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World Copper Ltd. — Management Reports 2025
Apr 28, 2025
45949_rns_2025-04-28_89b0a76a-3c45-4904-a4b3-2133699be1e3.pdf
Management Reports
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WORLD COPPER LTD
(An Exploration Stage Company)
Management’s Discussion and Analysis
For the Year ended
December 31, 2024
Corporate Head Office
1570 – 200 Burrard Street
Vancouver, BC
V6C 3L6
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
INTRODUCTION
This Management Discussion & Analysis ("MD&A") for World Copper Ltd. (the "Company") for the year ended December 31, 2024 has been prepared by management, in accordance with the requirements of National Instrument 51-102, as of April 25, 2024, and compares its financial results for the year ended December 31, 2024 to the year ended December 31, 2023. This MD&A provides a detailed analysis of the business of the Company and should be read in conjunction with the Company's consolidated financial statements and the accompanying notes for the year ended December 31, 2024 and 2023, which 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. References to "US$" are to United States dollars. The Company is presently a "venture issuer" as defined in NI 51-102.
FORWARD-LOOKING STATEMENTS
Certain information in this MD&A, including all statements that are not historical facts, constitutes forward-looking information within the meaning of applicable Canadian securities laws. Such forward-looking information may include, but is not limited to, information which reflect management's expectations regarding the Company's future growth, results of operations (including, without limitation, future production and capital expenditures), performance (both operational and financial) and business prospects (including the timing and development of new deposits and the success of exploration activities) and opportunities. Often, this information includes words 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.
In making and providing the forward-looking information included in this MD&A the Company's assumptions may include among other things: (i) assumptions about the price of metals; (ii) that there are no material delays in the optimization of operations at the exploration and evaluation assets; (iii) assumptions about operating costs and expenditures; (iv) assumptions about future production and recovery; (v) that there is no unanticipated fluctuation in foreign exchange rates; and (vi) that there is no material deterioration in general economic conditions. Although management believes that the assumptions made and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. By its nature, forward-looking information is based on assumptions and involves known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements, or results, to be materially different from future results, performance or achievements expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include among other things the following: (i) decreases in the price of base precious metals; (ii) the risk that the Company will continue to have negative operating cash flow; (iii) the risk that additional financing will not be obtained as and when required; (iv) material increases in operating costs; (v) adverse fluctuations in foreign exchange rates; and (vi) environmental risks and changes in environmental legislation.
This MD&A (See "Risks and Uncertainties") contains information on risks, uncertainties and other factors relating to the forward-looking information. Although the Company has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of the factors are beyond the Company's control. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to reissue or update forward looking information as a result of new information or events after the date of this MD&A except as may be required by law. All forward-looking information disclosed in this document is qualified by this cautionary statement.
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
Caution Regarding Adjacent or Similar Exploration and Evaluation Assets
This MD&A contains information with respect to adjacent or similar mineral properties in respect of which the Company has no interest or rights to explore or mine. The Company advises US investors that the mining guidelines of the US Securities and Exchange Commission (the "SEC") set forth in the SEC's Industry Guide 7 ("SEC Industry Guide 7") strictly prohibit information of this type in documents filed with the SEC.
All readers are cautioned that the Company has no interest in or rights to acquire any interest in any such properties, and that mineral deposits on adjacent or similar properties, and any production therefrom or economics with respect thereto, are not indicative of mineral deposits on the Company's properties or the potential production from, or cost or economics of, any future mining of any of the Company's mineral properties.
Caution Regarding Historical Results
Historical results of operations and trends that may be inferred from the discussion and analysis in this MD&A may not necessarily indicate future results from operations. In particular, the current state of the global securities markets may cause significant 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, thus resulting in the Company losing its rights to some or all of its mineral properties. See "Risk Factors".
All of the Company's public disclosure filings, including its most recent material change reports, press releases and other information, may be accessed via www.sedarplus.ca and readers are urged to review these materials, including the technical reports filed with respect to the Company's exploration and evaluation assets.
Qualified Persons
John Drob, P.Geo., a qualified person as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101"), has reviewed the scientific and technical information that forms the basis for the technical disclosure in this MD&A with respect to the Escalones and Zonia Properties, and has approved the disclosure with respect thereto herein. Mr. Drob is not independent of the Company, as he is a consultant.
DESCRIPTION OF BUSINESS AND GOING CONCERN
The Company was incorporated under the Business Corporations Act (British Columbia) on June 16, 2006. On January 15, 2021, the Company changed its name from Allante Resources Ltd. to World Copper Ltd. and began trading under the symbol "WCU.V" on the TSXV on January 26, 2021.
The Company is an exploration stage junior mining company currently engaged in the identification, acquisition and exploration of mineral resources in the USA and Chile. The Company's head office and records office are located at #1570 - 200 Burrard Street, Vancouver, British Columbia, V6C 3L6, Canada.
These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern. Several adverse conditions may cast significant doubt on the validity of this assumption. The Company incurred a loss of $27,282,563 during the year ended December 31, 2024 (December 31, 2023 - $3,656,311). The Company is currently unable to self-finance operations, has limited resources, has no source of operating cash flow, and has no assurances that sufficient funding will be available to conduct further exploration and development of its exploration and evaluation assets and to maintain operations.
The Company has relied principally upon the issuance of securities for financing. Future capital requirements will depend on many factors, including the Company's ability to execute its business plan. The Company intends to continue relying upon the issuance of securities to finance its future activities, but there can be no assurance that such financing will be available on a timely basis under terms acceptable to the Company.
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets and liabilities that may result from the inability to secure future financing, and therefore be unable to continue as a going concern. Such a situation would have a material adverse effect on the Company’s business, financial performance and financial condition. Such adjustments could be material.
EXPLORATION PROPERTY UPDATES
Zonia Property update:
On May 21, 2024, the Company reported that it will be focusing its efforts on the Zonia Property as the Company’s flagship asset, with the aim of working to advance Zonia to a bankable feasibility study and then proceeding into construction and production.
Given the current global copper supply deficit, management's belief is that the short-term solution to the copper supply crisis will come from smaller more efficient copper operations, which are cheaper to build and have less environmental impacts. Recent events in the sector have shown that major mining companies are hesitating to take on very large-scale, high capital intensity projects by looking for partners to share the risk and costs, or by targeting smaller assets and innovative or conventional leaching technologies.
