NexMetals Mining Corp 10-Q/A, filed Dec 20, 2024
NexMetals Mining Corp. (NEXM)
About this 10-Q/A
NexMetals Mining Corp filed this 10-Q/A on December 20, 2024, covering the quarter ended September 30, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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As of December 12, 2024, there were Common Shares issued and outstanding.
TABLE OF CONTENTS
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 6 | Exhibits | 19 |
| SIGNATURES | 20 | |
| 2 |
Explanatory Note
On November 15, 2024, the Company filed a Certificate of Amendment with the Ministry of Public and Business Service Delivery of Ontario, Canada, to change the Company’s name to Premium Resources Ltd. from Premium Nickel Resources Ltd (the “Name Change”). The Name Change was approved by the Company’s shareholders at the Annual General and Special Meeting of shareholders of the Company held on October 29, 2024. All references to Premium Nickel Resources Ltd., Premium Nickel or PNRL throughout this Amendment should be read as referring to the Company. In connection with the Name Change, the Company’s website was changed to https://premiumresources.com. As such, certain references to the Company’s former website have also been updated in the amended and restated MD&A presented in this Amendment to update the Company’s website address.
Pursuant to the rules of the SEC, Item 6 of Part II of the Initial Filing has been amended to contain currently-dated certifications from our principal executive officer and principal financial officer, as required by Sections 302 of the Sarbanes-Oxley Act of 2002. The certifications of our principal executive officer and our principal financial officer are attached to this Amendment as Exhibits 31.1 and 31.2. Because no financial statements are included in this Form 10-Q/A and this Form 10-Q/A does not contain or amend any disclosure with respect to Items 307 or 308 of Regulation S-K promulgated by the SEC under the Securities Exchange Act of 1934, paragraphs 3, 4 and 5 of the Section 302 certifications have been omitted. Further, because no financial statements are included in this Amendment, new certifications of the Company’s principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are not required to be included with this Amendment.
Except as described above, no other changes have been made to the Initial Filing. Except as described above, this Amendment does not reflect events occurring after the filing of the Initial Filing, or modify or update those disclosures, including any exhibits to the Initial Filing affected by subsequent events. Information not affected by the changes described above is unchanged and reflects the disclosures made at the time of the Initial Filing. Accordingly, this Amendment should be read in conjunction with our filings made with the SEC subsequent to the filing of the Initial Filing.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis (this “MD&A”) of our financial condition and results of operation should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company and accompanying notes thereto for the quarters ended September 30, 2024 and 2023 (the “Quarterly Financial Statements”) appearing elsewhere in this Report. This discussion and analysis below includes forward-looking statements that are subject to risks, uncertainties and other factors described in the “Risk Factors” section set forth in the 2023 Form 10-K that could cause actual results to differ materially from those anticipated in these forward-looking statements as a result of various factors. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. We caution you to read the “Cautionary Note Regarding Forward-Looking Statements” section of this Report.
This MD&A is intended to assist the reader to assess material changes in the financial condition of the Company during the quarter ended September 30, 2024, and the results of operations of the Company for the three-month and nine-month periods ended September 30, 2024 and September 30, 2023. The Quarterly Financial Statements and the financial information contained in this MD&A were prepared in accordance with US GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission.
In this MD&A, unless the context otherwise requires, references to the Company or PNRL refer to Premium Nickel Resources Ltd. and its consolidated subsidiaries. All monetary amounts in the discussion are expressed in Canadian dollars unless otherwise indicated.
This MD&A contains forward-looking information within the meaning of applicable securities laws. All forward-looking information, including information not specifically identified herein, is made subject to cautionary language in this MD&A. Readers are cautioned to refer to the disclosure in this Report under the heading “Cautionary Note Regarding Forward-Looking Statements” when reading any forward-looking information.
Company Overview
PNRL is a mineral exploration and evaluation company focused on the discovery and advancement of high-quality nickel-copper-cobalt-platinum group metals (“Ni-Cu-Co-PGM”) resources. The principal assets of the Company are the Selebi and Selebi North nickel-copper-cobalt (“Ni-Cu-Co”) mines in Botswana and related infrastructure (together, the “Selebi Mines”), as well as the nickel, copper, cobalt, platinum-group elements (“Ni-Cu-Co-PGE”) Selkirk mine in Botswana, together with associated infrastructure and four surrounding prospecting licenses (collectively, the “Selkirk Mine” and together with the Selebi Mines, the “Mines”). PNRL is committed to governance through transparency, accountability, and open communication within PNRL’s team and stakeholders.
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The Company’s principal business activity is the exploration and evaluation of the Mines.
The Mines are permitted with 10-year mining licences and benefit from significant local infrastructure. The Company’s flagship Selebi Mines includes two operational shafts, the Selebi and Selebi North shafts, and related infrastructure such as rail, power and roads.
PNRL is headquartered in Toronto, Ontario, Canada and is publicly traded on the TSX Venture Exchange under the symbol “PNRL”.
