Fury Gold Mines Ltd 6-K, filed May 17, 2021
Fury Gold Mines Ltd (FURY)
6-K
2021-05-17
For: 2021-05-14
View Original
Added on
April 10, 2026
About this 6-K
Fury Gold Mines Ltd filed this 6-K on May 17, 2021.
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May
2021
Commission
File No. 001-38145
Fury Gold Mines Limited
(Translation
of registrant’s name into English)
34 King Street East Suite 900, Toronto, M5C 2X8
Canada
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F
Form
20-F [ ] Form
40-F [X]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1) [
]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7) [
]
SUBMITTED HEREWITH
Exhibits
Condensed consolidated interim consolidated financial
statements for the three months ended March 31,
2021
Management’s Discussion & Analysis for the three
months ended March 31, 2021
CEO certification of interim filings
CFO certification of interim filings
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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Fury Gold Mines Limited
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Date: May 14, 2021
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By:
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/s/ Lynsey
Sherry
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Lynsey Sherry
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Chief Financial Officer
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(An
exploration and development company)
CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2021
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Fury Gold Mines Limited
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Condensed Interim Consolidated Statements of Financial
Position
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(Expressed in
thousands of Canadian dollars – Unaudited)
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At
March 31
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At December
31
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Note
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2021
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2020
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Assets
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Current
assets:
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Cash
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$10,215
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$15,361
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Marketable
securities
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4
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1,743
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2,675
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Amounts
receivable
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572
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827
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Prepaid expenses
and deposits
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989
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785
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13,519
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19,648
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Non-current
assets:
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Restricted
cash
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165
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165
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Prepaid expenses
and deposits
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243
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243
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Property and
equipment
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6
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1,494
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1,222
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Mineral property
interests
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5
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160,341
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160,772
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162,243
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162,402
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Total
assets
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$175,762
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$182,050
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Liabilities
and Equity
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Current
liabilities:
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Accounts payable
and accrued liabilities
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$2,354
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$3,280
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Flow-through share
premium liability
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7
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6,421
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7,644
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Advances received
for exploration
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316
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316
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Lease
liability
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6
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87
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55
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9,178
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11,295
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Non-current
liabilities:
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Lease
liability
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6
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436
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193
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Provision for site
reclamation and closure
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8
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3,872
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4,290
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Total
liabilities
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$13,486
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$15,778
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Equity:
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Share
capital
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10
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$294,727
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$294,710
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Share option and
warrant reserve
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11
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12,433
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11,521
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Deficit
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(144,884)
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(139,959)
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Total
equity
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$162,276
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$166,272
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Total liabilities and equity
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$175,762
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$182,050
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Subsequent events
(note 16)
Approved on behalf
of the Board of Directors:
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“Michael
Timmins”
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“Steve Cook”
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President
& Chief Executive Officer
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Director
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The
accompanying notes form an integral part of these condensed interim
consolidated financial statements.
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Fury Gold Mines Limited
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1
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Fury Gold Mines Limited
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Condensed Interim Consolidated Statements of Loss and Comprehensive
Loss
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(Expressed in
thousands of Canadian dollars, except per share amounts –
Unaudited)
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Three
months ended March 31
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Note
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2021
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2020
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Operating
expenses:
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Exploration and
evaluation costs
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9
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$3,688
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$379
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Fees, salaries and
other employee benefits
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11
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1,261
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400
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Insurance
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133
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81
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Legal and
professional fees
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917
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54
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Marketing and
investor relations
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592
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398
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Office and
administration
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200
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99
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Regulatory and
compliance costs
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117
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71
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6,908
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1,482
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Other
(income) expenses:
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Unrealized net loss
on marketable securities
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4
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932
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160
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Amortization of
flow-through share premium
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7
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(1,223)
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(7)
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Finance expense on
bridge loan
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-
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124
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Loss on bridge
loan
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15
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-
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159
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Accretion of
provision for site reclamation and closure
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8
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13
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9
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Interest expense on
lease liability
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6
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26
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-
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Interest and other
income
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(20)
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(32)
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Foreign exchange
loss (gain)
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6
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(6)
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(266)
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407
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Loss
from continuing operations before taxes
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6,642
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1,889
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Income tax
recovery
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2
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(1,717)
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(57)
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Loss
from continuing operations
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4,925
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1,832
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Loss
from discontinued operations
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3
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-
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883
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Loss
for the period
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$4,925
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$2,715
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Other
comprehensive income, net of tax
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Items that may be
reclassified subsequently to profit or loss:
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Unrealized currency
gain on translation of
foreign
operations
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-
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(385)
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Other comprehensive
income for the period
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-
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(385)
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Total
comprehensive loss for the period
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$4,925
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$2,330
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Loss
per share from continuing operations:
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Basic and diluted
loss per share
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14
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$0.04
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$0.03
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Loss
per share:
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Basic and diluted
loss per share
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14
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$0.04
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$0.04
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The
accompanying notes form an integral part of these condensed interim
consolidated financial statements.
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Fury Gold Mines Limited
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2
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Fury Gold Mines Limited
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Condensed Interim Consolidated Statements of Equity
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(Expressed in
thousands of Canadian dollars, except share amounts –
Unaudited)
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Number of common
shares(1)
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Share
capital
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Share option and
warrant reserve
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Accumulated
other comprehensive income
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Deficit
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Total
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Balance at December 31,
2019
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64,340,963
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$129,413
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$9,992
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$22
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$(102,604)
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$36,823
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Comprehensive loss for the
period
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-
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-
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-
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385
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(2,715)
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(2,330)
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Shares issued pursuant to offering,
net of share issue costs
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6,333,984
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14,771
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-
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-
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-
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14,771
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Share options
exercised
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50,672
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156
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(49)
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-
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-
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107
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Fair value of conversion feature,
net of tax
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-
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-
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154
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-
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-
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154
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Share-based
compensation
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-
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-
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320
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-
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-
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320
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Balance at March 31,
2020
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70,725,619
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$144,340
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$10,417
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$407
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$(105,319)
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$49,845
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Balance at December 31,
2020
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117,823,857
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$294,710
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$11,521
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$-
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$(139,959)
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$166,272
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Comprehensive loss for the
period
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-
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-
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-
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-
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(4,925)
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(4,925)
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Warrants exercised (note 10,
11)
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10,793
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17
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(1)
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-
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-
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16
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Share-based compensation (note
11)
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-
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-
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913
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-
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-
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913
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Balance at March
31, 2021
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117,834,650
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$294,727
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$12,433
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$-
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$(144,884)
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$162,276
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(1) Share information restated retroactively to reflect the
share consolidation on October 9, 2020 (note 2).
The
accompanying notes form an integral part of these condensed interim
consolidated financial statements.
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Fury Gold Mines Limited
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3
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Fury Gold Mines Limited
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Condensed Interim Consolidated Statements of Cash
Flows
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(Expressed in
thousands of Canadian dollars – Unaudited)
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Three
months ended March 31
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Note
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2021
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2020
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Operating
activities:
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Loss for the period
from continuing operations
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$(4,925)
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$(1,832)
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Adjusted
for:
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Interest
and other income
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(20)
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(32)
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Items not involving
cash:
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Unrealized net loss
on marketable securities
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4
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932
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160
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Depreciation
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90
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62
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Amortization of
flow-through share premium
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7
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(1,223)
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(7)
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Finance expense on
bridge loan
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15
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-
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124
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Loss on bridge
loan
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15
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-
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159
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Accretion of
provision for site reclamation and closure
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8
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13
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9
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Share-based
compensation
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11
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913
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219
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Other
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26
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(54)
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Changes in non-cash
working capital
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13
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334
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(529)
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Cash used in
operating activities, continuing operations
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(3,860)
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(1,721)
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Cash used in
operating activities, discontinued operations
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-
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(775)
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Investing
activities:
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Interest
received
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20
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32
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Acquisition of
Eastmain, net of cash acquired
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(1,209)
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-
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Plant and equipment
additions
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(69)
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-
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Cash (used in)
provided by investing activities, continuing
operations
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(1,258)
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32
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Cash used in
investing activities, discontinued operations
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-
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(1)
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Financing
activities:
|
|
|
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Proceeds from
issuance of common shares,
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net of cash share
issuance costs
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-
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14,903
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Transaction costs
on loan amendment
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-
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(5)
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Lease
payments
|
6
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(44)
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-
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Proceeds from share
option and warrant exercises
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16
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107
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Cash (used in)
provided by financing activities, continuing
operations
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(28)
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15,005
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Effect of foreign
exchange rate changes on cash
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-
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8
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(Decrease)
increase in cash
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(5,146)
|
12,548
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Cash, beginning of
the period
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15,361
|
660
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Cash, end of the period
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$10,215
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$13,208
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Supplemental
cash flow information (note 13)
The
accompanying notes form an integral part of these condensed interim
consolidated financial statements.
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Fury Gold Mines Limited
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4
Note 1:
Nature of operations
Fury Gold Mines Limited (the
“Company” or “Fury Gold”) is a
Canadian-focused exploration and development company, positioned in
three prolific gold mining regions. The Company’s principal
business activity is the acquisition, exploration, and development
of resource properties in Canada. At March 31, 2021, the Company
had three principal projects: Eau Claire in Québec, Homestake
Ridge in British Columbia, and Committee Bay in Nunavut. The Eau
Claire project is viewed as the Company’s lead
asset.
The
Company was incorporated on June 9, 2008, under the Business Corporations Act (British
Columbia) and is listed on the Toronto Stock Exchange and the
NYSE-American, with its common shares trading under the symbol
FURY. The registered office is 595 Burrard Street, Suite 2600,
Vancouver, British Columbia (“BC”), V7X 1L3, and the
mailing address is 34 King Street East, Suite 900, Toronto, Ontario
(“ON”), M5C 2X8.
Acquisition of
Eastmain and transfer of Peruvian exploration
properties
On
October 9, 2020, the Company acquired Eastmain Resources Inc.
(“Eastmain”), including Eastmain’s principal
asset, the 100%-owned Eau Claire gold project located in James Bay,
Québec. Prior to October 9, 2020, the Company, formerly Auryn
Resources Inc. (“Auryn”), also held secured rights to
various mining concessions in southern Peru which included the
Sombrero, Curibaya, and Huilacollo projects. These projects were
transferred to two new companies, Tier One Silver Inc. and Sombrero
Resources Inc. (collectively, the “Spincos”), as part
of the arrangement agreement to acquire Eastmain (note
3).
Response to
COVID-19
The
situation in Canada regarding COVID-19 remains fluid and permitted
activities are subject to change. The Company is continually
monitoring the situation, along with provincial and government
guidelines, and allowing work to be undertaken once it is confident
that it is safe for its employees and stakeholders to do so.
The Company continues to have full access to its properties in
Canada and measures have been taken to enhance the safety of
employees and contractors at all active sites, including COVID-19
screening of all on-site employees. At the Company’s Eau
Claire project, the community vaccination program already underway
in northern Québec was made available in February 2021 to any
persons working in the area and, as of March 2021, all on-site
employees have received their first dose of the two-dose Moderna
COVID-19 vaccine. The Company’s corporate offices remain
closed, and all employees continue to work remotely.
Note 2:
Basis of presentation
Statement of compliance
These
unaudited condensed interim consolidated financial statements (the
“interim financial statements”) have been prepared in
accordance with International Accounting Standard 34 –
Interim Financial Reporting
(“IAS 34”) as issued by the International Accounting
Standards Board (“IASB”). Certain disclosures included
in the Company’s annual consolidated financial statements
(the “consolidated financial statements”) prepared in
accordance with International Financial Reporting Standards
(“IFRS”) as issued by the IASB and interpretations
issued by the IFRS Interpretations Committee (“IFRICs”)
have been condensed or omitted herein. Accordingly, these interim
financial statements should be read in conjunction with the
Company’s consolidated financial statements for the year
ended December 31, 2020.
These
interim financial statements were approved and authorized for
issuance by the Board of Directors of the Company on May 13,
2021.
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Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
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5
Basis of preparation and consolidation
These
interim financial statements incorporate the financial statements
of the Company and entities controlled by the Company (its
subsidiaries). Control exists when the Company has power over an
investee, exposure or rights to variable returns from its
involvement with the investee, and the ability to use its power
over the investee to affect the amount of the Company’s
returns. The Company’s interim results are not necessarily
indicative of its results for a full year.
The
principal subsidiaries of the Company at March 31, 2021 were as
follows:
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Subsidiary
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Place
of incorporation
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Functional
currency
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Beneficial
interest
|
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North
Country Gold Corp. (“North Country”)
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BC,
Canada
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CAD
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100%
|
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Homestake
Resource Corporation (“Homestake”)
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BC,
Canada
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CAD
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100%
|
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Eastmain
Resources Inc. (“Eastmain”)
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ON,
Canada
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CAD
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100%
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Eastmain
Mines Inc. (“Eastmain Mines”) (1)
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Canada
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CAD
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100%
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Homestake
Royalty Corporation (inactive)
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BC,
Canada
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CAD
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100%
|
(1) Company incorporated federally in Canada.
These
interim financial statements have been prepared on a historical
cost basis except for certain financial instruments that have been
measured at fair value (note 15). All amounts are expressed in
thousands of Canadian dollars unless otherwise noted. Reference to
US$ are to United States dollars. All intercompany balances and
transactions have been eliminated.
Share
consolidation
On
October 9, 2020, pursuant to the acquisition of Eastmain, the
Company consolidated the 112,340,434 common shares outstanding as
of that date to 75,900,000 common shares and the exercise price of
share options issued prior to that date were adjusted downwards by
$0.95 to reflect the fair value of the Peruvian projects allocated
to the Spincos (note 3). As such, all share and per share data
presented in these interim financial statements have been
retroactively adjusted to reflect the share consolidation unless
otherwise noted.
Critical accounting estimates, judgements, and
policies
The
preparation of financial statements in accordance with IFRS
requires management to select accounting policies and make
estimates and judgments that may have a significant impact on
consolidated financial statements. Estimates are continuously
evaluated and are based on management’s experience and
expectations of future events that are believed to be reasonable
under the circumstances. Actual outcomes may differ from these
estimates.
In
preparing the Company’s interim financial statements for the
three months ended March 31, 2021, the Company applied the critical
accounting judgements and estimates and accounting policies
disclosed in notes 2 and 3, respectively, of its consolidated
financial statements for the year ended December 31, 2020, except
as noted below:
Credit on duties refundable for loss and refundable tax credits for
resource investment
The
Company is entitled to a refundable credit on duties of 16% for
eligible losses under the Québec Mining Duties Act and a
refundable resource investment tax credit of 31% under the
Québec Income Tax Act. These credits are applicable to
qualified exploration expenditures on properties located within the
province of Québec. Application for these credits is subject
to verification and, as such, they are recognized only when they
are received or when a notice of assessment confirming the amount
to be paid is issued. During the three months ended March 31, 2021,
the Company received a refund of $1,717, consisting of $1,670
principal and $47 interest.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
6
New and amended
standards not yet effective
Certain
pronouncements have been issued by the IASB that are mandatory for
accounting periods beginning after December 31, 2021. The Company
has not early adopted any of these pronouncements, and they are not
expected to have a significant impact in the foreseeable future on
the Company's consolidated financial statements once
adopted.
Segmented information
The
Company’s operating segments are reviewed by the key decision
maker to make decisions about resources to be allocated to the
segments and to assess their performance. The Company operates in
one reportable operating segment, being the acquisition,
exploration, and development of mineral resource properties, and in
one geographical location, Canada.
Prior
to October 9, 2020, the Company also held secured rights to various
mining concessions in southern Peru. These projects were
transferred to the Spincos as part of the arrangement agreement to
acquire Eastmain (note 3).
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
7
Note 3:
Acquisition of Eastmain and transfer of Peruvian
properties
Acquisition of Eastmain
On
October 9, 2020, the Company acquired Eastmain including its
principal asset, the 100%-owned Eau Claire gold project located in
James Bay, Québec, by issuing 34,100,000 shares of the Company
to the Eastmain shareholders with a total fair value of $124,169.
Acquisition costs of $3,029 and the expense of $3,450 arising from
1,570,754 share options and 1,297,591 warrants issued to former
Eastmain share option and warrant holders were included in the
total purchase price. The key net assets acquired included
marketable securities ($1,662) and mineral property interests in
Québec ($125,606), offset by accounts payable and accrued
liabilities ($1,203) and a provision for site reclamation and
closure ($1,849).
