2025 - Exploration & Outlook
The Company continues to address all new technical questions from ANM and the Environmental Secretary.
As previously stated, with regards to its 3 main tenements (Queimadas, Coelhos and Mirador):
- On April 30th, 2024, SEMACE (the environmental agency of the state of Ceara) issued the Terms of Reference stablishing the minimum requirements for the environmental studies in the area of influence of the Project. The document is valid for one year.
- Initial findings demonstrated that the mine plan will need to be readjusted and further exploration will be required. While the mine plan will need to be re-drafted, a proper Environmental Impact Study cannot be conducted.
- The Company has decided to update its original reports called RRR (Resource Revaluation Report) for ANM during mid-may. It was a very extensive and in-depth report, which will result in a re-start of the mine plan approval with ANM. A new mine plan will need to be drafted once ANM as had the time to review the RRR report. There is no specific date yet set as ANM has not even started the review of the report.
Based on the reports above and all its current status, the Company remains in compliance with the Environmental Agency of the State of Ceara, as well as with ANM, and will continue to work with such agencies to make sure that all questions are answered properly.
Outlook
The Company will continue to do the work necessary to keep the tenements in good standing, which in part will require new exploration programs to achieve later levels of permits, as well as drafting new mine plan and potentially issuing a full mine license in the future. The Company will require additional funding to complete any further exploration and development work.
Expenditures for the three months ended May 31, 2025, on Exploration and Evaluation Assets include:
| | Brazil
Pedra Branca | Bid Kidd | Total |
| --- | --- | --- | --- |
| Balance as at February 28, 2025 | $ 3,326,581 | $ - | $ 3,326,581 |
| Exploration Costs | | | |
| Community relations | 58,846 | - | 58,846 |
| Vehicle and equipment rental & fuel | 444 | - | 444 |
| Travel/Site | 5,851 | - | 5,851 |
| Total Exploration costs | 65,141 | - | 65,141 |
| Balance at May 31, 2025 | $ 3,391,722 | $ - | $ 3,391,722 |
Expenditures for the year ended February 28, 2025, on Exploration and Evaluation Assets include:
| | Brazil
Pedra Branca | Bid Kidd | Total |
| --- | --- | --- | --- |
| Balance as at February 28, 2024 | $ 3,222,960 | $ 600,931 | $ 3,823,891 |
| Exploration Costs | | | |
| Field equipment and supplies | 59 | - | 59 |
| Camp/Site Costs | 1,857 | - | 1,857 |
| Community relations | 62,737 | - | 62,737 |
| GIS mapping | 15,062 | - | 15,062 |
| Travel/Site | 23,906 | - | 23,906 |
| Total Exploration costs | 103,621 | - | 103,621 |
| Sale of exploration and evaluation assets | - | (575,000) | (575,000) |
| Loss on sale of exploration evaluation assets | | (25,931) | (25,931) |
| Balance at February 28, 2025 | $ 3,326,581 | $ - | $ 3,326,581 |
Financial Results for the three months ended May 31, 2025, and May 31, 2024
The Company has no operating revenues and relies on external financings to generate capital for its continued operations. As a result of its activities South Atlantic continues to incur annual net losses.
For the three months ended May 31, 2025, the Company reported a $79,398 net and comprehensive loss or $0.00 basic and diluted loss per share compared to a $76,806 or $0.00 loss per share for the same comparative period ended May 31, 2024. The primary component of the current three month loss was general and administration costs of $61,449 (2024 - $46,109), wages and benefits of $3,086 (2024 - $50,301), corporate development costs of $9,975 (2024 - $Nil); and share-based payments of $1,936 (2024 - $9,265) in connection with the vesting of stock options. Additionally, the Company recorded a loss of $2,755 on foreign exchange (2024 - $28,743 gain). Further, the Company recorded interest income of $559 (2024 - $1,147). Additionally the Company wrote off recovery of exploration and evaluation expenses of $1,133 (2024 - $Nil) in connection with an overpayment of BC MET refund to the Company.
