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Xcite Resources Inc. — Management Reports 2025
Jun 30, 2025
48326_rns_2025-06-30_ef8dd32f-ec8a-4700-a85b-ab03aeaf8a79.pdf
Management Reports
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MANAGEMENT'S DISCUSSION AND ANALYSIS
The following Management's Discussion and Analysis ("MD&A") is dated June 30, 2025 and should be read in conjunction with the unaudited financial statements of Xcite Resources Inc. ("Xcite" or the "Company") for the three-months ended April 30, 2025, along with the audited financial statements of Xcite for the year ended October 31, 2024. 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.
On December 14, 2023 and as amended on December 18, 2024, 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 each of the following properties 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 ($330,000 in total for all six claims) according to the following schedule:
- $5,000 in cash on the execution of the agreement ($30,000 in total paid)
- an additional $10,000 in cash on or before June 30, 2025; ($60,000 in total) and
- an additional $10,000 in cash on or before December 31, 2025; ($60,000 in total) and
- an additional $10,000 in cash on or before December 31, 2026; ($60,000 in total) and
- an additional $20,000 in cash on or before December 31, 2027; ($120,000 in total) and
(b) issue to EPL on each of the individual option agreements an aggregate of 750,000 shares (4,500,000 shares in total for all six claims) according to the following schedule:
- 50,000 shares on the execution of this agreement (300,000 issued in total), and
- an additional 100,000 shares on or before December 31, 2024 (600,000 issued in total); and
- an additional 150,000 shares on or before December 31, 2025; (900,000 in total) and
- an additional 200,000 shares on or before December 31, 2026; (1,200,000 in total) and
- an additional 250,000 shares on or before December 31, 2027; (1,500,000 in total) and
(c) incur aggregate exploration expenditures on the property on each of the individual option agreements of $3,200,000 ($19,200,000 in total for all six claim) according to the following schedule:
- $50,000 on or before June 30, 2025 ($300,000 in total); and
- an additional $150,000 on or before December 31, 2025; ($900,000 in total) and
- an additional $1,000,000 on or before December 31, 2026; ($6,000,000 in total) and
- an additional $2,000,000 on or before December 31, 2027; ($12,000,000 in total).
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.
The six properties are:
Gulch – 1,685 hectares, Beaver River – 1,455 hectares, Black Bay – 1,114 hectares, Don Lake – 524 hectares, Lardo – 245 hectares and Smitty – 882 hectares.
OVERALL PERFORMANCE
Key Performance Indicators
| Three-Months Ended April 30, | Six-Months Ended April 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Revenue | $ - | $ - | $ - | $ - |
| Net loss | $ (77,132) | $ (115,174) | $ (175,483) | $ (204,274) |
| Loss per share | $ (0.00) | $ (0.01) | $ (0.01) | $ (0.01) |
| Total assets | $ 594,713 | $ 537,479 | $ 594,713 | $ 537,479 |
| Mineral properties | $ 446,500 | $ 350,500 | $ 446,500 | $ 350,500 |
The Company incurred a net loss of $77,132 for the three-months ended April 30, 2025 compared to $115,174 for the prior period. The decrease in the net loss is attributed to the decrease in consulting fees expenses of $75,000 resulting in the change in management and the switching to salary in the period, decrease in travel expenses of $12,929 due to additional travel for investment purposes in the prior period, and a decrease in professional fees of $6,290 due to increased legal and accounting fees due to general corporate items and filing requirements. This was offset by an increase in salaries and wages as certain management members moved from consultants to employees.
For the six-months ended April 30, 2025, the Company incurred a net loss of $175,483 compared to $204,274 from the previous period. The decrease in net loss is attributable to the decrease in consulting fees expenses of $41,000 resulting in the change in management and the switching to salary in the period, decrease in share-based compensation of $39,454 due to stock options being granted in 2024, a decrease in professional fees of $18,965 due to a decrease in legal fees and accounting fees due to general corporate items and filing requirements, and a decrease in travel expenses of $5,432 due to additional travel for investment purposes in the prior period. This was offset by an increase in transfer agent and filing fees resulting from the additional transfer agent fees for share issuances and annual general meetings. In addition, there was an increase in salaries and wages as certain management members moved from consultants to employees.
The Company has assets of $594,713 at April 30, 2025 compared to $385,282 at October 31, 2024 representing an increase of $209,431. The increase is the result of the share issuances during the period
offset by the net loss. During the six-months ended April 30, 2025, the Company incurred an additional $96,000 in expenses for the various mineral exploration projects.