The
Eastmain purchase price of $124,169 was calculated on the basis of
the market capitalization of Auryn on October 9, 2020, adjusted for
the fair value of the Peruvian assets distributed to the Spincos as
of that date. The fair value of the Peruvian assets was determined
through a valuation assessment undertaken by an independent
specialist. Calculation of the fair value required application of
significant judgment with regards to the determination of the
probability of economic recoverability (see note 3i of the
Company’s consolidated financial statements for the year
ended December 31, 2020).
Spin off of Peruvian exploration projects
In
2020, the Company accounted for the transfer of the Peruvian
exploration projects to the Spincos as a common control transaction
based on the carrying value of the investments in the Peruvian
subsidiaries and certain intercompany loans held by Fury Gold at
the transaction date. This transfer is presented as a discontinued
operation in these interim financial statements and comparative
figures for the three months ended March 31, 2020 have been
restated, where applicable.
The
loss from the discontinued operations for the three months ended
March 31, 2020 was as follows:
|
|
Three months
ended
March 31,
2020
|
|
Operating
expenses:
|
|
|
Exploration and
evaluation costs (note 9)
|
$712
|
|
Fees, salaries and
other employee benefits
|
54
|
|
Legal and
professional fees
|
22
|
|
Office and
administration
|
52
|
|
|
840
|
|
Other
expenses:
|
|
|
Project
investigation costs
|
36
|
|
Foreign exchange
loss
|
7
|
|
|
43
|
|
Loss from
discontinued operations
|
$883
|
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
8
Note 4:
Marketable securities
The
marketable securities held by the Company were as
follows:
|
|
Total
|
|
Balance at December
31, 2019
|
$346
|
|
Additions
(1)
|
1,764
|
|
Unrealized net gain
(1)
|
565
|
|
Balance at December
31, 2020
|
$2,675
|
|
Unrealized net
loss
|
(932)
|
|
Balance
at March 31, 2021
|
$1,743
|
(1) As part of the acquisition of Eastmain on October 9,
2020, the Company acquired certain shares and warrants in publicly
traded entities valued at $1,662 (note 3). The change in fair value
for the acquired securities recognized during the year ended
December 31, 2020 was calculated for the period from acquisition
date of October 9, 2020 to December 31, 2020 and is included in
unrealized net gain.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
9
Note 5:
Mineral property interests
The
Company’s principal resource properties are located in Canada
and prior to October 9, 2020, in Peru (note 3).
Québec
Pursuant
to the acquisition of Eastmain in October 2020, the Company
acquired interests in 12 properties within the James Bay region of
Québec (note 3). The principal projects acquired
were:
Eau
Claire
The
Company owns a 100% interest in the Eau Claire project located
immediately north of the Eastmain reservoir, approximately 10
kilometres (“km”) northeast of Hydro
Québec’s EM-1 hydroelectric power facility, 80 km north
of the town of Nemaska, 320 km northeast of the town of Matagami,
and 800 km north of Montreal, in the Eeyou Istchee James Bay region
of Québec. The property consists of map-designated claims
totaling approximately 233 square kilometres (“km2”).
Eastmain
Mine
The
Eastmain Mine project hosts the Eastmain Mine gold deposit. The
past-producing Eastmain Mine project comprises 152 mineral claims
and an industrial lease. Located on the eastern most part of the
Upper Eastmain River Greenstone Belt of the James Bay region of
northern Québec, the property covers approximately 80
km2 of
highly prospective terrain.
In
2019, Benz Mining Corp. (“Benz Mining”) entered into an
option agreement with Eastmain to allow Benz Mining the option to
earn a 75% interest in the Eastmain Mine property in return for
making option payments of $2,320 between October 2019 and October
2023, and incurring exploration expenditures of $3,500 on the
property. The option payments may be settled in both cash and
shares. Upon completion of the first option to earn 75%, Benz
Mining may acquire the remaining 25% interest upon payment of
$1,000. This option agreement was subsequently amended in April
2020 to grant Benz Mining the option to earn up to 75% of the Ruby
Hill properties located to the west of the Eastmain Mine project.
In October 2020, the Company received option payments from Benz
Mining totaling $150 in cash and Benz Mining shares with a fair
value upon receipt of $102. These option payments are due annually
in October.
Éléonore
South Joint Venture
The
Éléonore South Joint Venture project consists of two
separate blocks of map-designated claims, comprising a total of 282
claims covering approximately 147 km2 of the Opinaca area
of James Bay, Québec. The Éléonore West block
consists of 34 mineral claims covering approximately 18
km2, while
the Éléonore South block contains 248 claims extending
over an area of approximately 130 km2. The project is a
three-way joint venture agreement between Eastmain, Azimut
Exploration Inc. (“Azimut”), and Goldcorp Canada Ltd.
(“Goldcorp Canada”), a wholly owned subsidiary of
Newmont Corporation. Project ownership is based on participation in
the funding of annual exploration programs. As such, the project is
held by the joint operation partners approximately as follows: Fury
Gold 36.7%, Goldcorp Canada 36.7%, and Azimut 26.6%. The Company is
currently designated as operator.
Nunavut
Committee
Bay
The
Company, through its wholly owned subsidiary North Country, owns a
100% interest in the Committee Bay project located in Nunavut,
Canada. The Committee Bay project includes approximately 280,000
hectares situated along the Committee Bay Greenstone Belt located
within the Western Churchill province of Nunavut. The Committee Bay
project is subject to a 1% Net Smelter Royalty (“NSR”)
on gold production, with certain portions subject to an additional
1.5% NSR. The 1.5% NSR is payable on only 7,596 hectares and can be
purchased by the Company within two years of commencement of
commercial production for $2,000 for each one-third (0.5%) of the
1.5% NSR.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
10
Gibson
MacQuoid
In
2017, the Company acquired a number of prospecting permits and
mineral claims along the Gibson MacQuoid Greenstone Belt in
Nunavut, Canada. In 2019, the Company staked additional claims,
which overlapped the Company’s prospecting claims that
expired in February 2020, to maintain a contiguous land package
over the Company’s current areas of interest. The
Company’s claims, which are located between the Meliadine
deposit and Meadowbank mine, cover approximately 120 km of strike
length of the prospective greenstone belt and total 51,622 hectares
collectively.
British Columbia
Homestake
Ridge
The
Company, through its wholly owned subsidiary Homestake, owns a 100%
interest in the Homestake Ridge project subject to various royalty
interests held by third parties not exceeding 2%. The project
covers approximately 7,500 hectares and is located in the
Iskut-Stewart-Kisault gold belt in northwestern British
Columbia.
Costs capitalized as mineral property interests
The
following is a continuity of the Company’s mineral property
acquisition costs:
|
|
Québec
|
Nunavut
|
British
Columbia
|
Peru(1)
|
Total
|
|
Balance at December
31, 2019
|
$-
|
$19,085
|
$16,060
|
$4,569
|
$39,714
|
|
Additions
|
-
|
-
|
-
|
4,246
|
4,246
|
|
Eastmain
acquisition, mineral property interests acquired
|
125,606
|
-
|
-
|
-
|
125,606
|
|
Option payment
received (2)
|
(252)
|
-
|
-
|
-
|
(252)
|
|
Dispositions (note
3)
|
-
|
-
|
-
|
(8,949)
|
(8,949)
|
|
Change in estimate
of provision for site reclamation and closure (note 8)
|
-
|
273
|
-
|
-
|
273
|
|
Currency
translation adjustment
|
-
|
-
|
-
|
134
|
134
|
|
Balance at December
31, 2020
|
$125,354
|
$19,358
|
$16,060
|
$-
|
$160,772
|
|
Change in estimate
of provision for site reclamation and closure (note 8)
|
(202)
|
(229)
|
-
|
-
|
(431)
|
|
Balance
at March 31, 2021
|
$125,152
|
$19,129
|
$16,060
|
$-
|
$160,341
|
(1) Peruvian operations were spun out to the Spincos as part
of the Eastmain acquisition on October 9, 2020 and are disclosed as
discontinued operations in these interim financial statements (note
3).
(2) During the fourth quarter of 2020, the Company received
an option payment comprising $150 cash and 124,177 shares in Benz
Mining with a fair value upon date of receipt of $102 for the Ruby
Hill property.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
11
Note 6:
Leases and right-of use assets
On
October 9, 2020, as part of the Eastmain acquisition, the Company
acquired a right-of-use asset (“ROU asset”) for a
5-year lease of office space that commenced on April 1, 2019. At
the date of the acquisition, the ROU asset and corresponding lease
liability were measured at fair value as part of the purchase price
allocation (note 3).
Effective
January 1, 2021, the Company amended the lease agreement, expanding
the floor space and extending the term of the current lease by one
year. The amendment was accounted for as a separate lease liability
and additional ROU asset, with the original lease and ROU asset
remaining unchanged. The new ROU asset was measured at the fair
value of the lease liability at inception of the lease amendment
and will be depreciated over the new lease term of 4.33 years on a
straight-line basis. The new lease liability reflects the present
value of the additional square footage, discounted over the new
lease term at an interest rate of 10%, which approximates the
Company’s incremental borrowing rate.
The
Company’s ROU assets, recorded in property and equipment, and
the corresponding lease liabilities were as follows:
|
|
ROU
Assets
|
Lease
Liabilities
|
|
Balance at December
31, 2020
|
$219
|
$248
|
|
Additions
|
293
|
293
|
|
Depreciation
|
(33)
|
-
|
|
Interest
expense
|
-
|
26
|
|
Lease
payments
|
-
|
(44)
|
|
Balance
at March 31, 2021
|
$479
|
$523
|
|
|
ROU
Asset
|
Lease
Liability
|
|
Balance at December
31, 2019
|
$-
|
$-
|
|
Additions
|
236
|
259
|
|
Depreciation
|
(17)
|
-
|
|
Interest
expense
|
-
|
14
|
|
Lease
payments
|
-
|
(25)
|
|
Balance at December
31, 2020
|
$219
|
$248
|
|
|
March
31
2021
|
December
31
2020
|
|
Lease
liabilities classified as:
|
|
|
|
Current
|
$87
|
$55
|
|
Non-current
|
436
|
193
|
|
|
$523
|
$248
|
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
12
Note 7:
Flow-through share premium liability
Flow-through
shares are issued at a premium, calculated as the difference
between the price of a flow-through share and the price of a common
share at that date. Tax deductions generated by eligible
expenditures are passed through to the shareholders of the
flow-through shares once the eligible expenditures are incurred and
renounced. In July 2020, in response to the economic impact of
COVID-19, the Government of Canada extended the timelines for
eligible expenditures from 24 to 36 months.
As a
result of the acquisition of Eastmain in October 2020 (note 3), the
Company assumed a flow-through share premium liability of $590,
representing the remaining expenditures to be incurred on the
Québec projects before December 31, 2022, and which was
renounced to investors in December 2020. This obligation was
extinguished during the three months ended March 31,
2021.
In
September 2020, the Company completed an equity financing by
raising $23 million through the issuance of 7,750,000 subscription
receipts (the “September 2020 Offering”); gross
proceeds were held in escrow until the completion of the
acquisition on October 9, 2020. Out of the subscription receipts
sold, 5,000,000 were flow-through receipts for gross proceeds of
$17.5 million and were exchanged for Fury Gold common shares
designated as flow-through shares, while 2,750,000 subscription
receipts were sold as non-flow-through for gross proceeds of $5.5
million and exchanged for Fury Gold common shares. The flow-through
proceeds will be used for mineral exploration in Québec. The
Company is committed to incur the remaining exploration
expenditures of $14,984 (December 31, 2020 – $17,500) before
December 31, 2022, which was renounced to investors in December
2020.
The
flow-through share funding and expenditures, along with the
corresponding impact on the flow-through share premium liability,
were as follows:
|
|
Flow-through
funding and expenditures
|
Flow-through
|
|||
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
premium
liability
|
|
Balance at December
31, 2019
|
$-
|
$24
|
$-
|
$24
|
$7
|
|
Flow-through
liability assumed
|
2,391
|
-
|
-
|
2,391
|
590
|
|
Flow-through funds
raised
|
17,500
|
-
|
-
|
17,500
|
7,500
|
|
Flow-through
eligible expenditures
|
(1,812)
|
(24)
|
-
|
(1,836)
|
(453)
|
|
Balance at December
31, 2020
|
$18,079
|
$-
|
$-
|
$18,079
|
$7,644
|
|
Flow-through
eligible expenditures
|
(3,095)
|
-
|
-
|
(3,095)
|
(1,223)
|
|
Balance
at March 31, 2021
|
$14,984
|
$-
|
$-
|
$14,984
|
$6,421
|
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
13
Note 8:
Provision for site reclamation and closure
The
Company recognizes a provision for site reclamation and closure,
which reflects the present value of the estimated amount of cash
flows required to satisfy the asset retirement obligation in
respect of the Committee Bay project and Québec properties.
The components of this obligation are the removal of equipment
currently being used at the site as well as costs associated with
the reclamation of the camp housing and work sites on the property.
The estimate of future asset retirement obligations is subject to
change based on amendments to applicable laws, management’s
intentions, and mining lease renewals.
The key
assumptions used to calculate the present value of the future
estimated cash flows of the Company’s projects are as
follows:
■
Undiscounted cash
flow obligation for site reclamation of $5,060 (December 31, 2020
– $5,060);
■
Expected timing of
future cash flows is based on mining leases expiration, which is
between the years 2026 and 2041;
■
Annual inflation
rate of 2% (December 31, 2020 – 2%); and
■
Risk-free interest
rate of 1.97% (December 31, 2020 – 1.21%).
The
present value of the liability for the site reclamation and closure
provision for the Company’s projects was as
follows:
|
|
Québec
|
Nunavut
|
Total
|
|
Balance at December
31, 2019
|
$-
|
$2,134
|
$2,134
|
|
Provision, assumed
on acquisition of Eastmain (note 3)
|
1,849
|
-
|
1,849
|
|
Accretion
|
5
|
29
|
34
|
|
Change in
estimate
|
-
|
273
|
273
|
|
Balance at December
31, 2020
|
$1,854
|
$2,436
|
$4,290
|
|
Accretion
|
5
|
8
|
13
|
|
Change in
estimate
|
(202)
|
(229)
|
(431)
|
|
Balance at March 31, 2021
|
$1,657
|
$2,215
|
$3,872
|
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
14
Note 9:
Exploration and evaluation costs
For the
three months ended March 31, 2021 and 2020, the Company’s
exploration and evaluation costs were as follows:
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
Peru(1)
|
|
Assaying
|
$378
|
$30
|
$14
|
$422
|
$-
|
|
Exploration
drilling
|
1,272
|
-
|
-
|
1,272
|
-
|
|
Camp cost,
equipment and
field
supplies
|
375
|
59
|
3
|
437
|
-
|
|
Geological
consulting services
|
176
|
34
|
2
|
212
|
-
|
|
Geophysical
analysis
|
149
|
-
|
-
|
149
|
-
|
|
Permitting,
environmental and community costs
|
95
|
34
|
13
|
142
|
-
|
|
Expediting and
mobilization
|
7
|
-
|
-
|
7
|
-
|
|
Salaries and
wages
|
504
|
45
|
20
|
569
|
-
|
|
Fuel and
consumables
|
174
|
35
|
-
|
209
|
-
|
|
Aircraft and
travel
|
61
|
-
|
1
|
62
|
-
|
|
Share-based
compensation
|
160
|
34
|
13
|
207
|
-
|
|
Three months ended
March 31, 2021
|
$3,351
|
$271
|
$66
|
$3,688
|
$-
|
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
Peru(1)
|
|
Assaying
|
$-
|
$10
|
$2
|
$12
|
$4
|
|
Exploration
drilling
|
-
|
12
|
-
|
12
|
-
|
|
Camp cost,
equipment and
field
supplies
|
-
|
62
|
8
|
70
|
58
|
|
Geological
consulting services
|
-
|
-
|
104
|
104
|
67
|
|
Permitting,
environmental and community costs
|
-
|
5
|
7
|
12
|
250
|
|
Expediting and
mobilization
|
-
|
5
|
-
|
5
|
5
|
|
Salaries and
wages
|
-
|
89
|
41
|
130
|
196
|
|
Fuel and
consumables
|
-
|
-
|
-
|
-
|
2
|
|
Aircraft and
travel
|
-
|
-
|
2
|
2
|
35
|
|
Share-based
compensation
|
-
|
21
|
11
|
32
|
95
|
|
Three months
ended
March 31,
2020
|
$-
|
$204
|
$175
|
$379
|
$712
|
(1) Peruvian
operations were spun out to the Spincos as part of the Eastmain
acquisition on October 9, 2020 and are disclosed as discontinued
operations in these interim financial statements (note
3).
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
15
Note 10:
Share capital
Authorized
Unlimited
common shares without par value.