Zonia fits into these new copper market dynamics perfectly offering a viable smaller scale and lower cost operation that can be permitted and constructed in half the time required on average to develop new larger concentrate mines. Being a past producer, Zonia's mineralization is pre-stripped resulting in a 1:1 strip ratio for our new operations, and it has power and water on site.
The Company recently announced the formation of a Technical Advisory Committee that will play a lead role in the proposed development and construction of the Zonia mining operation. Derek White and Joe Philips have joined the Company as advisors. Derek is an industry leader in the copper sector having developed and built several copper mines. As the former CEO of KGHM International he built the Sierra Gorda mine in Chile and the Carlota mine in Arizona. Most recently he completed construction of the Premier Gold mine in BC. He is a consummate mine builder. Derek will guide the World Copper team in taking Zonia down the path to production. Joe Philips brings a wealth of mine building experience having lead construction on 14 mining operations in 11 different counties. His upgrading and expansion of the SX-EW plant for Tres Valles in Chile will be of particular importance to our Zonia development process.
The Company’s seasoned team are looking to put the asset into production within 3 to 5 years and at a quarter of the costs of conventional concentrate operations. Zonia is uniquely positioned with a strategic location in Arizona allowing it to supply the domestic US refined copper market, which is currently in dire need for US-manufactured cathodes, Zonia has the potential to become a net-zero facility benefiting from low energy consumption, favorable energy mix and emission compensation returns.
The Company has adopted a two-phase plan to move the Zonia project down the production track. Phase one would target only the portion of the project located on private land. Phase two will target copper mineralization located on non-private land so that it could be permitted for future inclusion into the anticipated mine plan. To satisfy the parameters of a bankable feasibility study Phase one will move to convert a major portion of the inferred resources in from the PEA to indicated resources. This will most likely entail an infill drilling campaign. Other Phase one programs will include environmental studies, land and water use permits, metallurgical studies, mine planning, engineering, financing modelling and construction planning.
Phase two programs will comprise primarily of permitting the BLM land (non-private) that surrounds the Zonia private land, environmental studies, and some exploration drilling. The Company’s BLM lands are 3 times the size of the Company’s private land package and have the potential to increase our copper resource exponentially. These phase two programs will be initiated in parallel with the phase one activity as the timeline to receiving exploration and mining permits for these areas are longer.
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
Zonia's historical preliminary economic assessment (PEA) in 2018 concluded that the economics of the project are excellent and gives the Company the assurance to advance the project through feasibility. The historical PEA outlines an open-pit, copper-oxide heap leach project with a 9-year mine life and favourable economics. The base case uses a $2.00/lb designed pit shell with a grade cutoff of 0.17% total copper. The PEA was prepared by Global Resource Engineering Ltd. ("GRE") of Denver, Colorado, in accordance with the Canadian Securities Administrators (CSA) NI 43-101. GRE reported on the scoping-level capital and operating costs, and project economics associated with the potential development of the Zonia copper oxide project. The full report entitled "Preliminary Economic Assessment, NI 43-101 Technical Report Zonia Copper Project Yavapai County, Arizona, USA" with an Effective Date of March 22, 2018, and an Issue Date of April 17, 2018, is available on SEDAR+ or can be downloaded using this link.
The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves; there is no certainty that the preliminary economic assessment will be realized.
The updated mineral resource estimate for Zonia (see news release dated February 23, 2023), includes 75.7 million short tons grading 0.30% total-copper (Indicated Resources) containing 450.5 million pounds of copper and 122.0 million short tons grading 0.24% total-copper (Inferred Resources) containing 575.4 million pounds of copper, which is a significant expansion of the historical resource estimate.
Further information on Zonia's updated resource estimated can be found in the technical report entitled "National Instrument 43-101 Technical Report: Updated Mineral Resource Estimate for the Zonia Copper Project Yavapai County, Arizona USA" dated December 20, 2022 and dated effective September 1, 2022. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Inferred Mineral Resources are that part of the Mineral Resource for which quantity and grade, or quality, are estimated based on limited geologic evidence and sampling, which is sufficient to imply but not verify grade or quality continuity. Inferred Mineral Resources may not be converted to Mineral Reserves. It is reasonably expected, though not guaranteed, that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
The Company is also currently reviewing additional assets in the United States. The United States has declared copper a critical metal, and it is a consistently mining friendly jurisdiction. 4 US states were listed in the top 10 most attractive jurisdictions globally by Fraser Institute (that included Arizona with rank #7). Both the Department of Energy and the Department of defence have created funding programs for copper and other critical metals. By shifting focus to US copper markets World Copper will have a new captive and supportive potential pool of interest.
Escalones Property Update:
On May 21, 2024, the Company reported that Escalones remains the largest undeveloped copper oxide deposit in Chile and is one of the most desirable copper projects in the sector. Further drilling at Escalones is needed in order to advance the project, and this drilling will also assist in de-risking Escalones. The Company is currently in discussions with the Chilean authorities for drilling permits and to better understand the next steps in formalizing the directives under the new sanctuary of nature established by presidential decree (see news release dated January 23, 2024).
MARKETING
On May 2, 2024, the Company, subject to TSX Venture Exchange acceptance, has entered into a consulting agreement with Upcountry Strategy Ltd. ("Upcountry") of Cobble Hill, BC, whereby Upcountry will provide advice to the Company's board of directors and senior management on public company administration, the development and implementation of a marketing strategy for the Company and the review of potential strategic opportunities. The term of the agreement with Upcountry is for six months, effective May 2, 2024, and may be terminated at any time, by either party, with 30 days written notice. Upcountry will receive a consulting fee of USD$600,000 to be paid over 90 days. The agreement was terminated during the period and the Company only paid $300,000.
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
ACQUISITION OF TMI GROUP
On September 25, 2019, the Company acquired 100% of the common shares of the SASC Metallurgy Corp., Escalones Copper Corp., and TriMetals Mining Chile SCM (collectively the "TMI Group"), which included a 100% interest in the Escalones property from Gold Springs Resource Corp. ("Gold Springs"). As part of the acquisition, the Company issued a special warrant whereby Gold Springs will be entitled to receive up to an additional 8,148,901 common shares upon the deemed exercise of the special warrant. The special warrants will be deemed to be exercised on a proportionate basis at the time the Company's warrants are exercised. On October 22, 2021, Wealth Minerals Ltd. ("Wealth Minerals"), a related party via common management and board of directors, acquired 13,225,198 common shares and remaining special warrants of the Company held by Gold Springs.
