Fury Gold Mines Ltd 6-K, filed Nov 12, 2021
Fury Gold Mines Ltd (FURY)
6-K
2021-11-12
For: 2021-11-12
View Original
Added on
April 10, 2026
About this 6-K
Fury Gold Mines Ltd filed this 6-K on November 12, 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 November
2021
Commission
File No. 001-38145
Fury Gold Mines Limited
(Translation
of registrant’s name into English)
1630-1177 West Hastings Street, Vancouver, BC,V6E 2 K3
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
|
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Condensed Interim Consolidated Financial Statements (Unaudited) For
The Three And Nine Months Ended September 30,
2021
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Management’s Discussion And Analysis For The Three And Nine
Months Ended September 30, 2021
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CEO certification of interim filings
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CFO certification of interim filings
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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: November 12, 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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Exhibit 99.1
(An
exploration company)
CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
Fury Gold Mines Limited
Condensed Interim Consolidated Statements of Financial
Position
(Expressed
in thousands of Canadian dollars – Unaudited)
|
|
Note
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At September
30
2021
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At December
31
2020
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
|
$2,596
|
$15,361
|
|
Marketable
securities
|
4
|
536
|
2,675
|
|
Accounts
receivable
|
|
398
|
827
|
|
Prepaid expenses and
deposits
|
|
1,240
|
785
|
|
|
|
4,770
|
19,648
|
|
Non-current
assets:
|
|
|
|
|
Restricted cash
|
|
165
|
165
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|
Accounts
receivable
|
|
50
|
-
|
|
Prepaid expenses and
deposits
|
|
243
|
243
|
|
Property and
equipment
|
|
1,340
|
1,222
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Mineral property
interests
|
5
|
160,649
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160,772
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|
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162,447
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162,402
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Total
assets
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$167,217
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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
|
|
$5,359
|
$3,280
|
|
Lease liability
|
6
|
99
|
55
|
|
Flow-through share premium
liability
|
7
|
3,531
|
7,644
|
|
Advances received for
exploration
|
9a
|
127
|
316
|
|
Deferred share issuance
proceeds
|
16
|
1,920
|
-
|
|
|
|
11,036
|
11,295
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Non-current
liabilities:
|
|
|
|
|
Lease liability
|
6
|
385
|
193
|
|
Provision for site reclamation and
closure
|
8
|
3,867
|
4,290
|
|
Total
liabilities
|
|
$15,288
|
$15,778
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Share capital
|
10
|
$295,168
|
$294,710
|
|
Share option and warrant
reserve
|
11
|
13,212
|
11,521
|
|
Deficit
|
|
(156,451)
|
(139,959)
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|
Total
equity
|
|
$151,929
|
$166,272
|
|
Total liabilities and
equity
|
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$167,217
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$182,050
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Going
concern (note 1), Commitments (note 7 &
15)
Subsequent events
(note 1, 4, 5 & 16)
Approved on behalf
of the Board of Directors:
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“Forrester A. Clark”
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“Steve Cook”
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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
Condensed Interim Consolidated Statements of Loss and Comprehensive
Loss
(Expressed in thousands of Canadian dollars, except per share
amounts – Unaudited)
|
|
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Three months
ended
|
Nine months
ended
|
||
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September
30
|
September
30
|
||
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|
Note
|
2021
|
2020
|
2021
|
2020
|
|
Operating
expenses:
|
|
|
|
|
|
|
Exploration and
evaluation costs
|
9
|
$6,717
|
$352
|
$13,947
|
$1,097
|
|
Fees, salaries and
other employee benefits
|
11
|
808
|
615
|
3,000
|
1,767
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Insurance
|
|
179
|
103
|
444
|
266
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Legal and
professional fees
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462
|
100
|
1,832
|
224
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Marketing and
investor relations
|
|
164
|
176
|
919
|
1,034
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Office and
administration
|
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151
|
126
|
511
|
326
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Regulatory and
compliance costs
|
|
84
|
168
|
332
|
285
|
|
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8,565
|
1,640
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21,015
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4,999
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Other
expenses (income):
|
|
|
|
|
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Unrealized net loss
(gain) on marketable securities
|
4
|
169
|
27
|
911
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(39)
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Realized net loss
on marketable securities
|
4
|
290
|
-
|
290
|
-
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|
Amortization of
flow-through share premium
|
7
|
(1,558)
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-
|
(4,113)
|
(7)
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|
Finance expense on
bridge loan
|
|
-
|
10
|
-
|
259
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Loss on bridge
loan
|
15
|
-
|
66
|
-
|
225
|
|
Accretion
|
8
|
18
|
5
|
50
|
22
|
|
Interest expense on
lease liability
|
6
|
24
|
-
|
75
|
-
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Interest and other
income
|
|
(4)
|
(14)
|
(33)
|
(65)
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Foreign exchange
loss
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3
|
27
|
14
|
27
|
|
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(1,058)
|
121
|
(2,806)
|
422
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Loss
from continuing operations, before taxes
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|
7,507
|
1,761
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18,209
|
5,421
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Income tax expense
(recovery)
|
2
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-
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57
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(1,717)
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-
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Loss
from continuing operations
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7,507
|
1,818
|
16,492
|
5,421
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Loss
from discontinued operations
|
3
|
-
|
1,644
|
-
|
3,490
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|
Loss
for the period
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$7,507
|
$3,462
|
$16,492
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$8,911
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|
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|
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Other
comprehensive loss (income), net of tax
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|
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Items that may be
reclassified subsequently to profit or loss:
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Unrealized
currency loss (gain) on translation of
foreign
operations
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-
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19
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-
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(185)
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Other comprehensive loss (income) for the period
|
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-
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19
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-
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(185)
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Total
comprehensive loss for the period
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$7,507
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$3,481
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$16,492
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$8,726
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Loss
per share from continuing operations:
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Basic and diluted loss per share
|
14
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$0.06
|
$0.02
|
$0.14
|
$0.08
|
|
Loss
per share:
|
|
|
|
|
|
|
Basic and diluted loss per share
|
14
|
$0.06
|
$0.05
|
$0.14
|
$0.13
|
The
accompanying notes form an integral part of these condensed interim
consolidated financial statements.
|
Fury
Gold Mines Limited
|
2
|
|
Fury
Gold Mines Limited
|
||||||
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Condensed Interim Consolidated Statements of Equity
|
||||||
|
(Expressed in
thousands of Canadian dollars, except share amounts –
Unaudited)
|
||||||
|
|
Number
of
common
shares(a)
|
Share
capital
|
Share option
and
warrant
reserve
|
Accumulated
other
comprehensive
income
|
Deficit
|
Total
|
|
Balance at December 31,
2019
|
64,340,963
|
$129,413
|
$9,992
|
$22
|
$(102,604)
|
$36,823
|
|
Comprehensive loss for the
period
|
-
|
-
|
-
|
185
|
(8,911)
|
(8,726)
|
|
Shares issued pursuant to offering,
net of share
issue costs
|
6,333,984
|
14,753
|
-
|
-
|
-
|
14,753
|
|
Shares issued upon conversion of
Amended Bridge
Loan
|
1,318,877
|
3,334
|
-
|
-
|
-
|
3,334
|
|
Shares issued pursuant to Alturas
option
|
743,187
|
3,036
|
-
|
-
|
-
|
3,036
|
|
Share options
exercised
|
1,428,525
|
5,046
|
(1,917)
|
-
|
-
|
3,129
|
|
Share-based
compensation
|
-
|
-
|
653
|
-
|
-
|
653
|
|
Balance at September 30,
2020
|
74,165,536
|
$155,582
|
$8,728
|
$207
|
$(111,515)
|
$53,002
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2020
|
117,823,857
|
$294,710
|
$11,521
|
$-
|
$(139,959)
|
$166,272
|
|
Comprehensive loss for the
period
|
-
|
-
|
-
|
-
|
(16,492)
|
(16,492)
|
|
Shares issued pursuant to the
purchase of
a royalty, net of share issue
costs (note 5c)
|
328,767
|
293
|
-
|
-
|
-
|
293
|
|
Share options exercised (note
10,11)
|
5,834
|
6
|
(1)
|
-
|
-
|
5
|
|
Warrants exercised (note
10,11)
|
101,042
|
159
|
(12)
|
-
|
-
|
147
|
|
Share-based compensation (note
11)
|
-
|
-
|
1,704
|
-
|
-
|
1,704
|
|
Balance at
September 30, 2021
|
118,259,500
|
$295,168
|
$13,212
|
$-
|
$(156,451)
|
$151,929
|
(a) 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.
|
Fury
Gold Mines Limited
|
3
|
|
Fury Gold Mines Limited
|
|
|
|
|
|
|
Condensed Interim Consolidated Statements of Cash
Flows
|
|
||||
|
(Expressed in
thousands of Canadian dollars – Unaudited)
|
|||||
|
|
|
Three months
ended
|
Nine months
ended
|
||
|
|
|
September
30
|
September
30
|
||
|
|
Note
|
2021
|
2020
|
2021
|
2020
|
|
Operating
activities:
|
|
|
|
|
|
|
Loss for the period
from continuing operations
|
|
$(7,507)
|
$(1,818)
|
$(16,492)
|
$(5,421)
|
|
Adjusted
for:
|
|
|
|
|
|
|
Interest
and other income
|
|
(4)
|
(14)
|
(33)
|
(65)
|
|
Items not involving
cash:
|
|
|
|
|
|
|
Unrealized net loss
(gain) on marketable securities
|
4
|
169
|
27
|
911
|
(39)
|
|
Realized net loss
on marketable securities
|
4
|
290
|
-
|
290
|
-
|
|
Depreciation
|
|
92
|
55
|
279
|
178
|
|
Amortization of
flow-through share premium
|
7
|
(1,558)
|
-
|
(4,113)
|
(7)
|
|
Share-based
compensation
|
11
|
171
|
82
|
1,704
|
459
|
|
Bridge loan
expense
|
15
|
-
|
76
|
-
|
484
|
|
Accretion
expense
|
6 & 8
|
42
|
5
|
125
|
22
|
|
Other
|
|
18
|
67
|
(1)
|
3
|
|
Changes in non-cash
working capital
|
13
|
2,740
|
(2,191)
|
3,073
|
(2,033)
|
|
Cash used in
operating activities, continuing operations
|
|
(5,547)
|
(3,711)
|
(14,257)
|
(6,419)
|
|
Cash used in
operating activities, discontinued operations
|
|
-
|
(1,591)
|
-
|
(3,264)
|
|
Investing
activities:
|
|
|
|
|
|
|
Interest
received
|
|
4
|
14
|
33
|
65
|
|
Acquisition of
Eastmain, net of cash acquired
|
3
|
-
|
4
|
(1,209)
|
-
|
|
Acquisition of
Homestake Ridge royalty, net of fees
|
5
|
(107)
|
-
|
(107)
|
-
|
|
Proceeds from sale
of marketable securities
|
4
|
938
|
|
938
|
|
|
Plant and equipment
additions
|
|
(21)
|
-
|
(103)
|
-
|
|
Cash provided by
(used in) investing activities,
continuing
operations
|
|
814
|
18
|
(448)
|
65
|
|
Cash (used in)
investing activities, discontinued operations
|
|
-
|
(1,212)
|
-
|
(1,210)
|
|
Financing
activities:
|
|
|
|
|
|
|
Lease
payments
|
6
|
(43)
|
-
|
(132)
|
-
|
|
Funds received in
advance of issuance of common shares
|
16
|
1,920
|
-
|
1,920
|
-
|
|
(Costs) Proceeds
from issuance of common shares, net
|
10
|
-
|
(51)
|
-
|
14,753
|
|
Transaction costs
on loan amendment
|
|
-
|
-
|
-
|
(5)
|
|
Interest
paid
|
|
-
|
(64)
|
-
|
(64)
|
|
Proceeds from share
option and warrant exercises
|
10
|
-
|
2,956
|
152
|
3,129
|
|
Cash provided by
financing activities, continuing operations
|
|
1,877
|
2,841
|
1,940
|
17,813
|
|
Effect of foreign
exchange rate changes on cash
|
|
-
|
(2)
|
-
|
-
|
|
(Decrease)
increase in cash
|
|
(2,856)
|
(3,657)
|
(12,765)
|
6,985
|
|
Cash, beginning of
the period
|
|
5,452
|
11,302
|
15,361
|
660
|
|
Cash,
end of the period
|
|
$2,596
|
$7,645
|
$2,596
|
$7,645
|
The
accompanying notes form an integral part of these condensed interim
consolidated financial statements.