Unlimited
preferred shares – nil issued and outstanding.
Share issuances
Three months ended
March 31, 2021:
i.
The Company did not
have any new share issuances during the three months ended March
31, 2021.
ii.
During the three
months ended March 31, 2021, 10,793 shares were issued as a result
of share warrants being exercised with a weighted average exercise
price of $1.46 for gross proceeds of $16. An amount of $1
attributed to the fair value of these share warrants was
transferred from the equity reserves and recorded against share
capital.
Three months ended
March 31, 2020:
i.
On February 6,
2020, the Company closed the “February 2020 Offering”,
a non-brokered private equity placement, for gross proceeds of $15
million which was closed in two tranches and consisted of 6,333,984
(9,375,000 pre-consolidation) common shares priced at $2.37 ($1.60
pre-consolidation) per share.
Share
issue costs related to the February 2020 Offering totaled $229 as
at March 31, 2020 and included $59 in commissions and $170 in other
issuance costs. A reconciliation of the impact of the February 2020
Offering on share capital was as follows:
|
|
Number of common
shares
|
Impact
on
share
capital
|
|
Common shares
issued at $2.37 per share
|
6,333,984
|
$15,000
|
|
Cash share issue
costs
|
-
|
(229)
|
|
Proceeds, net of
share issue costs
|
6,333,984
|
$14,771
|
ii.
During the three
months ended March 31, 2020, 50,672 shares (75,000
pre-consolidation) were issued as a result of share options being
exercised with a weighted average exercise price of $2.11 ($1.42
pre-consolidation) for gross proceeds of $107. An amount of $49
attributed to these share options was transferred from the equity
reserves and recorded against share capital.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
16
Note 11:
Share option and warrant reserves
Share-based compensation expense
The
Company uses the fair value method of accounting for all
share-based payments to directors, officers, employees, and other
service providers. During the three months ended March 31, 2021 and
2020, no share options or warrants were granted to directors,
officers, employees, and other service providers, and the
share-based compensation expense was as follows:
|
|
Three months
ended March 31
|
|
|
|
2021
|
2020
|
|
Recognized in net
loss from continuing operations and included in:
|
|
|
|
Exploration and
evaluation costs
|
$207
|
$32
|
|
Fees, salaries and
other employee benefits
|
706
|
187
|
|
|
913
|
219
|
|
Recognized in net
loss from discontinued operations
|
-
|
101
|
|
Total share-based compensation expense
|
$913
|
$320
|
Share option plan
The
Company maintains a rolling share option plan providing for the
issuance of share options up to 10% of the Company’s issued
and outstanding common shares at the time of the grant. The Company
may grant share options from time to time to its directors,
officers, employees, and other service providers. The share options
vest as to 25% on the date of the grant and 12.5% every three
months thereafter for a total vesting period of 18
months.
The
number of share options issued and outstanding and the weighted
average exercise price were as follows:
|
|
Number
of
share
options
|
Weighted
average
exercise
price
($/option)(1)
|
|
Outstanding,
December 31, 2019
|
5,602,619
|
$2.96
|
|
Granted
(2)
|
5,857,459
|
2.42
|
|
Exercised
|
(3,228,182)
|
2.42
|
|
Expired
|
(20,272)
|
2.90
|
|
Forfeited
|
(70,620)
|
2.61
|
|
Outstanding,
December 31, 2020
|
8,141,004
|
$2.67
|
|
Expired
|
(45,151)
|
2.64
|
|
Outstanding, March 31, 2021
|
8,095,853
|
$2.50
|
(1) The exercise price of issued share options prior to
October 9, 2020 were adjusted downwards by $0.95, pursuant to the
acquisition of Eastmain, reflecting the fair value of the Peruvian
projects allocated to the Spincos (note 3). The above weighted
average exercise prices were retrospectively adjusted to reflect
this change.
(2) As part of the acquisition, Eastmain’s 14.3
million share options outstanding at October 9, 2020 were converted
to approximately 1.6 million of Fury Gold share options for a value
of $1,890 (note 3).
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
17
As at
March 31, 2021, the number of share options outstanding was as
follows:
|
|
Options
outstanding
|
Options
exercisable
|
||||
|
Exercise
price
($/option)
|
Number of
shares
|
Weighted average
exercise price ($/option)
|
Weighted average
remaining life (years)
|
Number of
shares
|
Weighted average
exercise price ($/option)
|
Weighted average
remaining life (years)
|
|
$0.56 –
$1.95
|
1,585,239
|
1.53
|
3.35
|
1,448,755
|
1.50
|
3.24
|
|
$2.05 –
$5.31
|
6,274,331
|
2.50
|
3.17
|
3,808,706
|
2.79
|
2.27
|
|
$7.54 –
$9.86
|
207,113
|
8.60
|
0.81
|
207,113
|
8.60
|
0.81
|
|
$12.94
|
29,170
|
12.94
|
0.07
|
29,170
|
12.94
|
0.07
|
|
|
8,095,853
|
2.50
|
3.13
|
5,493,744
|
2.72
|
2.46
|
Share purchase warrants
The
number of share purchase warrants outstanding at March 31, 2021 was
as follows:
|
|
Warrants
outstanding
|
Exercise
price ($/share)
|
|
Outstanding at
December 31, 2019
|
337,813
|
$2.96
|
|
Issued (1)
|
1,297,591
|
1.33
|
|
Exercised
|
(8,664)
|
1.46
|
|
Outstanding at
December 31, 2020
|
1,626,740
|
$1.66
|
|
Exercised
|
(10,793)
|
1.46
|
|
Outstanding
at March 31, 2021
|
1,615,947
|
$1.67
|
(1) As part of the acquisition of Eastmain in October 2020,
11.1 million warrants were converted to approximately 1.3 million
of Fury Gold warrants for a value of $1,560 (note 3).
The
following table reflects the warrants issued and outstanding as of
March 31, 2021:
|
Expiry
date
|
Warrants
outstanding
|
Exercise price
($/share)
|
|
May 8,
2021
|
530,951
|
1.46
|
|
October 24,
2021
|
334,993
|
1.37
|
|
March 6,
2022
|
189,613
|
1.11
|
|
March 9,
2022
|
222,577
|
1.11
|
|
September 12,
2022
|
337,813
|
2.96
|
|
Total
|
1,615,947
|
1.67
|
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
18
Note 12:
Related party balances and transactions
All
transactions with related parties have occurred in the normal
course of operations. All amounts are unsecured, non-interest
bearing, and have no specific terms of settlement, unless otherwise
noted.
Related parties
|
|
Three months
ended March 31
|
|
|
|
2021
|
2020
|
|
Universal Mineral Services
Ltd.(1)
|
|
|
|
Exploration and
evaluation costs:
|
|
|
|
Québec
|
$38
|
$-
|
|
Nunavut
|
5
|
60
|
|
British
Columbia
|
7
|
37
|
|
Peru
|
-
|
51
|
|
Fees, salaries and
other employee benefits
|
10
|
55
|
|
Legal and
professional fees
|
2
|
7
|
|
Marketing and
investor relations
|
23
|
37
|
|
Office and
administration
|
46
|
87
|
|
Project
investigation costs
|
-
|
4
|
|
Total transactions for the period
|
$131
|
$338
|
(1) Universal Mineral Services
Ltd. (“UMS”) is a private company with one director in
common, Mr. Ivan Bebek. UMS provides geological, financial, and
transactional advisory services as well as administrative services
to the Company on an ongoing, cost recovery basis. Having these
services available through UMS, on an as needed basis, allows the
Company to maintain a more efficient and cost-effective corporate
overhead structure by hiring fewer full-time employees and engaging
outside professional advisory firms less frequently. The agreement
has an indefinite term and can be terminated by either party upon
providing due notice.
The
outstanding balance owing at March 31, 2021, was $24 (December 31,
2020 – $109) which is included in accounts payable. In
addition, the Company had $150 on deposit with UMS as at March 31,
2021 (December 31, 2020 – $150) which is included in prepaid
expenses and deposits.
Key management personnel
Pursuant
to the acquisition of Eastmain and the creation of the Fury Gold in
October 2020, key management personnel was redefined by the Company
to include Fury Gold’s board of directors and certain
executive officers of the Company, including the Chief Executive
Officer and Chief Financial Officer.
The
remuneration of the Company’s directors and other key
management personnel was as
follows:
|
|
Three months
ended March 31
|
|
|
|
2021
|
2020
|
|
Short-term benefits
provided to executives (1)(2)
|
$317
|
$366
|
|
Directors’
fees paid to non-executive directors
|
52
|
36
|
|
Share-based
payments (2)
|
663
|
219
|
|
Total (3)
|
$1,032
|
$621
|
(1) Short-term employee
benefits include salaries, bonuses payable within twelve months of
the date of the condensed interim consolidated statement of
financial position, and other annual employee
benefits.
(2) As a result of the acquisition of Eastmain and the
formation of a new board of directors and management team, certain
former key management personnel of the Company were provided with
transition contracts to support the formation of Fury Gold. For the
three months ended March 31, 2021, $87 of short-term benefits
(October 9 to December 31, 2020 – $79) and $54 of share-based
payment expense (October 9 to December 31, 2020 – $283) were
recognized in the condensed interim consolidated statement of loss
and comprehensive loss in respect of these transition
arrangements.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
19
(3) The
renumeration for key management personnel for the three months
ended March 31, 2020 is comprised of those individuals who were key
management personnel as at March 31, 2020 and is the combined total
for both continuing operations and the discontinued operation of
the Peru properties transferred to the Spincos (note
3).
Note 13:
Supplemental cash flow information
The
impact of changes in non-cash working capital was as
follows:
|
|
Three months
ended March 31
|
|
|
|
2021
|
2020
|
|
Amounts
receivable
|
$255
|
$(16)
|
|
Prepaid expenses
and deposits
|
(204)
|
(158)
|
|
Accounts payable
and accrued liabilities
|
283
|
(355)
|
|
Change
in non-cash working capital
|
$334
|
$(529)
|
Operating
activities include the following cash received:
|
|
Three months
ended March 31
|
|
|
|
2021
|
2020
|
|
Income taxes
refunded (note 2)
|
$1,717
|
$-
|
Note 14:
Loss per share
For the
three months ended March 31, 2021 and 2020, the weighted average
number of shares outstanding and loss per share from continuing
operations were as follows:
|
|
Three months
ended March 31
|
|
|
|
2021
|
2020
|
|
Loss for the period
from continuing operations
|
$4,925
|
$1,832
|
|
Loss for the
period
|
4,925
|
2,715
|
|
Weighted average
number of shares outstanding
|
117,829,973
|
67,663,312
|
|
Basic and diluted
loss per share from continuing operations
|
$0.04
|
$0.03
|
|
Basic and diluted
loss per share
|
$0.04
|
$0.04
|
All of
the outstanding share options and share purchase warrants at March
31, 2021 and 2020 were anti-dilutive for the periods then ended as
the Company was in a loss position.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
20
Note 15:
Financial instruments
The
Company’s financial instruments as at March 31, 2021
consisted of cash, marketable securities, amounts receivable,
deposits, and accounts payable and accrued liabilities. The fair
values of these financial instruments approximate their carrying
values, unless otherwise noted.
Financial assets and liabilities by categories
|
|
At March 31,
2021
|
At December 31,
2020
|
||||
|
|
Amortized
Cost
|
FVTPL
|
Total
|
Amortized Cost
|
FVTPL
|
Total
|
|
Cash
|
$10,215
|
$-
|
$10,215
|
$15,361
|
$-
|
$15,361
|
|
Marketable
securities
|
-
|
1,743
|
1,743
|
-
|
2,675
|
2,675
|
|
Deposits
|
493
|
-
|
493
|
243
|
-
|
243
|
|
Total
financial assets
|
10,708
|
1,743
|
12,451
|
15,604
|
2,675
|
18,279
|
|
Accounts payable
and accrued liabilities
|
2,354
|
-
|
2,354
|
3,280
|
-
|
3,280
|
|
Total financial liabilities
|
$2,354
|
$-
|
$2,354
|
$3,280
|
$-
|
$3,280
|
Bridge
Loan
In
February 2020, the Company amended the original Bridge Loan
(“Amended Bridge Loan”) to provide mutual conversion
rights to the lender and the Company, and also reduce the annual
interest rate from 10% to 5% from the date of amendment. The
Amended Bridge Loan was identified as a compound instrument and the
Company used the residual method to determine the allocation of the
Amended Bridge Loan between the liability and equity component, by
first determining the fair value of the debt ($2,912), discounted
at an effective interest rate of 18%, and allocating the residual
value, net of deferred taxes, to the equity component ($154). The
loss on derecognition of the original Bridge Loan was
$159.
In July
2020, the Amended Bridge Loan was converted to 1,318,877 (1,952,084
pre-consolidation) common shares at a price of $2.37 ($1.60
pre-consolidation) per share for the $3 million principal loan and
the $123 of interest that accrued at a rate of 10% per annum up to
the date of the loan amendment. The balance of the interest on the
loan, that accrued at a rate of 5% per annum, was then settled in
cash to the lender. The loss on derecognition of the Amended Bridge
Loan was $65.
Financial assets and liabilities measured at fair
value
The
categories of the fair value hierarchy that reflect the
significance of inputs used in making fair value measurements are
as follows:
Level 1
– fair values based on unadjusted quoted prices in active
markets for identical assets or liabilities;
Level 2
– fair values based on inputs that are observable for the
asset or liability, either directly or indirectly; and
Level 3
– fair values based on inputs for the asset or liability that
are not based on observable market data.
The
Company’s policy to determine when a transfer occurs between
levels is to assess the impact at the date of the event or the
change in circumstances that could result in a transfer. No
transfers occurred between the levels during the
period.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
21
The
Company’s financial instruments measured at fair value on a
recurring basis were as follows:
|
|
At March 31,
2021
|
At
December 31, 2020
|
||
|
|
Level
1
|
Level 2(1)
|
Level 1
|
Level 2(1)
|
|
Cash
|
$10,215
|
$-
|
$15,361
|
$-
|
|
Marketable securities
|
1,422
|
321
|
2,165
|
510
|
(1) Marketable securities included in level 2 include
warrants that are valued using an option pricing model which
utilizes a combination of quoted prices and market-derived inputs,
including volatility estimates.
As at
March 31, 2021, there were no financial assets or financial
liabilities measured and recognized in the condensed interim
consolidated statement of financial position at fair value that
would be categorized as level 3 in the fair value
hierarchy.
Financial instruments and related risks
The
Company’s financial instruments are exposed to credit risk,
liquidity risk, and market risks, which include currency risk and
interest rate risk. As at March 31, 2021, the primary risks were as
follows:
Liquidity risk
Liquidity
risk is the risk that the Company will encounter difficulty in
meeting obligations associated with financial liabilities. The
Company proactively manages its capital resources and has in place
a budgeting and cash management process to help determine the funds
required to ensure the Company has the appropriate liquidity to
meet its current project development plans and achieve its growth
objectives. The Company ensures that there is sufficient liquidity
available to meet its short-term business requirements, taking into
account its anticipated cash outflows from exploration and
development activities, and its holdings of cash and marketable
securities. The Company monitors and adjusts, when required, these
exploration and development programs as well as corporate
administrative costs to ensure that adequate levels of working
capital are maintained.
As at
March 31, 2021, the Company had unrestricted cash of $10,215
(December 31, 2020 – $15,361), working capital of $4,341
(December 31, 2020 – working capital of $8,353), which the
Company defines as current assets less current liabilities, and an
accumulated deficit of $144,884 (December 31, 2020 –
$139,959). The Company notes that the flow-through share premium
liability, which reduced the Company’s working capital by
$6,421 (December 31, 2020 – $7,644), is not settled through
cash payment. Instead, the flow-through share premium liability
will be drawn down as the Company incurs exploration expenditures
for the Eau Claire project. During the three months ended March 31,
2021, Fury Gold incurred a loss of $4,925 (three months ended March
31, 2020 – $2,715) and expects to continue to incur operating
losses in relation to exploration activities. With no source of
operating cash flow, there is no assurance that sufficient funding
will be available to conduct further exploration and development of
its mineral properties.