Results of Operations
| For the Three-Months Ended April 30, | For the Six-Months Ended April 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Share-based compensation | $ - | $ - | $ - | $ 39,454 |
For the six-months ended April 30, 2024, the Company incurred $39,454 of share-based compensation as a result of the granting of 500,000 stock options in the three months. No grants occurred for the six-months ended April 30, 2025.
| For the Three-Months Ended April 30, | For the Six-Months Ended April 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Management and consulting fees | $ 4,500 | $ 79,500 | $ 59,000 | $ 100,000 |
For the three-months ended April 30, 2025, the Company incurred $4,500 compared of management and consulting fees compared to $79,500 for 2024. For the six-months ended April 30, 2024, the Company incurred $59,000 compared of management and consulting fees compared to $100,000 for 2024. These expenses relate to the fees paid to management of the Company for the day-to-day management requirements. During 2025, certain management became employees and as a result consulting fees have decreased.
| For the Three-Months Ended April 30, | For the Six-Months Ended April 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Professional fees | $ 6,030 | $ 12,320 | $ 10,731 | $ 29,726 |
Professional fees were $6,030 for the three-months ended April 30, 2025 compared to $12,320 for 2024. For the six-month period ended April 30, 2025 was $10,731 compared to $29,726 for the comparative period. The increase is the result from legal and accounting fees for general corporate matters and required filings of the Company.
| For the Three-Months Ended April 30, | For the Six-Months Ended April 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Transfer agent and filing fees | $ 12,841 | $ 4,290 | $ 16,350 | $ 9,829 |
Transfer agent and filing fees were $12,841 for the three-months ended April 30, 2025 compared to $4,290 for the comparative period, representing an increase of $8,551. For the six-months ended April 30, 2025, transfer agent and filing fees were $16,350 compared to $9,829 for the six-months ended April 30, 2024, representing an increase of $6,521. The increase is the result of the filing fees and costs associated with annual general meeting materials.
| For the Three-Months Ended April 30, | For the Six-Months Ended April 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Travel expenses | $ - | $ 12,929 | $ 8,970 | $ 14,402 |
Travel expenses were nil for the three-months ended April 30, 2025 compared to $12,929 for the comparative period. For the six-months ended April 30, 2025, travel expenses were $8,970 compared to
$14,402 for the six-months ended April 30, 2024. The increase is the result of the increased traveling costs associated with mineral properties and investor meetings.
| For the Three-Months Ended April 30, | For the Six-Months Ended April 30, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Salaries and wages | $ 49,703 | $ - | $ 66,271 | $ - |
Salaries and wages were $49,703 for the three-months ended April 30, 2025 compared to nil for the comparative period. For the six-months ended April 30, 2025, salaries and wages were $66,271 compared to nil for the six-months ended April 30, 2024. The increase is the result of the increased salaries and wages is due to certain management members becoming an employee rather than a consultant in the period.
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
| 2025 | 2024 | |
|---|---|---|
| Cash on hand, beginning of period | $ 4,807 | $ 106,992 |
| Cash flow from operations | (126,314) | (63,260) |
| Cash flow from financing activities | 201,231 | 119,659 |
| Cash flow used in investing activities | - | (157,040) |
| Cash on hand, end of period | $ 79,724 | $ 6,351 |
Cash flow used in operations for the period ended April 30, 2025 was $126,314 compared to $63,260, resulting from the expenses incurred for the general operating costs incurred for the day-to-day management of the Company offset by the fluctuations from non-cash working capital from the timing of payment of the accounts payable and the collection of the goods and service taxes.
For the first half of 2025, the Company had received a net cash inflow of $201,231 (2024 - $119,659) resulting from the issuance of 2,092,340 (2024 - 716,600) common shares for gross proceeds of $199,443 (2024 - $71,660). In addition, the Company received $30,000 resulting from a short-term loan in 2024.
For the six-months ended April 30, 2025, the Company spent nil (2024 - $157,040) on purchases of exploration and evaluation assets resulting from the schedule payments for the acquisition of the mineral property and various work performed on the properties. In addition, the Company issued 600,000 (2024 - 300,000) common shares with a value of $96,000 (2024 - $34,500) for the Athabasca property acquisition.