Summary of Activities
In 2023, PNRL commenced its Phase 2 drill program undertaking a combination of resource and continued exploration drilling at the Selebi Mines to demonstrate the size potential of the Selebi Mines mineral system, with the aim of establishing an initial mineral resource estimate (“MRE”) on the Selebi Mines (the “Initial MRE”) that will serve as the basis for future engineering studies. The resource drilling at the Selebi Mines commenced underground from the Selebi North infrastructure in August 2023 and is currently ongoing with three drills turning. Assay results for completed holes are released as they are received and confirmed by the Company.
On September 20, 2024, the Company filed the Initial MRE for its Selebi Mines in accordance with Canadian standards. The Initial MRE reflects a significant expansion of the 2016 historic estimate.
During the third quarter and up to November 10, 2024, the Company has drilled approximately 17,167 metres in 36 holes at Selebi North. Assays for a total of 30,915 metres across 71 completed holes, with 3 more in progress, have not been accounted for in the Initial MRE. These assay results will continue to be released as they are received and confirmed by the Company.
The Company plans to continue its work at the Selkirk Mine and its surrounding prospecting licences, which is the Company’s second asset in Botswana, located approximately 75 kilometres north of the Selebi Mines. The focus of this work will be to understand the legacy work done by previous owners, which had advanced the Selkirk Mine to a bankable feasibility study for re-development as an open pit mine.
The Company’s Q3 2024 activities included a re-sampling program of historical drill core to support a MRE in respect of the Selkirk Mine, anticipated to be delivered in Q4 2024. In 2023, the Company completed test work to evaluate an alternative ore processing and tailings management strategy to those used in previous economic studies, the results of which are set forth in the Selkirk Technical Report (as defined herein).
For more information relating to the contemplated activities and milestones for the Mines, please see “Exploration and Evaluation Activities” below.
Highlights and Key Developments to date in 2024:
| ● | On January 1, 2024, James Gowans was appointed as the Chair of the Board of Directors. | |
| ● | The Company continued its Phase 2 Selebi North drilling program, which commenced August 9, 2023. In aggregate to November 10, 2024, the Company has drilled a total of 60,899 metres in 156 drill holes. | |
| ● | Since January 1, 2024, the Company has reported assay results from the Selebi Mines from a total of 80 drill holes within and immediately outside of the existing wireframe of the Initial MRE, pursuant to news releases issued from January 18 to November 13, 2024, the full text of which are available on the Company’s website (https://premiumresources.com/). The Company’s website is not incorporated in this Report. | |
| ● | On June 14 and June 21, 2024, the Company closed two tranches of a non-brokered private placement offering of units of the Company (the “Units”), pursuant to which the Company issued a total of 35,256,409 Units at a price of $0.78 per Unit for gross proceeds of approximately $27.5 million (the “June 2024 Financing”). For a more detailed summary of the June 2024 Financing, see “Liquidity — Financings”. | |
| ● | On June 24, 2024, Norman MacDonald was appointed to the Board of Directors. | |
| ● | On September 19, 2024, the Company announced the appointment of Paul Martin to the Board of Directors of the Company to fill a vacancy resulting from John Hick’s retirement from the Board. | |
| ● | On September 20, 2024, the Company filed the Initial MRE for the Selebi Mines, prepared in accordance with Canadian requirements. |
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| ● | On October 24, 2024, the Company announced deposit expansion and high-grade assay results for a further three holes, and assays pending for one hole, all drilled outside of the Initial MRE wireframe at its Selebi Mines. Assay highlights include: | |
| Ø | SNUG-24-096-W1: South Limb - deepest intersection drilled to date and located 100 meters down plunge of SNUG-24-089 and outside the resource defined in the Initial MRE: |
| ○ | 12.90 metres of 4.12% CuEq or 2.00% NiEq; and | |
| ○ | 24.50 metres of 2.17% CuEq or 1.05%. |
| Ø | SNUG-24-102 extension: N2 outside the resource defined in the Initial MRE: |
| ○ | 17.00 metres of 2.02% CuEq or 0.98% NiEq, including 8.10 metres of 2.42% CuEq or 1.17% NiEq. |
| Ø | SNUG-24-114: South Limb infill drilling and N2 outside the resource defined in the Initial MRE: |
| ○ | 21.30 metres of 4.14% CuEq or 2.01% NiEq, including 13.80 metres of 4.40% CuEq or 2.14% NiEq. |
| Ø | SNUG-24-144: Intersected N2 mineralization outside the resource defined in the Initial MRE. Assay results are pending. |
| ● | On October 28, 2024, the Company announced strong assay results from the re-sampling of historic drill core and an update on the pending mineral resource estimate for the Selkirk Mine. The Company assayed samples from a total of seventeen historic drill holes extracted by the former operator, Tati Nickel Mining Company (“TNMC”), to obtain additional platinum group elements analyses required for the mineral resource estimate on the Selkirk Mine. For further information, see “Selkirk Mine, Botswana”. |
| ● | On November 11, 2024, the Company announced the extension of the Study Phase (as defined under Section 43 of the Botswana Mining Act) for the Selebi Mines project pursuant to the terms of the Selebi asset purchase agreement (the “Selebi APA”) with the BCL liquidator. This extension follows successful completion by the Company of the work and investment milestones required by the Selebi APA. It provides the Company with an additional one year, to February 1, 2026, to complete an economic study and make the next milestone payment, in the amount of US$25 million, under the Selebi APA. |
Exploration and Evaluation Activities
The following table outlines for the balance of 2024 key milestones, estimated timing and costs related to each of the Company’s material projects, the Selebi Mines and the Selkirk Mine, based on the Company’s reasonable expectations, intended courses of action and current assumptions and judgement, with information based as of September 30, 2024.