The
Company’s contractual obligations are as
follows:
|
|
Within
1 year
|
2 to 3
years
|
Over 3
years
|
At March 31
2021
|
At December
31
2020
|
|
Accounts payable
and accrued liabilities
|
$2,354
|
$-
|
$-
|
$2,354
|
$3,280
|
|
Québec
flow-through expenditure requirements
|
-
|
14,984
|
-
|
14,984
|
18,079
|
|
Undiscounted lease
payments
|
180
|
371
|
206
|
757
|
762
|
|
Total
|
$2,534
|
$15,355
|
$206
|
$18,095
|
$22,121
|
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
22
Additionally,
the Company is obligated to pay in perpetuity an annual payment of
$50 pursuant to certain royalty arrangements on the Homestake Ridge
project. The Company also makes certain payments arising on mineral
claims and leases on an annual or bi-annual basis to ensure the
properties remain in good standing. In 2021, the Company estimates
expenditures of $470 in respect of these claims and leases at the
Company’s projects. Cash payments of $266 were made during
the first quarter of 2021 in respect of these mineral claims, with
$242 recognized in prepaid expenses as at March 31, 2021 (December
31, 2020 – $65).
Market risk
This is
the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices.
Significant market risks to which the Company is exposed are as
follows:
i.
Currency
risk
The
Company is exposed to currency risk by having balances and
transactions in currencies that are different from its functional
currency (the Canadian dollar). The Company’s foreign
currency exposure related to its financial assets and liabilities
held in US dollars was as follows:
|
|
At March
31
2021
|
At December 31
2020
|
|
Financial
assets
|
|
|
|
US$ bank
accounts
|
$205
|
$70
|
|
Financial
liabilities
|
|
|
|
Accounts
payable
|
(41)
|
(42)
|
|
|
$164
|
$(28)
|
A 10%
increase or decrease in the US dollar to Canadian dollar exchange
rate would not have a material impact on the Company’s net
loss.
ii.
Price
risk
The
Company holds certain investments in marketable securities (note 4)
which are measured at fair value, being the closing share price of
each equity security at the date of the condensed interim
consolidated statement of financial position. The Company is
exposed to changes in share prices which would result in gains and
losses being recognized in the loss for the period. A 10% increase
or decrease in the Company’s marketable securities’
share prices would not have a material impact on the
Company’s net loss.
Note 16:
Subsequent events
Prospectus
On
April 30, 2021, the Company filed a preliminary short form base
shelf prospectus (the “Prospectus”) with the securities
commissions in all provinces in Canada and the Securities and
Exchange Commission in the United States to maintain financial
flexibility as it advances its flagship projects in Canada. The
final Prospectus was filed on May 10, 2021. The Prospectus will
allow the Company to offer and issue up to $200 million of common
shares, subscription receipts, warrants, units, or any combination
of such securities during the 25-month period that the Prospectus
is effective.
|
Fury
Gold Mines Limited
Notes to Q1 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
23
(An
exploration and development company)
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2021
This Management’s Discussion and Analysis (the
“MD&A”) for Fury Gold Mines Limited (“Fury
Gold” or the “Company) should be read in conjunction
with the condensed interim consolidated financial statements of the
Company and related notes thereto for the three months ended March
31, 2021. The condensed interim consolidated financial statements
have been prepared in accordance with International Accounting
Standard 34 – Interim Financial
Reporting (“IAS
34”) of the International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting
Standards Board (“IASB”). All dollar amounts presented
are expressed in thousands of Canadian dollars unless otherwise
stated. Certain amounts presented in this MD&A have been
rounded. The effective date of this MD&A is May 13,
2021.
|
Section 1: Forward-looking statements and risk factors
|
2
|
|
|
1.1
|
Forward-looking statements
|
2
|
|
1.2
|
Qualified persons and technical disclosures
|
4
|
|
1.3
|
Impact of COVID-19
|
4
|
|
Section 2: Business overview
|
6
|
|
|
Section 3: Q1 2021 highlights and subsequent events
|
7
|
|
|
3.1
|
Corporate highlights
|
7
|
|
3.2
|
Operational highlights
|
7
|
|
Section 4: Corporate strategy
|
9
|
|
|
Section 5: Projects overview
|
12
|
|
|
5.1
|
Québec
|
12
|
|
5.1.1
|
Eau Claire
|
12
|
|
5.1.2
|
Éléonore South JV
|
14
|
|
5.2
|
Committee Bay and Gibson MacQuoid projects
|
16
|
|
5.2.1
|
Committee Bay
|
16
|
|
5.2.2
|
Gibson MacQuoid
|
17
|
|
5.3
|
Homestake Ridge project
|
18
|
|
Section 6: Review of quarterly financial information
|
19
|
|
|
Section 7: Financial position, liquidity, and capital
resources
|
21
|
|
|
Section 8: Financial risk summary
|
26
|
|
|
Section 9: Related party balances and transactions
|
27
|
|
|
Section 10: Critical judgments and accounting
estimates
|
28
|
|
|
Section 11: New accounting standards and policies
|
28
|
|
|
Section 12: Controls and procedures
|
28
|
|
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
1
1.1
Forward-looking statements
Certain statements made in this MD&A contain forward-looking
information within the meaning of applicable Canadian and United
States securities laws (“forward-looking statements”).
These forward-looking statements are presented for the purpose of
assisting the Company’s securityholders and prospective
investors in understanding management’s views regarding those
future outcomes and may not be appropriate for other purposes. When
used in this MD&A, the words “may”,
“would”, “could”, “will”,
“intend”, “plan”, “anticipate”,
“believe”, “seek”, “propose”,
“estimate”, “expect”, and similar
expressions, as they relate to the Company, are intended to
identify forward-looking statements. Specific forward-looking
statements in this MD&A include, but are not limited to:
issues relating to the COVID-19
pandemic, including its potential impacts on the Company’s
business and operations; future
capital expenditures and requirements, and sources and timing of
additional financing; the Company’s exploration and
development activities, including the success of such exploration
and development activities; the Company’s mineral reserves
and mineral resources; estimates of mineral reserves and mineral
resources; the realization of mineral resource and mineral reserve
estimates; any objectives, expectations, intentions, plans,
results, levels of activity, goals or achievements; the timing and
amount of estimated future production, production guidance and net
revenue expectations, anticipated cash flows, costs of production,
capital expenditures, costs and timing of development; realization
of unused tax benefits; statements relating to the financial
condition, assets, liabilities (contingent or otherwise), business,
operations or prospects of the Company; and other events or
conditions that may occur in the future.
The forward-looking statements
contained in this MD&A represent the Company’s views only
as of the date such statements were made. Forward-looking
statements contained in this MD&A are based on
management’s plans, estimates, projections, beliefs and
opinions as at the time such statements were made, and the
assumptions related to these plans, estimates, projections, beliefs
and opinions may change. Such assumptions, which may prove to be
incorrect, include: the Company’s budget, including expected
costs and the assumptions regarding market conditions and other
factors upon which the Company has based its expenditure
expectations; the Company’s ability to raise additional
capital to proceed with its exploration, development and operations
plans; the Company’s ability to obtain or renew the licences
and permits necessary for the operation and expansion of its
existing operations and for the development, construction and
commencement of new operations; that financial markets will not in
the long term be adversely impacted by the COVID-19 pandemic;
production and cost estimates; the Company’s ability to
obtain all necessary regulatory approvals, permits and licences for
its planned activities under governmental and other applicable
regulatory regimes; the Company’s ability to complete and
successfully integrate acquisitions; the effects of climate change,
extreme weather events, water scarcity, and seismic events, and the
effectiveness of strategies to deal with these issues; the
Company’s expectations regarding the demand for, and supply
and price of, precious metals; the Company’s ability to
recruit and retain qualified personnel; the Company’s mineral
reserve and resource estimates, and the assumptions upon which they
are based; the Company’s ability to comply with current and
future environmental, safety and other regulatory requirements and
to obtain and maintain required regulatory
approvals.
Inherent in the forward-looking statements are known and unknown
risks, uncertainties and other factors beyond the Company’s
ability to control or predict, that may cause the actual results,
performance or achievements of the Company, or developments in the
Company’s business or in its industry, to differ materially
from the anticipated results, performance, achievements or
developments expressed or implied by such forward-looking
statements. Some of the risks and other factors (some of which are
beyond the Company’s control) which could cause results to
differ materially from those expressed in the forward-looking
statements and information contained in this MD&A include, but
are not limited to, risks related to: COVID-19 and other pandemics; fluctuations in spot and forward markets for
silver, gold, base metals and certain other commodities (such as
natural gas, fuel oil and electricity); risks and hazards associated with the business of
mineral exploration, development and mining (including
environmental hazards, potential unintended releases of
contaminants, industrial accidents, unusual or unexpected
geological or structural formations, pressures, cave-ins and
flooding); the speculative
nature of mineral exploration and development; the estimation of
mineral reserves and mineral resources, including the realization
of mineral reserve estimates; the Company’s ability to obtain addition
funding; global financial conditions, including the market reaction
to COVID-19; competitive conditions in the exploration and mining
industry; environmental risks and
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
2
remediation measures, including evolving environmental regulations
and legislation; the Company’s mineral properties being
subject to prior unregistered agreements, transfers or claims and
other defects in title; the
effects of climate change, extreme weather events, water scarcity,
and seismic events, and the effectiveness of strategies to deal
with these issues; health and safety regulations and
legislation; changes in laws
and regulations; changes in
national and local government regulation of mining operations, tax
rules and regulations, and political and economic developments in
jurisdictions in which the Company operates; volatility in the
price of the Common Shares, and uncertainty and volatility related
to stock market prices and conditions; future dilution and
fluctuation in the price of the Common Shares; acquisitions,
partnerships and joint ventures; disputes as to the validity of mining or
exploration titles or claims or rights, which constitute most of
our property holdings; the Company’s limited business history
and history of losses, which may continue in the future; general
business, economic, competitive, political and social
uncertainties; and public health crises such as the COVID-19
pandemic and other uninsurable risks. This is not an exhaustive
list of the risks and other factors that may affect any of the
Company’s forward-looking statements. Readers should refer to
the risks discussed herein and in the Company’s Annual
Information Form (the “Annual Information Form”) for
the year ended December 31, 2020, subsequent disclosure filings
with the Canadian Securities Administrators, the Company’s
registration statement on Form 40-F for the year ended December 31,
2020, and subsequent disclosure filings with the United States
Securities and Exchange Commission (the “SEC”),
available on SEDAR at www.sedar.com and with the SEC at
www.sec.gov, as applicable.
Although the Company believes that the assumptions and expectations
reflected in those forward-looking statements were reasonable at
the time such statements were made, there can be no assurance that
such assumptions and expectations will prove to be correct. The
Company cannot guarantee future results, levels of activity,
performance or achievements and actual results or developments may
differ materially from those contemplated by the forward-looking
statements. The Company does not undertake to update any
forward-looking statements, except to the extent required by
applicable securities laws.
In addition, forward-looking financial information with respect to
potential outlook and future financial results contained in this
MD&A are based on assumptions about future events, including
economic conditions and proposed courses of action, based on
management’s reasonable assessment of the relevant
information available as at the date of such forward-looking
financial information. Readers are cautioned that any such
forward-looking financial information should not be used for
purposes other than for which it is disclosed.
Cautionary Note to United States Investors concerning Estimates of
Measured, Indicated, and Inferred Resource Estimates:
This MD&A, uses the terms “mineral reserve”,
“proven mineral reserve”, “probable mineral
reserve”, “mineral resource”, “measured
mineral resource”, “indicated mineral resource”
and “inferred mineral resource”, which are Canadian
mining terms as defined in, and required to be disclosed in
accordance with, National
Instrument 43-101 – Standards of Disclosure for Mineral Projects
(“NI 43-101”), which references the guidelines set out
in the Canadian Institute of
Mining, Metallurgy and
Petroleum (the “CIM”) – CIM Definition Standards
on mineral resources and
mineral reserves (“CIM
Definition Standards”), adopted by the CIM Council, as amended. However, these terms are
not defined terms under SEC Industry Guide 7 (“SEC Industry
Guide 7”) under the United States Securities Act of 1933, as
amended, and normally are not permitted to be used in reports and
registration statements filed with the SEC. The SEC has adopted
amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC under the United States Securities Exchange
Act of 1934, as amended. These amendments became effective February
25, 2019 (the “SEC Modernization Rules”) with
compliance required for the first fiscal year beginning on or after
January 1, 2021. The SEC Modernization Rules replace the historical
disclosure requirements for mining registrants that were included
in SEC Industry Guide 7. As a
foreign private issuer that files its annual report on Form 40-F
with the SEC pursuant to the multi-jurisdictional disclosure
system, the Company is not required to provide disclosure on its
mineral properties under the SEC Modernization Rules and will
continue to provide disclosure under NI 43-101 and the CIM
Definition Standards. If the Company ceases to be a foreign private
issuer or loses its eligibility to file its annual report on Form
40-F pursuant to the multi-jurisdictional disclosure system, then
the Company will be subject to the SEC Modernization Rules which
differ from the requirements of NI 43-101 and the CIM Definition
Standards.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
3
United States investors are cautioned that there are differences in
the definitions under the SEC Modernization Rules and the CIM
Definition Standards. There is no assurance any mineral resources
that the Company may report as “measured mineral
resources”, “indicated mineral resources” and
“inferred mineral resources” under NI 43- 101 would be
the same had the Company prepared the resource estimates under the
standards adopted under the SEC Modernization Rules. United States
investors are also cautioned that while the SEC will now recognize
“measured mineral resources”, “indicated mineral
resources” and “inferred mineral resources”,
investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves.
Mineralization described using these terms has a greater amount of
uncertainty as to their existence and feasibility than
mineralization that has been characterized as reserves.
Accordingly, investors are cautioned not to assume that any
“measured mineral resources”, “indicated mineral
resources” or “inferred mineral resources” that
the Company reports are or will be economically or legally
mineable. Further, “inferred mineral resources” have a
greater amount of uncertainty as to their existence and as to
whether they can be mined legally or economically. Therefore,
United States investors are also cautioned not to assume that all
or any part of the “inferred mineral resources” exist.
In accordance with Canadian securities laws, estimates of
“inferred mineral resources” cannot form the basis of
feasibility or other economic studies, except in limited
circumstances where permitted under NI 43-101. In addition, the SEC
has amended its definitions of “proven mineral
reserves” and “probable mineral reserves” to be
“substantially similar” to the corresponding CIM
definitions. United States investors are cautioned that a
preliminary economic assessment (“PEA”) cannot support
an estimate of either “proven mineral reserves” or
“probable mineral reserves” and that no feasibility
studies have been completed on the Company’s mineral
properties.
Accordingly, information contained in this MD&A describing the
Company’s mineral deposits may not be comparable to similar
information made public by U.S. companies subject to the reporting
and disclosure requirements under the United States federal
securities laws and the rules and regulations
thereunder.
See the heading “Resource
Category (Classification) Definitions” in the Annual Information Form
for a description of certain of the mining terms used in this
MD&A.
1.2
Qualified persons and technical disclosures
Michael Henrichsen, P. Geo., Senior Vice President, Exploration,
and David Rivard, Exploration Manager, of the Company are each a
“qualified person” or “QP” under and for
the purposes of NI 43-101 with respect to the technical disclosures
in this MD&A. As noted within, the Peruvian exploration
projects were distributed to shareholders on October 9, 2020, and
as they are not part of the Company at the date of this report, are
not included in this disclosure.
1.3
Impact of COVID-19
The situation in Canada regarding COVID-19 remains fluid and
permitted activities continue to be subject to change. At the
Company’s Eau Claire project in Québec, the community
vaccination program already underway in northern Québec was
made available in February 2021 to any persons working in the area
and, as of March 2021, all on-site employees have participated in
the vaccination program. Scheduling for the second dose commenced
at the end of April 2021. In addition to the COVID-19 screening of
all on-site employees implemented in 2020, the Company was approved
by Public Health Canada for on-site Rapid Testing for COVID-19
which was implemented in April 2021. Québec’s COVID-19
relief program ended on April 1, 2021, and all work and reporting
requirements are now in force. As access to the Eau Claire property
has not been materially impacted, the Company continues to move
forward with its planned drilling at the Eau Claire project. See
“Eau Claire exploration program 2020 – 2022” in
Section 5 for more information on the drill program.
Operations in Nunavut for 2021 will again be subject to COVID-19
travel restrictions and the Company is assessing ways to safely
operate in the Territory. On April 16, 2021, the Government of Nunavut announced that
all rotational workers traveling in and out of the Territory were
eligible to receive the Moderna COVID-19 vaccine in one of the
communities.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
4
In April 2021, British Columbia implemented restrictions on
non-essential travel between health regions. Currently, mining and
exploration have been deemed essential and plans for working at the
Homestake Ridge project in 2021 will be subject to approval of a
COVID-19 plan by the Chief Provincial Health Officer.
Effective April 8, 2021, the government of Ontario issued a
province-wide Stay-at-Home order expected to last until at least
May 20, 2021. As a result, the Company’s corporate office in
Toronto remains temporarily closed and all employees continue to
work remotely.