|
Fury Gold Mines
Limited
|
4
|
Fury
Gold Mines Limited (the “Company” or “Fury
Gold”) is a Canadian-focused exploration company positioned
in three prolific gold mining regions. The Company’s
principal business activity is the acquisition and exploration of
resource properties in Canada. At September 30, 2021, the Company
had 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 1630-1177 West Hastings Street, Vancouver, BC,
V6E 2K3.
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).
Going Concern
As a
company focused on the acquisition and exploration of mineral
properties, the Company does not generate revenues and thus
finances its activities through equity and debt financings. The
Company has not yet determined whether its properties contain
economically recoverable ore reserves. The Company’s mineral
property interests recorded on its statement of financial position
reflect historical acquisition costs incurred, and while the
carrying values are assessed at each reporting period for
indicators of impairment, their recoverability is dependent upon
the existence of economically recoverable reserves, the ability of
the Company to obtain financing to continue exploration of these
assets, and ultimately on future profitable operations or the sale
of such mineral properties.
As at
September 30, 2021, the Company had unrestricted cash of $2,596,
including $1,920 of
deferred share issuance proceeds (note 16) (December 31,
2020 – unrestricted cash of $15,361), working capital deficit
of $6,266 (December 31, 2020 – working capital of $8,353),
which the Company defines as current assets less current
liabilities, and an accumulated deficit of $156,451 (December 31,
2020 – $139,959). During the three and nine months ended
September 30, 2021, Fury Gold incurred a loss of $7,507 and $16,492
(three and nine months ended September 30, 2020 – $3,462 and
$8,911), respectively, 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 of its mineral
properties.
On
October 13, 2021, the Company announced the completion of a
previously announced non-brokered private placement for total gross
proceeds of CAD$5,596 by issuing 7,461,450 units at a price of
$0.75 per unit. Each unit consists of one common share of Fury Gold
and one warrant entitling the holder to purchase one warrant share
at a price of CAD$1.20 for a period of three years. During the
three months ended September 30, 2021, the Company received $1,920
of cash proceeds in advance of the closing of the financing, which
has been recognized as deferred share issuance proceeds in the
unaudited Condensed Interim Consolidated Statement of Financial
Position as at September 30, 2021 (note 16).
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 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.
Management
plans to continue to secure the necessary financing through a
combination of equity financing and/or disposition of mineral
properties, however, the ability to continue as a going concern
remains dependent upon its ability to obtain sufficient financing
necessary to continue to fund its mineral properties. These
conditions create a material uncertainty that may cast significant
doubt about the Company’s ability to continue as a going
concern.
These
unaudited condensed interim consolidated financial statements have
been prepared on the basis that the Company will continue as a
going concern which assumes that the Company will be able to meet
its commitments, continue operations and realize its assets and
discharge its liabilities in the normal course of operations for
the foreseeable future. These unaudited condensed interim
consolidated financial statements do not give effect to adjustments
to the carrying values and classification of assets and liabilities
that would be necessary should the Company be unable to continue as
a going concern. Such adjustments could be material.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
5
|
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 in Québec, all on-site employees have
participated in the vaccination program and have received both
doses. In addition to the COVID-19 screening of all on-site
employees implemented in 2020, the Company was approved by
l'institut national de santé publique du Québec 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.
Operations
in Nunavut for 2021 continue to be subject to COVID-19 protocols
and travel restrictions. 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. Currently, all travellers
require an exemption from the public health officer of Nunavut
prior to travel into the Territory, either through evidence of
double vaccination status or evidence of direct travel to remote
regions with no interaction with Nunavut Hamlets or Nunavummiuts.
As part of the preparation for the drill program undertaken at
Committee Bay in the third quarter of 2021, the Company implemented
certain protocols at site to ensure safe operations in the
Territory including increased cleaning and sanitation; rapid
COVID-19 testing; and an isolation facility for symptomatic
personnel. Additionally, all workers were required to provide the
Company with a completed self-assessment form and evidence of a
negative COVID test 48 hours prior to travel to site.
In
April 2021, British Columbia implemented restrictions on
non-essential travel between health regions. Currently, mining and
exploration have been deemed essential and any work plans for
Homestake Ridge project in 2021 will be subject to approval of a
COVID-19 plan by the Chief Provincial Health Officer.
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 November 12,
2021.
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.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
6
|
The
principal subsidiaries (with a beneficial
interest of 100% and a Canadian Functional currency) of the
Company at September 30, 2021 were as follows:
|
Subsidiary
|
Place of incorporation
|
|
North
Country Gold Corp. (“North Country”)
|
BC,
Canada
|
|
Homestake
Resource Corporation (“Homestake”)
|
BC,
Canada
|
|
Eastmain
Resources Inc. (“Eastmain”)
|
ON,
Canada
|
|
Eastmain
Mines Inc. (“Eastmain Mines”)(a)
|
Canada
|
|
Homestake
Royalty Corporation (inactive)
|
BC,
Canada
|
(a) 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 and nine months ended September 30, 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 nine months ended September 30,
2021, the Company received a refund of $1,717, consisting of $1,670
principal and $47 interest (nine months ended September 30, 2020
– nil), classified as
income tax recovery on the unaudited condensed Interim Consolidated
Statements of Loss and Comprehensive Loss.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
7
|
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 and
exploration 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 Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
8
|
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 and nine months ended September 30, 2020,
have been restated, where applicable.
The
loss from the discontinued operations for the three and nine months
ended September 30, 2020 was as follows:
|
|
Three months ended
|
Nine months ended
|
|
|
September 30,
2020
|
September 30,
2020
|
|
Operating
expenses:
|
|
|
|
Exploration and
evaluation costs (note 9)
|
$1,494
|
$2,892
|
|
Fees, salaries and
other employee benefits
|
92
|
243
|
|
Legal and
professional fees
|
38
|
101
|
|
Office and
administration
|
26
|
92
|
|
|
1,650
|
3,328
|
|
Other
expenses:
|
|
|
|
Project
investigation costs
|
(20)
|
136
|
|
Foreign exchange
loss
|
14
|
26
|
|
|
(6)
|
162
|
|
Loss from
discontinued operations
|
$1,644
|
$3,490
|
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
9
|
Note
4:
Marketable securities
The
marketable securities held by the Company were as
follows:
|
|
Total
|
|
Balance at December
31, 2019
|
$346
|
|
Additions(a)
|
1,764
|
|
Unrealized net
gain(a)
|
565
|
|
Balance at December
31, 2020
|
$2,675
|
|
Sale of marketable
securities(b)
|
(938)
|
|
Realized loss on
disposition (b)
|
(290)
|
|
Unrealized net
loss
|
(911)
|
|
Balance
at September 30, 2021
|
$536
|
(a) 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 deemed acquisition date of
October 9, 2020 to December 31, 2020 and is included in unrealized
net gain.
(b) During the
three months ended September 30, 2021, the Company sold 1,481,177
common shares of Benz Mining Corp (“Benz Mining”) for
total proceeds of $938. Upon disposition, the Company realized a
loss of $290, representing the decline in market value from the
deemed date of acquisition of the shares on October 9, 2020, under
the acquisition of Eastmain (note 3), to date of disposal. As at
September 30, 2021, the Company held 100,000 common shares of Benz
Mining. Subsequently, on October 21, 2021, the Company received
174,658 common shares of Benz Mining in respect of an option
payment on certain mineral properties (note 5).
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
10
|
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 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 upon closing of project financing,
and $1,500 upon commencement of commercial production. This option
agreement was subsequently amended in April 2020 to grant Benz
Mining the option to earn up to 100% of the Ruby Hill properties
located to the west of the Eastmain Mine project. The Company would
retain 1-2% net smelter royalties in respect of the properties
option payments pursuant to the amended agreement are due annually
in October.
On
October 21, 2021, the Company received $150 in cash and 174,658
common shares of Benz with a fair value of $110, in respect of the
amended option agreement (2020 - $150 in cash and 124,177 common
shares with a fair value of $100).
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 38.12%, Goldcorp Canada 38.11%, and Azimut 23.77%. The Company
is currently designated as operator and the 2021 exploration
program is funded 50% by the Company and 50% by Goldcorp Canada
(note 9a).
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
11
|
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.
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 a 2% NSR
applicable to the Crown grants. The project covers approximately
7,500 hectares and is located in the Iskut-Stewart-Kisault gold
belt in northwestern British Columbia.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
12
|
Costs capitalized as mineral property interests
The
following is a continuity of the Company’s mineral property
acquisition costs:
|
|
Québec
(a)
|
Nunavut
|
British Columbia
|
Peru(b)
|
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(b)
|
(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
|
|
Purchase of
Homestake Ridge royalty (c)
|
-
|
-
|
400
|
-
|
400
|
|
Disposition(d)
|
(50)
|
-
|
-
|
-
|
(50)
|
|
Change in estimate
of provision for site reclamation and closure (note 8)
|
(221)
|
(252)
|
-
|
-
|
(473)
|
|
Balance
at September 30, 2021
|
$125,083
|
$19,106
|
$16,460
|
$-
|
$160,649
|
(a) 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).
(b) During the three
months ended December 31, 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.
(c)
During the three
months ended September 30, 2021, the Company completed the purchase
of a corporate 2% NSR on 14 mineral claims on the Homestake Ridge
project for $400, comprising a $100 cash payment and 328,767 of
common shares in the Company, with a fair value of
$300.