General and Administrative Expenses
General and administrative expenses saw an overall 33% decrease in expenditures noting the following significant variances:
| | 2025
$ | 2024
$ | Variance
$ |
| --- | --- | --- | --- |
| Accounting and legal | 29,640 | 7,766 | 21,874 |
| Consulting | 17,749 | 9,569 | 8,180 |
| Website, advertising, shareholder communication | 3,553 | 1,376 | 2,177 |
| Office and administration fees | 5,847 | 6,995 | (1,148) |
| Insurance | 3,442 | 4,484 | (1,042) |
| Rent | 600 | 2,400 | (1,800) |
| Regulatory fees | 618 | - | 618 |
| Transfer agent fees | - | 916 | (916) |
| Travel | - | 12,603 | (12,603) |
| | 61,449 | 46,109 | 15,340 |
Accounting and legal – the increase in expenditures were in relation to legal and accounting costs incurred in connection with the Transaction with Valore as noted hereinabove;
Consulting – the increase in consulting fees primarily related to change of consulting fees from wages from the prior period see related party disclosure hereinbelow;
Website, advertising, shareholder communication – the increase in expenditures related to the timing difference of holding of the Company's annual general meeting from prior year;
Office and administration – the decrease in office and administration costs related primarily to the limited activities in Brazil to preserve the treasury;
Insurance – the decrease in insurance relates to the decrease in insurance requirements for BC exploration liability;
Rent – the decrease in rent was in connection with the downsizing from the Company's corporate office during the current period; and
Travel – the Company did not incur any travel related to corporate activities to reserve the treasury.
Summary of quarterly results
The following is a summary of selected financial data for the Company for the eight most recently completed quarters.
| For the quarters ended | ||||
|---|---|---|---|---|
| May 31 2025 | February 28 2025 | November 30 2024 | August 31 2024 | |
| Total interest income | $559 | $1,735 | $2,090 | $812 |
| Net loss | ($79,398) | ($65,643) | ($68,687) | ($54,921) |
| Basic and diluted loss per share | ($0.00) | ($0.00) | ($0.00) | ($0.00) |
| For the quarters ended | ||||
| --- | --- | --- | --- | --- |
| May 31 2024 | February 29 2024 | November 30 2023 | August 31 2023 | |
| Total interest income | $1,147 | $1,424 | $1,424 | $786 |
| Net loss | ($75,806) | ($602,652) | ($156,908) | ($282,469) |
| Basic and diluted loss per share | ($0.00) | ($0.01) | ($0.00) | ($0.00) |
Significant variances to note for prior quarters:
During the fourth quarter February 28, 2025, the Company reported a loss of $65,6431 or $0.00 per share. The primary component was general and administrative cost of $164,563 which was offset primarily by other income of $70,000 in connection with an exclusivity fee as described hereinabove.
During the fourth quarter February 29, 2024, the Company reported a loss of $602,652 or $0.01 loss per share. The primary component of the current loss included the reclassification of costs related to the proposed Tucano Transaction of $471,000 to property evaluation costs that were capitalized to Pedra Branca and general and administrative costs of wages of $43,735 and share-based payment expense for vested options of $15,683 during the year.
For the three months ended August 31, 2023, the Company reported a $282,469 net and comprehensive loss or $0.00 basic and diluted loss per share the primary component of the current period included corporate development expenses of $105,500 in connection with the issuance of common shares for corporate advisory services.
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Liquidity and capital resources
| | May 31
2025 | February 28
2025 |
| --- | --- | --- |
| Financial position: | | |
| Cash | $65,381 | $225,658 |
| Working capital (deficiency) | $(114,216) | $18,809 |
| Total Assets | $3,503,040 | $3,613,985 |
| Shareholders' equity | $3,293,650 | $3,371,177 |
As at May 31, 2025, the Company had a working capital deficiency of $114,216 (February 28, 2025 – $18,809).
Capital expenditures primarily included exploration expenditures of $65,141 in relation to the Company's Pedra Branca project. Additional working capital will be required to complete further exploration programs at Pedra Branca.
The Company has not yet generated revenue to date and the Company's activities have been funded through equity financing and the Company expects it will continue to be able to utilize this source of financing until it develops cash flow from future operations for the advancement of exploration and development of its exploration assets.