While the disruptions resulting from the pandemic may cause some
delays in the Company’s planned goals for 2021, mainly
related to an inability to conduct field programs due to movement
and travel restrictions, management expects to execute much of its
planned activity and allow work to be undertaken once it is safe
for its employees and stakeholders to do so. As the situation
surrounding COVID-19 continues to develop daily, the Company
continues to monitor the situation closely and respond
appropriately.
|
Fury Gold Mines LimitedManagement’s Discussion and
Analysis of Financial Condition and
Results
of Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
5
Section 2: Business
overview
Fury Gold is a Canadian-focused exploration and development
company, positioned in three prolific gold mining regions. The
Company has three principal projects: Eau Claire in Québec,
Committee Bay in Nunavut, and Homestake Ridge in British Columbia.
The Eau Claire project is viewed as the Company’s lead
asset.
The Company was incorporated on June 9, 2008, under the
Business
Corporations Act (British
Columbia) and is listed on the Toronto Stock Exchange and the
NYSE-American, with its common shares trading under the symbol
FURY. The registered office is 595 Burrard Street, Suite 2600,
Vancouver, British Columbia (“BC”), V7X 1L3, and the
mailing address is 34 King Street East, Suite 900, Toronto, Ontario
(“ON”), M5C 2X8.
Acquisition of
Eastmain and transfer of Peruvian exploration
properties
On October 9, 2020, the Company acquired Eastmain Resources Inc.
(“Eastmain”), including Eastmain’s principal
asset, the 100%-owned Eau Claire gold project located in James Bay,
Québec, by issuing 34,100,000 shares of the Company to the
Eastmain shareholders with a total fair value of $124,169 (the
“Transaction”). Acquisition costs of $3,029 and the
expense of $3,450 arising from 1,570,754 share options and
1,297,591 warrants issued to former Eastmain share option and
warrant holders were included in the total purchase price. The key
net assets acquired included marketable securities ($1,662) and
mineral property interests in Québec ($125,606), offset by
accounts payable and accrued liabilities ($1,203) and a provision
for site reclamation and closure ($1,849).
Prior to October 9, 2020, the Company, formerly Auryn Resources
Inc. (“Auryn”), also held secured rights to various
mining concessions in southern Peru which included the Sombrero,
Curibaya, and Huilacollo projects. These projects were transferred
to two new companies, Tier One Silver Inc. and Sombrero Resources
Inc. (collectively, the “Spincos”), as part of the
arrangement agreement to acquire Eastmain. The transfer was
presented as a discontinued operation and comparative figures for
the three months ended March 31, 2020 have been restated, where
applicable.
Share
Consolidation
On October 9, 2020, pursuant to the acquisition of Eastmain, the
Company consolidated the 112,340,434 common shares outstanding as
of that date to 75,900,000 common shares and the exercise price of
share options issued prior to that date were adjusted downwards by
$0.95 to reflect the fair value of the Peruvian projects allocated
to the Spincos. As such, all share and per share data presented in
the MD&A have been retroactively adjusted to reflect the share
consolidation unless otherwise noted.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
6
Section 3: Q1
2021 highlights and subsequent events
3.1 Corporate
highlights
■
On April 30, 2021,
the Company announced the filing of a preliminary short form base
shelf prospectus (the "Prospectus") with the securities commissions
or similar regulatory authorities in all of the provinces and
territories of Canada and has filed a corresponding registration
statement on Form F-10 with the United States Securities and
Exchange Commission. Upon the issuance of a receipt for the final
base shelf prospectus and declaration by the SEC, the Company will
be permitted to offer up to $200 million of common shares,
subscription receipts, warrants, and units or any combination
thereof (the “Securities”) during the 25-month period
that the Prospectus is effective. The final Prospectus was filed on
May 10, 2021. The specific terms of any offering of Securities,
including the use of proceeds from any offering, will be set forth
in a shelf prospectus supplement.
■
On March 16, 2021,
the Company announced the appointment of Mr. Tim Clark, MBA, to the
Board of Directors as an independent director, effective
immediately. Additionally, the Company appointed Mr. Jeffrey Mason,
CPA, ICD.D, as Lead Director.
■
On January 6, 2021,
the Company announced the appointment of Ms. Salisha Ilyas to the
newly formed role of Vice President, Investor Relations.
Additionally, the Company also announced that Fury Gold had been
invited to participate in the BMO 2021 Capital Markets Global
Metals & Mining Conference.
3.2 Operational
highlights
■
On April 20, 2021,
the Company announced additional results from its 25,000-metre
(“m”) resource expansion drill program at the Eau
Claire deposit located in the Eeyou Istchee Territory in the James
Bay region of Québec. The drill program, which is part of the
larger 50,000m drill program at Eau Claire, is aimed at expanding
the resource by testing outside of known resource blocks with 50m
to 100m step outs in the lower eastern region of the deposit.
Highlights from the eastern edge of the resource include 3m of 8.87
grams per tonne (“g/t”) gold and 1m of 59.3 g/t gold in
drill hole 21EC-013.
■
On April 12, 2021,
the Company provided an update on its exploration plans at the
high-grade Eau Claire project. The Company has identified two
target areas on the western limit of the resource that have the
potential to significantly expand the deposit. These targets are
located below an area called the 850 Zone and were developed
through an increased understanding of the structural and
lithological controls on mineralization within the
deposit.
■
On March 30, 2021,
the Company announced results from three additional exploration
drill holes targeting a 550m to 660m extension from the known
resource at the Eau Claire deposit. Drill hole 21EC-007 intercepted
1.0m of 15.3 g/t gold and drill hole 21EC-010 intercepted 1.5m of
8.8 g/t gold. The mineralization is situated within the same
structure that intercepted 3.0m of 2.59 g/t gold from 21EC-006. The
Company also announced plans for an initial drill test at the Snake
Lake target aimed at offsetting shallow historical intercepts of
2.65m of 13.24 g/t gold, 1.5m of 12.2 g/t gold, and 2.0m of 6.62
g/t gold with 150m to 300m offsets down plunge to the
west.
■
On March 1, 2021,
the Company announced the first set of results from its 25,000m
resource expansion and infill drill program at the Eau Claire
deposit. The drill program was designed to expand the resource by
testing between defined resource blocks as well as confirm the
quality and continuity of mineralization within the inferred
resource category in the lower eastern region of the deposit.
Highlights from drill holes outside of the defined resource include
6.04m of 11.56 g/t gold and 2.51m of 8.87 g/t gold and demonstrates
the potential to expand the deposit.
■
On January 25,
2021, the Company announced results from its first exploration
drill hole targeting a 660m extension from the known resource at
the Eau Claire deposit. The drill hole intercepted 3m
of
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
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7
2.59 g/t gold with
a broader interval of 8m of 1.21 g/t gold at a drill depth of 643m
to 651m. The gold mineralization encountered was associated with
quartz-tourmaline veining and amphibole alteration, which is
consistent with mineralization within the defined resource at the
Eau Claire deposit.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
8
Section 4: Corporate
strategy
Fury Gold’s business objective for the next twelve to
eighteen months is to focus on advancing exploration work across
the Company’s portfolio of assets. Initially, the focus will
be on advancing the 50,000m Eau Claire drilling program which
commenced in November 2020. The Company has also outlined the next
exploration programs at Committee Bay and Homestake Ridge, which
are subject to, and conditional upon, future financing and market
conditions, drill results, and incorporating seasonal weather
considerations. Adopting a multi-asset strategy provides the
Company with greater flexibility by allocating capital resources
across the portfolio in response to both external and internal
factors, enabling the Company to maximize returns from its existing
resources. The Company maintains the optionality to initiate drill
programs at one or more of its properties and can defer or
accelerate expenditures at each project dependent upon certain
criteria in the Company’s capital resource allocation model.
To support the Company’s focus on financial flexibility, the
Company does not pay out dividends, does not have any long-term
debt, and is not subject to any externally imposed capital
requirements.
The following summarizes the Company’s planned exploration
programs at each of its core projects, subject to meeting certain
conditions as outlined above.
Update to previously disclosed exploration plans
The Company has previously outlined its exploration plans at the
Eau Claire project, the Homestake Ridge project, and the Committee
Bay project in its MD&A for the year ended December 31, 2020 as
well as news releases dated February 2, 2021, February 17, 2021,
and April 12, 2021, and the Company’s investor presentations
dated March and April 2021 (posted and available on the
Company’s website) (collectively, the “Prior
Disclosure”). Management continues to anticipate pursuing the
exploration plans laid out in such Prior Disclosure, but advises
readers that, except as otherwise disclosed herein, the exploration
programs set out in the Prior Disclosure are subject to, among
other things, the Company raising additional funds, and may occur
at a later date than originally disclosed.
The Company currently anticipates that its available financial
resources will be used to advance its Eau Claire project during
2021 and early 2022, as set out below under the heading “Eau
Claire exploration program 2020 – 2022”, with certain
exploration expenditures at the Eau Claire project being deferred
until the second half of 2022 or later unless the Company is able
to raise funds for such exploration activities, in which case they
may be accelerated. Exploration programs at the Homestake Ridge
project and the Committee Bay project will be deferred to the
second half of 2022 or later unless the Company is able to raise
funds for such programs, in which case such programs may be
accelerated.
Eau Claire
The Company currently has sufficient capital resources to complete
the 50,000m drilling program at Eau Claire over 2021. The Company
will need to raise additional funds in order to initiate the
regional exploration program at the Eau Claire project as noted
below. There are no seasonal weather restrictions at Eau Claire,
therefore, the Company can undertake exploration activity at the
project all year round. There can be no assurances that Fury Gold
will be able to obtain sufficient financing in the
future.
The exploration program at Eau Claire will comprise 25,000m of
infill drilling and a further 25,000m of exploration drilling,
targeting the one-kilometre (“km”) down plunge
extension east of the Eau Claire deposit as well as untested
targets within the 7km deposit trend. The goal of the deposit
expansion program is to upgrade the resource from inferred to
indicated category at the southeastern limit of the deposit as well
as add additional ounces between currently defined resource blocks.
While the goal of the exploration drill program is to identify
additional mineralization within the deposit trend, the 2021
– 2022 program will incorporate environmental, geotechnical,
and metallurgical aspects in order to advance the project on all
fronts.
On February 10, 2021, the Company also provided an update on its
regional exploration plans at the Eau Claire deposit, with plans to
explore the Percival trend, located 14km east of the Eau Claire
deposit. Subject to raising sufficient additional funds, Fury Gold
plans to conduct an extensive biogeochemistry program across the
Eau Claire property with the goal of developing new drill targets.
In conjunction with the geochemical surveys, ground-based induced
polarization geophysical surveys are planned along the Percival
trend to fingerprint the geophysical
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
9
signature of the mineralization. If no additional financing is
obtained, the biogeochemistry and geochemical surveys will be
deferred until such time as additional funds are secured.
Additionally, on April 12th, 2021, the Company announced that it
had identified two target areas on the western limit of the
resource located below an area called the 850 Zone and were
developed through an increased understanding of the structural and
lithological controls on mineralization within the
deposit.
Committee Bay
The Company will need to raise additional funds in order to
commence the proposed work program at Committee Bay, and there can
be no assurances that Fury Gold will be able to obtain adequate
financing in the future. Additionally, exploration work at
Committee Bay is constricted by seasonal weather conditions which
impact on the Company’s ability to access the property as
well as the extent and type of exploration activity. The program
will be deferred to 2022 unless the Company raises sufficient
financing to fund the commencement of the program in the summer of
2021. There can be no assurances that Fury Gold will be able to
obtain sufficient financing in the future.
On February 17, 2021, the Company announced its proposed
exploration plans for the Committee Bay gold project located in the
Kitikmeot region of Nunavut, which are subject to raising
sufficient additional funds. The Company expects to drill between
5,000m to 10,000m, subject to COVID-19 limitations and the
availability of funds, with the goal of: 1) drilling the
underexplored Raven high-grade vein target, which sits along an 8km
shear zone that has the potential to turn into a significant
discovery; 2) expanding the Three Bluffs deposit through the
drilling of a major conductor down dip from a high-grade portion of
the resource; and 3) advancing the previous geological work on
targets along the Aiviq – Kalulik corridor to advance them to
drill stage.
Homestake Ridge
The Company will need to raise additional funds in order to
commence the proposed work program at Homestake Ridge, and there
can be no assurances that Fury Gold will be able to obtain adequate
financing in the future. Additionally, exploration work at
Homestake Ridge is constricted by seasonal weather conditions which
impact on the Company’s ability to access the property as
well as the extent and type of exploration activity. The program
will be deferred to 2022 unless the Company raises sufficient
financing to fund the commencement of the program in the summer of
2021. There can be no assurances that Fury Gold will be able to
obtain sufficient financing in the future.
On February 2, 2021, following publication of the PEA in the first
half of 2020, Fury Gold announced that 25,000m of drilling was,
subject to the availability of funds, expected to be undertaken at
the Homestake Ridge gold-silver project with the primary goal of
expanding the resource and testing high quality gold-silver targets
along the deposit trend. In addition, an infill drill program will
be conducted with the goal of converting a large portion of the
resource at the Homestake Silver deposit from inferred to indicated
category.
Indigenous and community relations
The pursuit of environmentally sound and socially responsible
mineral development guides all of Fury Gold’s activities as
the Company understands the broad societal benefits that
responsible mining can bring, as well as the risks that must be
managed through the implementation of sustainable development
practices. The Company strives to maintain the highest standards of
environmental protection and community engagement at all of its
projects.
The Company considers sustainability to include the pursuit of four
mutually reinforcing pillars: environmental and cultural heritage
protection; social and community development; economic growth and
opportunity; and cultural competency development for all employees.
The Company assesses the environmental, social, and financial
benefits and risks of all business decisions and believes this
commitment to sustainability generates value and benefits for local
communities and shareholders alike.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
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|
10
The Company’s approach to Indigenous and stakeholder
engagement provides opportunities and benefits
through:
■
the provision of
jobs and training programs
■
contracting
opportunities
■
capacity funding
for Indigenous engagement
■
sponsorship of
community events
The Company places a priority on creating mutually beneficial,
long-term relationships with the communities in which it operates.
Engagement goals include providing First Nations governments,
communities, and residents with corporate and project-related
information, including details of work programs, collaborative
opportunities, and other activities being undertaken in the
field.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
11
Section 5: Projects
overview
5.1
Québec
Following completion of the Transaction, Fury Gold acquired
Eastmain’s 100% interests in the Eau Claire and Eastmain Mine
projects as well as interests in nine other properties covering
approximately 109,000 hectares in total within the Eeyou Istchee
James Bay region of Québec. The Company also acquired from
Eastmain a 36.7% joint venture interest in the Éléonore
South JV project, of which Fury Gold is the operator. The Eastmain
Mine project along with the Ruby Hill East and Ruby Hill West
projects are under option to Benz Mining Corp. (“Benz
Mining”) whereby Benz Mining can earn a 75% interest in those
properties, subject to certain option payments and exploration
expenditures being met, with a further option to increase Benz
Mining’s holding to 100% in the Eastmain Mine property upon
receipt of a final milestone payment. Benz Mining currently acts as
operator. Additionally, the Lac Lessard project is under option to
EV Metals Holdings Pty Ltd.
5.1.1 Eau
Claire
The Eau Claire project is located immediately north of the Eastmain
reservoir, 10 km northeast of Hydro Québec’s EM-1
hydroelectric power facility, 80 km north of the town of Nemaska,
approximately 320 km northeast of the town of Matagami, and 800 km
north of Montreal. This property consists of map-designated claims
totaling approximately 233 square kilometres. These claims are held
100% by Fury Gold and are currently in good standing. Permits are
obtained annually for all surface exploration, particularly
trenching and drilling, undertaken on the property.
The La Grande and Opinaca sub-provinces are located in the Eeyou
Istchee James Bay region. The Eau Claire project is underlain by
typical Archean greenstone assemblages of the Eastmain Greenstone
Belt, which are essentially composed of volcanic rocks of basaltic
to rhyolitic composition and of related clastic and chemical
sedimentary rocks. These rocks have been intruded by an assemblage
of mafic to felsic sills, stocks, and dykes. Metamorphism ranges
from upper greenschist to amphibolite facies in the greenstone
assemblages, while higher-grade facies, up to granulite level,
typically characterize the Opinaca sub-province. Archean-aged
deformation affects all rocks on the property. Near the Eau Claire
deposit, the volcano-sedimentary assemblage has been
folded,
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
12
forming a closed antiform plunging gently to the west. Regional
rock foliation and lithology are generally east-west in strike with
moderate to sub-vertical southerly dips in the vicinity of the Eau
Claire gold deposit.