As at December 31, 2024, a balance of 6,384,400 (December 31, 2023 - 6,384,400) special warrants remain outstanding.
ACQUISITION OF ZONIA
On January 28, 2022, the Company acquired 100% of the common shares of Zonia Holdings Corp. (formerly Cardero Resource Corp.) ("Zonia" or "Cardero") pursuant to a plan of arrangement (the "Acquisition").
On February 19, 2025, the Company announced that it has entered into a binding letter agreement made as of February 12, 2025 (the "Letter Agreement") to sell its interest in the Zonia copper project located in the Walnut Grove Mining District, Yavapai County, Arizona ("Zonia" or the "Project") to an arm's length third party (the "Purchaser") in consideration for CAD $26.0 million cash (the "Purchase Price"), payable in tranches (the "Proposed Transaction").
The Letter Agreement provides for a 90-day due diligence period and sets forth the proposed commercial terms for the Proposed Transaction. It is currently expected that the Proposed Transaction will be effected by way of a share purchase and sale transaction pursuant to which the Purchaser would acquire all of the issued and outstanding shares of the Company's Arizona subsidiary, Cardero Copper (USA) Ltd. ("Subco"). Following completion of due diligence to the satisfaction of the Purchaser, the parties will have 15 days to enter into a definitive agreement. The payment of the Purchase Price shall be payable as to CAD $8.0 million to World Copper at closing of the Proposed Transaction (the "Closing"), an additional instalment of CAD $8.0 million on or before the 15-month anniversary of Closing, and a final instalment of CAD $10.0 million on or before the 30-month anniversary of Closing, subject to the Purchaser's right to accelerate the additional instalments. Until the payment in full of the Purchase Price, it is proposed that the shares of Subco will be held in escrow, and the Purchaser will grant World Copper a security interest over such shares and the Project. If the Purchaser fails to make any instalment payment for the Purchase Price, the shares of Subco will be returned to World Copper and the Purchaser would retain no interest in the Subco shares or the Project.
The Purchaser is a European based metals and mining investment manager with two decades of leadership in investing in and developing mining projects worldwide. Completion of the Proposed Transaction is subject to, among other things, satisfactory completion of due diligence by the Purchaser, the Purchaser obtaining financing to complete the Proposed Transaction, the parties entering into a definitive agreement which will contain customary terms and conditions for a transaction of this nature, and receipt of all necessary shareholder, board and regulatory (including TSX Venture Exchange) consents and approvals. A USD $75,000 break fee is payable by World Copper if it terminates the Letter Agreement. Finder's fees in the amount of up to 4% will be payable in connection with the Proposed Transaction, subject to TSX Venture Exchange approval. World Copper plans to issue a comprehensive news release detailing the Proposed Transaction once further updates become available.
On February 19, 2025, the Company provided an update on the proposed sale of its Zonia Copper project in Arizona ("Zonia" or the "Project") to an arms length third party (the "Purchaser") for CAD $26M in cash (the "Purchase Price"), payable in tranches, as previously announced on February 19, 2025 (the "Proposed Transaction"). The Purchaser is a metals and mining investment manager with two decades of leadership in investing in and developing mining projects. Pursuant to the terms of the binding letter agreement among the Purchaser, World Copper and World Copper's Arizona subsidiary ("Subco"), the Purchaser has approximately 35 days remaining in the 90-day due diligence period, and the
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
Company continues to work diligently with the Purchaser to assist with the completion of the Purchaser's due diligence on the Project.
EXPLORATION AND EVALUATION ASSETS
| Zonia Property, USA | Escalones Property, Chile | Cristal Property, Chile | Total | |
|---|---|---|---|---|
| Acquisition costs capitalized | ||||
| Balance, December 31, 2022 | $ 34,701,408 | $ 7,385,934 | $ 279,367 | $ 42,366,709 |
| Acquisition costs - cash | - | 583,818 | - | 583,818 |
| Impairment | - | - | (279,367) | (279,367) |
| Balance, December 31, 2023 | 34,701,408 | 7,969,752 | - | 42,671,160 |
| Impairment | (14,068,705) | (7,969,751) | - | (22,038,456) |
| Transfer to assets held for sale | (20,632,703) | - | - | (20,632,703) |
| Balance, December 31, 2024 | $ - | $ 1 | $ - | $ 1 |
| Exploration and evaluation expenses - 2024 | Zonia Property, USA | Escalones Property, Chile | Cristal Property, Chile | Total |
| --- | --- | --- | --- | --- |
| Assays | $ 5,243 | $ - | $ - | $ 5,243 |
| Consulting | 456,310 | - | - | 456,310 |
| Environmental | 1,927 | - | - | 1,927 |
| Field and camp supplies | 42,530 | 17,060 | - | 59,590 |
| Geophysical | 126,210 | - | - | 126,210 |
| Property taxes, lease and other | 135,614 | 86,485 | - | 222,099 |
| Reports | 6,178 | - | - | 6,178 |
| Transportation and equipment rentals | 70,855 | - | - | 70,855 |
| Year ended December 31, 2024 | $ 844,867 | $ 103,545 | $ - | $ 948,412 |
| Exploration and evaluation expenses - 2023 | Zonia Property, USA | Escalones Property, Chile | Cristal Property, Chile | Total |
| --- | --- | --- | --- | --- |
| Assays | $ 4,906 | $ - | $ - | $ 4,906 |
| Community relations | - | 1,498 | - | 1,498 |
| Consulting | 64,279 | - | - | 64,279 |
| Drilling, roads & trenches | 186,927 | 2,257 | - | 189,184 |
| Environmental | 1,402 | - | - | 1,402 |
| Field and camp supplies | 12,113 | 16,995 | - | 29,108 |
| Geological | 57,819 | 32,611 | - | 90,430 |
| Geophysical | 20,475 | - | - | 20,475 |
| Property taxes, lease and other | 152,627 | 171,334 | - | 323,961 |
| Transportation and equipment rentals | 792 | 2,429 | - | 3,221 |
| Expenditures | 501,340 | 227,124 | - | 728,464 |
| Expense recovery (Chilean VAT) | - | (2,422,971) | - | (2,422,971) |
| Year ended December 31, 2023 | $ 501,340 | $ (2,195,847) | $ - | $ (1,694,507) |
Zonia, Arizona USA
Pursuant to an option agreement dated August 27, 2015, and as amended on October 3, 2018, between Zonia and Redstone Resources Corporation ("Redstone"), Zonia completed the acquisition of a 100% interest in the Zonia copper project.
