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Xcite Resources Inc. — Management Reports 2025
Mar 1, 2025
48326_rns_2025-02-28_b4d002d2-ee08-44a7-85da-d4aa7f0b5043.pdf
Management Reports
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MANAGEMENT'S DISCUSSION AND ANALYSIS
The following Management's Discussion and Analysis ("MD&A") is dated February 28, 2025 and should be read in conjunction with the audited consolidated financial statements of Xcite Resources Inc. ("Xcite" or the "Company") for the year ended October 31, 2024 and 2023. Xcite prepares its audited financial statements in accordance with International Financial Reporting Standards ("IFRS"), as set out in Part 1 of the Handbook of the Canadian Institute of Chartered Professional Accountants.
FORWARD-LOOKING INFORMATION
Certain statements in this MD&A that are not based on historical facts constitute forward-looking information. Forward-looking information is not a promise or guarantee of future performance but is only a prediction that relates to future events, conditions or circumstances or the Company's future results, performance, achievements or developments and is subject to substantial known and unknown risks, assumptions, uncertainties and other factors that could cause the Company's actual results, performance, achievements or developments in its business or industry to differ materially from those expressed, anticipated or implied by such forward-looking information. Forward-looking statements include statements regarding the outlook for the Company's future operations, plans and timing for the introduction or enhancement of its services and products, statements concerning strategies or developments, statements about future market conditions, supply conditions, end customer demand conditions, channel inventory and sell through, revenue, gross margin, operating expenses, profits, forecasts of future costs and expenditures, and other expectations, intentions and plans that are not historical fact. The forward-looking statements in this MD&A are based on certain factors and assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. Specifically, management has assumed that the Company's performance will meet management's internal projections. While management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Readers are also advised to consider such forward-looking statements in light of the risk factors and uncertainties that may affect the Company's actual results, performance, achievements or developments.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Further information concerning risks and uncertainties associated with these forward-looking statements and the Company's business may be found in the Company's other filings.
OVERVIEW
Xcite Resources Inc. is an exploration company incorporated on February 8, 2021 under the laws of the Province of British Columbia, Canada. The Company's head office and principal address is Suite 1910, 1030 West Georgia Street, Vancouver, British Columbia, Canada, V6E 2Y3.
The Company is engaged in the investigation, acquisition and exploration of potentially economically viable mineral properties. The recoverability of the cost of the mineral properties is dependent upon the existence of economically recoverable resources, the ability to secure necessary financing to complete the exploration and development programs to generate future profitable production.
HIGHLIGHTS AND NOTABLE EVENTS
On April 12, 2021, the Company entered into a purchase and sale agreement to acquire a 100% interest in the Turgeon Lake Gold Property ("Turgeon Lake Property"), which was amended October 1, 2021 and November 24, 2021. The Turgeon Lake Property consists of 39 mineral claims covering 2,203.28 hectares.
To earn 100% interest, the Company must make cash payments totaling $250,000 as follows:
- $30,000 on execution of the agreement (paid);
- $35,000 on or before November 30, 2023 (paid)
- $35,000 earlier of the date of listing and February 28, 2023 (paid); and
- $150,000 3 years from execution of the agreement.
In addition, to earn a 100% interest the Company must issue 1,500,000 common shares to the vendor as follows:
- 250,000 shares on the closing of the transaction (issued).
- 750,000 shares earlier of the date of listing and February 28, 2023 (issued); and
- 500,000 shares 3 years from the date of execution.
Finally, to earn a 100% interest the Company must complete a minimum work commitment totaling $500,000 as follows:
- $200,000 on or before 2 years from the date of execution (outstanding); and
- $300,000 on or before 3 years from the date of execution (outstanding).
During 2023, the Company entered into a purchase and sale agreement with the vendor to acquire 100% working interest in the property by paying $20,000 (paid) of cash and the issuance of 600,000 (issued) common shares of the Company. Under this agreement, the remaining commitments listed above expired.
The Company has also agreed to grant a 2% Net Smelter Returns Royalty ("NSR") to the vendor. The NSR requires will require the Company to pay a 2% royalty on production and the Company will have the right to acquire 1% of the NSR by making a payment of $1,000,000 to the vendor. In addition, the Turgeon Lake Property is subject to an additional 2% NSR in favour of the prospectors who staked the property.
Gulch, Saskatchewan
On December 14, 2023, the Company entered into six individual option agreements with Eagle Plains Resources Ltd. ("EPL"), whereby the Company may earn up to an 80% interest in the property totaling 1,685 hectares in northern Saskatchewan. To maintain the option agreement in good standing, the Company must:
(a) pay to EPL on each of the individual option agreements, an aggregate of $55,000 in cash according to the following schedule:
- $5,000 in cash on the execution of the agreement (paid)
- an additional $10,000 in cash on or before December 31, 2024; and
- an additional $10,000 in cash on or before December 31, 2025; and
- an additional $10,000 in cash on or before December 31, 2026; and
- an additional $10,000 in cash on or before December 31, 2027; and
(b) issue to EPL on each of the individual option agreements an aggregate of 750,000 shares according to the following schedule:
- 50,000 shares on the execution of this agreement (issued), and
- an additional 100,000 shares on or before December 31, 2024; and
- an additional 150,000 shares on or before December 31, 2025; and
- an additional 200,000 shares on or before December 31, 2026; and
- an additional 250,000 shares on or before December 31, 2027; and
(c) incur aggregate exploration expenditures on the property on each of the individual option agreements of $3,200,000 according to the following schedule:
- $50,000 on or before December 31, 2024; and
- an additional $150,000 on or before December 31, 2025; and
- an additional $1,000,000 on or before December 31, 2026; and
- an additional $2,000,000 on or before December 31, 2027.