| Key Milestones for Project | Expected Timing of Completion | Anticipated Remaining Costs(1) | ||||
| Selebi Mines(2) | ||||||
| Ongoing drilling and assays | Ongoing, costs to December 2024 | $ | 2,000,000 | |||
| Operating costs, and care & maintenance | Ongoing costs to December 2024 | $ | 4,000,000 | |||
| Engineering and development | Ongoing costs to December 2024 | $ | 2,000,000 | |||
| Selkirk Mine(3) | ||||||
| Mineral resource estimate for Selkirk Mine | Ongoing costs to December 2024 | $ | 150,000 | |||
Notes:
| (1) | As at September 30, 2024. | |
| (2) | The key milestones are to complete the resource characterization drilling program at Selebi North and to complete the underground development required to support underground exploration drilling at the Selebi Main deposit, and focus on advancing key activities that will support an economic study. Please refer to the Selebi Technical Report, including the recommendations provided therein, for more details. | |
| (3) | Expenditures contemplated for the Selkirk Mine are minimal and contingent on additional financing. The contemplated geology and geophysics work represented in this table is a portion of the geology and geophysics work program outlined in the Selkirk Technical Report (as defined below) which is required to advance the project towards a mineral resource estimate and evaluate high priority targets on the prospecting licences. The costs for the mineral resource estimate are data verification costs that include a resampling program. |
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Readers are cautioned that the above represents the opinions, assumptions and estimates of management considered reasonable at the date the statements are made and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those described above. See “Cautionary Note Regarding Forward Looking Statements”.
Mineral Properties
The information relating to the Selebi Mines is derived from, and in some instances is an extract from, the technical report entitled “NI 43-101 Technical Report, Selebi Mines, Central District, Republic of Botswana” dated September 30, 2024 (with an effective date of June 30, 2024), which was prepared for the Company by SLR Consulting (Canada) Ltd. (“SLR”) (the “Selebi Technical Report”), and in accordance with Canadian standards.
The information relating to the Selkirk Mine is derived from, and in some instances is an extract from, the technical report summary entitled “Technical Report Summary on the Selkirk Nickel Project, North East District, Republic of Botswana” dated June 27, 2024 (with an effective date of May 31, 2024) prepared for the Company by SLR (the “Selkirk Technical Report”), prepared in compliance with the SEC’s Modernization of Property Disclosures for Mining Registrants set forth in subpart 1300 of Regulation S-K.
Selebi Mines, Botswana
The Selebi Mines are located in Botswana approximately 150 km southeast of the city of Francistown, and 410 km northeast of the national capital Gaborone. The Selebi Mines are readily accessed via paved and gravel roads from the town of Selebi-Phikwe, located just north of the mining licence. With a population of approximately 52,000, the town is accessed via a well-maintained paved road that branches due east from the major A1 highway at the town of Serule, 57 km from the Selebi Mines.
The Selebi Mines infrastructure includes two mines that are currently on care and maintenance, Selebi (#2 Shaft) and Selebi North (#4 Shaft), and associated surface infrastructure.
The Selebi Mines consists of a single mining licence covering an area of 11,504 hectares. The mining licence is centred approximately at 22°03’00”S and 27°47’00”E.
Mining licence 2022/1L was granted to Premium Nickel Resources Proprietary Limited, a wholly-owned subsidiary of PNRL in Botswana, on January 31, 2022 over the Selebi Mines deposits discovered under mining licence 4/72. The original licence which had been granted to BCL Limited (“BCL”) on March 7, 1972, covered both Selebi and Phikwe project areas, was amended several times and renewed once, and was set to expire on March 6, 2022. The new mining licence is limited to the Selebi and Selebi North deposits and their surrounding areas and expires May 26, 2032.
On August 8, 2024, the Company announced the results of the Initial MRE at the Selebi Mines, prepared in accordance with Canadian requirements.