Eau Claire exploration program 2020 – 2022
In November 2020, Fury Gold commenced its 50,000m drill program at
the Eau Claire project. The drill program consists of an infill
phase focused on upgrading and expanding the current resource and
an exploration phase designed to test a 1km down plunge extension
of the resource. The program will also focus on several highly
prospective, untested gold targets within the 7km deposit
trend.
The infill drill program at the Eau Claire deposit will consist of
approximately 25,000m on the southeast margin of the existing
inferred mineral resource, which is currently defined by 200,000
ounces (“oz”) at 12.2 g/t gold (using a 3.5g/t gold
cut-off grade). This portion of the drill program is designed to
add ounces between defined resource blocks as well as upgrade the
resource category from inferred to indicated in this
location.
The exploration phase aims to significantly expand the Eau Claire
deposit with a focused 10,000m to 12,000m drill program that
targets a 1km down plunge extension. The potential for high-grade
gold mineralization to continue down plunge is strongly supported
by gradient array IP chargeability data where the intersection of
primary and secondary shear zones has been imaged approximately
600m to 800m to the east of the existing limits of drilling at the
Eau Claire deposit. This newly imaged structural pattern is defined
by the intersection of the mineralized Snake Lake structure and the
projected continuation of the Eau Claire deposit structure. This
structural geometry is consistent with that observed at the Eau
Claire deposit and in part forms the basis of the down plunge
targets.
The exploration drilling is focused on five target
areas:
■
Target A is situated 100m to 300m down
plunge from the limit of the current resource. The planned drill
array represents a 200m to 500m down dip extension from the target
area where historical drilling above the target area hosts
intercepts of 1.0m of 12.6 g/t gold, 2.5m of 4.4 g/t gold, and 2.0m
of 4.8 g/t gold. Collectively, these historical results are
associated with both QT veins and secondary shear zone alteration
and are interpreted to be vertically situated above the projected
down plunge extension of the deposit but demonstrate the continuity
of the mineralized system to the east of the current resource.
Results are pending for the three holes in Target A.
■
Target B is situated 500m to 700m down
plunge from the limit of the current resource. The planned drill
array represents a 400m to 700m down dip extension from historical
drilling above the target area where there is a 20m-wide zone of
alteration that is similar to that observed with secondary shear
zones at the Eau Claire deposit. Importantly, newly acquired
gradient array IP chargeability data images the intersection of the
primary shear zone and secondary shear zones that are associated
with the extension of the Eau Claire deposit structure and the
mineralized Snake Lake structure, respectively. Similar structural
intersections at the Eau Claire deposit are associated with
high-grade gold mineralization. Fury Gold completed four drill
holes into Target B for a total of 4,434m. Results from these
first holes include 1.0m of 5.3 g/t gold from 21EC-007, 1.5m of 8.8
g/t gold from 21EC-010, and 3.0m of 2.59 g/t gold from 20EC-006.
Further targeting along Target B is underway.
■
Target C is situated 800m to 1,000m down
plunge from the limit of the current resource. The planned drill
array represents a 700m to 900m down dip extension from the
historical drilling above the target area. Results are pending for
two drill holes into Target C.
■
Snake Lake structure is located 1.2 km
to the east of the Eau Claire deposit and has seen limited
drilling. The Company is planning an initial drill test aimed at
offsetting shallow historical intercepts of 2.65m of 13.24 g/t
gold, 1.5m of 12.2 g/t gold, and 2.0m of 6.62g/t gold with 150m to
300m offsets down plunge to the west. A deep intersection in
21EC-010, 1.5m of 6.43 g/t gold is located in the same structural
and stratigraphic position as the Snake Lake
mineralization. The intercept in 21EC-010 is approximately
1,100m down plunge of the nearest Snake Lake drilling and
has
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
13
significantly
opened up the exploration potential along this structural corridor.
Results are pending for three drill holes at Snake
Lake.
■
850 Zone hosts two targets identified at
the western limit of the Eau Claire resource using structural and
lithogeochemical modeling. Through the analysis of
phosphorous/titanium ratios within drill core and surface samples
along the Eau Claire deposit trend, the Company has been able to
define two mappable basaltic units that collectively define two
distinct stratigraphic positions associated within the 850 and 450
zones, which was previously unrecognized. Fury Gold's technical
team has determined that the mineralized horizon of the 450 zone,
which represents approximately 85% of the resource at Eau Claire,
remains untested below the 850 Zone and provides an excellent
opportunity to expand the deposit footprint on the western margin
of the deposit.
The 50,000m drill program is anticipated to take place over two
drill phases, the timing of which is dependent upon positive drill
results, market conditions, and the availability of funds. Subject
to these conditions, the Company expects to incur $6,300 of
expenditures during the remainder of 2021 and the early part of
2022 at Eau Claire, which is fully funded by the Company’s
existing working capital. Subject to additional funds being
obtained, the remainder of the 50,000m drill program is estimated
to incur a further $9,550 of expenditures.
|
Activity
|
Estimated
Expenditures
|
|
|
|
With
current
financial
resources
|
Assuming
sufficient additional capital
is
raised
|
|
Drilling
|
$4,000
|
$4,500
|
|
Geophysical
data acquisition
|
-
|
150
|
|
Ground-based
field work
|
300
|
1,450
|
|
Engineering
studies
|
-
|
1,350
|
|
Environmental
studies
|
-
|
100
|
|
Camp
and on-site personnel costs
|
1,500
|
2,000
|
|
Desktop
processing, studies and integration of data
|
500
|
-
|
|
Total
|
$6,300
|
$9,550
|
There can be no assurances that Fury Gold will be able to obtain
adequate financing in the future, or that the terms of such
financing will be favourable for the further exploration and
development of the Eau Claire project.
The Company expects to incur approximately $314 in mineral claims
expenditures in order to keep the property in good standing,
payable every two years. During the three months ended March 31,
2021, the Company made a cash payment in respect of certain mineral
claims in Québec of $266, with $242 recognized as a prepaid
expense as at March 31, 2021 (December 31, 2020 –
$65).
Eau Claire resource estimate and PEA technical report
The Eau Claire resource estimation and PEA were completed by P
& E Mining Consultants Inc. (see the Technical Report, Updated
Mineral Resource Estimate and Preliminary Economic Assessment on
the Eau Claire Gold Deposit, Clearwater Property, Québec,
Canada, filed on SEDAR on July 3, 2018).
5.1.2
Éléonore South JV
Fury Gold owns a 36.72% interest in the Éléonore South JV
project and is the operator of the joint venture. Currently, the
Éléonore South JV is held by Fury Gold (36.72%), Azimut
Exploration Inc. (26.57%), and Goldcorp Canada Ltd., a wholly owned
subsidiary of Newmont Corporation (36.71%).
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
14
The Éléonore South property is strategically located in
an area of prolific gold mineralization within the James Bay gold
camp and is locally defined by the Éléonore mine and the
Cheechoo deposit. The property has been explored over the last 12
years by the joint venture with the majority of the exploration
focused on the extension of the Cheechoo deposit through
approximately 27,000m of drilling in 172 drill holes, covering only
a small fraction of the property at the Moni and JT zones. Notable
drill intercepts include 6.0m of 49.50 g/t gold, which included
1.0m of 294 g/t gold.
Éléonore South JV exploration program
In December 2020, Fury Gold announced the identification of
large-scale gold in till anomalies on the Éléonore South
property through a review of historic datasets. These targets were
not previously drill tested. Fury Gold intends, subject to raising
sufficient additional funds, to advance these targets to
drill-ready stage through the processing and interpretation of
historic geophysical data along with a short mapping and sampling
field program.
There was no exploration activity undertaken at the
Éléonore South project in during the first quarter of
2021.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
15
5.2
Committee Bay and Gibson MacQuoid projects
5.2.1 Committee
Bay
The Committee Bay project comprises approximately 280,000 hectares
situated along the Committee Bay Greenstone Belt approximately 180
km northeast of the Meadowbank mine operated by Agnico Eagle Mines
Limited.
The Committee Bay belt comprises one of a number of Archean-aged
greenstone belts occurring within the larger Western Churchill
province of northeastern Canada. The character and history of rock
packages, and the timing and nature of mineralization occurring
within the belt is considered to be equivalent to that of other
significant gold bearing Archean greenstones within the Western
Churchill province, which hosts gold deposits such as Meadowbank,
Meliadine, and Amaruq.
The Committee Bay project is held 100% by the Company, subject to a
1% Net Smelter Return (“NSR”), and an additional 1.5%
NSR payable on only 7,596 hectares which may be purchased within
two years of the commencement of commercial production for $2,000
for each one-third (0.5%) of the NSR.
Committee Bay exploration program 2021 – 2022
The Company will need to raise additional funds in order to
commence the work program at the Committee Bay project set out
below, and the Company will not initiate the exploration program
until funding has been secured. There can be no assurances that
Fury Gold will be able to obtain adequate financing in the future,
or that the terms of such financing will be favourable for the
further exploration and development of the Committee Bay
project.
The Company plans, subject to COVID-19 limitations, the
availability of capital resources, favourable market conditions,
and seasonal weather considerations to drill between 5,000m and
10,000m at Committee Bay with the goal of: 1) drilling the
underexplored Raven high-grade vein target, which sits along an 8km
shear zone that has the potential to turn into a significant
discovery; 2) expanding the Three Bluffs deposit through the
drilling of a major conductor down dip from a high-grade portion of
the resource; and 3) advancing the previous geological work on
targets along the Aiviq – Kalulik corridor to advance them to
drill stage.
Raven Prospect Overview: The
Raven prospect is located in the southwest third of the Committee
Bay Gold Belt, approximately 80 km west of the Three Bluffs
deposit. The prospect is situated along an 8km long shear zone
where defined gold mineralization occurs in quartz-arsenopyrite
veins in highly sheared gabbros and mafic volcanic rocks over a
strike length of approximately 1.2km. There have been 207 rock
samples historically taken over the defined area of mineralization,
with 30 samples returning values greater than 5 g/t gold with a
peak value of 143 g/t gold. Importantly, only 1.2km of the 8km
shear zone has been systematically explored to
date.
The prospect has a total of nine historical drill holes totaling
1,670m with intercepts including 5.49m of 12.6 g/t gold, 2.84m of
31.1 g/t gold, and 5.38m of 2.99 g/t gold over a drilled strike
length of 400m. Historical drilling at the prospect has defined a
high-grade body of mineralization approximately 250m in length,
with a 30-degree plunge to the east that is open along strike and
down dip. Fury Gold plans to drill the Raven prospect through
aggressive step-outs to demonstrate the scale of the system and to
explore the entire length of the 8km shear zone to define new
targets through systematic till sampling and geological
mapping.
Three Bluffs Deposit Expansion Drilling: The Three Bluffs deposit contains a high-grade
resource defined by 525,000oz at 7.85 g/t gold in the indicated
category and 720,000oz at 7.64 g/t gold in the inferred category.
The deposit is characterized by gold mineralization hosted within a
folded, silicified, and sulphidized banded iron formation. The
anticline that defines the deposit has a strike length of
approximately 4km and has been drilled from 150m to 650m vertical
depth and is open down dip. High-grade mineralization at the
deposit is associated with high conductivity responses due to the
intense sulphidation of the banded iron formation as evidenced in
the hinge zone of the anticline.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
16
Fury Gold's primary target at the Three Bluffs deposit is a
conductive body that measures 600m by 200m at a vertical depth of
between 300m and 500m. The target is down dip from high grade
mineralization within the limbs of the anticline and is offsetting
the following intersections: 5m of 40.6 g/t gold, 5.3m of 29.03 g/t
gold, 11m of 16.23 g/t gold, 5m of 15.2 g/t gold, 2m of 21.81 g/t
gold, and 2m of 19.38 g/t gold. The Company plans to drill across
the entire conductivity body to demonstrate the potential for
resource growth at the deposit.
Ground-based
exploration at the Committee Bay project is designed to follow up
on conceptual targets identified through desktop studies. This work
will include mapping, prospecting, and sampling in order to advance
these targets from conceptual to drill ready. Subject to raising
sufficient additional financing to fund its exploration program at
Committee Bay, the Company expects that the exploration program at
Committee Bay will incur the following estimated
costs:
|
Activity
|
Estimated
Expenditures
|
|
Drilling
|
$1,850
|
|
Ground-based
field work
|
550
|
|
Mining
lease survey
|
75
|
|
Camp
and on-site personnel costs
|
1,850
|
|
Core
storage facility setup
|
150
|
|
Total
|
$4,475
|
The Company expects to incur approximately $156 in mineral claims
expenditures in 2021 to keep the property in good
standing.
Committee Bay resource estimate and technical report
Three Bluffs resource estimations were completed by Roscoe Postle
Associates Inc. (“RPA”) (see the Technical Report on
the Three Bluffs Project, Nunavut Territory, Canada, filed on SEDAR
on May 31, 2017, as amended October 23, 2017).
5.2.2 Gibson
MacQuoid
The Gibson MacQuoid project is an early-stage gold exploration
project situated between the Meliadine deposit and Meadowbank mine
in Nunavut, Canada. The 66 mineral claims that make up the project
encompass approximately 120 km of strike length of the prospective
greenstone belt and total
51,622 hectares collectively.
The Gibson MacQuoid Greenstone belt is one of a number of
Archean-aged greenstone belts located in the Western Churchill
province of northeastern Canada. These gold bearing Archean
greenstone belts host deposits such as the Three Bluffs,
Meadowbank, Amaruq, and Meliadine deposits. In particular, the
highly magnetic signature of the Gibson MacQuoid Belt is consistent
with the other productive greenstone belts in the eastern Arctic
that host large-scale gold deposits.
In 2020, the Company was successful in extending all reporting and
expenditure requirements at Gibson MacQuoid for one year under the
Nunavut Mining Recorder’s Office’s COVID-19 relief
program.
Planning is underway for 2021 exploration work at Gibson MacQuoid,
which will not be pursued unless the Company raises additional
funds.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
17
5.3 Homestake Ridge
project
The Homestake Ridge project is located in the prolific
Iskut-Stewart-Kisault gold belt in northwestern British Columbia,
Canada, and covers approximately 7,500 hectares. The project is
host to a high-grade gold, silver, copper, and lead resource which
remains open at depth and along strike. The Homestake Ridge project
is held 100% by the Company subject to two royalties, with a 2% NSR
applicable to the Crown grants and a 2% NSR on 14 mineral claims,
which may be purchased for $1,000. The royalties do not
overlap.
2020 updated mineral resource estimate and PEA
On April 15, 2020, the Company announced the results of its initial
PEA prepared in accordance with NI 43-101 by MineFill Services Inc.
of Seattle, Washington, with other contributors including RPA, now
part of SLR Consulting Ltd. (QP for updated mineral resource
estimate) and One-Eighty Consulting Group (for environmental,
permitting, and social). The Company filed the related PEA on SEDAR
at www.sedar.com in July 2020.
Homestake Ridge exploration program 2021 – 2022
The Company will need to raise additional funds in order to
commence the work programs at the Homestake Ridge project set out
below, and the Company will not initiate the exploration program
until funding has been secured. There can be no assurances that
Fury Gold will be able to obtain adequate financing in the future,
or that the terms of such financing will be favourable for the
further exploration and development of the Homestake Ridge
project.
The Company plans, subject to the availability of capital
resources, favourable market conditions and seasonal weather
considerations, to drill 25,000m at Homestake Ridge, with the
primary goal of expanding the resource and testing high quality
gold-silver targets along the deposit trend. In addition, an infill
drill program will be conducted with the goal of converting a large
portion of the resource at the Homestake Silver deposit from
inferred to indicated category. The deposit extension targets are
based upon expanding zones of high-grade mineralization, which are
defined by intense silicification, continuous breccia bodies, and
vein sets that are based on a relog and the completed geological
model of the deposit. Planned step-outs from these high-grade
breccia bodies and vein sets range from 100m to 350m.
The Company also plans as part of the 25,000m drill program to
conduct approximately 10,000m of infill drilling at Homestake
Silver. The goal of this program is to upgrade a portion of the
resource from inferred to indicated category and to demonstrate the
geologic continuity of mineralization based on all recently
completed geological data sets and models to date. The timing of
the above exploration program will be dependent upon both
availability of funds as well as favourable weather conditions as
typically exploration work at Homestake Ridge is restricted to
spring and summer seasons before access to the project is
restricted during the winter months.