(d)
During the
three months ended September 30, 2021, the Company sold certain
mineral claims on the Radisson property for $50, payable in 18
months from date of purchase in either cash or common shares, at
the election of the purchaser.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
13
|
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
|
(100)
|
-
|
|
Interest
expense
|
-
|
75
|
|
Lease
payments
|
-
|
(132)
|
|
Balance
at September 30, 2021
|
$412
|
$484
|
|
|
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
|
|
|
September
30
2021
|
December 31
2020
|
|
Lease
liabilities classified as:
|
|
|
|
Current
|
$99
|
$55
|
|
Non-current
|
385
|
193
|
|
|
$484
|
$248
|
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
14
|
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 $8,145 (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
|
(9,840)
|
-
|
-
|
(9,840)
|
(4,113)
|
|
Balance at September 30,
2021
|
$8,239
|
$-
|
$-
|
$8,239
|
$3,531
|
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
15
|
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 sites as well as costs associated with
the reclamation of the camp housing and work sites on the
properties. 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 $5,073 (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 1.98% (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
|
22
|
28
|
50
|
|
Change in
estimate
|
(221)
|
(252)
|
(473)
|
|
Balance at September 30, 2021
|
$1,655
|
$2,212
|
$3,867
|
|
Fury
Gold Mines Limited
Notes to Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
16
|
For the
three and nine months ended September 30, 2021 and 2020, the
Company’s exploration and evaluation costs were as
follows:
|
|
Québec
(a)
|
Nunavut
|
British
Columbia
|
Total
|
Peru(b)
|
|
Assaying
|
$886
|
$36
|
$3
|
$925
|
$-
|
|
Exploration
drilling
|
1,080
|
569
|
125
|
1,774
|
-
|
|
Camp cost,
equipment and
field
supplies
|
486
|
194
|
100
|
780
|
-
|
|
Geological
consulting services
|
179
|
270
|
-
|
449
|
-
|
|
Geophysical
analysis
|
16
|
-
|
-
|
16
|
-
|
|
Permitting,
environmental and community costs
|
34
|
58
|
13
|
105
|
-
|
|
Expediting and
mobilization
|
19
|
91
|
5
|
115
|
-
|
|
Salaries and
wages
|
489
|
343
|
24
|
856
|
-
|
|
Fuel and
consumables
|
149
|
51
|
-
|
200
|
-
|
|
Aircraft and
travel
|
333
|
1,071
|
-
|
1,404
|
-
|
|
Share-based
compensation
|
58
|
26
|
9
|
93
|
-
|
|
Three
months ended
September
30, 2021
|
$3,729
|
$2,709
|
$279
|
$6,717
|
$-
|
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
Peru(b)
|
|
Assaying
|
$-
|
$87
|
$8
|
$95
|
$6
|
|
Camp cost,
equipment and field supplies
|
-
|
71
|
8
|
79
|
248
|
|
Geological
consulting services
|
-
|
-
|
20
|
20
|
198
|
|
Geophysical
analysis
|
-
|
-
|
-
|
-
|
174
|
|
Permitting,
environmental and community costs
|
-
|
25
|
12
|
37
|
733
|
|
Expediting and
mobilization
|
-
|
-
|
-
|
-
|
5
|
|
Salaries and
wages
|
-
|
87
|
25
|
112
|
89
|
|
Fuel and
consumables
|
-
|
-
|
-
|
-
|
7
|
|
Aircraft and
travel
|
-
|
-
|
-
|
-
|
4
|
|
Share-based
compensation
|
-
|
7
|
2
|
9
|
30
|
|
Three months
ended
September 30,
2020
|
$-
|
$277
|
$75
|
$352
|
$1,494
|
|
Fury
Gold Mines Limited
Notes to Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
17
|
|
|
Québec (a)
|
Nunavut
|
British
Columbia
|
Total
|
Peru(b)
|
|
Assaying
|
$1,983
|
$76
|
$19
|
$2,078
|
$-
|
|
Exploration
drilling (c)
|
3,444
|
599
|
125
|
4,168
|
-
|
|
Camp cost,
equipment and
field
supplies
|
1,243
|
316
|
108
|
1,667
|
-
|
|
Geological
consulting services
|
438
|
304
|
3
|
745
|
-
|
|
Geophysical
analysis
|
165
|
-
|
-
|
165
|
-
|
|
Permitting,
environmental and community costs
|
156
|
139
|
41
|
336
|
-
|
|
Expediting and
mobilization
|
70
|
132
|
5
|
207
|
-
|
|
Salaries and
wages
|
1,591
|
423
|
57
|
2,071
|
-
|
|
Fuel and
consumables
|
459
|
86
|
-
|
545
|
-
|
|
Aircraft and
travel
|
449
|
1,073
|
1
|
1,523
|
-
|
|
Share-based
compensation
|
332
|
82
|
28
|
442
|
-
|
|
Nine
months ended
September
30, 2021
|
$10,330
|
$3,230
|
$387
|
$13,947
|
$-
|
|
|
Québec
|
Nunavut
|
British
Columbia
|
Total
|
Peru(b)
|
|
Assaying
|
$-
|
$107
|
$24
|
$131
|
$16
|
|
Exploration
drilling
|
-
|
26
|
-
|
26
|
-
|
|
Camp cost,
equipment and
field
supplies
|
-
|
194
|
24
|
218
|
340
|
|
Geological
consulting services
|
-
|
2
|
193
|
195
|
291
|
|
Geological
analysis
|
-
|
-
|
-
|
-
|
174
|
|
Permitting,
environmental and community costs
|
-
|
50
|
19
|
69
|
1,360
|
|
Expediting and
mobilization
|
-
|
5
|
-
|
5
|
10
|
|
Salaries and
wages
|
-
|
282
|
106
|
388
|
465
|
|
Fuel and
consumables
|
-
|
-
|
-
|
-
|
9
|
|
Aircraft and
travel
|
-
|
-
|
2
|
2
|
53
|
|
Share-based
compensation
|
-
|
45
|
18
|
63
|
174
|
|
Nine months
ended
September 30,
2020
|
$-
|
$711
|
$386
|
$1,097
|
$2,892
|
(a) During the three
and nine months ended September 30, 2021, the Company incurred
exploration and evaluation costs of $340 and $378, respectively (on
a 100% basis) at the Éléonore South Joint Venture. 50% of
the costs were applied to the advances received for exploration
from the joint venture partner Goldcorp Canada. The net 50% of
costs borne by the Company are included as exploration and
evaluation expenditures for the three and nine months ended
September 30, 2021.
(b) 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).
(c) Exploration
drilling expense incurred at the Homestake Ridge project in the
three months ended September 30, 2021, comprised the expensing of a
drilling contract deposit of $125.
|
Fury
Gold Mines Limited
Notes to Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
18
|
Note 10:
Share capital
Authorized
Unlimited
common shares without par value.
Unlimited
preferred shares – nil issued and outstanding.
Share issuances
Nine months ended September 30, 2021:
i.
During the nine
months ended September 30, 2021, 328,767 shares were issued to
purchase a 2% royalty interest on the Homestake Ridge project (note
5c).
ii.
During the nine
months ended September 30, 2021, 5,834 shares were issued as a
result of share options being exercised with a weighted average
exercise price of $0.86 for gross proceeds of $5. An amount of $1
attributed to these share options was transferred from the equity
reserves and recorded against share capital.
iii.
During the nine
months ended September 30, 2021, 101,042 shares were issued as a
result of share warrants being exercised with a weighted average
exercise price of $1.46 for gross proceeds of $147. An amount of
$12 attributed to these share warrants was transferred from the
equity reserves and recorded against share capital.
Nine months ended September 30, 2020:
i.
On September 9,
2020, the Company issued 743,187 (1,100,000 pre-consolidation)
common shares at a price of $4.29 ($2.90 pre-consolidation) per
share as part of the consideration made for the purchase of the
Alturas concessions in Sombrero.
ii.
On July 7, 2020,
the Company converted the Amended Bridge Loan (Note 15) to
1,318,877 (1,952,084 pre-consolidation) common shares at a price of
$2.37 ($1.60 pre-consolidation) per share. Of the aggregate shares
issues, 1,266,797 (1,875,000 pre-consolidation) were issued for the
$3,000,000 principal loan and 52,080 (77,084 pre-consolidation)
were issued in satisfaction of $123,000 of interest that accrued at
a rate of 10% per annum up to the date of the loan
amendment.
iii.
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 $239 as
at September 30, 2020, and included $59 in commissions and $180 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
|
-
|
(239)
|
|
Proceeds, net of share issue
costs
|
6,333,984
|
$14,761
|
iv.
During the nine
months ended September 30, 2020, 1,428,525 (2,114,375
pre-consolidation) shares were issued as a result of share options
being exercised with a weighted average exercise price of
approximately $2.19 ($1.48 pre-consolidation) for gross proceeds of
$3,128,438. An amount of $1,916,955 attributed to these share
options was transferred from the equity reserves and recorded
against share capital.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
19
|
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 and nine months ended September
30, 2021, the share-based compensation expense was as
follows:
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Recognized in net
loss from continuing operations and included in:
|
|
|
|
|
|
Exploration and
evaluation costs
|
$93
|
$9
|
$442
|
$63
|
|
Fees, salaries and
other employee benefits
|
78
|
73
|
1,262
|
396
|
|
|
$171
|
$82
|
$1,704
|
$459
|
|
Recognized in net
loss from discontinued operations
|
-
|
34
|
-
|
194
|
|
Total share-based compensation expense
|
$171
|
$116
|
$1,704
|
$653
|
During
the three and nine months ended September 30, 2021, the Company
granted 1,275,000 and 1,405,000 share options, respectively, to
directors, officers, employees and certain consultants who provide
certain on-going services to the Company, representative of
employee services. The weighted average fair value per option of
these share options for the three and nine months ended September
30, 2021, was calculated as $0.56 and $0.56, respectively, using
the Black-Scholes option valuation model at the grant
date.
During
the three and nine months ended September 30, 2020, the Company
granted nil and 50,672 share options (nil and 75,000
pre-consolidation), respectively, to directors, officers, and
employees. The weighted average fair value per option of these
share options was calculated as $1.33 ($0.90 pre-consolidation)
using the Black-Scholes option valuation model at the grant
date.
The
fair value of the share-based options granted during the three and
nine months ended September 30, 2021 and 2020 were estimated using
the Black-Scholes option valuation model with the following
weighted average assumptions:
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Risk-free interest
rate
|
0.96%
|
-
|
0.91%
|
0.39%
|
|
Expected dividend
yield
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Share price
volatility
|
67%
|
-
|
67%
|
58%
|
|
Expected forfeiture
rate
|
0%
|
-
|
0%
|
0%
|
|
Expected life in
years
|
4.90
|
-
|
4.90
|
4.90
|
The
risk-free interest rate assumption is based on the Government of
Canada benchmark bond yields and treasury bills with a remaining
term that approximates the expected life of the share-based
options. The expected volatility assumption is based on the
historical and implied volatility of the Company’s common
shares. The expected forfeiture rate and the expected life in years
are based on historical trends.
|
Fury
Gold Mines Limited
Notes to Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
20
|
Share option plan
The
Company maintains a rolling share option plan providing for the
issuance of share options up to 10% of the Company’s issued
and outstanding common shares at the time of the grant. The Company
may grant share options from time to time to its directors,
officers, employees, and other service providers. The share options
typically vest as to 25% on the date of the grant and 12.5% every
three months thereafter for a total vesting period of 18
months.