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
On August 17, 2022, the Company granted to Electric Royalties Ltd. ("Electric Royalties"): (i) a 0.5% Gross Revenue Royalty ("GRR") on the Zonia Project; (ii) an option to acquire a further 0.5% GRR on the Zonia Project for an additional cash payment of $3.0 million; and (iii) an option to acquire a 1% GRR on the Zonia Norte deposit, for a cash payment of $3.0 million.
Escalones Property, Chile
During the year ended December 31, 2019, the Company became party to an option agreement for the Escalones property. The remaining payments required to earn a 100% interest in the Escalones property, amended on May 24, 2021, are as follows:
i) paying USD$60,000 on or before June 30, 2020 (paid);
ii) paying USD$140,000 on or before December 31, 2020 (paid);
iii) paying USD$150,000 on or before May 24, 2021 amendment date (paid);
iv) paying USD$150,000 on or before September 30, 2021 (paid);
v) paying USD$200,000 on or before July 12, 2022 (paid);
vi) paying USD$150,000 on or before September 30, 2022 (paid);
vii) paying USD$165,000 on or before November 30, 2022 (paid);
viii) paying USD$216,000 on or before July 6, 2023 (paid);
ix) paying USD$216,000 on or before September 30, 2023 (paid);
x) paying USD$218,000 on or before December 31, 2024;
xi) paying USD$800,000 on or before June 30, 2025;
xii) paying USD$800,000 on or before December 31, 2025;
xiii) paying USD$800,000 on or before June 30, 2026; and
xiv) paying USD$450,000 on or before December 31, 2026.*
- The Company is currently renegotiating the terms to reduce and extend payments.
An additional payment of USD $350,000 is required to be made with the final payment on or before December 31, 2026. The Company has granted a 2% net smelter returns royalty ("NSR") to the underlying Escalones Property owner.
During the year ended December 31, 2024, the Company made the decision to write down the Escalones Project to a nominal value of $1. The write-down is warranted due to the continued uncertainty regarding any future re-categorization of the Sanctuary of Nature (within which the Escalones Project is located) and the lapse of a pre-existing easement. The Company has been communicating with the landowner to secure a flexible management plan in order for the area in which the Escalones Project is located to be categorized as a multiple-use conservation area and has also been renegotiating access rights to the Escalones Project. There is uncertainty as to the outcome of any future re-categorization of the Sanctuary of Nature and the surface access rights negotiations, and any potential impacts of same on the exploration of the Escalones Project. The uncertainty is an indicator of impairment, and accordingly, an impairment expense of $7,969,751 was recorded in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2024. The estimated recoverable value was based on its fair value less cost of disposal of $1, estimated in accordance with Level 3 of the fair value hierarchy. As the property has been in the exploration stage, there are no projected cash flows available to determine an appropriate value-in-use. Therefore, a value-in-use model is not further considered.
Cristal Property, Chile
During the year ended December 31, 2019, the Company entered into an assignment and assumption agreement (the "Assignment Agreement") with New Energy Metals Corp. ("Vendor") whereby the Company obtained the right, title, benefit, and interest in and to an option agreement in respect of the Cristal property. To date, the Company has made cash payments of USD$200,000 towards the option.
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
During the year ended December 31, 2023, the Company impaired the cost of $279,367 bringing the carrying value of the Cristal Property to $Nil in accordance with Level 3 of the fair value hierarchy. The Company has not incurred any exploration expenditures on the property in the past two fiscal years nor does it plan to incur exploration expenditures subsequent to December 31, 2023. As the Cristal property has been in the exploration stage, there are no projected cash flows available to determine an appropriate value-in-use. Therefore, a value-in-use model is not further considered. During the year ended December 31, 2023, the Company informed the Optionor that it was not proceeding with the agreement and returned the Cristal Property.
RESULTS OF OPERATIONS
The following discussion addresses the operating results and financial condition of the Company for the three and twelve month periods ended December 31, 2024 compared with the three and twelve month periods ended December 31, 2023. The Management's Discussion and Analysis should be read in conjunction with the Company's consolidated financial statements and the accompanying notes for the year ended December 31, 2024.
For the three-month period ended December 31, 2024:
Net loss for the period
The Company had net loss for the three-month period ended December 31, 2024, of $15,027,146 (2023 loss - $1,267,622). The net increase of $13,759,529 in the net loss for the three-month period ended December 31, 2024, compared to the three-month period ended December 31, 2023, was primarily due to the following:
In comparison to the three-month period ended December 31, 2023:
- Accretion of $49,935 (2023 - $49,330) remained consistent and due to loan warrants issued in the current and prior periods on the extension of loans with the value of the fair value of warrants amortized to their due dates.
- Consulting fees of $347,480 (2023 - $142,460) increased by $205,020 mainly due to consulting services providing advice to the Company's board of directors and senior management on public company administration, the development and implementation of a marketing strategy for the Company and the review of potential strategic opportunities and fees paid to the current CEO, the former CEO was paid as employee with the expenses recorded in wages and benefits.
- Depreciation of $1,575 (2023 - $1,229) remained consistent and is based on property plant and equipment acquired on the acquisition of Zonia on January 28, 2022.
- Exploration and evaluation of $182,171 (2023 - $105,784) increased by $76,387 mainly due to work done on the Zonia Property in the current period.
- Foreign exchange loss of $110,454 (2023 gain - $75,206) changed by $185,660 due to a fluctuating exchange rate in United States dollars and Chilean Pesos and the amount of USD and Pesos denominated liabilities payable including USD denominated loans.
- Insurance of $12,273 (2023 - $12,211) remained consistent during the period.
- Interest of $48,147 (2023 - $105,622) decreased by $57,475 mainly on loans assumed on the Zonia acquisition due to the April 29, 2024 payment reducing the principal and accrued interest by $2,557,237.
- Office and miscellaneous of $18,922 (2023 - $20,144) decreased by $1,222 mainly due to corporate filing costs and offset by a reduction in Chilean office activities.
- Professional fees of $173,890 (2023 - $166,359) increased by $7,531 mainly due to timing of legal services required in the prior year.
- Rent of $23,007 (2023 - $29,909) decreased by $6,902 mainly due to a recent move to a new office and reduced usage of shared office space.
- Share-based compensation credit of $138,138 (2023 - $Nil) decreased by $138,138 are non-cash expenses and due to a timing and amount of stock option issuances. The credit was due to a correction on vesting.