The Company is also required to grant a 2% Net Smelter Returns Royalty ("NSR") to the vendor. The Company maintains the right to purchase half of the royalty from the vendor by making a payment of $2,000,000 to the vendor.
Beaver River, Saskatchewan
On December 14, 2023, the Company entered into six individual option agreements with Eagle Plains Resources Ltd. ("EPL"), whereby the Company may earn up to an 80% interest in the property totaling 1,455 hectares in northern Saskatchewan. To maintain the option agreement in good standing, the Company must:
(a) pay to EPL on each of the individual option agreements, an aggregate of $55,000 in cash according to the following schedule:
- $5,000 in cash on the execution of the agreement (paid)
- an additional $10,000 in cash on or before December 31, 2024; and
- an additional $10,000 in cash on or before December 31, 2025; and
- an additional $10,000 in cash on or before December 31, 2026; and
- an additional $10,000 in cash on or before December 31, 2027; and
(b) issue to EPL on each of the individual option agreements an aggregate of 750,000 shares according to the following schedule:
- 50,000 shares on the execution of this agreement (issued), and
- an additional 100,000 shares on or before December 31, 2024; and
- an additional 150,000 shares on or before December 31, 2025; and
- an additional 200,000 shares on or before December 31, 2026; and
- an additional 250,000 shares on or before December 31, 2027; and
(c) incur aggregate exploration expenditures on the property on each of the individual option agreements of $3,200,000 according to the following schedule:
- $50,000 on or before December 31, 2024; and
- an additional $150,000 on or before December 31, 2025; and
- an additional $1,000,000 on or before December 31, 2026; and
- an additional $2,000,000 on or before December 31, 2027.
The Company is also required to grant a 2% Net Smelter Returns Royalty ("NSR") to the vendor. The Company maintains the right to purchase half of the royalty from the vendor by making a payment of $2,000,000 to the vendor.
Black Bay, Saskatchewan
On December 14, 2023, the Company entered into six individual option agreements with Eagle Plains Resources Ltd. ("EPL"), whereby the Company may earn up to an 80% interest in the property totaling 1,114 hectares in northern Saskatchewan. In order to maintain the option agreement in good standing, the Company must:
(a) pay to EPL on each of the individual option agreements, an aggregate of $55,000 in cash according to the following schedule:
- $5,000 in cash on the execution of the agreement (paid)
- an additional $10,000 in cash on or before December 31, 2024; and
- an additional $10,000 in cash on or before December 31, 2025; and
- an additional $10,000 in cash on or before December 31, 2026; and
- an additional $10,000 in cash on or before December 31, 2027; and
(b) issue to EPL on each of the individual option agreements an aggregate of 750,000 shares according to the following schedule:
- 50,000 shares on the execution of this agreement (issued), and
- an additional 100,000 shares on or before December 31, 2024; and
- an additional 150,000 shares on or before December 31, 2025; and
- an additional 200,000 shares on or before December 31, 2026; and
- an additional 250,000 shares on or before December 31, 2027; and
(c) incur aggregate exploration expenditures on the property on each of the individual option agreements of $3,200,000 according to the following schedule:
- $50,000 on or before December 31, 2024; and
- an additional $150,000 on or before December 31, 2025; and
- an additional $1,000,000 on or before December 31, 2026; and
- an additional $2,000,000 on or before December 31, 2027.
The Company is also required to grant a 2% Net Smelter Returns Royalty ("NSR") to the vendor. The Company maintains the right to purchase half of the royalty from the vendor by making a payment of $2,000,000 to the vendor.
Don Lake, Saskatchewan
On December 14, 2023, the Company entered into six individual option agreements with Eagle Plains Resources Ltd. ("EPL"), whereby the Company may earn up to an 80% interest in the property totaling 524 hectares in northern Saskatchewan. To maintain the option agreement in good standing, the Company must:
(a) pay to EPL on each of the individual option agreements, an aggregate of $55,000 in cash according to the following schedule:
- $5,000 in cash on the execution of the agreement (paid)
- an additional $10,000 in cash on or before December 31, 2024; and
- an additional $10,000 in cash on or before December 31, 2025; and
- an additional $10,000 in cash on or before December 31, 2026; and
- an additional $10,000 in cash on or before December 31, 2027; and
(b) issue to EPL on each of the individual option agreements an aggregate of 750,000 shares according to the following schedule:
- 50,000 shares on the execution of this agreement (issued), and
- an additional 100,000 shares on or before December 31, 2024; and
- an additional 150,000 shares on or before December 31, 2025; and
- an additional 200,000 shares on or before December 31, 2026; and
- an additional 250,000 shares on or before December 31, 2027; and
(c) incur aggregate exploration expenditures on the property on each of the individual option agreements of $3,200,000 according to the following schedule:
- $50,000 on or before December 31, 2024; and
- an additional $150,000 on or before December 31, 2025; and
- an additional $1,000,000 on or before December 31, 2026; and
- an additional $2,000,000 on or before December 31, 2027.