The
number of share options issued and outstanding and the weighted
average exercise price were as follows:
|
|
Number
of
share
options
|
Weighted
average
exercise
price
($/option)(a)
|
|
Outstanding,
December 31, 2019
|
5,602,619
|
$2.96
|
|
Granted(b)
|
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
|
|
Granted
(c)
|
1,405,000
|
1.03
|
|
Exercised
|
(5,834)
|
0.86
|
|
Expired
|
(1,685,048)
|
3.62
|
|
Forfeited
|
(418,750)
|
2.04
|
|
Outstanding, September 30, 2021
|
7,436,372
|
$2.00
|
(a) 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.
(b) 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).
(c) On August 26, 2021,
870,000 share options exercisable at $0.93 for a five year term
were granted to Mr. Forrester Clark following his appointment as
Chief Executive Officer. These options vest over a period of two
years with 12.5% vesting every three months. In respect of the
predecessor CEO, one million options expired unexercised, of which
375,000 and 625,000 expired during the quarter and after quarter
end, respectively.
As at
September 30, 2021, the number of share options outstanding was as
follows:
|
|
Options
outstanding
|
Options
exercisable
|
||||
|
Exercise
price
($/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
|
2,950,030
|
1.29
|
3.79
|
1,645,573
|
1.51
|
2.96
|
|
$2.05 – $4.37
|
4,355,074
|
2.31
|
3.56
|
3,269,450
|
2.39
|
3.40
|
|
$7.54 – $9.00
|
131,268
|
7.88
|
0.67
|
131,268
|
7.88
|
0.67
|
|
|
7,436,372
|
2.00
|
3.60
|
5,046,291
|
2.25
|
3.18
|
|
Fury
Gold Mines Limited
Notes to Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
21
|
Share purchase warrants
The
number of share purchase warrants outstanding at September 30, 2021
was as follows:
|
|
Warrants
outstanding
|
Exercise price
($/share)
|
|
Outstanding,
December 31, 2019
|
337,813
|
$2.96
|
|
Issued(1)
|
1,297,591
|
1.33
|
|
Exercised
|
(8,664)
|
1.46
|
|
Outstanding,
December 31, 2020
|
1,626,740
|
$1.66
|
|
Exercised
|
(101,042)
|
1.46
|
|
Expired
|
(440,702)
|
1.46
|
|
Outstanding,
September 30, 2021
|
1,084,996
|
$1.77
|
(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 $1,560 (note 3).
The
following table reflects the warrants issued and outstanding as of
September 30, 2021:
|
Expiry date
|
Warrants
outstanding
|
Exercise price
($/share)
|
|
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
|
1,084,996
|
1.77
|
|
Fury
Gold Mines Limited
Notes to Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
22
|
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
|
Nine months ended
|
||
|
|
September 30
|
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Universal
Mineral Services Ltd.(a)
|
|
|
|
|
|
Exploration
and evaluation costs:
|
|
|
|
|
|
Québec
|
$16
|
$-
|
$113
|
$-
|
|
Nunavut
|
13
|
69
|
32
|
186
|
|
British
Columbia
|
1
|
34
|
17
|
98
|
|
Peru
|
-
|
54
|
-
|
146
|
|
Fees,
salaries and other employee benefits
|
35
|
55
|
71
|
188
|
|
Legal
and professional fees
|
11
|
1
|
14
|
12
|
|
Marketing
and investor relations
|
7
|
31
|
15
|
92
|
|
Office
and administration
|
69
|
116
|
167
|
303
|
|
Project
investigation costs
|
-
|
99
|
-
|
134
|
|
Total transactions for the period
|
$152
|
$459
|
$429
|
$1,159
|
(a)
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 September 30, 2021, was $311 (December
31, 2020 – $109) which is included in accounts payable. In
addition, the Company had $150 on deposit with UMS as at September
30, 2021 (December 31, 2020 – $150) and $73 in current
prepaids (2020 - nil) representing certain geological software
licenses purchased on behalf of the Company by UMS, and which are
amortized over twelve months.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
23
|
Key management personnel
Pursuant
to the acquisition of Eastmain and the creation of 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
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Short-term benefits
provided to executives(a)(b)
|
$215
|
$248
|
$764
|
$1,571
|
|
Directors’
fees paid to non-executive directors
|
51
|
196
|
157
|
269
|
|
Share-based
payments(b)
|
(66)
|
64
|
988
|
444
|
|
Total(c)
|
$200
|
$508
|
$1,909
|
$2,284
|
(a) Short-term
employee benefits include salaries, bonuses payable within twelve
months of the date of the unaudited condensed interim consolidated
statement of financial position, and other annual employee
benefits.
(b) 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 until April 2021. For the three
and nine months ended September 30, 2021, $nil and $96 of
short-term benefits (three and nine months ended September 30, 2020
– $nil), respectively, and $nil and $54 of share-based
payment expense (three and nine months ended September 30, 2020
– $nil), respectively, were recognized in the unaudited
condensed interim consolidated statement of loss and comprehensive
loss in respect of these transition arrangements.
(c) The renumeration
for key management personnel for the three and nine months ended
September 30, 2020 is comprised of those individuals who were key
management personnel as at September 30, 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
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Accounts
receivable
|
$33
|
$(521)
|
$429
|
$(722)
|
|
Prepaid expenses
and deposits
|
(442)
|
(1,132)
|
(455)
|
(1,114)
|
|
Accounts payable
and accrued liabilities
|
3,149
|
(538)
|
3,099
|
(197)
|
|
Change
in non-cash working capital
|
$2,740
|
$(2,191)
|
$3,073
|
$(2,033)
|
Operating
activities include the following cash received:
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Income taxes
refunded (note 2)
|
$-
|
$-
|
$1,717
|
$-
|
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
24
|
Note
14:
Loss per share
For the
three and nine months ended September 30, 2021 and 2020, the
weighted average number of shares outstanding and loss per share
from continuing operations were as follows:
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Loss for the period
from continuing operations
|
$7,507
|
$1,818
|
$16,492
|
$5,421
|
|
Loss for the
period
|
7,507
|
3,462
|
16,492
|
8,911
|
|
Weighted average
number of shares outstanding
|
117,941,454
|
72,758,821
|
117,888,555
|
70,392,736
|
|
Basic and diluted
loss per share from continuing operations
|
$0.06
|
$0.02
|
$0.14
|
$0.08
|
|
Basic and diluted
loss per share
|
$0.06
|
$0.05
|
$0.14
|
$0.13
|
All of
the outstanding share options and share purchase warrants at
September 30, 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 Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
25
|
The
Company’s financial instruments as at September 30, 2021
consisted of cash, marketable securities, accounts 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 September 30, 2021
|
At December 31,
2020
|
||||
|
|
Amortized
Cost
|
FVTPL
|
Total
|
Amortized
Cost
|
FVTPL
|
Total
|
|
Cash
|
$2,596
|
$-
|
$2,596
|
$15,361
|
$-
|
$15,361
|
|
Marketable
securities
|
-
|
536
|
536
|
-
|
2,675
|
2,675
|
|
Accounts
receivable
|
76
|
-
|
76
|
-
|
-
|
-
|
|
Deposits
|
418
|
-
|
418
|
243
|
-
|
243
|
|
Total
financial assets
|
3,090
|
536
|
3,626
|
15,604
|
2,675
|
18,279
|
|
Accounts payable
and accrued liabilities
|
5,359
|
-
|
5,359
|
3,280
|
-
|
3,280
|
|
Total financial liabilities
|
$5,359
|
$-
|
$5,359
|
$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. 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.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
26
|
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.
The
Company’s financial instruments measured at fair value on a
recurring basis were as follows:
|
|
At September 30,
2021
|
At
December 31, 2020
|
||
|
|
Level
1
|
Level
2(1)
|
Level 1
|
Level 2(1)
|
|
Cash
|
$2,596
|
$-
|
$15,361
|
$-
|
|
Marketable
securities
|
250
|
286
|
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
September 30, 2021, there were no financial assets or financial
liabilities measured and recognized on the unaudited condensed
interim consolidated statement of financial position at fair value
that would be categorized as level 3 in the fair value
hierarchy.
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
27
|
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 September 30, 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 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 activities, and its
holdings of cash and marketable securities. The Company monitors
and adjusts, when required, these exploration programs as well as
corporate administrative costs to ensure that adequate levels of
working capital are maintained.
As at
September 30, 2021, the Company had unrestricted cash of $2,596,
including $1,920 of deferred share issuance proceeds, (December 31,
2020 – unrestricted cash of $15,361), working capital deficit
of $6,266 (December 31, 2020 – working capital of $8,353),
which the Company defines as current assets less current
liabilities, and an accumulated deficit of $156,451 (December 31,
2020 – $139,959). The Company notes that the flow-through
share premium liability, which reduced the Company’s working
capital by $3,531 (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 and nine months ended September 30, 2021, Fury Gold incurred
a loss of $7,507 and $16,492 (three and nine months ended September
30, 2020 – $3,498 and $8,947), respectively, 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 of its mineral properties.
The
Company’s contractual obligations are as
follows:
|
|
Within
1 year
|
2 to 3
years
|
Over 3
Years
|
At September 30
2021
|
At December
31
2020
|
|
Accounts payable
and accrued liabilities
|
$5,359
|
$-
|
$-
|
$5,359
|
$3,280
|
|
Québec
flow-through expenditure requirements
|
8,239
|
-
|
-
|
8,239
|
18,079
|
|
Undiscounted lease
payments
|
182
|
374
|
111
|
667
|
762
|
|
Other
|
315
|
-
|
-
|
315
|
-
|
|
Total
|
$14,095
|
$374
|
$111
|
$14,580
|
$22,121
|
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 all the
Company’s 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 $nil
and $266 were made during the three and nine months ending
September 30, 2021, respectively, in respect of these mineral
claims, with $186 recognized in prepaid expenses as at September
30, 2021 (December 31, 2020 – $65).
|
Fury Gold Mines Limited
Notes to Q3 2021 Condensed Interim Consolidated
Financial Statements
(Expressed in
thousands of Canadian dollars, except where noted –
Unaudited)
|
28
|
Market risk
This is
the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices.
Significant market risks to which the Company is exposed are as
follows:
i.
Currency
Risk
The
Company is exposed to currency risk by having balances and
transactions in currencies that are different from its functional
currency (the Canadian dollar). The Company’s foreign
currency exposure related to its financial assets and liabilities
held in US dollars was as follows:
|
|
At September 30
2021
|
At December 31
2020
|
|
Financial
assets
|
|
|
|
US$ bank
accounts
|
$14
|
$70
|
|
|
|
|
|
Financial
liabilities
|
|
|
|
Accounts
payable
|
(109)
|
(42)
|
|
|
$(95)
|
$(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 unaudited 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
i.
On
October 13, 2021, the Company completed a previously announced
non-brokered private placement for total gross proceeds of
CAD$5,596 by issuing 7,461,450 units at a price of $0.75 per unit.