Subject to raising sufficient additional financing to fund its
exploration program at Homestake Ridge, the Company expects that
the exploration program at Homestake Ridge will incur the following
expenditures:
|
Activity
|
Estimated
Expenditures
|
|
Drilling
|
$4,650
|
|
Air
support
|
1,475
|
|
Engineering
studies
|
350
|
|
Environmental
and permitting studies
|
525
|
|
Camp
and on-site personnel costs
|
2,600
|
|
Total
|
$9,600
|
The Company is obligated to pay in perpetuity an annual payment of
$50 pursuant to certain royalty arrangements on the Homestake Ridge
project.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
18
Section 6: Review
of quarterly financial information
|
Three months
ended:
|
Interest
income
|
Loss from
continuing operations
|
Loss from
discontinued
operations
|
Comprehensive
loss
|
Loss per share
($/share)
|
|
March
31, 2021
|
$20
|
$4,925
|
$-
|
$4,925
|
$0.04
|
|
December 31,
2020
|
26
|
5,306
|
-
|
5,468
|
0.05
|
|
September 30,
2020
|
14
|
1,854
|
1,644
|
3,517
|
0.05
|
|
June 30,
2020
|
19
|
1,771
|
963
|
2,915
|
0.04
|
|
March 31,
2020
|
32
|
1,832
|
883
|
2,330
|
0.04
|
|
December 31,
2019
|
9
|
1,921
|
1,123
|
3,126
|
0.04
|
|
September 30,
2019
|
14
|
3,265
|
653
|
3,871
|
0.06
|
|
June 30,
2019
|
19
|
3,123
|
1,922
|
5,139
|
0.07
|
Three months ended March 31, 2021 compared to three months ended
March 31, 2020
During the three months ended March 31, 2021, the Company reported
a comprehensive loss of $4,925 and loss per share of $0.04,
compared to a comprehensive loss of $2,330 and loss per share of
$0.04 for the three months ended March 31, 2020. The significant
drivers of changes in comprehensive loss were as
follows:
Operating
expenses:
■
Exploration and
evaluation costs increased to $3,688 for the three months ended
March 31, 2021 compared to $379 for the three months ended March
31, 2020, primarily reflecting the 50,000m drill campaign at Eau
Claire which commenced in November 2020. The reduced exploration
activity in the prior year reflects the impact of weather
constraints at the Committee Bay and Homestake Ridge projects as
well as the impact of COVID-19, which resulted in travel
restrictions in March 2020;
■
Fees, salaries, and
other employment benefits increased to $1,261 for the three months
ended March 31, 2021 compared to $400 for the three months ended
March 31, 2020 primarily due to share-based compensation expense of
$706 in the first quarter of 2021 compared to expense of $187
recognized in the first quarter of 2020, arising from new grants of
share options in the fourth quarter of 2020. Additionally, certain
transitional employment arrangements to support the formation of
the new company resulted in an increase to employee costs in the
first quarter of 2021;
■
Legal and
professional fees increased to $917 for the three months ended
March 31, 2021 compared to $54 for the three months ended March 31,
2020, primarily due to legal and professional fees incurred in
respect of the Prospectus, the final of which was filed on May 10,
2021;
■
Marketing and
investor relations costs increased to $592 for the three months
ended March 31, 2021 compared to $398 for the three months ended
March 31, 2020, primarily due to increased marketing activities in
the first quarter of 2021 associated with the drilling program at
Eau Claire and establishment of the new company; and
■
Office and
administrative costs increased to $200 for the three months ended
March 31, 2021 compared to $99 for the three months ended March 31,
2020 due to office relocation costs, and IT support and maintenance
costs.
Other expenses and
income:
■
Amortization of
flow-through share premium of $1,223 for the three months ended
March 31, 2021 as compared to $7 for the three months ended March
31, 2020, reflecting the exploration activity at Eau Claire in the
first quarter of 2021; and
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
19
■
Unrealized net loss
of $932 on the Company’s marketable securities for the three
months ended March 31, 2021 as compared to $160 unrealized net loss
for the three months ended March 31, 2020, reflecting a decline in
the fair value of the Company’s marketable
securities.
Loss from
discontinued operations:
■
Loss from
discontinued operations was $nil for the three months ended March
31, 2021 compared to $883 for the three months ended March 31, 2020
due to the transfer of the Peruvian operations to the Spincos in
October 2020.
Summary of project costs
During the three months ended March 31, 2021, the Company’s
mineral properties decreased to $160,341 compared to $160,772 as at
December 31, 2020, due to the decrease in the provision for site
reclamation and closure at the Company’s Québec and
Nunavut projects, caused primarily by an increase in the risk-free
interested rate to 1.97% from 1.21% as at December 31,
2020.
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
|
Balance at December
31, 2020
|
$125,354
|
$19,358
|
$16,060
|
$160,772
|
|
Change in estimate
of provision for
site reclamation
and closure
|
(202)
|
(229)
|
-
|
(431)
|
|
Balance
at March 31, 2021
|
$125,152
|
$19,129
|
$16,060
|
$160,341
|
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
|
Assaying
|
$378
|
$30
|
$14
|
$422
|
|
Exploration
drilling
|
1,272
|
-
|
-
|
1,272
|
|
Camp cost,
equipment and field supplies
|
375
|
59
|
3
|
437
|
|
Geological
consulting services
|
176
|
34
|
2
|
212
|
|
Geophysical
analysis
|
149
|
-
|
-
|
149
|
|
Permitting,
environmental and
community
costs
|
95
|
34
|
13
|
142
|
|
Expediting and
mobilization
|
7
|
-
|
-
|
7
|
|
Salaries and
wages
|
504
|
45
|
20
|
569
|
|
Fuel and
consumables
|
174
|
35
|
-
|
209
|
|
Aircraft and
travel
|
61
|
-
|
1
|
62
|
|
Share-based
compensation
|
160
|
34
|
13
|
207
|
|
Total
for the three months
ended
March 31, 2021
|
$3,351
|
$271
|
$66
|
$3,688
|
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
20
Section 7: Financial
position, liquidity, and capital resources
|
|
At March 31
2021
|
At December
31
2020
|
|
Cash
|
$10,215
|
$15,361
|
|
Restricted
cash
|
165
|
165
|
|
Other
assets
|
5,041
|
5,752
|
|
Mineral property
interests
|
160,341
|
160,772
|
|
Current
liabilities
|
9,178
|
11,295
|
|
Non-current
liabilities
|
4,308
|
4,483
|
As at March 31, 2021, the Company had unrestricted cash of $10,215
(December 31, 2020 – $15,361), working capital of $4,341
(December 31, 2020 – working capital of $8,353), which the
Company defines as current assets less current liabilities, and an
accumulated deficit of $144,884 (December 31, 2020 –
$139,959). The Company notes that the flow-through share premium
liability which represents $6,421 (December 31, 2020 –
$7,644) of current liabilities and included in working capital is
not settled through cash payment. Instead, this balance is
amortized against qualifying flow-through expenditures which are
required to be incurred before December 31, 2022. Working capital
excluding the flow-through premium liability was $10,762 (December
31, 2020 – $15,997).
During the three months ended March 31, 2021, Fury Gold incurred a
loss of $4,925 (three months ended March 31, 2020 – $2,715)
and expects to continue to incur operating losses in relation to
exploration activities. With no source of operating cash flow,
there is no assurance that sufficient funding will be available to
conduct further exploration and development of its mineral
properties.
As at March 31, 2021, the Company recognized $572 (December 31,
2020 – $827) of amounts receivable. This balance primarily
consisted of sales tax refunds due.
As at March 31, 2021, the Company held marketable securities with a
fair value of $1,743 (December 31, 2020 – $2,675), which
represent certain shares and warrants held in other publicly listed
mining companies and which are available to the Company if it
should wish to generate additional liquidity through the sale of
these investments.
The Company proactively manages its capital resources and makes
adjustments in light of changes in the economic environment and the
risk characteristics of the Company’s assets. To effectively
manage its capital requirements, the Company has in place a
budgeting and cash management process to help determine the funds
required to ensure the Company has the appropriate liquidity to
meet its current project development plans and achieve its growth
objectives. The Company ensures that there is sufficient liquidity
available to meet its short-term business requirements, taking into
account its anticipated cash outflows from exploration and
development activities and its holdings of cash and marketable
securities. The Company monitors and adjusts, when required, these
exploration and development programs as well as corporate
administrative costs to ensure that adequate levels of working
capital are maintained.
As at the date of this MD&A, the Company expects its capital
resources to support certain planned activities for the next 12
months at the Eau Claire project, which are set out above. The
Company’s ability to undertake further project expansionary
plans as outlined herein at the Eau Claire project, the
Éléonore South JV project, the Committee Bay project, and
the Homestake Ridge project are dependent upon the Company’s
ability to obtain adequate financing in the future. While the
Company has been successful at raising capital in the past, there
can be no assurance that the Company will have sufficient financing
to meet its future capital requirements or that additional
financing will be available on terms acceptable to the Company in
the future.
On May 10, 2021, the Company filed the final Prospectus which will
permit the Company to offer up to $200 million of the Securities
during the 25-month period that the Prospectus is effective. The
Prospectus is expected to provide the Company with additional
financial flexibility to raise capital, subject to favourable
financing conditions.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
21
Contractual commitments
In the normal course of business, the Company enters into contracts
that give rise to commitments for future minimum payments. The
following table summarizes the remaining contractual maturities of
the Company's financial liabilities and commitments as at March 31,
2021, shown in contractual undiscounted cashflows:
|
|
Within 1
year
|
2 to
3
years
|
Over
3
years
|
At March
31
2021
|
At December
31
2020
|
|
Accounts payable
and accrued liabilities
|
$2,354
|
$-
|
$-
|
$2,354
|
$3,280
|
|
Québec
flow-through expenditure requirements
|
-
|
14,984
|
-
|
14,984
|
18,079
|
|
Undiscounted lease
payments
|
180
|
371
|
206
|
757
|
762
|
|
Total
|
$2,534
|
$15,355
|
$206
|
$18,095
|
$22,121
|
Certain
of the mining properties in which the Company has interests are
subject to royalty arrangements. The Company has an obligation to
pay in perpetuity an annual royalty payment of $50 pursuant to
certain royalty arrangements on the Homestake Ridge
project.
Additionally, to maintain the Company’s properties in good
standing order, the Company is required to make certain mineral
claims payments on an annual or bi-annual basis. In 2021, those
mineral claims payments are estimated to be $470. Cash payments of
$266 were made during the first quarter of 2021 in respect of these
mineral claims, with $242 recognized in prepaid expenses as at
March 31, 2021 (December 31, 2020 – $65).
Exploration program expenditures
The Company has adopted a portfolio capital resource allocation
model, which is subject to Board approval, whereby it allocates its
existing capital resources based upon both internal factors such as
drill results, estimated expenditures to meet certain milestones,
and the seasonality of exploration at certain of its projects, as
well as external market conditions including the economic
environment and availability of financing. By deploying such a
multi-asset capital resource model, the Company can elect to
advance exploration programs at one or all of its projects,
dependent on those conditions identified above.
As described herein, the Company has developed next stage
exploration programs at Eau Claire, Committee Bay, and Homestake
Ridge. Currently, the Company expects that its existing working
capital will be deployed as follows over the next 12
months:
|
|
Estimated
Expenditures
|
|
Eau
Claire project
|
$6,300
|
|
Committee
Bay project
|
156
|
|
Homestake
Ridge project
|
50
|
|
Total funded expenditures
|
$6,506
|
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
22
Should the Company obtain further financing, the Company may
commence the proposed exploration programs as described above at
Committee Bay or Homestake Ridge or accelerate the exploration
program at Eau Claire, preserving the optionality of the
Company’s capital resource allocation. Those additional
exploration program expenditures are estimated as
follows:
|
|
Estimated
Expenditures
|
|
Eau
Claire project
|
$9,550
|
|
Committee
Bay project
|
4,475
|
|
Homestake
Ridge project
|
9,600
|
There can be no assurances that Fury Gold will be able to obtain
adequate financing in the future, or that the terms of such
financing will be favourable for the further exploration and
development of the Company’s exploration projects. Further,
the Company may elect to not proceed with one or more of the above
exploration programs, and has not committed significant
expenditures to the above programs, other than the Eau Claire
program. The Company does not plan to initiate phase 2 of the Eau
Claire 50,000m drill program or the exploration programs at
Committee Bay and Homestake Ridge as set out above until sufficient
funding has been secured.
Other financial information
|
Cash flows from continuing operations:
|
Three months ended March 31
|
|
|
|
2021
|
2020
|
|
Cash
(used in) operating activities
|
$(3,860)
|
$(1,721)
|
|
Cash
(used in) provided by investing activities
|
(1,258)
|
32
|
|
Cash
(used in) provided by financing activities
|
(28)
|
15,005
|
During the three months ended March 31, 2021, the Company used cash
of $3,860 in operating activities from continuing operations
compared to $1,721 during the three months ended March 31, 2020.
The cash outflow for the current quarter was higher primarily due
to higher exploration activity at Eau Claire and increased
employee-related and administrative costs associated with the
formation of Fury Gold.
During the three months ended March 31, 2021, the Company used cash
in investing activities from continuing operations of $1,258 as
compared to cash provided by continuing operations of $32 in the
three months ended March 31, 2020. This increase was primarily due
to settlement of $1,209 of transaction costs associated with the
purchase of Eastmain in 2020.
For the three months ended March 31, 2021, the Company used cash of
$28 in financing activities consisting of $44 for rental payments
arising from the Toronto office lease offset by $16 proceeds from
warrant exercises. This compares to cash generated by financing
activities of $15,005 for the three months ended March 31, 2020
which primarily comprised $14,903 from issuance of shares and $107
proceeds from options and warrant exercises.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
23
Capital resources
The company did not have any new share issuances during the three
months ended March 31, 2021.
September 2020
offering
In September 2020, the Company issued 7,750,000 subscription
receipts, which were exchanged for common shares of the Company
pursuant to the arrangement to acquire Eastmain; the gross proceeds
were held in escrow until the completion of the acquisition on
October 9, 2020. Of the subscription receipts sold, 5,000,000 were
flow-through receipts for gross proceeds of $17.5 million and were
exchanged for Fury Gold common shares designated as flow-through
shares, while 2,750,000 subscription receipts were sold as
non-flow-through for gross proceeds of $5.5 million and exchanged
for Fury Gold common shares.
|
|
Number
of
common
shares
|
Impact
on
share
capital
|
|
Flow-through
shares, issued at $3.50 per share
|
5,000,000
|
$17,500
|
|
Less: flow-through
share premium liability
|
-
|
(7,500)
|
|
Common shares,
issued at $2.00 per share
|
2,750,000
|
5,500
|
|
Cash share issue
costs
|
-
|
(1,518)
|
|
Proceeds, net of
share issue costs
|
7,750,000
|
$13,982
|
The proceeds of the September 2020 flow-through financing are
intended to fund the current exploration program at Eau Claire with
the remaining non-flow-through financing used for corporate
administrative activities.
The flow-through funding and expenditures from the Company’s
activities for the three months ended March 31, 2021 were as
follows:
|
|
Flow-through
funding and expenditures
|
Flow-through
|
|||
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
premium
liability
|
|
Balance at December
31, 2019
|
$-
|
$24
|
$-
|
$24
|
$7
|
|
Flow-through
liability assumed
|
2,391
|
-
|
-
|
2,391
|
590
|
|
Flow-through funds
raised
|
17,500
|
-
|
-
|
17,500
|
7,500
|
|
Flow-through
eligible expenditures
|
(1,812)
|
(24)
|
-
|
(1,836)
|
(453)
|
|
Balance at December
31, 2020
|
$18,079
|
$-
|
$-
|
$18,079
|
$7,644
|
|
Flow-through
eligible expenditures
|
(3,095)
|
-
|
-
|
(3,095)
|
(1,223)
|
|
Balance at March
31, 2021
|
$14,984
|
$-
|
$-
|
$14,984
|
$6,421
|
Of the $3,095 (December 31, 2020 – $1,812) flow-through
eligible expenditures incurred at the Company’s Québec
properties for the three months ended March 31, 2021, $579
(December 31, 2020 – $1,812) was applied against the
flow-through liability acquired from Eastmain as part of the
Transaction, extinguishing the assumed obligation. The flow-through
premium liability arising from the September 2020 Offering
outstanding as at March 31, 2021 was $14,984 (December 31, 2020
– $17,500). The Company notes that further funding will be
required to meet this obligation in full by December
2022.
February 2020
private placement
In February 2020, the Company closed a non-brokered equity private
placement for gross proceeds of $15 million (the “2020
February Offering”) which was closed in two tranches and
consisted of 6,333,984 common shares priced at $2.37 per share, and
total insider participation of 183,686 shares for proceeds of $435.