The Company is also required to grant a 2% Net Smelter Returns Royalty ("NSR") to the vendor. The Company maintains the right to purchase half of the royalty from the vendor by making a payment of $2,000,000 to the vendor.
Lardo, Saskatchewan
On December 14, 2023, the Company entered into six individual option agreements with Eagle Plains Resources Ltd. ("EPL"), whereby the Company may earn up to an 80% interest in the property totaling 245 hectares in northern Saskatchewan. To maintain the option agreement in good standing, the Company must:
(a) pay to EPL on each of the individual option agreements, an aggregate of $55,000 in cash according to the following schedule:
- $5,000 in cash on the execution of the agreement (paid)
- an additional $10,000 in cash on or before December 31, 2024; and
- an additional $10,000 in cash on or before December 31, 2025; and
- an additional $10,000 in cash on or before December 31, 2026; and
- an additional $10,000 in cash on or before December 31, 2027; and
(b) issue to EPL on each of the individual option agreements an aggregate of 750,000 shares according to the following schedule:
- 50,000 shares on the execution of this agreement (issued), and
- an additional 100,000 shares on or before December 31, 2024; and
- an additional 150,000 shares on or before December 31, 2025; and
- an additional 200,000 shares on or before December 31, 2026; and
- an additional 250,000 shares on or before December 31, 2027; and
(c) incur aggregate exploration expenditures on the property on each of the individual option agreements of $3,200,000 according to the following schedule:
- $50,000 on or before December 31, 2024; and
- an additional $150,000 on or before December 31, 2025; and
- an additional $1,000,000 on or before December 31, 2026; and
- an additional $2,000,000 on or before December 31, 2027.
The Company is also required to grant a 2% Net Smelter Returns Royalty ("NSR") to the vendor. The Company maintains the right to purchase half of the royalty from the vendor by making a payment of $2,000,000 to the vendor.
Smitty, Saskatchewan
On December 14, 2023, the Company entered into six individual option agreements with Eagle Plains Resources Ltd. ("EPL"), whereby the Company may earn up to an 80% interest in the property totaling 882 hectares in northern Saskatchewan. In order to maintain the option agreement in good standing, the Company must:
(a) pay to EPL on each of the individual option agreements, an aggregate of $55,000 in cash according to the following schedule:
- $5,000 in cash on the execution of the agreement (paid)
- an additional $10,000 in cash on or before December 31, 2024; and
- an additional $10,000 in cash on or before December 31, 2025; and
- an additional $10,000 in cash on or before December 31, 2026; and
- an additional $10,000 in cash on or before December 31, 2027; and
(b) issue to EPL on each of the individual option agreements an aggregate of 750,000 shares according to the following schedule:
- 50,000 shares on the execution of this agreement (issued), and
- an additional 100,000 shares on or before December 31, 2024; and
- an additional 150,000 shares on or before December 31, 2025; and
- an additional 200,000 shares on or before December 31, 2026; and
- an additional 250,000 shares on or before December 31, 2027; and
(c) incur aggregate exploration expenditures on the property on each of the individual option agreements of $3,200,000 according to the following schedule:
- $50,000 on or before December 31, 2024; and
- an additional $150,000 on or before December 31, 2025; and
- an additional $1,000,000 on or before December 31, 2026; and
- an additional $2,000,000 on or before December 31, 2027.
The Company is also required to grant a 2% Net Smelter Returns Royalty ("NSR") to the vendor. The Company maintains the right to purchase half of the royalty from the vendor by making a payment of $2,000,000 to the vendor.
OVERALL PERFORMANCE
Key Performance Indicators
| 2024 | 2023 | 2022 | |||
|---|---|---|---|---|---|
| Revenue | $ | - | $ | - | $ |
| Net loss | $ | (581,275) | $ | (355,280) | $ |
| Loss per share | $ | (0.04) | $ | (0.03) | $ |
| Total assets | $ | 385,282 | $ | 414,114 | $ |
| Cash purchase of mineral properties and option on mineral properties | $ | 30,000 | $ | 90,000 | $ |
For the year ended October 31, 2024, Xcite incurred a net loss of $581,275 compared to $355,280 in the prior year. The increase in the net loss is attributed to an increase in exploration and evaluation expenditures of $171,435 resulting from the increased exploration program conducted during the year. Management fees increased $99,000 resulting in the change of management and increased time resulting from the exploration program, an increase in share-based compensation of $33,258 resulting from the additional grants to board members and management, increase in travel expenses of $6,402 resulting from travel conducted for investor meetings, and an increase in general and administrative expenses of $10,235 resulting from increased insurance expenses. This was offset by a decrease in consulting fees of $24,463 due to fewer consultants used on various items, a decrease in professional fees of $37,485 resulting from the fees relate to the agreements for the acquisition of Turgeon Lake Property, the analysis of potential acquisitions, and general corporate matters that occurred in the prior year, and a decrease in investor relations and filings fees of $32,986 due to lower fees related to applications on the IPO.