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
- Shareholder communications of $129,422 (2023 - $170,583) decreased by $41,161 as the Company’s expenses in the comparative period were higher due to the reporting on its activities and the communications as the Company was closing on a share offering private placement.
- Transfer agent and regulatory fees credit of $22,918 (2023 - $3,414) decrease of $26,332 was mainly due to a correction an invoice corrected on an over expense posted in the prior quarter.
- Travel of $34,524 (2023 - $41,694) decreased by $7,170 due to an increase in trade shows, conferences and meetings.
- Wages and benefits recovered of $12,303 (2023 - $181,308) decreased by $193,611 and was mainly due to the resignation of the previous CEO, the new CEO is paid as a consultant.
- Recovery of exploration and evaluation expenditures of $Nil (2023 - $193) was due an adjustment to the recovery of VAT taxes in the Company’s Chilean subsidiary on exploration expenditures.
- Write-down of exploration and evaluation assets of $14,068,705 (2023 - $279,367) increased by $13,789,338 due to an impairment of the Zonia Property of $14,068,705 in the current period when reclassifying the asset as Available for sale and a write down of the Cristal Property in the comparative period.
For the twelve-month year ended December 31, 2024:
Net loss for the period
The Company had a net loss for the twelve-month period ended December 31, 2024, of $27,282,563 (2023 - $3,656,311). The net increase of $23,626,252 in the net loss for the twelve-month period ended December 31, 2024, compared to the twelve-month period ended December 31, 2023, was primarily due to the following:
In comparison to the twelve-month year ended December 31, 2023:
- Accretion of $109,389 (2023 - $280,612) decreased by $171,223 due to loan warrants issued in the current and prior periods on the extension of loans with the value of the fair value of warrants amortized to their due dates.
- Consulting fees of $1,549,526 (2023 - $1,237,209) increased by $312,317 mainly due to the Upcountry agreement announced where Upcountry will provide advice to the Company's board of directors and senior management on public company administration, the development and implementation of a marketing strategy for the Company and the review of potential strategic opportunities, the addition of the new CEO (the prior CEO was an employee and included in wages and benefits) and offset by a reduction in activities and consulting fees in the Company's Chilean office.
- Depreciation of $6,300 (2023 - $4,979) remained consistent and is based on property plant and equipment acquired on the acquisition of Zonia on January 28, 2022.
- Exploration and evaluation of $948,412 (2023 - $728,464) increased by $219,948 mainly due to work done on the Zonia Property in the current period.
- Foreign exchange loss of $175,915 (2023 - $50,970) increased by $124,945 due to a fluctuating exchange rate in United States dollars and Chilean Pesos and the amount of USD and Pesos denominated liabilities payable including USD denominated loans.
- Insurance of $52,310 (2023 - $74,958) decreased by $22,648 due to decreased policy costs.
- Interest of $217,510 (2023 - $407,579) decreased by $190,069 mainly on loans assumed on the Zonia acquisition due to the April 29, 2024 payment reducing the principal and accrued interest by $2,557,237.
- Office and miscellaneous of $125,795 (2023 - $104,799) increased by $20,966 mainly due an increase in administrative costs and offset by a reduction in Chilean office activities.
- Professional fees of $505,764 (2023 - $513,172) remained fairly consistent and consisted mainly of legal fees.
- Rent of $100,266 (2023 - $118,447) decreased by $18,181 mainly due to a recent move to a new office and reduced usage of shared office space.
- Share-based compensation of $1,035,688 (2023 - $84,945) increased by $950,743 are non-cash expenses and due to a timing and amount of stock option issuances.
-
Shareholder communications of $483,748 (2023 - $744,911) decreased by $261,13 as the Company's expenses in the comparative period were higher due to the reporting on its activities and the communications as the Company was closing on a share offering private placement.
-
10 -
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
- Transfer agent and regulatory fees of $39,994 (2023 - $50,654) decreased by $10,660 mainly due to decreased regulatory filing costs.
- Travel of $161,565 (2023 - $239,344) decreased by $77,779 due to a decrease in trade shows, conferences and meetings.
- Wages and benefits of $12,874 (2023 - $376,903) decreased by $364,29 due to the resignation of the previous CEO, the new CEO is paid as a consultant.
- Interest income of $Nil (2023 - $7,839) was due to an interest on a refund on GST input tax credits.
- Recovery of exploration and evaluation expenditures of $Nil (2023 - $2,422,971) decreased by $2,422,971 due to the recovery of VAT taxes in 2023 on the Company's Chilean subsidiary's exploration expenditures.
- Gain on write off of debt of $197,435 (2023 - $Nil) increased by $197,435 due to the reversal of accounts payable that were over 4 years old where requests for payments or contact by the Company were not received and statute of limitation was used.
- Loss on write off of receivables of $8,448 (2023 - $Nil) increased by $8,448 due to the reversal of accounts receivable that were over 4 years old where receipts were not received, and statute of limitation has determined that it would be uncollectible.
- Loss on the sale of investment of $Nil (2023 - $60,000) is due to the sale of the investment in Electric Royalties Ltd. during the prior period.
- Gain on extinguishment of $91,962 (2023 loss - $696,201) is due to warrants issued in the current and prior period on the extension of loan due dates in those periods.
- Write-down of exploration and evaluation asset of $22,038,456 (2023 - $279,367) increased by $21,759,089 due to an impairment of the Zonia Property of $14,068,705 by reclassifying the asset as Available for sale, and impairment and write-down of the Escalones Property in the current period, and due to write-down of the Cristal Property in the comparative period.