For the three months ended March 31, 2020, share issue costs
related to the February 2020 Offering totalled $229, including $59
paid in commissions and $170 in other issuance costs.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
24
A reconciliation of the impact of the February 2020 Offering on
share capital was as follows:
|
|
Number
of
common
shares
|
Impact
on
share
capital
|
|
Common shares,
issued at $2.37 per share
|
6,333,984
|
$15,000
|
|
Cash share issue
costs
|
-
|
(229)
|
|
Proceeds, net of
share issue costs
|
6,333,984
|
$14,771
|
The 2020 February Offering was undertaken to allow the Company to
meet its short-term liquidity needs, provide working capital to
continue with exploration plans, and to repay the Bridge Loan in
full, if required during 2020. As noted below, the Bridge Loan was
converted into shares; therefore, cash settlement through use of
the financing proceeds was not required.
Bridge
Loan, amendment and conversion
Concurrent with the closing of the first tranche of the February
2020 Offering, on February 5, 2020, the Company entered into the
Bridge Loan Amendment which provided mutual conversion rights to
the lender and the Company, and also reduced the annual interest
rate from 10% to 5% from the date of amendment. Under the terms of
the Bridge Loan Amendment, the lender had the right to convert the
$3 million of principal that had been advanced and $123 of interest
that had accrued to date (the “Amended Bridge Loan”)
into common shares at the price of $2.37 ($1.60 pre-consolidation).
On July 7, 2020, the lender converted the Bridge Loan to equity,
and the arrangement was extinguished, and the related security was
discharged.
Exercise
of share options and warrants
During the three months ended March 31, 2021, no share options and
only a nominal number of warrants were exercised for gross proceeds
of $16.
As at March 31, 2021, the share options and warrants outstanding
were as follows:
|
|
Share options outstanding
|
Share options exercisable
|
||||
|
Exercise price
($/option)
(1)
|
Number of shares
|
Weighted average exercise price ($/option)
|
Weighted average remaining life (years)
|
Number of shares
|
Weighted average exercise price ($/option)
|
Weighted average remaining life (years)
|
|
$0.56 –
$1.95
|
1,585,239
|
1.53
|
3.35
|
1,448,755
|
1.50
|
3.24
|
|
$2.05 –
$5.31
|
6,274,331
|
2.50
|
3.17
|
3,808,706
|
2.79
|
2.27
|
|
$7.54 –
$9.86
|
207,113
|
8.60
|
0.81
|
207,113
|
8.60
|
0.81
|
|
$12.94
|
29,170
|
12.94
|
0.07
|
29,170
|
12.94
|
0.07
|
|
|
8,095,853
|
2.50
|
3.13
|
5,493,744
|
2.72
|
2.46
|
(1) The exercise price of
issued share options prior to October 9, 2020 were adjusted
downwards by $0.95, pursuant to the Transaction, reflecting the
fair value of the Peruvian projects allocated to the Spincos. The
above weighted average exercise prices were retrospectively
adjusted to reflect this change.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
25
|
Expiry date
|
Warrants
outstanding
|
Exercise price
($/share)
|
|
May 8,
2021
|
530,951
|
1.46
|
|
October 24,
2021
|
334,993
|
1.37
|
|
March 6,
2022
|
189,613
|
1.11
|
|
March 9,
2022
|
222,577
|
1.11
|
|
September 12,
2022
|
337,813
|
2.96
|
|
Total
|
1,615,947
|
1.67
|
The Company does not utilize off-balance sheet arrangements.
Earn-in arrangements are not viewed as off-balance sheet
arrangements, and there are no other commitments held by the
Company at the balance sheet date.
As at May 13, 2021, there were 8,131,468 and 1,084,996 of share
options and warrants outstanding, respectively, with a weighted
average exercise price of $2.44 and $1.76,
respectively.
Capital structure
Authorized: Unlimited common shares without par value.
Unlimited preferred shares – nil
issued and outstanding.
Number of common shares issued and outstanding as at March 31,
2021: 117,834,650
Number of common shares issued and outstanding as at May 13, 2021:
117,930,733
Section 8: Financial
risk summary
As at March 31, 2021, the Company’s financial instruments
consist of cash, marketable securities, amounts receivable,
deposits, and accounts payable and accrued liabilities. The fair
values of these financial instruments, other than the marketable
securities, approximate their carrying values due to their short
term to maturity. Certain of the Company’s marketable
securities, representing investments held in publicly traded
entities, were classified as level 1 of the fair value hierarchy
and measured at fair value using their quoted market price at
period end. The remaining amount of the Company’s marketable
securities were warrants held in respect of shares of other
publicly traded entities. They were classified as level 2 of the
fair value hierarchy and measured using an option pricing
model.
The Company’s financial instruments are exposed to certain
financial risks, primarily liquidity risk and market risk. Details
of the primary financial risks that the Company is exposed to are
available in the notes to the Company’s condensed interim
consolidated financial statements for the three months ended March
31, 2021.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
26
Section 9: Related
party balances and transactions
All transactions with related parties have occurred in the normal
course of operations. All amounts are unsecured, non-interest
bearing, and have no specific terms of settlement, unless otherwise
noted.
Related parties
|
|
Three
months ended March 31
|
|
|
|
2021
|
2020
|
|
Universal Mineral Services
Ltd.(1)
|
|
|
|
Exploration and
evaluation costs:
|
|
|
|
Québec
|
$38
|
$-
|
|
Nunavut
|
5
|
60
|
|
British
Columbia
|
7
|
37
|
|
Peru
|
-
|
51
|
|
Fees, salaries and
other employee benefits
|
10
|
55
|
|
Legal and
professional fees
|
2
|
7
|
|
Marketing and
investor relations
|
23
|
37
|
|
Office and
administration
|
46
|
87
|
|
Project
investigation costs
|
-
|
4
|
|
Total
|
$131
|
$338
|
(1) Universal
Mineral Services Ltd. (“UMS”) is a private company with
one director in common, Mr. Ivan Bebek. UMS provides geological,
financial, and transactional advisory services as well as
administrative services to the Company on an ongoing, cost recovery
basis. Having these services available through UMS, on an as needed
basis, allows the Company to maintain a more efficient and
cost-effective corporate overhead structure by hiring fewer
full-time employees and engaging outside professional advisory
firms less frequently. The agreement has an indefinite term and can
be terminated by either party upon providing due
notice.
The outstanding balance owing at March 31, 2021, was $24 (December
31, 2020 – $109) which is included in accounts payable. In
addition, the Company had $150 on deposit with UMS as at March 31,
2021 (December 31, 2020 – $150) which is included in prepaid
expenses and deposits.
Key management personnel
Pursuant to the acquisition of Eastmain and the creation of Fury
Gold in October 2020, key management personnel was redefined to
include Fury Gold’s board of directors and officers of the
Company, including the Chief Executive Officer (“CEO”)
and Chief Financial Officer (“CFO”).
The remuneration of the Company’s directors and other key
management personnel was
as follows:
|
|
Three months
ended March 31
|
|
|
|
2021
|
2020
|
|
Short-term benefits
provided to executives (1)(2)
|
$317
|
$366
|
|
Directors’
fees paid to non-executive directors
|
52
|
36
|
|
Share-based
payments (2)
|
663
|
219
|
|
Total (3)
|
$1,032
|
$621
|
(1) Short-term employee benefits include salaries, bonuses
payable within twelve months of the date of the condensed interim
consolidated statement of financial position, and other annual
employee benefits.
(2) As a result of the
acquisition of Eastmain and the formation of a new board of
directors and management team, certain former key management
personnel of the Company were provided with transition contracts to
support the formation of Fury Gold. For the three months ended
March 31, 2021, $87 of short-term benefits (October 9 to December
31, 2020 – $79) and $54 of share-based payment expense
(October 9 to December 31, 2020 – $283) were recognized in
the condensed interim consolidated statement of loss and
comprehensive loss in respect of these transition
arrangements.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
27
(3)
The renumeration for key management
personnel for the three months ended March 31, 2020 is comprised of
those individuals who were key management personnel as at March 31,
2020 and is the combined total for both continuing operations and
the discontinued operation of the Peru properties transferred to
the Spincos in October 2020.
Section 10: Critical
judgments and accounting estimates
The preparation of financial statements in conformity with IFRS
requires management to select accounting policies and make
estimates and judgments that may have a significant impact on the
consolidated financial statements. Estimates are continuously
evaluated and are based on management’s experience and
expectations of future events that are believed to be reasonable
under the circumstances. Actual outcomes may differ from these
estimates.
In preparing the Company’s condensed interim consolidated
financial statements for the three months ended March 31, 2021, the
Company applied the critical accounting judgements and estimates
disclosed in note 2 of its consolidated financial statements for
the year ended December 31, 2020, except as follows:
Credit on duties refundable for loss and refundable tax credits for
resource investment
The Company is entitled to a refundable credit on duties of 16% for
eligible losses under the Québec Mining Duties Act and a
refundable resource investment tax credit of 31% under the
Québec Income Tax Act. These credits are applicable to
qualified exploration expenditures on properties located within the
province of Québec. Application for these credits is subject
to verification and, as such, they are recognized only when they
are received or when a notice of assessment confirming the amount
to be paid is issued. During the three months ended March 31, 2021,
the Company received a refund of $1,717, consisting of $1,670
principal and $47 interest.
Section 11: New
accounting standards and policies
The Company did not adopt any new accounting standards or policies
during the quarter, and the accounting policies applied in
preparing the Company’s condensed interim consolidated
financial statements for the three months ended March 31, 2021 were
consistent with those disclosed in note 3 of its consolidated
financial statements for the year ended December 31,
2020.
New and amended standards not yet effective
Certain pronouncements have been issued by the IASB that are
mandatory for accounting periods beginning after December 31, 2021.
The Company has not early adopted any of these pronouncements, and
they are not expected to have a significant impact in the
foreseeable future on the Company's consolidated financial
statements once adopted.
Section 12: Controls
and procedures
Disclosure controls and procedures (“DC&P”) are
designed to provide reasonable assurance that material information
related to the Company, including its consolidated subsidiaries, is
made known to the Company’s certifying officers. The
Company’s CEO and CFO are responsible for establishing and
maintaining adequate DC&P and have concluded that the DC&P
the Company has in place are effective in providing reasonable
assurance that information required to be disclosed under
applicable securities regulations is recorded, processed,
summarized, and reported within the time periods
specified.
The Company’s management, with the involvement of the CEO and
CFO, performs regular reviews of its DC&P to ensure they are
designed and operating effectively. As there are inherent
limitations in all control systems, any economically feasible
control system can only provide reasonable, not absolute, assurance
that the control system will prevent or detect all misstatements
due to error or fraud.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
28
Management’s most recent evaluation of the DC&P was
conducted for the year ended December 31, 2020, from which
management concluded that the Company’s DC&P are
effective in providing reasonable assurance that information
required to be disclosed under applicable securities regulations is
recorded, processed, summarized, and reported within the required
time periods. No changes have occurred in the Company’s
DC&P during the three months ended March 31, 2021 that have
materially affected, or are reasonably likely to materially affect,
the Company’s disclosure controls and
procedures.
Internal control over financial reporting
Internal control over financial reporting (“ICFR”)
includes those policies and procedures that:
■
pertain to the
maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of
the Company;
■
provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of consolidated financial statements in accordance with
IFRS, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and
directors of the Company; and
■
provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company assets, or
incurring liabilities or other obligations that could have a
material effect on the consolidated financial
statements.
It is management’s responsibility to establish and maintain
adequate ICFR to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
consolidated financial statements for external purposes in
accordance with IFRS.
As part of its annual evaluation process, management engaged a
third-party consultant to perform testing over the design and
effectiveness of ICFR as at December 31, 2020. This testing was
done under the supervision of the CEO and CFO to support
management’s evaluation of the key controls based on the
framework in Internal Control— Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Management
concluded that the Company’s ICFR was effective as of that
date. No changes have occurred in the Company’s ICFR during
the three months ended March 31, 2021 that have materially
affected, or are reasonably likely to materially affect, the
Company’s internal control over financial
reporting.
Additional disclosures pertaining to the Company’s management
information circulars, material change reports, press releases, and
other information are available on SEDAR at
www.sedar.com.
On behalf of the Board of Directors,
“Michael Timmins”
Michael Timmins
President and Chief Executive Officer
May 13, 2021
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three Months Ended March 31,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
29
Exhibit 99.3
Form 52-109F2
Certification of Interim Filings
Full Certificate
I,
Michael Timmins, Chief Executive
Officer of Fury Gold Mines Limited., certify the
following:
1.
Review: I have reviewed the interim
financial report and interim MD&A (together, the “interim
filings”) of Fury Gold Mines
Limited (the “issuer”) for the interim period
ended March 31,
2021.
2.
No
misrepresentations: Based on my knowledge, having
exercised reasonable diligence, the interim filings do not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim
filings.
3.
Fair
presentation: Based on my knowledge, having
exercised reasonable diligence, the interim financial report
together with the other financial information included in the
interim filings fairly present in all material respects the
financial condition, financial performance and cash flows of the
issuer, as of the date of and for the periods presented in the
interim filings.
4.
Responsibility: The
issuer’s other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings, for the issuer.
5.
Design: Subject to
the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer’s other certifying officer(s) and I have, as at the
end of the period covered by the interim filings
(a)
designed DC&P,
or caused it to be designed under our supervision, to provide
reasonable assurance that
(i)
material
information relating to the issuer is made known to us by others,
particularly during the period in which the interim filings are
being prepared; and
(ii)
information
required to be disclosed by the issuer in its annual filings,
interim filings or other reports filed or submitted by it under
securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities
legislation; and
(b)
designed ICFR, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with the issuer’s GAAP.
5.1
Control framework:
The control framework the issuer’s other certifying
officer(s) and I used to design the issuer’s ICFR is
based on Internal Control –
Integrated Framework (2013) published by the Committee of
Sponsoring Organizations of the Treadway
Commission.
5.2
ICFR – material
weakness relating to design: NA
5.3
Limitation on scope of
design: NA
6.
Reporting changes in
ICFR: The issuer
has disclosed in its interim MD&A any change in the
issuer’s ICFR that occurred during the period beginning on
January 1, 2021 and ended on
March 31, 2021 that has
materially affected, or is reasonably likely to materially affect,
the issuer’s ICFR.
Date:
May 13, 2021
Signed “Michael Timmins”
_______________________
Michael
Timmins
Chief
Executive Officer
Exhibit 99.4
Form 52-109F2
Certification of Interim Filings
Full Certificate
I,
Lynsey Sherry, Chief Financial
Officer of Fury Gold Mines Limited, certify the
following:
1.
Review: I have reviewed the interim
financial report and interim MD&A (together, the “interim
filings”) of Fury Gold Mines
Limited (the “issuer”) for the interim period
ended March 31,
2021.
2.
No
misrepresentations: Based on my knowledge, having
exercised reasonable diligence, the interim filings do not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim
filings.
3.
Fair
presentation: Based on my knowledge, having
exercised reasonable diligence, the interim financial report
together with the other financial information included in the
interim filings fairly present in all material respects the
financial condition, financial performance and cash flows of the
issuer, as of the date of and for the periods presented in the
interim filings.
4.
Responsibility: The
issuer’s other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings, for the issuer.
5.
Design: Subject to
the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer’s other certifying officer(s) and I have, as at the
end of the period covered by the interim filings
(a)
designed DC&P,
or caused it to be designed under our supervision, to provide
reasonable assurance that
(i)
material
information relating to the issuer is made known to us by others,
particularly during the period in which the interim filings are
being prepared; and
(ii)
information
required to be disclosed by the issuer in its annual filings,
interim filings or other reports filed or submitted by it under
securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities
legislation; and
(b)
designed ICFR, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with the issuer’s GAAP.
5.1
Control framework:
The control framework the issuer’s other certifying
officer(s) and I used to design the issuer’s ICFR is
based on Internal Control –
Integrated Framework (2013) published by the Committee of
Sponsoring Organizations of the Treadway
Commission.
5.2
ICFR – material
weakness relating to design: NA
5.3
Limitation on scope of
design: NA
6.
Reporting changes in
ICFR: The issuer
has disclosed in its interim MD&A any change in the
issuer’s ICFR that occurred during the period beginning on
January 1, 2021 and ended on
March 31, 2021 that has
materially affected, or is reasonably likely to materially affect,
the issuer’s ICFR.
Date:
May 13, 2021
Signed “Lynsey Sherry”
_______________________
Lynsey
Sherry
Chief
Financial Officer