During the year ended October 31, 2023, the Company incurred a net loss of $355,280 compared to $142,291 for the year ended October 31, 2022. The increase in the net loss is attributed to an increase in consulting fees of $99,049, management fees of $24,100, due to the addition of new management, increase of $27,586 in investor relations and filing fees resulting from the fees related to the Initial Public Offering, and an increase of $64,228 in professional fees due to additional legal fees for general corporate matters, the acquisition of the exploration property, and the analysis of potential property acquisitions. In addition,
the Company had an increase of $22,819 in share-based compensation as a result of the issuance of stock options during the year. This was offset by a decrease of $15,762 in exploration and evaluation expenses as the amounts for the exploration and evaluation meet capitalization criteria. In addition, there was a decrease in general and administration expenses of $9,579 resulting from the reduction in investor meetings.
During the year ended 2024, Xcite spent $30,000 and $90,000 in 2023 on acquiring exploration and evaluation assets and on option payments for exploration and evaluation assets.
Results of Operations
| 2024 | 2023 | |
|---|---|---|
| Exploration and evaluation expenses | $ 187,070 | $ 15,635 |
For the year ended October 31, 2024, the Company incurred $187,070 of exploration and evaluation expenses compared to $15,635 for the year ended October 31, 2023. The expenses relate to the analysis and work performed on the Turgeon Lake Property.
| 2024 | 2023 | |
|---|---|---|
| Management fees | $ 168,000 | $ 69,000 |
For the year ended October 31, 2024, the Company incurred management and consulting fees of $168,000 compared to $69,000 for the year ended October 31, 2023. These expenses relate to the fees paid to management of the Company for the day-to-day management requirements. The increase relates to the increased fees paid to management contracted during the year.
| 2024 | 2023 | |
|---|---|---|
| Professional fees | $ 38,440 | $ 75,925 |
For the year ended October 31, 2024, the Company incurred $38,440 of professional fees compared to $75,925 for the year ended October 31, 2023. The decrease in the fees relate to the agreements for the acquisition of Turgeon Lake Property, the analysis of potential acquisitions, and general corporate matters that occurred in the prior year.
| 2024 | 2023 | |
|---|---|---|
| General and administration expenses | $ 19,392 | $ 9,157 |
General and administrative fees were $19,392 compared to $9,157 resulting from the increase in office rent and investor meetings.
| 2024 | 2023 | |
|---|---|---|
| Investor relations and filing fees | $ 14,726 | $ 47,712 |
For the year ended October 31, 2024, the Company incurred $14,726 of professional fees compared to $47,712 for the year ended October 31, 2023. These expenses relate to the fees associated with the transfer agent and the listing application fees incurred in the prior year.
| 2024 | 2023 | |
|---|---|---|
| Share-based compensation | $ 70,952 | $ 37,694 |
For the year ended October 31, 2024, the Company incurred $70,952 of share-based compensation compared to $37,694 for the year ended October 31, 2023. These expenses relate to the fair value of the stock-options which were issued during the respective periods.
| 2024 | 2023 | |
|---|---|---|
| Consulting fees | $ 74,586 | $ 99,049 |
For the year ended October 31, 2024, the Company incurred $74,586 of consulting fees compared to $99,049 for the year ended October 31, 2023. These expenses relate to the consultants used for general day to day items.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Management has determined that cash flows for operating, exploration and evaluation expenses, and general and administrative expenses will be funded by Xcite's existing cash on hand. Any expected short fall of cash required for these expenses will be funded by the issuance of common shares through private placements.
Cash Flow Summary
| 2024 | 2023 | |
|---|---|---|
| Cash on hand, beginning of period | $ 106,992 | $ 6,153 |
| Cash flow used in operations | (170,445) | (157,043) |
| Cash flow from financing activities | 98,260 | 347,882 |
| Cash flow used in investing activities | (30,000) | (90,000) |
| Cash on hand, October 31, 2021 | $ 4,807 | $ 106,992 |
Cash flow used in operations for the year ended October 31, 2024 was $170,445 resulting from the expenses incurred on the consulting fees, investor relations and filing fees, exploration costs, and professional fees. These costs were incurred for the day-to-day management of the Company. Cash flow used in operations for the period ended October 31, 2023 was $157,043 resulting from the expenses incurred on the analysis and investigation of the mineral properties in addition to the general operating costs incurred for the day-to-day management of the Company.
Xcite had $98,260 of cash flows from financing from the year ended October 31, 2024. During this period, the Company issued 892,600 common shares for gross proceeds of $127,954.
Xcite had $347,882 of cash flows from financing from the year ended October 31, 2023. During this period, the Company issued 5,470,000 common shares for gross proceeds of $547,000.
From the year ended October 31, 2023, the Company incurred $30,000 (2023 - $90,000) of cash outflow from investing. This relates to the property payments for the various options.
The following table represents the net capital of the Company:
| 2024 | 2023 | |
|---|---|---|
| Shareholders' equity | $ (26,996) | $ 227,665 |
| Net capital | $ (26,966) | $ 227,665 |
Xcite uses net working capital to monitor leverage. The net capital is the result of the issuance of common shares offset by the operating loss of the Company in the current period.
Working Capital
The Company has a working capita deficit of $377,466 (2023 - $58,335) as at October 31, 2024. The working capital is comprised of current assets of $34,782 (2023 - $128,114) and current liabilities of $412,248 (2023 - $186,449).
Current assets are comprised of cash of $4,807 (2023 - $106,992) and goods and services tax receivable of $29,975 (2023 - $21,122).