There can be no assurance that the Company will be successful in its endeavors. If such funds are not available or other sources of finance cannot be obtained, then the Company will be forced to curtail its activities to a level for which funding is available and can be obtained.
Off balance-sheet arrangements
There are currently no off-balance sheet arrangements and no new information to report since the annual management's discussion and analysis.
Transactions with related parties
Key Management Compensation
The Company's related parties include key management personnel and directors. Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Board of Directors and corporate officers, including the Company's Chief Executive Officer and Chief Financial Officer.
Direct remuneration paid to the Company's directors and key management personnel during the three months ended May 31, 2025, and May 31, 2024, are as follows:
| | May 31
2025 | May 31
2024 |
| --- | --- | --- |
| Key management personnel compensation comprised: | | |
| Wages^{1} | $- | $33,799 |
| Consulting fees^{2} | 19,625 | 7,800 |
| Administration^{3} | 3,754 | 5,135 |
| Share-based payments | 1,936 | 8,879 |
| | $25,315 | $55,613 |
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1Wages include amounts paid to the CEO of $Nil (2024 - $33,799);
2Consulting fees include amounts paid or accrued to a company¹ controlled by the CEO in the amount of $9,000 (2024 - $Nil);
2Consulting fees include amounts paid or accrued to a company controlled by the CFO in the amount of $10,625 (2024 - $7,800);
3Administration fees include amount paid or accrued to a company controlled by the CFO of $2.551 (2024 - $5,135) for accounting and personnel services; and
3Administration fees include amount paid or accrued to a company controlled by a family member of the CFO of $1,250 (2024 - $Nil) for accounting and personnel services.
Rent
The Company previously paid Golden Ridge Resources Ltd. (a company with a common officer) rent and expenses on a month-to-month basis for shared offices space for a total of $Nil for the period ended May 31, 2025 (May 31, 2024 – $Nil).
Related Party Liabilities
Included in trade and other payables are amounts due to officers, directors and related parties for fees and expenses of $6,000 at May 31, 2025 (February 28, 2025 - $12,482) as follows.
| Amounts due to: | Service for: | May 31 2025 | February 28 2025 |
|---|---|---|---|
| Minco | Consulting Fees | $- | 6,842 |
| Golden Ridge Resources Ltd⁻¹ | Rent & Expenses | 6,000 | 6,000 |
| Total related party payables | $6,000 | $12,482 |
Related Party Prepaids and Advances
Included in prepaid and advances is $Nil (February 28, 2025 - $7,833) for advances to the CEO.
Critical Accounting Policies and Estimates
The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. 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 in the period of the change, if the change affects that period only, or in the period of the change and future years, if the change affects both.
Information about critical judgments and estimates in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities included in the preparation of the condensed consolidated interim statements are discussed below:
Going Concern
The assessment of the Company's ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meet its liabilities for the ensuing year, and to fund planned and contractual exploration programs, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.
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Impairment of Exploration and Evaluation Assets
The application of the Company's accounting policy for exploration and evaluation expenditures requires judgment in determining whether it is likely that future economic benefits will flow to the Company. If, after exploration and evaluation expenditures are capitalized, information becomes available suggesting that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, the Company carries out an impairment test at the cash-generating unit or group of cash-generating unit's level in the year the new information becomes available. Such impairment tests and recoverable value models have a degree of estimation and judgment which may differ in the future.
Valuation of Share-based Payments
The Company uses the Black-Scholes option pricing model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's earnings and equity reserves.
Recent and Future Accounting Pronouncements
There have been no accounting pronouncements with significant impact on the Company's consolidated financial statements.
Financial instruments and other instruments
The Company is exposed through its operations to the following financial risks:
- Market Risk
- Credit Risk
- Liquidity Risk
In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these consolidated financial statements.
There have been no substantive changes in the Company's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in the note.
General Objectives, Policies and Processes
The Board of Directors has overall responsibility for the determination of the Company's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's management. The effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets are reviewed periodically by the Board of Directors if and when there are any changes or updates required.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices are comprised of interest rate and commodity price risk.