SUMMARY OF ANNUAL INFORMATION
| December 31, 2024 | December 31, 2023 | December 31, 2022 | |
|---|---|---|---|
| Total Assets | $ 21,031,778 | $ 42,931,218 | $ 43,745,604 |
| Exploration and evaluation assets | 1 | 42,671,160 | 42,366,709 |
| Total Liabilities | 4,804,892 | 6,859,171 | 7,055,863 |
| Working capital (deficit) | 18,169,956 | (6,613,000) | (4,503,008) |
| Shareholders' equity | 16,226,886 | 36,072,047 | 36,689,741 |
| Loss for the Year | (27,282,563) | (3,656,311) | (16,447,294) |
| Loss per share – Basic and Diluted | (0.15) | (0.03) | (0.18) |
| Cash Dividends Declared | - | - | - |
SUMMARY OF QUARTERLY RESULTS
| December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | |
|---|---|---|---|---|
| Total assets | $ 21,031,778 | $ 34,926,585 | $ 35,718,378 | $ 42,962,119 |
| Exploration and evaluation assets | $ 1 | $ 34,701,409 | $ 34,701,409 | $ 42,671,160 |
| Total liabilities | $ 4,804,892 | $ 4,716,399 | $ 4,507,268 | $ 7,468,675 |
| Working capital (deficit) | $ 18,169,956 | $ (2,755,218) | $ (3,501,036) | $ (7,190,028) |
| Shareholders' equity | $ 16,226,886 | $ 30,210,186 | $ 31,211,110 | $ 35,493,444 |
| Total revenue | $ - | $ - | $ - | $ - |
| Net earnings (loss) for the period | $ (15,027,146) | $ (1,383,154) | $ (10,130,222) | $ (742,041) |
| Basic and diluted loss per share | $ (0.07) | $ (0.01) | $ (0.06) | $ (0.01) |
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |
|---|---|---|---|---|
| Total assets | $ 42,931,218 | $ 43,671,175 | $ 45,252,522 | $ 44,061,198 |
| Exploration and evaluation assets | $ 42,671,160 | $ 42,950,527 | $ 42,366,709 | $ 42,366,709 |
| Total liabilities | $ 6,859,171 | $ 6,331,506 | $ 6,697,874 | $ 7,349,152 |
| Working capital (deficit) | $ (6,613,000) | $ (5,625,974) | $ (3,245,559) | $ (3,809,221) |
| Shareholders’ equity | $ 36,072,047 | $ 37,339,669 | $ 38,554,648 | $ 36,712,046 |
| Total revenue | $ - | $ - | $ - | $ - |
| Net earnings (loss) for the period | $ (1,267,622) | $ (1,223,544) | $ 1,230,544 | $ (2,395,689) |
| Basic and diluted earnings (loss) per share | $ (0.01) | $ (0.01) | $ 0.01 | $ (0.02) |
TRANSACTIONS WITH RELATED PARTIES
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company's executive officers and directors. The transactions with related parties were in the normal course of operations and were measured at the fair value.
On November 17, 2023, the Company reported that Nolan Peterson had resigned as Chief Executive Officer and President of the Company. The Company had appointed Hendrik van Alphen, current Chairman of the Board, as Interim Chief Executive Officer and President until January 22, 2024, when Gordon Neal was appointed as the new Chief Executive Officer.
Key management personnel compensation during the years ended December 31, 2024, and 2023 was as follows:
| 2024 | 2023 | |
|---|---|---|
| Included in consulting fees: | ||
| Consulting fees paid or accrued to a corporation owned by a director and former CEO, namely Henk Van Alpen | $ 114,000 | $ 102,000 |
| Consulting fees paid or accrued to a corporation owned by the current CEO, namely Gordon Neal. | 287,500 | - |
| Consulting fees paid or accrued to a director, namely Patrick Burns | 8,071 | 32,420 |
| Professional fees for accounting services paid to a corporation controlled by Sead Hamzagic for CFO duties. | 84,000 | 84,000 |
| Consulting fees paid or accrued to a corporation controlled by Marla Ritchie for Corporate secretary services. | 36,000 | 36,000 |
| Included in rent expense: | ||
| Rent paid or accrued to a corporation controlled by Marla Ritchie. | 100,266 | 118,447 |
| Legal fees included in professional fees and share issue costs: | ||
| Included in professional fees, paid or accrued to a legal firm whereby a director, namely Jon Lotz is a senior lawyer and founder | 287,642 | - |
| Included in share issue costs, paid or accrued to a legal firm whereby a director, namely Jon Lotz is a senior lawyer and founder | 485,622 | - |
| Included in wages and benefits: | ||
| Wages and benefits paid or accrued to a former CEO, namely Nolan Peterson | - | 216,051 |
| $ 1,403,101 | $ 588,918 |
- 12 -
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
| 2024 | 2023 | |
|---|---|---|
| Management fees, included in consulting fees and wages and benefits | $ 521,500 | $ 438,051 |
| Directors’ fees included in consulting fees | $ 8,071 | $ 32,420 |
| Share-based compensation | $ 745,954 | $ - |
The transactions with related parties were in the normal course of operations and were measured at the exchange value, which represented the amount of consideration established and agreed to by the parties.
The amounts due to the related parties are as follows:
| 2024 | 2023 | |
|---|---|---|
| Included in accounts payable and accrued liabilities: | ||
| Due to directors and/or entities controlled by them | $ 647,685 | $ 92,929 |
| Due to former directors | 89,267 | 108,000 |
| Due to the CEO | 9,324 | - |
| Due to the former CEO’s | 94,500 | 149,690 |
| Due to the CFO | - | 14,700 |
| Due to the corporate secretary – Consulting fees | 18,375 | 30,975 |
| Due to the corporate secretary – Rent | 87,221 | 63,899 |
| Due to the corporate secretary – Expense reimbursements | 161,013 | 28,703 |
| Due to Wealth Minerals | 112,450 | 112,450 |
| 1,219,835 | $ 601,346 |
Included in management fees is a termination benefit of $Nil (2023 - $149,690) accrued to the former CEO.
Included in due to former CEO is a termination benefit of $Nil (2023 - $149,690) accrued to the former CEO.
The amounts owing above are unsecured, non-interest bearing and have no fixed term for repayment.