Each unit consists of one common share of Fury Gold and one warrant
entitling the holder to purchase one warrant share at a price of
CAD$1.20 for a period of three years. The expiry date of the
warrants can be accelerated to 30 days with notice from the Company
should the common shares trade after the expiry of the four-month
hold period at a price equal to or greater than CAD$1.50 for 20
consecutive trading days.
The
non-brokered private placement was completed in two tranches, with
5,085,670 units issued on October 6, 2021 for gross proceeds of
CAD$3,814 and 2,375,780 units issued on October 13, 2021 for gross
proceeds of CAD$1,782.
Certain
of the proceeds were received in advance of the closing date,
therefore $1,920 was recognized as deferred share issuance proceeds
as at September 30, 2021.
ii.
On October 5, 2021,
the Company received cash proceeds of $185 in respect of a
favourable court judgment following Eastmain’s legal
objection to certain disallowed expenditures for the years
2007-2010 which had been excluded from a mineral tax refund in
Quebec.
|
Fury
Gold Mines Limited
Notes to Q3 2021
Condensed Interim Consolidated Financial
Statements
(Expressed
in thousands of Canadian dollars, except where noted –
Unaudited)
|
29
|
Exhibit 99.2
(An
exploration company)
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 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
and nine months ended September 30, 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 November
12, 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
|
5
|
|
|
|
|
SECTION 3: Q3 2021 HIGHLIGHTS AND SUBSEQUENT EVENTS
|
6
|
|
|
|
|
3.1
Corporate highlights
|
6
|
|
3.2
Operational highlights
|
6
|
|
|
|
|
SECTION 4: CORPORATE STRATEGY
|
7
|
|
|
|
|
SECTION 5: PROJECTS OVERVIEW
|
9
|
|
|
|
|
5.1
Québec
|
9
|
|
5.1.1
Eau Claire
|
9
|
|
5.1.2
Éléonore South JV
|
12
|
|
5.2
Nunavut
|
13
|
|
5.2.1
Committee Bay
|
13
|
|
5.2.2
Gibson MacQuoid
|
13
|
|
5.3
British Columbia
|
13
|
|
5.3.1
Homestake Ridge
|
13
|
|
|
|
|
SECTION 6: REVIEW OF QUARTERLY FINANCIAL INFORMATION
|
14
|
|
|
|
|
SECTION 7: FINANCIAL POSITION, LIQUIDITY, AND CAPITAL
RESOURCES
|
18
|
|
|
|
|
SECTION 8: FINANCIAL RISK SUMMARY
|
22
|
|
|
|
|
SECTION 9: RELATED PARTY BALANCES AND TRANSACTIONS
|
23
|
|
|
|
|
SECTION 10: CRITICAL JUDGMENTS AND ACCOUNTING
ESTIMATES
|
24
|
|
|
|
|
SECTION 11: NEW ACCOUNTING STANDARDS AND POLICIES
|
24
|
|
|
|
|
SECTION 12: CONTROLS AND PROCEDURES
|
24
|
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
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 activities,
including the success of such exploration 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;
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 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 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.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
2
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.
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.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
3
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, all on-site
employees have participated in the vaccination program and have
received both doses. In addition to the COVID-19 screening of all
on-site employees implemented in 2020, the Company was approved by
l'institut national de santé publique du Québec 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.
Operations in Nunavut for 2021 continue to be subject to COVID-19
protocols and travel restrictions. 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. Currently, all travellers require an exemption from
the public health officer of Nunavut prior to travel into the
Territory, either through evidence of double vaccination status or
evidence of direct travel to remote regions with no interaction
with Nunavut Hamlets or Nunavummiuts. At site, the Company
implemented certain protocols to ensure safe operations in the
Territory including increased cleaning and sanitation; rapid
COVID-19 testing; and an isolation facility for symptomatic
personnel. Additionally, all workers were required to provide the
Company with a completed self-assessment form and evidence of a
negative COVID test 48 hours prior to travel to
site.
In April 2021, British Columbia implemented restrictions on
non-essential travel between health regions. Currently, mining and
exploration have been deemed essential and any work plans for the
Homestake Ridge project in 2021 is subject to approval of a
COVID-19 plan by the Chief Provincial Health Officer.
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, the Company continues to
monitor the situation closely and respond
appropriately.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
4
Fury Gold is a Canadian-focused exploration company, with 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 1630-1177 West Hastings Street, Vancouver, BC
V6E 2K3.
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 Eeyou
Istchee James Bay, Québec, by issuing 34,100,000 common 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 and nine months ended September 30, 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 and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
5
■
On October 13,
2021, the Company announced the closure of the second and final
tranche of its non-brokered private placement announced on
September 22, 2021 (the "Placement"). In aggregate, the Company
issued a total of 7,461,450 Units and raised gross proceeds of
CAD$5,596,088. Each Unit consists of one common share of Fury (a
"Common Share") and one common share purchase warrant (each, a
"Warrant") entitling the holder to purchase one Common Share
("Warrant Share") at a price of CAD$1.20 for a period of three
years. The Common Shares are subject to a four-month holding
period. The expiry date of the Warrants can be accelerated to 30
days with notice from the Company should the Common Shares trade
after the expiry of the four-month hold period at a price equal to
or greater than CAD$1.50 for 20 consecutive trading
days.
■
On September 13,
2021, the Company announced that it had entered into a Royalty
Purchase Agreement (‘the Agreement") for the purchase of a 2%
net smelter return royalty on certain claims at its Homestake Ridge
project in British Columbia. The purchase price was $400,000,
payable 25% in cash and 75% in common shares of the
Company.
■
On August 18, 2021,
the Company appointed Tim Clark to the position of Chief Executive
Officer and Director. Mr. Clark brings 23 years of global capital
markets experience with numerous major US, European and Canadian
banks. Over the years, he has developed strong working
relationships with Tier 1 institutional investors throughout the
United States and Canada, providing corporate strategy, and peer
and financial analysis and insights on corporates within the
materials, commodities and mining sectors. Mr. Clark holds a
Bachelor of Economics from the University of Massachusetts
(Amherst) and a Master of Business Administration in Finance and
Accounting from Vanderbilt University.
■
On August 4, 2021,
the Company announced results for eight core drill holes at the Eau
Claire project including results from the Company's deposit
drilling and initial results from the western extension targets.
Three of the drill holes focused on the previously untested Hinge
target at the western limit of the Eau Claire deposit. Significant
intercepts included 1.0 metre (“m”) of 12.81 grams
per tonne (“g/t”) gold and 8.0m of 1.18 g/t
gold, demonstrating that the Hinge target has both high-grade
veins and broader zones of mineralization. Additionally, the
Company announced the results of two resource expansion drill holes
on the western Limb target, drill results from both holes met the
minimum mining width of 2m above the resource cut-off grade of 2.5
g/t gold; and two resource expansion holes targeting the high-grade
eastern area of the deposit and outside of the current resource
blocks, which have intersected 1.29m of 14.27 g/t gold from drill
hole 21EC-030 and 1.33m of 9.37 g/t gold from drill hole
21EC-025.
■
To
date a total of 35,327 metres, or approximately 70% of the 50,000m
total planned program, have been drilled at Eau Claire. Due to the
temporary pause on drilling at Eau Claire in October 2021 while the
Company awaits the pending drillhole assay results, which comprise
11,791m representing 15 drill holes completed at Eau Claire, the
remainder of the program is planned to be completed in 2022.
However, the timing is dependent upon positive drill results,
market conditions, and the availability of funds. Subject to these
conditions, the Company expects to incur approximately $8.2 million
of expenditures during the remainder of 2021 through 2022 at Eau
Claire.
■
On July 14, 2021,
the Company announced that it
had commenced drilling at its Committee Bay project in the
Kitikmeot region of Nunavut, Canada, with 2,587m of diamond drilling completed during
a 6 week field program. The drill program was
designed to test the potential below the current resource at the
Three Bluffs deposit and to expand the defined high-grade
mineralization at the Raven prospect, which has historical drill
intercepts of 2.8m of 31.1 g/t gold and 5.49m of 12.6 g/t gold. The
Company conducted surface exploration work at five targets located
in the southern half of the belt to advance them to drill stage.
Assay results are anticipated in the fourth quarter of
2021.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
6
Fury Gold Mines is a Canadian-focused gold exploration company
strategically positioned in three prolific mining regions: Eeyou
Istchee James Bay, Quebec; the Kitikmeot Region Nunavut; and the
Golden Triangle, British Columbia. The Company’s vision is to
deliver shareholder value by growing the Company’s
multi-million-ounce gold portfolio through additional significant
gold discoveries in Canada.
The Company targets delivery of shareholder value through
strategically reviewing capital 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.
Section 5 summarizes the Company’s planned exploration
programs at each of its key projects, subject to meeting certain
conditions as outlined above.
Update to previously disclosed exploration plans and corporate
reorganization
The Company previously outlined its exploration plans at each of
the Company’s projects in its MD&A for the year ended
December 31, 2020, the first quarter ended March 31, 2021 and the
second quarter ended June 30, 2021, as well as in news releases,
and the Company’s investor presentations posted and available
on the Company’s website (collectively, the “Prior
Disclosure”).
On September 7, 2021, the Company provided an exploration and
corporate update which set out the Company’s realignment of
strategic objectives, including:
■
2021
and 2022 primary exploration activities focused on Fury's core
assets Eau Claire and Committee Bay, while concurrently conducting
a strategic review of non-core assets;
■
Establishing
a key performance metric of capital spend, targeting a minimum
allocation of 70% of capital resources on exploration and drilling
activities; and
■
Reduction
of corporate cash expenditures through certain strategic
initiatives, including transitioning the Toronto office to a
virtual work environment with a head office in Vancouver and
leveraging several cost sharing benefits through a shared service
function with Universal Mineral Services Ltd (Section
9).
The Company believes this strategic realignment provides a more
clearly focused capital allocation. Following completion of the
Placement in October 2021, the Company currently anticipates that
its available financial resources will be used primarily to advance
its Quebec exploration programs, comprising the 50,000 metre drill
program at the Eau Claire project; a surface exploration program at
the Éléonore South Joint Venture (“ESJV”)
which commenced in the third quarter of 2021; and a regional
exploration program, targeted to commence in the first half of
2022. Management notes that further financing will be required to
complete the full 50,000m drill program at Eau Claire in 2022.
While the Company has been successful in obtaining financing to
date, and the Company plans to continue to secure the necessary
financing through a combination of equity financing and/or
disposition of mineral properties, 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 of the Company’s assets.
Fury Gold
Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
7
Assay results are currently pending for fifteen drillholes at Eau Claire: one eastern extension,
five western Limb, one western Hinge and eight from Snake Lake;
results are pending for four of
the five drill holes at Committee Bay. Throughout 2021, the Company
has encountered significant delays in receipt of assay results from
its Eau Claire and Committee Bay drill programs. These delays
significantly worsened during the third quarter of 2021, with assay
turn around times of up to ninety days encountered. As a result,
the Company temporarily halted the 50,000m drill program at Eau
Claire in October 2021. The Company will recommence the program
following receipt of the outstanding assay results to allow the
Company appropriate time to review and refine subsequent targeting
at the Eau Claire project, as well as seek additional capital
resources.
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.
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.