Exploration
Exploration work completed at the Selebi Mines from 2021 to October 2024 consisted of the sourcing and digitization of existing historical information, confirming collar and down hole location information of selected historical holes, and drilling. PNRL also completed gyro, electromagnetic surveys (“BHEM”), televiewer, and downhole physical property surveys on selected high priority historical and recent exploration holes. A focused structural model over a portion of the Selebi deposit was developed by SRK Consulting Ltd. (“SRK”), and a 3D model of mineralization for use in targeting was created at Selebi North by SLR.
In August 2023, an underground drilling program at Selebi North was initiated, which is currently active with three drills turning. As of November 10, 2024, a total of 60,899 metres has been completed in 156 holes from eight underground drill bays, with three of those holes currently in progress. This new drilling is a combination of infill and exploration drilling to follow the extension of the mineralization down dip and down plunge. The core is sampled and sent to ALS Chemex in Johannesburg for analysis. Assay results are reported as they are received. All holes are surveyed with a gyro instrument and selected holes are surveyed with borehole electromagnetics. To date, a total of 59 underground holes have been surveyed.
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A summary of significant intersections at Selebi North as of September 30, 2024, is provided below. For assay results published after September 30, 2024, refer to the Company’s website (https://premiumresources.com/) (the Company’s website is not incorporated in this Report):
| Hole-ID | From (m) | To (m) | Length(1) (m) | Est. True Thickness(2) (m) | Cu (%) | Ni (%) | Co(3) (%) | Limb | CuEq(4) (%) | NiEq(5) (%) | ||||||||||||||||||||||||||||||
| SNUG-23-055 | 91.70 | 107.00 | 15.30 | 10.0 | 1.85 | 1.84 | 0.10 | South | 5.65 | 2.74 | ||||||||||||||||||||||||||||||
| SNUG-23-057 | 190.40 | 199.95 | 9.55 | 6.9 | 1.81 | 2.72 | 0.16 | N3 | 7.42 | 3.60 | ||||||||||||||||||||||||||||||
| SNUG-23-069 | 264.75 | 270.60 | 5.85 | 5.2 | 0.70 | 1.17 | 0.06 | N2 / N3 | 3.11 | 1.51 | ||||||||||||||||||||||||||||||
| including | 266.55 | 267.00 | 0.45 | 0.4 | 2.10 | 4.53 | 0.16 | N2 / N3 | 11.45 | 5.55 | ||||||||||||||||||||||||||||||
| SNUG-24-089 | 591.95 | 609.50 | 17.55 | 7.5 | 1.98 | 2.07 | 0.11 | South | 6.25 | 3.03 | ||||||||||||||||||||||||||||||
| SNUG-24-104 | 377.30 | 384.30 | 7.00 | 5.6 | 1.64 | 2.19 | 0.12 | South | 6.16 | 2.98 | ||||||||||||||||||||||||||||||
| SNUG-24-105 | 286.05 | 321.65 | 35.60 | 26.9 | 1.38 | 1.54 | 0.08 | South / N2 | 4.56 | 2.21 | ||||||||||||||||||||||||||||||
| including | 286.05 | 302.20 | 16.15 | 12.2 | 1.80 | 1.86 | 0.10 | South | 5.64 | 2.73 | ||||||||||||||||||||||||||||||
| SNUG-24-096-W1 | 684.60 | 697.50 | 12.90 | 11.5 | 1.54 | 0.95 | 0.05 | South | 4.12 | 2.00 | ||||||||||||||||||||||||||||||
| SNUG-24-106 | 515.70 | 542.05 | 26.35 | 15.0 | 1.09 | 1.56 | 0.08 | South | 4.31 | 2.09 | ||||||||||||||||||||||||||||||
| including | 525.95 | 542.05 | 16.10 | 11.0 | 1.54 | 2.10 | 0.11 | South | 5.87 | 2.84 | ||||||||||||||||||||||||||||||
| SNUG-24-107 | 521.20 | 529.60 | 8.40 | 5.0 | 2.64 | 2.13 | 0.11 | South | 7.04 | 3.41 | ||||||||||||||||||||||||||||||
| SNUG-24-121 | 400.60 | 408.90 | 8.30 | 8.0 | 1.86 | 2.04 | 0.10 | South | 6.07 | 2.94 | ||||||||||||||||||||||||||||||
| SNUG-24-123 | 246.95 | 260.80 | 13.85 | 12.5 | 1.29 | 2.33 | 0.12 | South | 6.08 | 2.95 | ||||||||||||||||||||||||||||||
| SNUG-24-124 | 482.45 | 486.00 | 3.55 | 2.4 | 4.44 | 0.53 | 0.03 | South | 5.52 | 2.68 | ||||||||||||||||||||||||||||||
| including | 482.45 | 484.80 | 2.35 | 1.6 | 6.40 | 0.68 | 0.04 | South | 7.80 | 3.78 | ||||||||||||||||||||||||||||||
| SNUG-24-125 | 370.20 | 381.05 | 10.85 | 9.3 | 1.69 | 0.96 | 0.06 | South | 3.67 | 1.78 | ||||||||||||||||||||||||||||||
| including | 370.20 | 375.30 | 5.10 | 4.4 | 2.43 | 1.41 | 0.09 | South | 5.33 | 2.59 | ||||||||||||||||||||||||||||||