The amounts owing as at December 31, 2024 and December 31, 2023, from a director and former directors of the Company's subsidiary are as follows:
| Directors’ Loans | Zonia Loan | Other Loan Advances | Dividend Loan | Total | |
|---|---|---|---|---|---|
| Loans payable: | |||||
| Balance – December 31, 2022 | $ 198,106 | $ 1,119,781 | $ 1,488,535 | $ 1,120,840 | 3,927,262 |
| Equity portion of compound instruments | - | - | (937,647) | - | (937,647) |
| Interest expense | 21,944 | 106,628 | 184,519 | 92,393 | 405,484 |
| Loss on Extinguishment | 696,201 | - | 696,201 | ||
| Accretion expense | 16,282 | 159,891 | 107,439 | - | 283,612 |
| Foreign exchange adjustment | - | (29,194) | 96,974 | - | 67,780 |
| Balance – December 31, 2023 | $ 236,332 | $ 1,357,106 | $ 1,636,021 | $ 1,213,233 | 4,442,692 |
| Equity portion of compound instruments | (13,433) | (119,767) | (137,130) | - | (270,330) |
| Interest expense | 21,743 | 86,365 | 71,550 | 32,950 | 212,608 |
| Gain on extinguishment | (4,570) | (40,743) | (46,649) | - | (91,962) |
| Accretion expense | 10,129 | 61,150 | 38,110 | - | 109,389 |
| Foreign exchange adjustment | - | 84,330 | 98,535 | - | 182,865 |
| Repaid | (50,363) | (584,070) | (693,657) | (1,245,856) | (2,573,946) |
| Balance – December 31, 2024 | $ 199,838 | $ 844,371 | $ 966,780 | $ - | $ 2,010,989 |
During the year ended December 31, 2024, the Company repaid the following amounts on the outstanding loans:
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
| Principal | Accrued Interest | Total | |
|---|---|---|---|
| Loans payable: | |||
| Directors’ Loans | $ - | $ 50,362 | $ 50,362 |
| Zonia Loan | - | 584,070 | 584,070 |
| Other Loan Advances | - | 693,658 | 693,658 |
| Dividend Loan | 1,019,836 | 226,020 | 1,245,856 |
| Total Repaid | $ 1,019,836 | $ 1,554,110 | $ 2,573,946 |
On August 13, 2024, the Company extended the due dates on advances from E.L. II Properties Trust (related to a Director of the Company). Four loans in the aggregate amount of USD$1,380,265 and CAD$85,000 were to be extended to have new due dates of February 22, 2026, and May 22, 2026, as noted above. The Company issued 7,251,925 non-transferable bonus warrants at an exercise price of $0.135 CAD per share expiring on the earlier of (i) July 18, 2026 (the expiry date prescribed by the policies of the TSXV), and (ii) the date, which is two years following their issuance (August 13, 2026). The issued warrants contain a clause that restricts exercise if exercising causes the holders' ownership to exceed 19.99%. In accordance with IFRS 9 – Financial Instruments, the Company determined the extension of the loans and grant of bonus warrants meet the definition of a substantial modification and was accounted for as an extinguishment of debt. The fair value of the liability portion at the time of amendment was determined based on an estimated discount rate of 23%, the bonus warrants of $270,330 were valued using Black-Scholes option pricing model with the following assumptions: risk-free rate of 3.24%, expected volatility of 111%, expected dividend of $Nil, and expected life of 2 years. Consequently, a gain on extinguishment of debt of $91,962 was recognized in the interim condensed consolidated statements of loss and comprehensive loss.
LIQUIDITY AND CAPITAL RESOURCES AND CAPITAL EXPENDITURES
At December 31, 2024, the Company has a deficit of $47,722,630 (December 31, 2023 - $21,571,628) and a working capital of $21,632,703 (December 31, 2023 working capital deficit - $6,613,000).
During the year ended December 31, 2024, the Company had the following cash flows:
i) Cash flows used in operating activities of $3,904,424 (December 31, 2023 - $1,925,287). Operating cash flows are due to day-to-day operations as detailed on the statement of financial position, adjusted for non-cash items and changes in non-cash working capital items.
ii) Cash used in investing activities of $Nil (December 31, 2023 - $83,818). The Company received proceeds of $Nil (December 31, 2023 - $500,000) on the sale of its investment in Electric Royalties and paid $Nil (December 31, 2023 - $583,818) in exploration and evaluation assets.
iii) Cash provided by financing activities of $4,084,072 (December 31, 2023 - $2,016,062). These cash inflows were a result of incoming funds in advance on private placements of $117,000 (December 31, 2023 - $Nil), proceeds on issuance of shares $6,899,379 (December 31, 2023 - $2,035,200) and less share issuance and ATM costs of $358,361 (December 31, 2023 - $19,175) less loan repayments of $2,573,946 (2023 - $Nil).
The Company had the following share capital transactions:
During the year ended December 31, 2024, the Company:
i) On April 12, 2024, the Company issued 53,015,112 units at $0.07 per unit for gross proceeds of $3,711,058 in the first of two tranches of a private placement. Each unit consisted of one common share and one-half of one common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to acquire one additional share of the Company for a period of two years from the date of issuance at a price of $0.17 per share. The expiry of the Warrants may be accelerated if the closing price of the Company's common shares on the TSX Venture Exchange ("TSXV") is equal to or greater than $0.30 for a minimum of twenty consecutive trading days and a notice of acceleration is provided in accordance
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
with the terms of the Warrants. In connection with the issuance, the Company paid aggregate finder's fees consisting of $85,393 in cash and issued 765,900 finder's warrants valued at $38,412. Each finder's warrant entitles the holder thereof to purchase one common share at a price of $0.17 for a period of 24 months from the date of issuance. Other share issuance costs totaled $78,842.
ii) On April 26, 2024, the Company issued 16,531,957 units at $0.07 per unit for gross proceeds of $1,157,237 in the second of two tranches of a private placement. Each unit consisted of one common share and one-half of one common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to acquire one additional share of the Company for a period of two years from the date of issuance at a price of $0.17 per share. The expiry of the Warrants may be accelerated if the closing price of the Company's common shares on the TSX Venture Exchange ("TSXV") is equal to or greater than $0.30 for a minimum of twenty consecutive trading days and a notice of acceleration is provided in accordance with the terms of the Warrants. No finder's fees were payable pursuant to this tranche.
iii) During the year, the Company established an at-the-market equity program (the "ATM Program") that allows the issuance and sale of common shares from treasury having an aggregate gross sales amount of up to $25 million to the public, over a two-year period (subject to earlier termination), from time to time through BMO Capital Markets (the "Agent"), as sole agent. Sales of the Common Shares under the ATM program will be made pursuant to the terms and conditions of an equity distribution agreement (the "Distribution Agreement") dated July 17, 2024, between the Company and the Agent. During the period from July 22, 2024, to December 31, 2024, the Company issued 29,480,500 shares under the ATM Program at an average price of $0.069 per share for gross proceeds of $2,031,084, commissions paid $60,933 and net proceeds received $1,970,151. The Company incurred $659,827 in additional costs during the period related to the ATM program.
iv) As at December 31, 2024, the Company received share subscriptions of $117,000 which shares have not yet been issued related to the private placement closed February 4, 2025 (note 16).