During 2021, employees and the board of directors took part in a
multi-module accredited in-house learning program to facilitate the
building of Indigenous cultural competency. Additionally, during
the three months ended September 30, 2021, the Company made three
$5,000 donations to local communities in support of Nunavut
Day.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
8
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 38.12% joint venture interest in the ESJV, 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 and is current with regards to all option payment
and expenditure obligations. Additionally, the
Lac Lessard project is under option to EV Metals Holdings Pty
Ltd.
The Eau Claire project is located immediately north of the Eastmain
reservoir, 10km northeast of Hydro Québec’s EM-1
hydroelectric power facility, 80km north of the town of Nemaska,
approximately 320km northeast of the town of Matagami, and 800km
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 on a campaign basis for all surface exploration,
particularly trenching and drilling, undertaken on the
property.
The Eau Claire project is underlain by typical Archean greenstone
assemblages of the Eastmain Greenstone Belt, which are composed of
volcanic rocks of basaltic to rhyolitic composition and 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, 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.
In November 2020, Fury Gold commenced an ongoing initial 50,000m
drill program at the Eau Claire project. The drill program consists
of i) an infill phase focused on upgrading and expanding the
current resource and ii) an exploration phase designed to test
targets along the 4.5km long deposit trend.
The drill program at the Eau Claire deposit targeted 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 3.5 g/t gold cut-off grade). This drill program is
designed to add ounces between defined resource blocks as well as
potentially upgrade the resource category from inferred to
indicated. To date, Fury has drilled sixteen holes targeting the
southeast margin of the Eau Claire Resource with nine drill holes
intersecting resource grade and width or higher
including: 23.27 g/t gold over 7.09m, 11.56 g/t gold over
6.04m, 59.3 g/t gold over 1m, 8.87 g/t gold over 3m, and 4.89 g/t
gold over 2.94m.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
9
The exploration drilling aims to significantly expand the Eau
Claire deposit by testing a diverse set of targets: a 1km eastern
down plunge extension, the Snake Lake mineralized structure and two
targets to the west (‘Hinge’ and ‘Limb’,
collectively “Eau Claire West”). All exploration
targets within the Deposit Trend have the potential to
significantly expand the Eau Claire mineralized footprint. The
potential for high-grade gold mineralization to continue down
plunge and along strike to the east is 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. Drilling along this newly imaged structural pattern has
successfully intersected high-grade gold mineralization over 660m
to the east of the Eau Claire deposit including: 15.3 g/t Au over
1m, and 8.83 g/t Au over 1.5m. Drilling at the Snake Lake target
has confirmed the historical mineralization remains open with
intersections of 6.43 g/t Au over 1.5m and 94.1 g/t Au over 0.5m
expanding the mineralized footprint by over 800m down dip. Drilling
at the western Hinge target intersected high grade mineralization,
12.81 g/t Au over 1m, as well gold mineralization over significant
width, 1.18 g/t Au over 8m confirming that the deposit remains open
to the west.
The exploration drilling has focused on four key 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 quartz tourmaline 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. Initial results returned from Target A, located 200m to
350m down plunge east of the deposit include 4.05 g/t gold over
0.5m, 2.41 g/t gold over 3.5m and 2.96 g/t gold over 1.5m. The
drilling intersected zones of stacked quartz-tourmaline veins and
associated quartz feldspar porphyry dykes along the Eau Claire
deposit structure.
■
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, 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 15.30 g/t gold from 21EC-007, 1.5m of
8.83 g/t gold from 21EC-010, and 3.0m of 2.59 g/t gold from
20EC-006. The reported intercepts extend the Eau Claire deposit
foot print by over 660m to the east. The Company is evaluating
these initial results and planning additional drilling in the
area.
■
Snake Lake structure is located 1.2km to
the east of the Eau Claire deposit and has seen limited
drilling. The Company drilled an initial three-hole test along
the Snake Lake Structure successfully extending the known
mineralization by 840m down dip and identifying a new zone of gold
mineralization. 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 (Target B) is approximately 1,100m down plunge of the
nearest Snake Lake drilling and has significantly opened up the
exploration potential along this structural corridor. Results from
these first holes include 0.5m of 94.10 g/t gold from 21EC-018,
0.5m of 19.60 g/t gold from 21SL-001, 5.0m of 2.85 g/t Au from
21SL-001 and 2.0m of 7.51 g/t Au from 21SL-001.
■
Eau Claire West 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. Three drill holes were completed which tested a
portion of the Hinge target beneath the 850 zone. Results from
these first holes include 1.5m of 8.50 g/t gold and 1.0m of 12.81
g/t gold from 21EC-032 and 8.0m of 1.18 g/t Au from 21EC-031. These
initial results from the Hinge target are extremely encouraging and
the Company is planning additional drilling. Two resource expansion
holes were drilled to confirm the geometry of the Limb target.
These holes intersected up to eight stacked zones of gold
mineralization associated with quartz tourmaline veining and quartz
porphyry dykes in 21EC-026. The second drill hole, 21EC-028,
intersected four zones of gold mineralization. Results from these
holes include 4.96m of 2.71 g/t Au, 1.49m of 7.3 g/t Au, 3.49m of
3.21 g/t Au and 1.0m of 9.6 g/t Au from 21EC-026 and 4.97m of 2.60
g/t Au and 1.49m of 7.77 g/t Au from 21EC-028. Assay results from
four Limb exploration holes are
pending.
Assay
results are currently pending for fifteen drillholes: one eastern
extension, five western Limb, one western Hinge and eight from
Snake Lake. Results from these drill holes are anticipated in the
fourth quarter of 2021. During the third quarter of 2021, the
Company completed biogeochemical surveys on three grids targeting
six defined targets. The results from the biogeochemical sampling
program are anticipated in early 2022.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
10
To date a total of 35,327 metres, or approximately 70% of the total
program, have been drilled at Eau Claire. Due to the temporary
pause on drilling at Eau Claire while the Company awaits the
pending drillhole assay results, which comprise 11,791m of total
drill holes completed at Eau Claire, the remainder of the program
is planned to be completed in 2022, however the timing is dependent
upon positive drill results, market conditions, and the
availability of funds. Subject to these conditions, the Company
expects to incur approximately $8.2 million of expenditures during
the remainder of 2021 through 2022 at Eau Claire.
|
Activity
|
Funding
of Estimated Expenditures
|
|
|
|
With
existing
capital
resources
|
Assuming sufficient
additional
capital is
raised
|
|
Drilling
|
$900
|
$4,050
|
|
Geophysical
data acquisition
|
-
|
150
|
|
Ground-based
field work
|
200
|
1,100
|
|
Engineering
studies
|
-
|
350
|
|
Environmental
studies
|
-
|
100
|
|
Camp
and on-site personnel costs
|
500
|
750
|
|
Desktop
processing, studies and integration of data
|
100
|
-
|
|
Total (existing and additional capital of
$8,200)
|
$1,700
|
$6,500
|
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 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 nine months ended September 30,
2021, the Company made a cash payment in respect of certain mineral
claims in Québec of $266, with $186 recognized as a prepaid
expense as at September 30, 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).
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
11
Fury Gold owns a 38.12% interest in the ESJV project and is the
operator of the joint venture. Currently, the ESJV is held by Fury
Gold, Azimut Exploration Inc. (23.77%), and Goldcorp Canada Ltd., a
wholly owned subsidiary of Newmont Corporation
(38.11%).
The Éléonore South property is strategically located in
an area of prolific gold mineralization within the Eeyou Istchee
James Bay gold camp and is locally defined by Newmont’s
Éléonore mine and Sirios Resources’ 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 proportion 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.
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. In September 2021 the ESJV initiated a
field program designed to define drill targets at this till anomaly
as well as the complete regional sampling in the southern portion
of the project where no historical systematic sampling has been
completed. During the three and nine months ended September 30
2021, the Company incurred ESJV approved exploration and evaluation
costs of $340 and $378, respectively (on a 100% basis) at the ESJV.
Results from this ongoing program are anticipated in late Q4 2021
and/or early Q1 2022.
The Committee Bay project comprises approximately 280,000 hectares
situated along the Committee Bay Greenstone Belt located 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, are 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.
The Company completed 2,587m of diamond
drilling during a six-week field program in the third quarter of
2021.
The drilling was
focused on expanding
the defined high-grade mineralization at the Raven prospect
and testing
the potential
mineralization
below the current resource
at the Three Bluffs deposit. Assay results are
anticipated in the fourth quarter of
2021.
Raven Prospect Overview: The
Raven prospect is located in the southwest third of the Committee
Bay Gold Belt, approximately 50 km west of the Three Bluffs
deposit. The prospect is situated along an 8km long shear zone
where defined gold mineralization is strongly associated with
arsenopyrite within sheared and altered gabbros as well as within
quartz veins marking the contact between the gabbro and
metasediments over a known 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.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
12
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. Assay results from four completed drill holes at the
Raven prospect are expected in Q4 2021. Additional till sampling
was completed at the Raven prospect to explore the entire length of
the 8km shear zone to define new targets. Results of the till
sampling are expected in Q4 2021.
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's primary target for 2021 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 completed a single
drill hole that intersected the conductivity body; assay results
are anticipated in the fourth quarter of 2021.
Ground-based
exploration at the Committee Bay project was designed to follow up
on conceptual targets identified through desktop studies. This work
included mapping, prospecting, and sampling in order to advance
these targets from conceptual to drill ready. Results from the
field exploration program are anticipated in the fourth quarter of
2021.
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).
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 2021, 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 2022 exploration work at Gibson MacQuoid,
which will not be pursued unless the Company raises additional
funds.
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 a 2% NSR applicable
to the Crown grants. On September 13th, 2021 the Company
announced the purchase of a separate corporate 2% NSR on 14 mineral claims for
$400 in cash and common
shares.
As a result of the Company’s on-going review of capital
resource allocation, the Company has elected to review various
strategic alternatives for the Homestake Ridge, as such the Company
has deferred the 2021 exploration program. The Company’s
commitment for project expenditures at the Homestake Ridge project
comprise an annual $50 royalty payment in perpetuity.