| SNUG-24-126 | 270.65 | 282.80 | 12.15 | 8.2 | 0.89 | 1.49 | 0.07 | South | 3.97 | 1.92 | ||||||||||||||||||||||||||||||
| SNUG-24-130 | 483.15 | 485.80 | 2.65 | 1.2 | 2.10 | 1.34 | 0.07 | South | 4.86 | 2.36 | ||||||||||||||||||||||||||||||
| SNUG-24-130 | 497.50 | 511.85 | 14.35 | 6.5 | 1.46 | 0.92 | 0.05 | South | 3.36 | 1.63 | ||||||||||||||||||||||||||||||
| including | 503.70 | 509.50 | 5.80 | 2.7 | 1.46 | 1.79 | 0.09 | South | 5.15 | 2.50 | ||||||||||||||||||||||||||||||
| SNUG-24-131 | 336.25 | 343.50 | 7.25 | 6.7 | 1.89 | 2.71 | 0.11 | South | 7.48 | 3.63 | ||||||||||||||||||||||||||||||
| including | 336.25 | 338.05 | 1.80 | 1.6 | 1.86 | 4.09 | 0.14 | South | 10.27 | 4.99 | ||||||||||||||||||||||||||||||
| SNUG-24-132 | 241.10 | 255.05 | 13.95 | 12.1 | 1.56 | 1.16 | 0.06 | South | 3.95 | 1.92 | ||||||||||||||||||||||||||||||
| including | 241.10 | 245.90 | 4.80 | 4.2 | 3.32 | 2.16 | 0.11 | South | 7.76 | 3.77 | ||||||||||||||||||||||||||||||
| SNUG-24-133 | 269.30 | 277.50 | 8.20 | 7.2 | 2.20 | 1.56 | 0.08 | N2 / N3 | 5.41 | 2.63 | ||||||||||||||||||||||||||||||
Notes:
| (1) | Length refers to drillhole length. |
| (2) | Estimated true thickness is estimated using the MRE wireframe. |
| (3) | Co is not included in the current MRE as cobalt analyses are not consistently available throughout the deposit. |
| (4) | CuEq (copper equivalent) was calculated using the formula CuEq=Cu+2.06*Ni. |
| (5) | NiEq (nickel equivalent) was calculated using the formula NiEq=Ni+0.485*Cu. |
| (6) | Assuming long-term prices of US$10.50/lb Ni and US$4.75/lb Cu, and nickel and copper recoveries of 72.0% and 92.4%, respectively, derived from metallurgical studies which consider a conceptual bulk concentrate scenario. |
Further information on the above assay results can be found in the Company’s news releases and the Selebi Technical Report. Assay results are publicly released as they are received and confirmed by the Company. Additional assay results for the Selebi North underground drilling program, confirmed subsequent to September 30, 2024, can be found in the Company’s news releases outlined in the table below, copies of which are available on the Company’s website (https://premiumresources.com/). The Company’s website is not incorporated in this Report.
| Release Date | Release Title | |
| October 22, 2024 | Premium Nickel Selebi North Continues to Deliver: Assays Include 7.25 Metres of 7.48% CuEq or 3.63% NiEq Incl. 1.80 Metres of 10.27% CuEq or 4.99% NiEq | |
| October 24, 2024 | Premium Nickel Expands Selebi North Deposit with Discoveries of New Mineralization Beyond Initial Mineral Resource Estimate | |
| November 13, 2024 | Premium Nickel Intersects Significant Lengths of Mineralization at Selebi North: 28.70 Metres of 3.45% CuEq or 1.67% NiEq |
Mineral Processing and Metallurgical Testing
The historical BCL operations consisted of an integrated mining, concentrating and smelting complex which operated for over 40 years over the Selebi Phikwe project area. The smelter processed Selebi and Phikwe concentrates and toll treated nickel concentrates received from the Nkomati Nickel Mine and the Phoenix Mine. The concentrator plant and smelter were placed on care and maintenance in 2016 and are located adjacent to the Selebi Mines at the historical Phikwe Mine.
PNRL intends to use pre-concentration methods to separate the minerals from waste materials to produce a mill feed and flotation to produce a concentrate for commercial sale, or for further refining, and does not plan to restart the existing concentrator or smelter. Concentrate options will be investigated in the next phase of work and include a bulk concentrate and separate nickel and copper concentrates. In 2021, PNRL carried out due diligence work that included metallurgical sampling and testing. Metallurgical study programs were carried out by SGS Canada Inc. (“SGS”) in Lakefield, Ontario in 2021 and 2023 for separate copper and nickel concentrate production at a conceptual level. The conceptual process flowsheet developed by SGS includes the key unit operations of crushing, grinding, and flotation.