During the year ended December 31, 2023, the Company:
i) On March 31, 2023, issued 7,974,344 units at $0.18 per unit for gross proceeds of $1,435,382 in the first of two tranches of a private placement. Each unit consisted of one common share and one-half of one common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to acquire one additional share of the Company for a period of two years from the date of issuance at a price of $0.30 per share. In connection with the issuance, the Company paid aggregate finder's fees consisting of $5,813 in cash and issued 32,297 finder's warrants valued at $37,056. Each finder's warrant entitles the holder thereof to purchase one common share at a price of $0.30 for a period of 24 months from the date of issuance.
ii) On April 27, 2023, the Company issued 3,332,323 units at $0.18 per unit for gross proceeds of $599,818 in the second of two tranches of a private placement. Each unit consisted of one common share and one-half of one common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to acquire one additional share of the Company for a period of two years from the date of issuance at a price of $0.30 per share. In connection with the issuance, the Company paid aggregate finder's fees consisting of $756 in cash and issued 4,200 finder's warrants valued at $206. Each finder's warrant entitles the holder thereof to purchase one common share at a price of $0.30 for a period of 24 months from the date of issuance.
- 15 -
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
Subsequent to the year ended December 31, 2024, and to the date of this report, the Company:
i) On February 4, 2025, the Company issued 2,837,500 units at a price of $0.08 per unit for gross proceeds of $227,000 on a non-brokered private placement. Each unit consisted of one common share and one common share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder to acquire one additional share of the Company for a period of three years from the date of issuance at a price of $0.16 per share. In connection with the issuance, the Company paid aggregate finder's fees consisting of $7,700 in cash and issued 96,250 finder's warrants. All securities issued in the Offering are subject to a four-month hold period expiring on June 15, 2025.
ii) During the period January 1, 2025, to April 25, 2025, the Company issued 18,817,000 shares under the ATM Program at an average price of $0.0464 per share for gross proceeds of $873,673, commissions paid $26,210 and net proceeds received $847,463.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has not entered into any off-balance sheet arrangements.
ACCOUNTING POLICIES AND FUTURE ACCOUNTING POLICIES
Please refer to the December 31, 2024, consolidated financial statements for details on accounting policies adopted in the period as well as future accounting policies.
FINANCIAL INSTRUMENTS AND FINANCIAL RISKS
The Company's financial instruments consist of cash, accounts receivable, accounts payable and accrued liabilities, and loans payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values, unless otherwise noted. See Note 13 of the Company's consolidated financial statements for the year ended December 31, 2024, for a discussion of the Company's risk exposure and the impact thereof on the Company's financial instruments.
The Company's cash at December 31, 2024 was $193,977 and was primarily held at a major Canadian financial institution. The Company is subject to financial risk arising from fluctuations in foreign currency exchange rates. The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign currency exchange rates.
CRITICAL ESTIMATES, JUDMENTS AND ASSUMPTIONS
The preparation of the Company's consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting year. Estimates and assumptions are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.
The areas which require management to make significant judgments, estimates and assumptions in determining carrying values include, but are not limited to:
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
Critical accounting estimates
Critical accounting estimates are estimates made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year and include, but are not limited to, the following:
Share-based payments
Share-based payment is valued using the Black-Scholes option pricing model at the date of grant and expensed in profit or loss over vesting period of each award. The Black Scholes option pricing model utilizes subjective assumptions such as expected price volatility and expected life of the option. Share-based payment expense also utilizes subjective assumption on forfeiture rate. Changes in these input assumptions can significantly affect the fair value estimate.
Significant Judgments
The preparation of these consolidated financial statements requires management to use judgment in applying its accounting policies and estimates and assumptions about the future. The following discusses the most significant accounting judgments the Company has made in the preparation of the consolidated financial statements.
Going concern
The assumption that the Company will be able to continue as a going concern is subject to critical judgments of management with respect to assumptions surrounding the short- and long-term operating budget, expected profitability, investing and financing activities, and management's strategic planning. Should those judgments prove to be inaccurate, management's continued use of the going concern assumption could be inappropriate.
Exploration and evaluation assets impairment
At the end of each reporting period, the Company assesses each of its exploration and evaluation assets or cash-generating units ("CGUs") to determine whether any indication of impairment exists. The Company has used geographical proximity, geological similarities, analysis of shared infrastructure, commodity type, assessment of exposure to market risks and materiality to define its CGUs.
Judgment is required in determining whether indicators of impairment exist, including factors such as: the period for which the Company has the right to explore, expected renewals of exploration rights, whether substantive expenditures on further exploration and evaluation of resource properties are budgeted or planned, and results of exploration and evaluation activities on the exploration and evaluation assets. If such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.
Value Added Tax
Management's assumptions regarding the recoverability of Value Added Tax ("VAT") receivable at the end of each reporting period is made using all relevant facts available, the development of VAT policies, and the general economic environment of the country to determine if a write-down of the VAT is required. Collection of the amount receivable depends on processing and payment of the claims by the local government.
The timing and amount of the VAT ultimately collectible could be materially different from the amount recorded in the consolidated financial statements. Any future recovery of the VAT receivable will be recorded in profit or loss as a recovery.
- 17 -
WORLD COPPER LTD.
(An Exploration Stage Company)
Management Discussion & Analysis
For the year ended December 31, 2024
Compound instruments
Compound financial instruments were separated into their liability and equity components on the consolidated statements of financial position. The liability component is initially recognized at fair value, calculated at the present value of the liability based upon non-convertible debt issued by comparable issuers and accounted for at amortized cost using the effective interest rate method. The effective interest rate used is the estimated rate for non-convertible debt with similar terms at the time of issue.
Modification versus extinguishment of financial liability
Judgment is required in applying IFRS 9 Financial Instruments to determine whether the amended terms of the loan agreements is a modification of an existing financial liability and whether amendments that are substantial should be accounted for as an extinguishment of the original financial liability.
Provisions and contingent liabilities
The Company is currently assessing the impact of a potential litigation by a certain director. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, a liability is accrued for the estimated loss. The Company assesses the potential liability by analyzing litigation and regulatory matters using available information. The Company develops its views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable.
Contingencies
During the year ended December 31, 2024, the Company became aware of a potential litigation by a certain director. The Company is assessing whether it has an obligation that can lead to outflow of economic benefits and the estimated amount of the obligation. Until such litigation is filed, it is difficult to assess any possible outcome or loss, if any.
DISCLOSURE OF OUTSTANDING SHARE DATA (as at April 25, 2025)
Authorized Capital
Unlimited common shares without par value
Issued and Outstanding Shares – 245,689,067
Issued and Outstanding Stock Options – 16,370,000
Issued and Outstanding Warrants – 62,292,412
Issued and Outstanding Special Warrants – 6,384,400