Current liabilities are the result of accounts payable of $156,795 (2023 - $141,274) resulting from the timing of vendor payments and due to related parties of $225,453 (2023 - $45,175) representing outstanding payment of management fees and rent. In addition, the Company issued $30,000 of demand promissory notes during the year ended October 31, 2024.
Contractual Obligations
There are no outstanding contractual obligations.
Contingencies
Contingent liabilities
The Company does not have any contingent liabilities.
Contingent assets
The Company does not have any contingent assets.
SELECTED QUARTERLY FINANCIAL INFORMATION
| Oct 31, 2024 | July 31, 2024 | April 31, 2024 | Jan 31, 2024 | |
|---|---|---|---|---|
| Revenue | $ - | $ - | $ - | $ - |
| Net loss | (303,195) | (73,806) | (115,174) | (89,100) |
| Loss per share | (0.00) | (0.00) | (0.01) | (0.01) |
| Oct 31, 2023 | July 31, 2023 | April 30, 2023 | Jan 31, 2023 | |
| Revenue | $ - | $ - | $ - | $ - |
| Net loss | (200,844) | (79,540) | (35,978) | (38,918) |
| Loss per share | (0.02) | (0.01) | (0.00) | (0.00) |
For the three-months ended October 31, 2024, the Company incurred a net loss of $303,195 resulting from management consulting fees of $49,500 due to the day-to-day management activities of the Company, $3,530 of general and administrative expenses due to rent, exploration and evaluation expenses of $187,070 due to work performed on the Turgeon Lake Property, travel expenses of $8,970 for various meetings, and $2,692 of filing fees due to the cost of the transfer agent.
For the three-months ended July 31, 2024, the Company incurred a net loss of $73,806 resulting from management consulting fees of $69,500 due to the day-to-day management activities of the Company,
$2,795 of general and administrative expenses due to rent, and $1,205 of filing fees due to the cost of the transfer agent.
For the three-months ended April 30, 2024, the Company incurred a net loss of $115,174 resulting from management and consulting fees of $79,500 due to day-to-day management of the Company, transfer agent and filing fees of $4,290 for the expenses related to the listing fee application and system fees, professional fees of $12,320 related to legal and accounting fees for general corporate matters and filing requirements, travel expenses of $12,929 due to travel costs associated with investor meeting, and general and administrative expenses of $5,650 primarily due to rent.
For the three-months ended January 31, 2024, the Company incurred a net loss of $89,100 resulting from management and consulting fees of $20,500, share-based compensation of $39,454 from the granting of stock-options, and professional fees of $17,406 due to legal fees.
For the quarter ended October 31, 2023, Xcite incurred a net loss of $185,209 resulting from management and consulting fees of $38,767 for day-to-day operations of the Company, consulting fees of $99,049 for the issuance of share purchase warrants to a consultant for services, and professional fees of $13,876 for legal fees.
For the quarter ended July 31, 2023, the Company incurred a net loss of $79,540 resulting from the management and consulting fees of $4,500, for to manage day-to-day operations of the Company, professional fees consisting of legal fees of $65,525 for fees associated with potential transactions, and $7,770 resulting from filing fees resulting from transfer agent fees.
For the second quarter ended April 30, 2023, the Company incurred a net loss of $35,978 resulting from management consulting fees of $13,500 for the day-to-day management of the Company, filing fees of $20,119 due to annual filing fees, application fees and transfer agent fees.
For the three-months ended January 31, 2023, the Company incurred a net loss of $38,918. The loss was the result of management consulting fees of $13,500 for the day-to-day management of the Company, $14,269 of transfer agent and filing fees resulting from the application fees, listing fees, and public company document filing fees, professional fees of $6,651 resulting from legal and accounting fees for general corporate items, and general and administration expenses of $3,755 for rent and other day-to-day items.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
Exploration and evaluation assets
The Company has acquired exploration and evaluation assets, which consists of mineral claims, for use in its business activities. Amortization is recognized using the unit of production basis, once available for use, based upon management's estimate of the useful life.
Taxes
The determination of taxes is inherently complex and requires making certain estimates and assumptions about future events. While income tax filings are subject to audits and reassessments, the Company has adequately provided for all income tax obligations. However, changes in facts and circumstances as a result of income tax audits, reassessments, jurisprudence and any new legislation may result in an increase or decrease in our provision for taxes. The value of deferred tax assets is evaluated based on the probability of realization; the Company has assessed that it is improbable that such assets will be realized and has accordingly not recognized a value for deferred taxes.
Going concern
The assessment of the Company's ability to execute its strategy by funding future working capital involves judgment. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstance. There is a material uncertainty regarding the Company's ability to continue as a going concern. The Company's principal source of cash is from private placements. The Company is dependent on raising funds in order to have sufficient capital to be able to identify, evaluate and then acquire an interest in assets or a business.
Impairment of non-current assets
To determine the recoverable amount, management estimates expected future cash flows from each asset or cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, management makes assumptions about future operating results. These assumptions relate to future events and circumstances. Actual results may vary and may cause significant adjustments to the Company's assets within the next financial year.
In addition, when determining the applicable discount rate, estimation is involved in determining the appropriate adjustments to market risk and asset-specific risk factors.