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PNRL and DRA collaborated in the analyses of historical data collected on key flotation parameters observed in the production of separate nickel and copper concentrates, such as metal upgrade ratios and mass pull, to simulate estimated metal grades and recoveries for bulk concentrate.
Selkirk Mine, Botswana
The Selkirk Mine is located in the northeast of Botswana approximately 28 km southeast of the city of Francistown, and 450 km northeast of the national capital Gaborone.
The Selkirk Mine is accessed year-round via paved and gravel roads from Gaborone and Francistown. The Selkirk Mine infrastructure includes relict surface infrastructure supporting the historical underground mine, and the original decline. The Selkirk Mine is quite flat, and beyond the mine footprint is covered in grassland with dispersed and clustered trees typical of a tree savanna biome.
The Selkirk Mine consists of a single mining licence covering an area of 1,458 hectares (14.58 km2) and four prospecting licences covering a total of 12,670 hectares (126.7 km2). The mining licence, 2022/7L, is centred approximately at 21°19’13” S and 27°44’17” E and is held by PNGPL, a subsidiary of PNRL. The mining licence was renewed for ten years commencing on May 27, 2022, ending on May 26, 2032. The four prospecting licences (PL050/2010, PL051/2010, PL210/2010, and PL071/2011) are currently being renewed and are expected to be valid to September 30, 2026.
Exploration
Exploration work completed by PNRL to date has consisted of the sourcing and digitization of existing historical information, confirming collar location information on selected historical holes, re-logging selected drill core, sampling mineralized drill core found untouched on surface, and submitting a number of samples for proof-of-concept metallurgical testing. PNRL has engaged SLR to complete an MRE. Following the data verification exercise, the Company has resampled core in from 17 holes to obtain additional PGM analyses to be used in the MRE at the Selkirk Mine. Re-sampled core was sent to ALS Chemex in Johannesburg for analysis.
A summary of significant intersections at the Selkirk Mine as of September 30, 2024 is provided below:
| HOLE ID | FROM (m) | TO (m) | LENGTH(1) (m) | Cu (%) | NI (%) | Co (%) | Au (ppm) | Pt (ppm) | Pd (ppm) | CuEq(2) (%) | NiEq(3) (%) | |||||||||||||||||||||||||||||||||
| DSLK012 | 71.00 | 211.00 | 139.00 | 0.47 | 0.38 | 0.02 | 0.08 | 0.16 | 0.68 | 1.55 | 0.90 | |||||||||||||||||||||||||||||||||
| DSLK028 | 37.00 | 110.00 | 68.70 | 0.32 | 0.26 | 0.01 | 0.06 | 0.13 | 0.61 | 1.11 | 0.64 | |||||||||||||||||||||||||||||||||
| DSLK035 | 61.00 | 92.85 | 31.85 | 0.29 | 0.27 | 0.01 | 0.05 | 0.13 | 0.62 | 1.10 | 0.64 | |||||||||||||||||||||||||||||||||
| DSLK035 | 110.00 | 189.00 | 79.00 | 0.24 | 0.22 | 0.01 | 0.05 | 0.11 | 0.49 | 0.90 | 0.52 | |||||||||||||||||||||||||||||||||
| DSLK037 | 31.15 | 120.00 | 88.85 | 0.29 | 0.27 | 0.01 | 0.05 | 0.14 | 0.61 | 1.09 | 0.63 | |||||||||||||||||||||||||||||||||
| DSLK039 | 120.00 | 238.00 | 108.01 | 0.29 | 0.21 | 0.01 | 0.05 | 0.11 | 0.44 | 0.93 | 0.54 | |||||||||||||||||||||||||||||||||
| DSLK040 | 81.00 | 169.00 | 88.00 | 0.37 | 0.30 | 0.02 | 0.05 | 0.12 | 0.53 | 1.23 | 0.71 | |||||||||||||||||||||||||||||||||
| DSLK040 | 186.60 | 200.00 | 13.40 | 0.51 | 0.27 | 0.02 | 0.05 | 0.12 | 0.53 | 1.30 | 0.76 | |||||||||||||||||||||||||||||||||
| DSLK047 | 107.00 | 264.00 | 157.00 | 0.35 | 0.29 | 0.02 | 0.09 | 0.12 | 0.54 | 1.21 | 0.70 | |||||||||||||||||||||||||||||||||
| DSLK075 | 50.00 | 73.00 | 23.00 | 0.24 | 0.24 | 0.01 | 0.04 | 0.10 | 0.50 | 0.94 | 0.55 | |||||||||||||||||||||||||||||||||
| DSLK075 | 89.00 | 101.00 | 12.00 | 0.27 | 0.26 | 0.01 | 0.05 | 0.13 | 0.60 | 1.06 | 0.62 | |||||||||||||||||||||||||||||||||
| DSLK075 | 115.00 | 214.00 | 99.00 | 0.32 | 0.27 | 0.01 | 0.06 | 0.13 | 0.63 | 1.15 | 0.67 | |||||||||||||||||||||||||||||||||