The following table represents the net capital of the Company:
| April 30, 2024 | October 31, 2024 | |
|---|---|---|
| Shareholders' equity | $ 100,784 | $ (26,966) |
| Net capital | $ 100,784 | $ (26,966) |
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 capital deficit of $345,716 as at April 30, 2025 compared to $377,466 as at October 31, 2024 representing a decrease of $31,750. The decrease in working capital is comprised of an increase in current assets of $113,431 and an increase in current liabilities of $81,681.
The increase in current assets was due to an increase of cash of $74,917, resulting from the payment of the cash operating expenses offset by the collection of cash on the exercise of warrants, an increase in goods and services tax receivable of $4,965 and an increase in prepaid expenses of $33,549 due to payment of an annual insurance policy and deposit with legal council for prospectus work.
The increase in current liabilities is the result of the increase in accounts payable of $64,004 resulting from the timing of vendor payments offset by an increase in due to related party of a $23,677 resulting from the timing of the payments for management consulting. In addition, current liabilities decreased $6,000 due to the repayment of a short-term loan by the issuance of common shares.
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
| April 30, 2025 | Jan 31, 2025 | Oct 31, 2024 | July 31, 2024 | |
|---|---|---|---|---|
| Revenue | $ - | $ - | $ - | $ - |
| Net loss | (77,132) | (98,351) | (303,195) | (73,806) |
| Loss per share | (0.00) | (0.01) | (0.02) | (0.00) |
| April 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | July 31, 2023 | |
| Revenue | $ - | $ - | $ - | $ - |
| Net loss | (115,174) | (89,100) | (200,844) | (79,540) |
| Loss per share | (0.01) | (0.01) | (0.02) | (0.01) |
For the three-month period ended April 30, 2025, the Company incurred a net loss of $77,132 resulting from management and consulting fees of $4,500 due to the day-to-day management activities of the Company, Salaries and wages of $49,703 due to a consulting switching to employee during the period, $3,650 of general and administrative expenses due to rent, and $12,841 of filing fees due to the cost of the transfer agent. In addition, the Company spent $6,030 on professional fees for legal fees on general corporate matters
For the three-month period ended January 31, 2025, the Company incurred a net loss of $98,351 resulting from management and consulting fees of $54,500 due to the day-to-day management activities of the Company, Salaries and wages of $16,568 due to a consulting switching to employee during the period, $5,580 of general and administrative expenses due to rent, exploration and evaluation expenses of $4,376 due to work performed on various properties, travel expenses of $8,970 for various meetings, and $3,509 of filing fees due to the cost of the transfer agent. In addition, the Company spent $4,701 on professional fees for legal fees on general corporate matters.
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 $200,844 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.
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 April 30, 2025 and October 31, 2024 the Company has no material decommissioning and restoration provision
NEW ACCOUNTING PRONOUNCEMENTS
The Company has not applied the following amendments to standards that have been issued but are not yet effective:
The Company did not adopt any new accounting standard changes or amendments in the current year that had a material impact on the Company's financial statements.
The Company has not yet begun the process of assessing the impact of other new and amended standards that are effective for annual periods beginning on or after October 31, 2024 will have on its financial statements or whether to early adopt any of the new requirements. The Company does not expect the impact of such changed on the financial statements to be material, although additional disclosure may be required.
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 April 30, 2025, the Company had a cash balance of $79,724 (October 31, 2024 - $4,807) to settle current liabilities of $493,929 (October 31, 2024 - $412,248). 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.
Market 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 April 30, 2025 and October 31, 2024, the Company did not have any investments in investment-grade short-term deposit certificates.
Price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to significant other price.
RELATED PARTY TRANSACTIONS
Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined the key personnel to be officers and directors of the Company.
Payments and accrual were made to the following officers and directors or to companies controlled by these officer and directors.
Management and consulting fees to the CEO and director of $30,000 (2024 – $60,000).
Management and consulting fees to the CFO and director of $9,000 (2024 - $9,000).
As at April 30, 2024, $249,130 (October 31, 2024 - $225,453) were owed to related parties.
Transactions with related parties are in the normal course of business and initially recorded at fair value.
SUBSEQUENT EVENTS
There are none.
OTHER INFORMATION
Outstanding share data:
| Issued and outstanding shares at April 30, 2025 | 19,507,045 |
|---|---|
| Outstanding warrants at April 30, 2025 | 2,637,955 |
| Outstanding stock options at April 30, 2025 | 1,000,000 |
| Fully diluted shares at April 30, 2025 and June 30, 2025 | 23,145,000 |
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, 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 precious 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.