Decommissioning and restoration provision
The decommissioning and restoration provision is based on future cost estimates using information available at the reporting date. The decommissioning and restoration provision is adjusted at each reporting period for changes to factors such as the expected amount of cash flows required to discharge the liability, the timing of such cash flows, and the discount rate. The decommissioning and restoration provision requires other significant estimates and assumptions such as requirements of the relevant legal and regulatory framework, and the timing, extent, and costs of required decommissioning and restoration activities. Actual costs may differ from these estimates. As at October 31, 2024 and 2023, the Company has no material decommissioning and restoration provision
NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted IAS 1 effective November 1, 2022. This standard clarifies how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances. The adoption of this new standard did not impact the Company's financial statements.
Issued but not yet effective, in April 2024, the IASB issued a new IFRS accounting standard to improve the reporting of financial performance. IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 Presentation of Financial Statements. The standard will become effective January 1, 2027, with early adoption permitted. The Company is in the process of assessing the impact of this new standard on the Company's consolidated financial statements.
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Risk is inherent in all business activities and cannot be eliminated. However, shareholder value can be maintained and enhanced by identifying, mitigating, and where possible, insuring against these risks. The following section addresses some, but not all, risk factors that could affect Xcite's future results, as well as activities used to mitigate such risks. These risks do not occur in isolation but must be considered in conjunction with each other.
The Board of Directors have overall responsibility for the establishment and oversight of Xcite's risk management framework. The Board is responsible for developing and monitoring Xcite's compliance with risk management policies and procedures.
Xcite's risk management policies are established to identify and analyze the risks faced by Xcite, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Xcite's activities.
Financial risks and financial instruments
Cash is carried at fair value using a level 1 fair value measurement. The carrying value of cash and accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments.
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.
The Company's risk exposures and the impact on the Company's financial instruments are summarized below:
Credit risk
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets including cash. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash with high-credit quality financial institutions.
Liquidity risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at October 31, 2024, the Company had a cash balance of $4,807 (2023 - $106,992) to settle current liabilities of $412,248 (2023 - $186,449). All of the Company's accounts payable and accrued liabilities have contractual maturities of 30 days or due on demand and are subject to normal trade terms. To maintain liquidity, the Company is currently investigating financing opportunities.
Mark Price risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. The Company does not have a practice of trading derivatives.
Interest rate risk
The Company's financial assets exposed to interest rate risk consist of cash balances. The Company's current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. As at October 31, 2024 and 2023, the Company did not have any investments in investment-grade short-term deposit certificates.
Foreign currency risk
The Company is exposed to foreign currency risk to the extent expenditures incurred or funds received and balances maintained by the Company are denominated in currencies other than Canadian dollars. As at October 31, 2024 and 2023, the Company did not have foreign currency risk.
Commodity price risk
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in commodity prices. The ability of the Company to develop its mineral properties and the future profitability of the Company are directly related to the market price of gold. The Company has not hedged any of its future gold sales. The Company's input costs are also affected by the price of fuel. The Company closely monitors gold and fuel prices to determine the appropriate course of action to be taken from interest rate risk or foreign currency risk. The Company is not exposed to significant other price risk
RELATED PARTY TRANSACTIONS
Payments and accruals were made to the following officers and directors or to companies controlled by these officer and directors.
| 2024 | 2023 | |
|---|---|---|
| Management fees | Management fees | |
| Former CEO and Directors (a and b) | $ 30,000 | $ 51,000 |
| CEO and Director | 150,000 | 33,000 |
| CFO and former Director | 18,000 | 18,000 |
| $ 198,000 | $ 44,900 |
(a) Resigned as CEO August 1, 2023; current director.
(b) Resigned as CEO and director December 21, 2023. 2024 fees are included in consulting expense.
As at October 31, 2024, the Company owed $225,453 (2023 - $45,175) to related parties for the above services and miscellaneous advances. Additionally, $6,000 was owed a note to a director.
SUBSEQUENT EVENTS
TBD
OTHER INFORMATION
Outstanding share data:
| Issued and outstanding shares at October 31, 2024 | 16,772,600 |
|---|---|
| Shares issued on property option agreement and exercise of warrants | 2,752,340 |
| Issued and outstanding stock options at October 31, 2024 | 1,420,000 |
| Issued and outstanding warrants at October 31, 2024 | 4,748,000 |
| Issued and outstanding shares at February 28, 2025 | 19,524,940 |
INDUSTRY RISKS
The Company's principal business activities are the acquisition, exploration, and definition of potentially economically viable mineral resource deposits on mineral properties, which, by nature, are speculative. Companies in this industry are subject to many and varied kinds of risks, including but not limited to; environmental, fluctuating commodity prices, social, political, financial and economics. Additionally, few exploration projects successfully achieve development due to factors that cannot be predicted or foreseen. While risk management cannot eliminate the impact of all potential risks, the Company strives to manage
such risks to the extent possible and practicable. Due to the high-risk nature of the Company's business and the present stage of the Company's various mineral properties, an investment in the Company's common shares should be considered a highly speculative investment that involves significant financial risks, and prospective investors should carefully consider all of the information disclosed in this MD&A, the risk factors discussed below, and the Company's other public disclosures, including the risks described in the "Risk Factors" section of the Company's MD&A for the year ended October 31, 2024 and 2023, prior to making any investment in the Company's common shares.