| DSLK079 | 100.00 | 214.00 | 114.00 | 0.41 | 0.35 | 0.02 | 0.05 | 0.14 | 0.59 | 1.36 | 0.79 | |||||||||||||||||||||||||||||||||
| including | 123.00 | 188.00 | 65.00 | 0.50 | 0.43 | 0.02 | 0.05 | 0.17 | 0.70 | 1.64 | 0.96 | |||||||||||||||||||||||||||||||||
| DSLK086 | 56.00 | 76.00 | 20.00 | 0.19 | 0.20 | 0.01 | 0.04 | 0.10 | 0.39 | 0.77 | 0.45 | |||||||||||||||||||||||||||||||||
| DSLK086 | 106.00 | 274.00 | 168.00 | 0.30 | 0.32 | 0.02 | 0.05 | 0.13 | 0.56 | 1.19 | 0.69 | |||||||||||||||||||||||||||||||||
| DSLK139 | 277.00 | 333.00 | 56.00 | 0.33 | 0.28 | 0.02 | 0.06 | 0.13 | 0.55 | 1.15 | 0.67 | |||||||||||||||||||||||||||||||||
| including | 277.00 | 297.00 | 20.00 | 0.39 | 0.35 | 0.02 | 0.06 | 0.15 | 0.64 | 1.38 | 0.80 | |||||||||||||||||||||||||||||||||
| DSLK145 | 90.00 | 128.00 | 38.00 | 0.13 | 0.16 | 0.01 | 0.03 | 0.09 | 0.40 | 0.64 | 0.37 | |||||||||||||||||||||||||||||||||
| DSLK145 | 140.00 | 202.00 | 25.80 | 0.06 | 0.08 | 0.01 | 0.01 | 0.04 | 0.14 | 0.28 | 0.16 | |||||||||||||||||||||||||||||||||
| DSLK145 | 213.00 | 349.50 | 136.50 | 0.28 | 0.27 | 0.01 | 0.05 | 0.13 | 0.55 | 1.06 | 0.62 | |||||||||||||||||||||||||||||||||
| including | 249.00 | 349.50 | 100.50 | 0.31 | 0.28 | 0.01 | 0.05 | 0.14 | 0.60 | 1.14 | 0.66 | |||||||||||||||||||||||||||||||||
| DSLK216 | 61.00 | 273.00 | 210.20 | 0.36 | 0.32 | 0.02 | 0.06 | 0.14 | 0.57 | 1.25 | 0.73 | |||||||||||||||||||||||||||||||||
| including | 61.00 | 97.00 | 36.00 | 0.24 | 0.27 | 0.02 | 0.05 | 0.11 | 0.44 | 0.99 | 0.58 | |||||||||||||||||||||||||||||||||
| and | 117.00 | 273.00 | 154.45 | 0.41 | 0.35 | 0.02 | 0.06 | 0.15 | 0.64 | 1.39 | 0.81 | |||||||||||||||||||||||||||||||||
| DSLK218 | 14.00 | 46.00 | 32.00 | 0.26 | 0.18 | 0.02 | 0.04 | 0.11 | 0.33 | 0.80 | 0.46 | |||||||||||||||||||||||||||||||||
| DSLK219 | 21.00 | 36.60 | 15.60 | 0.29 | 0.23 | 0.01 | 0.05 | 0.11 | 0.43 | 0.95 | 0.55 | |||||||||||||||||||||||||||||||||
| DSLK219 | 41.00 | 63.80 | 22.80 | 0.33 | 0.24 | 0.02 | 0.06 | 0.11 | 0.45 | 1.03 | 0.60 | |||||||||||||||||||||||||||||||||
| DSLK219 | 78.90 | 99.00 | 20.10 | 0.59 | 0.34 | 0.02 | 0.09 | 0.13 | 0.61 | 1.57 | 0.91 | |||||||||||||||||||||||||||||||||
| DSLK219 | 111.00 | 130.00 | 19.00 | 0.27 | 0.18 | 0.01 | 0.04 | 0.08 | 0.48 | 0.84 | 0.49 | |||||||||||||||||||||||||||||||||
| DSLK219 | 181.00 | 191.00 | 10.00 | 0.26 | 0.18 | 0.01 | 0.04 | 0.08 | 0.29 | 0.77 | 0.45 | |||||||||||||||||||||||||||||||||
| DSLK232 | 35.00 | 70.84 | 35.84 | 0.98 | 1.20 | 0.06 | 0.12 | 0.33 | 1.74 | 4.04 | 2.35 | |||||||||||||||||||||||||||||||||
| including | 47.3 | 64.00 | 16.70 | 1.56 | 1.73 | 0.1 | 0.09 | 0.37 | 2.14 | 5.78 | 3.36 | |||||||||||||||||||||||||||||||||
| DSLK243 | 120.00 | 306.25 | 186.25 | 0.48 | 0.41 | 0.02 | 0.08 | 0.17 | 0.76 | 1.65 | 0.96 | |||||||||||||||||||||||||||||||||
Notes:
| (1) | Length refers to drillhole length. |
| (2) | CuEq was calculated using the formula CuEq=Cu+1.72*Ni+2.57*Co+0.928*Au+0.35*Pt+0.36*Pd assuming October 23, 2024 prices of US$7.38/lb Ni, US$4.29/lb Cu, US$11.02/lb Co, US$2,716.85/troy ounce Au, US$1,017.20/troy ounce Pt and US$1,048.50/troy ounce Pd with no adjustments for recoveries or payabilities. |
| (3) | NiEq was calculated using the formula NiEq=Ni+0.58*CuEq. |
| 9 |
Exploration programs have also been ongoing at the prospecting licences located adjacent to the Selkirk mining licence, with a differential Global Positioning System of seven historical drillhole collars and two surface electromagnetics surveys completed in Q2 2024. The strongest electromagnetic anomaly occurs over the Rooikoppie Prospect, a gossan that was targeted by BCL drill holes. These five holes were located, Differential Global Positioning System coordinates collected, and two holes, DRKP001 and 002, were sampled in Q3 2024. Assays showed no significant results in Ni, Cu, or PGEs.