2020 mineral resource estimate and PEA
On April 15, 2020, the Company announced the results of its initial
PEA prepared in accordance with NI 43-101 by MineFill Services Inc.
of Seattle, Washington, with other contributors including RPA, now
part of SLR Consulting Ltd. (QP for updated mineral resource
estimate) and One-Eighty Consulting Group (for environmental,
permitting, and social). The Company filed the related PEA on SEDAR
at www.sedar.com in July 2020.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
13
|
Three months ended:
|
Interest
income
|
Loss from
continuing
operations
|
Loss from
discontinued
operations
|
Comprehensive
loss
|
Loss per
share
($/share)
|
|
September 30,
2021
|
$4
|
$7,507
|
$-
|
$7,507
|
$0.06
|
|
June 30, 2021
|
9
|
4,060
|
-
|
4,060
|
0.03
|
|
March 31, 2021
|
20
|
4,925
|
-
|
4,925
|
0.04
|
|
December 31,
2020
|
26
|
5,306
|
-
|
5,468
|
0.05
|
|
September 30,
2020
|
14
|
1,818
|
1,644
|
3,481
|
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
|
6.1 Three months ended September 30, 2021 compared to three months
ended September 30, 2020
During the three months ended September 30, 2021, the Company
reported a comprehensive loss of $7,507 and loss per share of $0.06
compared to a comprehensive loss of $3,517 and loss per share of
$0.05 for the three months ended September 30, 2020. The
significant drivers of changes in comprehensive loss were as
follows:
Operating expenses:
■
Exploration and
evaluation costs increased to $6,717 for the three months ended
September 30, 2021 compared to $352 for the three months ended
September 30, 2020 primarily reflecting the drill programs at Eau
Claire and Committee Bay which commenced in November 2020 and July
2021, respectively. The reduced exploration activity in the third
quarter of 2020 reflects the impact of COVID-19, which resulted in
travel restrictions during that period;
■
Fees, salaries, and
other employment benefits increased to $808 for the three months
ended September 30, 2021 compared to $615 for the three months
ended September 30, 2020 primarily due to severance costs
recognized in the third quarter of 2021;
■
Insurance costs
increased to $179 for the three months ended September 30, 2021
compared to $103 for the three months ended September 30, 2020,
primarily due to increased director and officer premiums,
consistent with increases seen across the sector for dual-listed
exploration stage companies;
■
Legal and
professional fees increased to $462 for the three months ended
September 30, 2021 compared to $100 for the three months ended
September 30, 2020, primarily due to legal and professional fees
incurred in respect of the financing which commenced during the
third quarter of 2021; and
■
Regulatory and
compliance costs decreased to $84 for the three months ended
September 30, 2021 compared to $168 for the three months ended
September 30, 2020 primarily due to costs incurred in the prior
year associated with the Transaction which completed on October 9,
2020.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
14
Other income and expenses:
■
Unrealized net loss
on marketable securities of $169 for the three months ended
September 30, 2021 as compared to $27 for the three months ended
September 30, 2020 due to a decline in the market value of the
Company’s equity investments;
■
Realized net loss
on marketable securities of $290 for the three months ended
September 30, 2021 as compared to $nil for the three months ended
September 30, 2020, reflecting the disposition of 1,481,177 common
shares of Benz Mining for total cash proceeds of $938;
and
■
Amortization of
flow-through share premium of $1,558 for the three months ended
September 30, 2021 as compared to $nil for the three months ended
September 30, 2020, reflecting the exploration activity at Eau
Claire in the third quarter of 2021.
Loss from discontinued operations:
■
Loss from
discontinued operations was $nil for the three months ended
September 30, 2021 as compared to $1,644 for the three months ended
September 30, 2020 due to the transfer of the Peruvian operations
to the Spincos in October 2020.
6.2 Nine months ended September 30, 2021 compared to nine months
ended September 30, 2020
During the nine months ended September 30, 2021, the Company
reported a comprehensive loss of $16,492 and loss per share of
$0.14, compared to a comprehensive loss of $8,726 and loss per
share of $0.13 for the nine months ended September 30, 2020. The
significant drivers of changes in comprehensive loss were as
follows:
Operating expenses:
■
Exploration and
evaluation costs increased to $13,947 for the nine months ended
September 30, 2021 compared to $1,097 for the nine months ended
September 30, 2020, primarily reflecting the drill programs at Eau
Claire and Committee Bay which commenced in November 2020 and July
2021, respectively. 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 $3,000 for the nine months
ended September 30, 2021 compared to $1,767 for the nine months
ended September 30, 2020 primarily due to share-based compensation
expense of $1,262 for the nine months ended September 30, 2021
compared to $397 for the nine months ended September 30, 2020,
arising from new grants of share options in the fourth quarter of
2020 and third quarter of 2021. Additionally, severance costs of
$374 resulted in an increase to employee costs for the nine months
ended September 30, 2021;
■
Legal and
professional fees increased to $1,832 for the nine months ended
September 30, 2021 compared to $224 for the nine months ended
September 30, 2020, primarily due to legal and professional fees
incurred in respect of various regulatory filings including the
Prospectus, translations, and Placement which commenced during the
third quarter of 2021; and
■
Office and
administrative costs increased to $511 for the nine months ended
September 30, 2021 compared to $326 for the nine months ended
September 30, 2020 due to office relocation costs, and IT support
and maintenance costs.
Other income and expenses:
■
Unrealized net loss
of $911 on the Company’s marketable securities for the nine
months ended September 30, 2021 as compared to an unrealized net
gain of $39 for the nine months ended September 30, 2020,
reflecting a decline in the fair value of the Company’s
marketable securities;
■
Realized net loss
on marketable securities of $290 for the three months ended
September 30, 2021 as compared to $nil for the three months ended
September 30, 2020, reflecting the disposition of 1,481,177 common
shares of Benz Mining for total cash proceeds of $938;
and
■
Amortization of
flow-through share premium of $4,113 for the nine months ended
September 30, 2021 as compared to $7 for the nine months ended
September 30, 2020, reflecting the exploration activity at Eau
Claire during the nine months ending September 30,
2021.
Loss from discontinued operations:
■
Loss from
discontinued operations was $nil for the nine months ended
September 30, 2021 as compared to $3,490 for the nine months ended
September 30, 2020 due to the transfer of the Peruvian operations
to the Spincos in October 2020.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
15
6.3 Summary of project costs
During the nine months ended September 30, 2021, the
Company’s mineral properties decreased to $160,649 compared
to $160,772 as at December 31, 2020, primarily 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 interest rate to 1.98% from 1.21%
as at December 31, 2020; offset in part by the purchase of a 2%
royalty on the Homestake Ridge project for total purchase price of
$400.
|
|
Québec
|
Nunavut
|
British Columbia
|
Total
|
|
Balance at December
31, 2020
|
$125,354
|
$19,358
|
$16,060
|
$160,772
|
|
Purchase of
Homestake Ridge Royalty
|
-
|
-
|
400
|
400
|
|
Disposition
|
(50)
|
-
|
-
|
(50)
|
|
Change in estimate
of provision for
site reclamation
and closure
|
(221)
|
(252)
|
-
|
(473)
|
|
Balance
at September 30, 2021
|
$125,083
|
$19,106
|
$16,460
|
$160,649
|
During
the three and nine months ended September 30, 2021, the
Company’s exploration expenditures were:
|
|
Quebec(a)
|
Nunavut
|
British Columbia
|
Total
|
|
Assaying
|
$886
|
$36
|
$3
|
$925
|
|
Exploration
drilling (b)
|
1,080
|
569
|
125
|
1,774
|
|
Camp cost,
equipment and field supplies
|
486
|
194
|
100
|
780
|
|
Geological
consulting services
|
179
|
270
|
-
|
449
|
|
Geophysical
analysis
|
16
|
-
|
-
|
16
|
|
Permitting,
environmental and
community
costs
|
34
|
58
|
13
|
105
|
|
Expediting and
mobilization
|
19
|
91
|
5
|
115
|
|
Salaries and
wages
|
489
|
343
|
24
|
856
|
|
Fuel and
consumables
|
149
|
51
|
-
|
200
|
|
Aircraft and
travel
|
333
|
1,071
|
-
|
1,404
|
|
Share-based
compensation
|
58
|
26
|
9
|
93
|
|
Total
for the three months
ended
September 30, 2021
|
$3,729
|
$2,709
|
$279
|
$6,717
|
|
|
Québec
(a) |
Nunavut
|
British Columbia
|
Total
|
|
Assaying
|
$1,983
|
$76
|
$19
|
$2,078
|
|
Exploration
drilling
|
3,444
|
599
|
125
|
4,168
|
|
Camp cost,
equipment and field supplies
|
1,243
|
316
|
108
|
1,667
|
|
Geological
consulting services
|
438
|
304
|
3
|
745
|
|
Geophysical
analysis
|
165
|
-
|
-
|
165
|
|
Permitting,
environmental and
community
costs
|
156
|
139
|
41
|
336
|
|
Expediting and
mobilization
|
70
|
132
|
5
|
207
|
|
Salaries and
wages
|
1,591
|
423
|
57
|
2,071
|
|
Fuel and
consumables
|
459
|
86
|
-
|
545
|
|
Aircraft and
travel
|
449
|
1,073
|
1
|
1,523
|
|
Share-based
compensation
|
332
|
82
|
28
|
442
|
|
Total
for the nine months
ended
September 30, 2021
|
$10,330
|
$3,230
|
$387
|
$13,947
|
(a)
During
the three and nine months ended September 30, 2021, the Company
incurred exploration and evaluation costs of $340 and $378,
respectively (on a 100% basis) at the Éléonore South
Joint Venture. 50% of the costs were applied to the advances
received for exploration from the joint venture partner Goldcorp
Canada. The net 50% of costs borne by the Company are included as
exploration and evaluation expenditures for the three and nine
months ended September 30, 2021.
(b)
Exploration
drilling expense incurred at the Homestake Ridge project in the
three months ended September 30, 2021, comprised the expensing of a
drilling contract deposit of $125.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
16
Section 7: Financial
position, liquidity, and capital resources
|
|
At September 30
2021
|
At December 31
2020
|
|
Cash
|
$2,596
|
$15,361
|
|
Restricted cash
|
165
|
165
|
|
Other assets
|
3,807
|
5,752
|
|
Mineral property
interests
|
160,649
|
160,772
|
|
Current
liabilities
|
11,036
|
11,295
|
|
Non-current
liabilities
|
4,252
|
4,483
|
7.1
Financial position and liquidity
As at September 30, 2021, the Company had unrestricted cash of
$2,596, including $1,920 of deferred share issuance proceeds
(December 31, 2020 – unrestricted cash of $15,361), working
capital deficit of $6,266 (December 31, 2020 – working
capital of $8,353), which the Company defines as current assets
less current liabilities, and an accumulated deficit of $156,451
(December 31, 2020 – $139,959). The Company notes that the
flow-through share premium liability which represents $3,531
(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 deficit excluding the flow-through premium
liability was $2,735(December 31, 2020 – working capital of
$15,997).
During the three and nine months ended September 30, 2021, Fury
Gold incurred a loss of $7,507 and $16,492 (three and nine months
ended September 30, 2020 – $3,462 and $8,911), respectively,
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 of its mineral properties.
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
||
|
Cash
flows from continuing operations:
|
2021
|
2020
|
2021
|
2020
|
|
Cash
(used in) operating activities
|
$(5,547)
|
$(3,711)
|
$(14,307)
|
$(6,419)
|
|
Cash
provided by (used in) investing activities
|
814
|
18
|
(448)
|
65
|
|
Cash
provided by financing activities
|
1,877
|
2,841
|
1,940
|
17,813
|
Operating
activities:
■
During
the three months ended September 30, 2021, the Company used cash of
$5,547 in operating activities from continuing operations compared
to $3,711 during the three months ended September 30, 2020. The
cash outflow for the current quarter was higher primarily due to
exploration activities at Eau Claire and Committee Bay, partially
offset by an increase in accounts payable and accrued liabilities
at September 30, 2021.