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Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company has cash balances and non-interest-bearing debt. The Company's current policy is to invest excess cash in guaranteed investment certificates or interest-bearing accounts of major Canadian chartered banks. The Company regularly monitors compliance to its cash management policy. Cash is subject to floating interest rates.
Credit Risk
The Company, as at May 31, 2025 and May 31, 2024, does not have any borrowings. Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions. The Company considers this risk to be not significant.
Commodity Price Risk
The Company's ability to raise capital to fund exploration or development activities may be subject to risks associated with fluctuations in the market prices of the relevant commodities. The Company closely monitors commodity prices to determine the appropriate course of action to be taken by the Company.
Foreign Exchange Risk
Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar, United States dollar and Brazil Real and other foreign currencies will affect the Company's operations and financial results.
The functional currency of the parent and its subsidiaries is Canadian dollars. A portion of the Company's operating expenses are in Brazilian Real.
As at May 31, 2025, the Company has not entered into contracts to manage foreign exchange risk.
The Company is exposed to foreign exchange risk through the following assets and liabilities:
| | May 31
2025 | February 28
2025 |
| --- | --- | --- |
| Cash | $15,000 | $107 |
| Accounts payable and accrued liabilities | (44,683) | (40,717) |
| | $(29,683) | $(40,610) |
As at May 31, 2025, with other variables unchanged, a 5% increase or decrease in value of the Brazilian Real against the currencies to which the Company is normally exposed to Canadian dollars would result in an increase or decrease of approximately $1,484 (February 28, 2025 - $2,030) to the net loss for the three months ended May 31, 2025.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company's policy is to endeavour that it will have sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. However, circumstances may arise where the Company is unable to meet those goals. The key to success in managing liquidity is the degree of certainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days. To achieve this objective, the Company would prepare annual capital
expenditure budgets, which are regularly monitored and updated as considered necessary. Further, when required the Company utilizes authorizations for expenditures on exploration projects to further manage expenditure.
The Company monitors its risk of shortage of funds by monitoring the maturity dates of existing trade and other accounts payable and option payment commitments. The Company endeavours to not maintain any trade payables beyond a 30-day period to maturity.
Determination of Fair Value
Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
The consolidated statements of financial position carrying amounts for trade and other payables and provision approximate fair value due to their short-term nature.
Due to the use of subjective judgments and uncertainties in the determination of fair values these values should not be interpreted as being realizable in an immediate settlement of the financial instruments.
CAPITAL MANAGEMENT
The Company monitors its common shares, warrants and stock options as capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares. Although the Company has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will continue this method of financing due to the current difficult market conditions.
In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. Management reviews the capital structure on a regular basis to ensure that the above objectives are met. The Company's capital is not subject to any externally imposed capital requirements. There have been no changes to the Company's approach to capital management during the three months ended May 31, 2025.
Outstanding Share Data
South Atlantic's authorized capital is unlimited common shares without par value. As at the date of this report 109,685,666 common shares as issued and outstanding as of the date hereof. Additionally, the Company as at the date of this report had the following outstanding options, share purchase warrants and agent warrants as follows:
Stock Options
| Expiry Date | Exercise Price | Number of Options | Vested and Exercisable | Unvested |
|---|---|---|---|---|
| 09-Jul-251 | $0.05 | 300,000 | 300,000 | |
| 10-Nov-25 | $0.14 | 1,910,000 | 1,910,000 | - |
| 05-Jan-27 | $0.06 | 2,855,000 | 2,855,000 | - |
| 11-May-28 | $0.05 | 1,205,000 | 903,750 | 301,250 |
| 6,270,000 | 5,968,750 | 301,250 |
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DSU's
| Number of DSUs | Weighted average grant date fair value per DSU |
|---|---|
| 2,360,000 | $0.045 |
RSU's
| Number of RSUs | Weighted average grant date fair value per RSU |
|---|---|
| 60,000 | $0.045 |
Shares in Escrow
As at the date of this report hereof there were no shares held in escrow.