The risk factors described below do not necessarily comprise all of the risks and uncertainties that the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also adversely affect the Company's business, results of operations, financial results, prospects and price of common shares. These risk factors could materially affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.
Mineral property exploration and mining risk
Mineral exploration and development are highly speculative and are characterized by a number of significant inherent risks, which may result in the inability to successfully develop a project for commercial, technical, political, regulatory or financial reasons, or if successfully developed, may not remain economically viable for their mine life owing to any of the foregoing reasons.
The Company's ability to identify Mineral Resources in sufficient quantity and quality to justify development activities and/or its ability to commence and complete development work and/or commence and/or sustain commercial mining operations at any of its projects will depend upon numerous factors, many of which are beyond its control, including exploration success, the obtaining of funding for all phases of exploration, development and commercial mining, the adequacy of infrastructure, geological characteristics, metallurgical characteristics of any deposit, the availability of processing and smelting capacity, the availability of storage capacity, the supply of and demand for silver and other metals, the availability of equipment and facilities necessary to commence and complete development, the cost of consumables and mining and processing equipment, technological and engineering problems, accidents or acts of sabotage or terrorism, civil unrest and protests, currency fluctuations, changes in regulations, the availability of water, the availability and productivity of skilled labour, the receipt of necessary consents, permits and licenses (including mining licenses), and political factors, including unexpected changes in governments or governmental policies towards exploration, development and commercial mining activities.
Furthermore, cost over-runs or unexpected changes in commodity prices in any future development could make the projects uneconomic, even if previously determined to be economic under feasibility studies. Accordingly, notwithstanding the positive results of one or more feasibility studies on the projects, there is a risk that the Company would be unable to complete development and commence commercial mining operations at one or more of the mineral properties which would have a material adverse effect on the Company's business, financial condition, results of operations and prospects.
Key management
The success of the Company is dependent upon the ability, expertise, judgment, discretion, and good faith of its senior management. While employment agreements are customarily used as a primary method of retaining the services of key employees, these agreements cannot assure the continued services of such employees. Any loss of the services of such individuals could have a material adverse effect on the Company's business, operating results, or financial condition.
Limited operating history
The Company has no present prospect of generating revenue from the sale of products. The Company is therefore subject to many of the risks common to early-stage enterprises, including undercapitalization, cash shortages, limitations with respect to personnel, financial, and other resources, and lack of revenues. There is no assurance that the Company will be successful in achieving a return on shareholders' investment and the likelihood of success must be considered considering the early stage of operations.
Ability to continue as a going concern
The Company's auditors' opinion on its October 31, 2024 financial statements includes an explanatory paragraph in respect of there being substantial doubt about its ability to continue as a going concern.
Financing and share price fluctuation risk
The Company has no source of operating cash flow and has no assurance that additional funding will be available to it for further exploration and development of its mineral properties. Future exploration and development of the Company's mineral properties may be dependent upon the Company's ability to obtain financing through equity, debt or other means. There can be no assurance that needed financing will be available in a timely or economically advantageous manner, or at all. Failure to obtain sufficient financing could result in delay or indefinite postponement of further exploration and development of on any or all of its mineral properties which could result in the loss of its property, in which case, the Company's ability to operate would be adversely affected. To obtain substantial additional financing, the Company may have to sell additional securities including, but not limited to, its Common Shares or some form of convertible securities, the effect of which may result in substantial dilution of the present equity interests of the Company's shareholders.
Securities markets have at times in the past experienced a high degree of price and volume volatility, and the market price of securities of many companies, particularly those considered to be exploration stage companies such as the Company, have experienced wide fluctuations in share prices which have not necessarily been related to their operating performance, underlying asset values or prospects. There can be no assurance that these kinds of share price fluctuations will not occur in the future, and if they do occur, how severe the impact may be on the Company's ability to raise additional funds through equity issues.
Commodity prices risk
The Company, along with all mineral exploration and development companies, is exposed to commodity price risk. A decline in the market price of gold, silver, base metals and other minerals may adversely affect the Company's ability to raise capital in order to fund its ongoing operations. Commodity price declines could also reduce the amount the Company would receive on the disposition of its mineral property to a third party.
Title risk
Title on mineral properties and mining rights involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history of many mining properties. The Company has diligently investigated and continues to diligently investigate and validate title to its mineral claims; however, this should not be construed as a guarantee of title. The Company cannot give any assurance that title to properties it acquired will not be challenged or impugned and cannot guarantee that the Company will have or acquire valid title to these mineral properties
Insured and uninsurable risks
In the course of exploration, development and production of mineral properties, the Company is subject to a number of hazards and risks in general, including adverse environmental conditions, operational accidents, labor disputes, unusual or unexpected geological conditions, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, and earthquakes. Such occurrences could result in damage to the Company's properties or facilities and equipment, personal injury or death, environmental damage to properties of the Company or others, delays, monetary losses and possible legal liability.
Although the Company maintains insurance to protect against certain risks in such amounts as it considers reasonable, its insurance may not cover all the potential risks associated with its operations. The Company may also be unable to maintain insurance to cover these risks at economically feasible premiums or for other reasons. Should such liabilities arise, they could reduce or eliminate future profitability and result in
increased costs, have a material adverse effect on the Company's results and could cause a decline in the value of the securities of the Company.