■
During
the nine months ended September 30, 2021, the Company used cash of
$14,307 in operating activities from continuing operations compared
to $6,419 during the nine months ended September 30, 2020. The cash
outflow for the nine months of 2021 was higher primarily due to
exploration activities at Eau Claire and Committee Bay and,
increased employee-related and administrative costs associated with
the formation of Fury Gold primarily during the first quarter of
2021. Additionally, legal and professional fees incurred increased
in respect of various regulatory filings, including the Prospectus
and non-brokered private placement financing during the third
quarter of 2021.
Investing
activities:
■
During
the three months ended September 30, 2021, the Company provided
cash by investing activities from continuing operations of $814 as
compared to cash provided by investing activities from continuing
operations of $18 during the three months ended September 30, 2020.
This increase in net cash inflow was primarily due to disposition
of marketable securities in the current quarter as compared to the
third quarter of 2020, where the net cash inflow resulted from
higher interest income earned on the Company’s cash
balances.
■
During
the nine months ended September 30, 2021, the Company used cash in
investing activities from continuing operations of $448 as compared
to cash provided by investing activities from continuing operations
of $65 in the nine months ended September 30, 2020. This increased
cash outflow was primarily due to settlement of $1,209 of
transaction costs in the first three months of 2021 associated with
the purchase of Eastmain in 2020 offset by proceeds from
disposition of marketable securities in the third quarter of
2021.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
18
Financing
activities:
■
For
the three months ended September 30, 2021, cash provided by
financing activities of $1,877 consists of $1,920 proceeds from
funds received in advance of common share issuance, partially
offset by rental payments arising from the Toronto office lease of
$43. This compares to cash provided by financing activities of
$2,841 for the three months ended September 30, 2020 which
primarily comprised of $2,956 proceeds from share option and
warrant exercises, partially offset by $51 used for the issuance of
shares and $64 interest payment.
■
For
the nine months ended September 30, 2021, cash provided by
financing activities of $1,940 consists of $152 proceeds from share
option and warrant exercises and $1,920 funds received in advance
of common share issuance partially offset by rental payments
arising from the Toronto office lease of $132. This compares to
cash provided by financing activities of $17,813 for the nine
months ended September 30, 2020, which primarily comprised of
$14,753 from the issuance of shares and $3,129 in proceeds from
share option and warrant exercises.
7.2 Capital resources
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 plans and achieve its growth objectives.
The Company ensures that there is sufficient liquidity available to
meet its short-term business requirements, including contractual
commitments, taking into account its anticipated cash outflows from
exploration activities and its holdings of cash and marketable
securities. The Company monitors and adjusts, when required, these
exploration 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 existing
capital resources to support certain planned activities for the
next 6 months at the Eau Claire project, which are set out herein,
and short term contractual commitments.
The Company’s ability to
undertake further project expansionary plans as outlined herein at
each of the Company’s projects is 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 October 13, 2021, the Company completed a previously announced
non-brokered private placement for total gross proceeds of
CAD$5,596 by issuing 7,461,450 units at a price of $0.75 per unit.
Each unit consists of one common share of Fury Gold and one warrant
entitling the holder to purchase one warrant share at a price of
CAD$1.20 for a period of three years. The expiry date of the
warrants can be accelerated to 30 days with notice from the Company
should the common shares trade after the expiry of the four-month
hold period at a price equal to or greater than CAD$1.50 for 20
consecutive trading days.
The non-brokered private placement was completed in two tranches,
with 5,085,670 units issued on October 6, 2021 for gross proceeds
of CAD$3,814 and 2,375,780 units issued on October 13, 2021 for
gross proceeds of CAD$1,782.
Certain of the proceeds were received in advance of the closing
date, therefore $1,920 was recognized as deferred share issuance
proceeds and within unrestricted cash as at September 30,
2021.
The proceeds are intended to fund the Quebec exploration program
and general working capital.
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.
7.2.1 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 September
30, 2021, shown in contractual undiscounted cashflows:
|
|
Within
1
year
|
2 to
3
years
|
Over
3
years
|
At September
30
2021
|
At December
31
2020
|
|
Accounts payable and accrued
liabilities
|
$5,359
|
$-
|
$-
|
$5,359
|
$3,280
|
|
Québec flow-through
expenditure requirements
|
8,239
|
-
|
-
|
8,239
|
18,079
|
|
Undiscounted lease
payments
|
182
|
374
|
111
|
667
|
762
|
|
Other
|
315
|
|
|
315
|
|
|
Total
|
$14,095
|
$374
|
$111
|
$14,580
|
$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
$nil and $266 were made during the three and nine months ended
September 30, 2021, respectively, for these mineral claims, with
$186 recognized in prepaid expenses as at September 30, 2021
(December 31, 2020 – $65).
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
19
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.
Currently, the Company expects that its existing working capital
resources will be deployed as follows over the next 12
months:
|
|
Estimated Expenditures
|
|
Eau
Claire exploration program
|
$1,700
|
|
Committee
Bay mineral claims
|
150
|
|
Homestake
Ridge annual royalty
|
50
|
|
Total funded expenditures
|
$1,900
|
Subject
to raising further financing the Company expects to spend
additional exploration program expenditures estimated as
follows:
|
|
Estimated Expenditures
|
|
Eau
Claire project
|
$6,500
|
There can be no assurances that Fury Gold will be able to obtain
adequate financing in the future, or that the terms of such
financing will be favourable for the further exploration of the
Company’s exploration projects. Further, the Company may
elect to not proceed with one or more of the above exploration
programs.
7.2.3 Exercise of share options and
warrants
|
|
Share
Options outstanding
|
Share
Options exercisable
|
||||
|
Exercise
price
($/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
|
2,950,030
|
1.29
|
3.79
|
1,645,573
|
1.51
|
2.96
|
|
$2.05
– $4.37
|
4,355,074
|
2.31
|
3.56
|
3,269,450
|
2.39
|
3.40
|
|
$7.54
– $9.00
|
131,268
|
7.88
|
0.67
|
131,268
|
7.88
|
0.67
|
|
|
7,436,372
|
2.00
|
3.60
|
5,046,291
|
2.25
|
3.18
|
(1)
The exercise price of issued share options prior
to October 9, 2020 were adjusted downwards by $0.95, pursuant to
the Transaction, reflecting the fair value of the Peruvian projects
allocated to the Spincos. The above weighted average exercise
prices were retrospectively adjusted to reflect this
change.
|
Expiry date
|
Warrants
outstanding
|
Exercise
price ($/share)
|
|
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
|
1,084,996
|
1.77
|
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 November 12, 2021, there were 7,436,372
and 8,211,453 of share options and warrants outstanding,
respectively, with a weighted average exercise price of
$1.99 and $1.27
respectively.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
20
7.2.4 2020 Financings and use of
proceeds
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 September 2020 flow-through financing funded 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 nine months ended September 30, 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
|
(9,934)
|
-
|
-
|
(9,934)
|
(4,153)
|
|
Balance of flow-through expenditure commitments
at September 30, 2021
|
$8,145
|
$-
|
$-
|
$8,145
|
$3,491
|
Of the $9,934 (December 31, 2020 – $1,812) flow-through
eligible expenditures incurred at the Company’s Québec
properties for the nine months ended September 30, 2021, $579
(December 31, 2020 – $1,812) was applied against the
flow-through expenditure requirement acquired from Eastmain as part
of the Transaction, extinguishing the assumed obligation. The
flow-through expenditure commitment arising from the September 2020
Offering outstanding as at September 30, 2021 was $8,145 (December
31, 2020 – $17,500). The Company notes that further funding
will be required to meet this obligation in full by the required
date of 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 and nine months ended September 30, 2020, share issue
costs related to the February 2020 Offering totalled $10 and $239,
respectively, including $59 paid in commissions and $180 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
|
-
|
(239)
|
|
Proceeds, net of
share issue costs
|
6,333,984
|
$14,761
|
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,
the arrangement was extinguished, and the related security was
discharged.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
21
7.3 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 September 30,
2021: 118,259,500
Number of common shares issued and outstanding as at
November 12,
2021: 125,720,950
As at September 30, 2021, the Company’s financial instruments
consist of cash, marketable securities, accounts 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 and nine months
ended September 30, 2021.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
22
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
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Universal Mineral
Services Ltd.(1)
|
|
|
|
|
|
Exploration and
evaluation costs:
|
|
|
|
|
|
Québec
|
$16
|
$-
|
$113
|
$-
|
|
Nunavut
|
13
|
69
|
32
|
186
|
|
British
Columbia
|
1
|
34
|
17
|
98
|
|
Peru
|
-
|
54
|
-
|
146
|
|
Fees, salaries and
other employee benefits
|
35
|
55
|
71
|
188
|
|
Legal and
professional fees
|
11
|
1
|
14
|
12
|
|
Marketing and
investor relations
|
7
|
31
|
15
|
92
|
|
Office and
administration
|
69
|
116
|
167
|
303
|
|
Project
investigation costs
|
-
|
135
|
-
|
170
|
|
Total
|
$152
|
$495
|
$429
|
$1,195
|
(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 September 30, 2021, was $311
(December 31, 2020 – $109) which is included in accounts
payable. In addition, the Company had $150 on deposit with UMS as
at September 30, 2021 (December 31, 2020 – $150) and $73 in
short-term prepayments (2020 - nil) representing certain geological
software licenses purchased on behalf of the Company by UMS, and
which are amortized over twelve months, both of which are 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 by the
Company to include Fury Gold’s board of directors and certain
executive 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
September 30
|
Nine months ended
September 30
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
Short-term benefits
provided to executives(1)(2)
|
$215
|
$248
|
$764
|
$1,571
|
|
Directors’
fees paid to non-executive directors
|
51
|
196
|
157
|
269
|
|
Share-based
payments(2)
|
(66)
|
64
|
988
|
444
|
|
Total(3)
|
$200
|
$508
|
$1,909
|
$2,284
|
(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 until
April 2021. For the three and nine months ended September 30, 2021,
$nil and $96 of short-term benefits (three and nine months ended
September 30, 2020 – $nil), respectively, and $nil and $54 of
share-based payment expense (three and nine months ended September
30, 2020 – $nil), respectively, were recognized in the
condensed interim consolidated statement of loss and comprehensive
loss in respect of these transition
arrangements.
(3) The remuneration for key
management personnel for the three months ended September 30, 2020
is comprised of those individuals who were key management personnel
as at September 30, 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.
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
23
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 and nine months ended
September 30, 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 and nine months ended
September 30, 2021, the Company received a refund of $1,717,
consisting of $1,670 principal and $47 interest (three and nine
months ended September 30, 2020 – $nil).
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 and nine months ended September
30, 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.
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.
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 September 30, 2021 that have
materially affected, or are reasonably likely to materially affect,
the Company’s disclosure controls and
procedures.
|
Fury Gold
Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
24
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 September 30, 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,
"Forrester A.
Clark"
Forrester A. Clark
Chief Executive Officer
November 12,
2021
|
Fury
Gold Mines Limited
Management’s Discussion and Analysis of Financial Condition
and
Results of
Operations for the Three and Nine Months Ended September 30,
2021
(Amounts
expressed in thousands of Canadian dollars, unless otherwise
noted)
|
|
25
Exhibit
99.3
Exhibit
99.4