Risks and uncertainties
The Company is in the mineral exploration and development business and as such, is exposed to a number of risks and uncertainties that are not uncommon to other companies in the same business. The industry is capital intensive and is subject to fluctuations in market sentiment, metal prices, foreign exchange and interest rates. There is no certainty that properties which the Company has described as assets on its balance sheet will be realized at the amounts recorded. The only sources of future funds for further exploration programs or, if such exploration programs are successful for the development of economic ore bodies and commencement of commercial production thereon, which are presently available to the Company are the sale of equity capital or the farm-out, of an interest in its properties to be earned by another party carrying out further exploration or development. Although the Company has been successful in accessing the equity market during the past years, there is no assurance that such sources of financing will be available on acceptable terms, if at all. The Company will require additional funding in order to maintain it current tenements related to its Pedra Branca Project (See Pedra Branca "Outlook")
The Company currently has one employee and the Company's subsidiary currently has no employees. All other work is carried out through independent consultants and the Company requires that all consultants carry their own insurance to cover any potential liabilities as a result of their work on a project. In certain cases where consultants are unable to carry their own insurance the Company includes such individuals under its coverage.
The Company is subject to additional risk factors in relation to operating in a foreign jurisdiction in relation to its Pedra Branca Property located in Brazil which initially include but are not limited to:
Global Economy Risk
The Company's business may be affected by changes in political and market conditions, such as interest rates, availability of credit, inflation rates, changes in laws, and national and international circumstances. Recent geopolitical events, including, relations between NATO and Russian Federation regarding the situation in Ukraine, and potential economic global challenges such as the risk of the higher inflation and
energy crises, may create further uncertainty and risk with respect to the prospects of the Company's business
Political stability and government regulations in Brazil
The Company's interests in Brazil that may be affected in varying degrees by political instability, government regulations relating to the mining industry and foreign investment therein, and the policies of other nations in respect of Brazil. Any changes in regulations or shifts in political conditions are beyond Company's control and may adversely affect its business. Company's operations may be affected in varying degrees by government regulations, including those with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, employment, land use, water use, environmental legislation and mine safety. The regulatory environment is in a state of continuing change, and new laws, regulations and requirements may be retroactive in their effect and implementation. The Company's operations may also be adversely affected in varying degrees by political and economic instability, economic or other sanctions imposed by other nations, terrorism, military repression, crime, extreme fluctuations in currency exchange rates and high inflation.
Environmental Compliance
The Company is currently taking all necessary technical and administrative steps to remain compliant with all licensing and permits required during its current Pedra Branca Project Exploration Licenses development stage. In addition, the Company is now required to conduct an Environmental Impact Study specifically to ANM Process 800.334/1995, moving forward into the mining concession stage.
ANM has issued Ordinance 55/2021 suspending all processual deadlines for mineral processes until June 30th, 2021. Time count restarts from July 1st, 2021.
Going Concern
The Company has not generated revenues from its operations to date. These consolidated financial statements are prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. For the three months ended May 31, 2025, the Company had a net loss of $79,398 (May 31, 2024 - $75,806), and as of that date, an accumulated a deficit of $5,546,277 (February 28, 2025 - $5,466,879). The Company will continue to have to raise funds in order to continue the development of its exploration properties and general operations.
As the Company is in the exploration stage, the recoverability of the costs incurred to date on exploration properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties and upon future profitable production or proceeds from the disposition of the properties. The Company has financed its operations to date primarily through the issuance of common shares and exercise of stock options and share purchase warrants.
Management cannot provide assurance that the Company will ultimately achieve profitable operations or positive cash flow. The Company's continuation as a going concern is dependent on its ability to attain profitable operations and raise additional capital. These matters indicate the existence of material uncertainties that cast significant doubt about the Company's ability to continue as a going concern. The Company's accompanying financial statements do not reflect the adjustments to the carrying values of assets and liabilities, the reported revenues and expenses and statement of financial position classifications that would be necessary if the going concern assumption was inappropriate. Such adjustments could be material.
Any forward-looking information in this MD&A is based on the conclusions of management. The Company cautions that due to risks and uncertainties, actual events may differ materially from current expectations.
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With respect to the Company's operations, actual events may differ from current expectations due to economic conditions, new opportunities, changing budget priorities of the Company and other factors.
Other Requirements
Additional disclosure of the Company's material change reports, news release and other information can be obtained under the Company's profile on SEDAR at www.sedarplus.ca.
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