Competition risk
Significant and increasing competition exists in the mining and mineral exploration industry. The Company faces strong competition from other mining and exploration companies in connection with the acquisition of properties producing, or capable of producing, minerals. Many of these companies are larger, more established, and have greater financial resources, operational experience and technical capabilities than the Company and make it difficult to compete for the acquisition of mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel. As a result of this competition, the Company may be unable to acquire additional attractive mining or exploration properties on terms it considers acceptable or at all. Consequently, the Company's business, results of operation, financial conditions and prospects could be adversely affected
Government regulations
Exploration and evaluation companies operate in a high-risk regulatory environment. The mining activities is governed by numerous statutes and regulations in the United States, Canada, and other countries where Xcite intends to market its products. The subject matter of such legislation includes approval of mining facilities and environmental regulations.
The process of completing exploration and evaluation activities and obtaining required approvals is likely to take several years and require the expenditure of substantial resources. Furthermore, there can be no assurance that the regulators will not require modification to any submissions which may result in delays or failure to obtain regulatory approvals. Any delay or failure to obtain regulatory approvals could adversely affect the ability of Xcite to utilize its assets, thereby adversely affecting operations. Further, there can be no assurance that Xcite's properties will achieve levels of sensitivity and specificity sufficient for regulatory approval or market acceptance. There is no assurance that Xcite will be able to timely and profitably produce its products while complying with all the applicable regulatory requirements. Foreign markets, other than the United States and Canada, generally impose similar restrictions.
Conflicts of interest risk
Certain of the Company's directors and officers do, and may in the future, serve as directors, officers, promoters and members of management of other mineral exploration and development companies and, therefore, it is possible that a conflict may arise between their duties as a director, officer, promoter or member of the Company's management team and their duties as a director, officer, promoter or member of management of such other companies. The Company's directors and officers are aware of the laws establishing the fiduciary duties of directors and officers including the requirement that directors act honestly and in good faith with a view to the best interests of the Company and to disclose any interest which they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in a conflict is required under the Business Corporations Act (British Columbia) to disclose their interest.
Environmental risk
All phases of the Company's operations are subject to extensive environmental regulations. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation, mitigation of impact of activities to wildlife and plant life, and provide for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry activities and operations. They also set forth limitations on the generation, transportation, storage and disposal of hazardous waste. A breach of these regulations may result in the imposition of fines and penalties. In addition, certain types of mining operations require the submission and approval of environmental-related permits and/or environmental impact assessments. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. The cost of compliance
with changes in governmental regulations has a potential to impact the timing of execution of work pans and reduce the viability or profitability of operations. Environmental hazards may exist on the properties in which the Company holds its interests or on properties that will be acquired which are unknown to the Company at present and which have been caused by previous or existing owners or operators of those properties.
Community relations risk
The Company's relationships with the communities in which it operates, and other stakeholders are critical to ensure the future success of the development of its properties. There is an increasing level of public concern relating to the perceived effect of mining activities on the environment and on communities impacted by such activities. Publicity adverse to the Company, its operations or extractive industries generally, could have an adverse effect on the Company and may impact relationships with the communities in which the Company operates and other stakeholders. While the Company is committed to operating in a socially responsible manner, there can be no assurance that its efforts in this respect will mitigate this potential risk. Further, damage to the Company's reputation can be the result of the perceived or actual occurrence of any number of events, and could include any negative publicity, whether true or not. The increased usage of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views in regard to the Company and its activities, whether true or not. While the Company strives to uphold and maintain a positive image and reputation, the Company does not ultimately have control over how it is perceived by others. Reputation loss may lead to increased challenges in developing, maintaining community relations and advancing its projects and decreased investor confidence, all of which may have a material adverse impact on the financial performance and growth of the Company.
Litigation risk
All industries, including the mining industry, may be made subject to legal claims and proceedings, with and without merit. Defence and settlement costs can be substantial, even with respect to claims that have no merit. The Company may also in the future become the subject of a legal claim or proceeding at any time, and without advance notice of the commencement of the proceeding. To the extent the Company becomes subject to any such claim or proceeding, it may materially impact management's time and the Company's financial resources to defend, even if it is without merit. As well, due to the inherent uncertainty of the litigation process, the resolution of any particular legal claim or proceeding could have a material adverse effect on the Company's business, results of operations, financial condition (including its cash position) and prospects.
Climate change risk
The potential physical impacts of climate change on the Company's exploration projects is highly uncertain and are particular to the geographic circumstances. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. The Company's future exploration programs in the United States may require water and a lack of necessary water could disrupt exploration programs and adversely impact future development and mining activities. Climate change is an international concern and as a result poses the risk of changes in government policy including introducing climate change legislation and treaties at all levels of government that could result in increased costs. The trend towards more stringent regulations and carbon-pricing mechanisms aimed at reducing the effects of climate change could impact the Company's decision to pursue future opportunities, or maintain our existing exploration programs, which could have an adverse effect on our business.
No Anticipated Dividends
The Company does not intend to pay dividends on any investment in the shares of stock of the Company. The Company has never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that the Company requires additional funding currently not provided for in
its financing plan, its funding sources may prohibit the payment of a dividend. Because the Company does not intend to declare dividends, any gain on an investment in the Company will need to come through an increase in the stock's price. This may never happen, and investors may lose all their investment in the Company.