Mineral Processing and Metallurgical Testing
PNRL intends to use flotation to produce a concentrate for commercial sale or for further refining. Concentrate options will be investigated in the next phase of work and include a bulk concentrate and separate nickel and copper concentrates. Metallurgical study programs were carried out by SGS in Lakefield, Ontario in 2021 and 2023 for separate copper and nickel concentrate production at a conceptual level. The conceptual process flowsheet developed by SGS includes the key unit operations of crushing, grinding, and flotation.
PNRL analyzed select SGS test results on key flotation parameters observed in the production of separate nickel and copper concentrates to simulate estimated metal grades and recoveries for bulk concentrate. The area is in a rural district and the available infrastructure is minimal. Strategic services (e.g., electricity and water supplies) could be provided by the Botswana Power Corporation and from existing governmental water pipelines within the Francistown Road Reserve, and potable water could be sourced on site from boreholes. A railway line crosses the western margin of the Selkirk area.
Maniitsoq Nickel-Copper-PGM Project, Southwest Greenland
The Maniitsoq project is centred on the 75 kilometre by 15 kilometre Greenland Norite Belt which hosts numerous high-grade nickel-copper sulphide occurrences associated with mafic and ultramafic intrusions. The property is located 100 kilometres north of Nuuk, the capital of Greenland, and is accessible year-round either by helicopter or by boat from Nuuk or Maniitsoq, the latter located on the coast approximately 15 kilometres to the west. The Company acquired the Maniitsoq project in 2011 due to its potential for the discovery of significant magmatic sulfide deposits in a camp-scale belt. The Maniitsoq property consists of three exploration licences, Sulussagut No. 2011/54 and Ininngui No. 2012/28, comprising 2,182 and 110.9 square kilometres, respectively, and the Carbonatite property No. 2018/21 (63 square kilometres), and a prospecting licence, No. 2020/05, for West Greenland. The Greenland properties have no mineral resources or reserves. Mineral exploration licence (“MEL”) 2018/21 and prospecting licence 2020/05 are in effect until December 31, 2024. MEL 2011/54 expires December 31, 2025, while MEL 2012/28 expires December 31, 2026.
Exploration Activities
Remaining targets were reviewed and prioritized in preparation for a potential field program in 2023, which was deferred. No exploration work was carried out in Greenland to date in 2024.
No material expenditures or activities are contemplated on the Maniitsoq property at this time.
| 10 |
Canadian Nickel Projects - Sudbury, Ontario
Post Creek Property
The Post Creek property is located 35 kilometres east of Sudbury in Norman, Parkin, Alymer and Rathburn townships and consists of 73 unpatented mining claim cells in two separate blocks, covering a total area of 912 hectares held by the Company. The Company acquired the property through an option agreement in April 2010, which was subsequently amended in March 2013. As at the date of this MD&A, the Company holds a 100% interest in the Post Creek property and is obligated to pay advances on a net smelter return of $10,000 per annum, which will be deducted from any payments to be made under the net smelter return.
The Post Creek property lies adjacent to the Whistle Offset Dyke Structure which hosts the past–producing Whistle Offset and Podolsky Cu-Ni-PGM mines. Post Creek lies along an interpreted northeast extension of the corridor containing the Whistle Offset Dyke and Footwall deposits and accounts for a significant portion of all ore mined in the Sudbury nickel district and, as such, represents favourable exploration targets. Key lithologies are Quartz Diorite and metabreccia related to offset dykes and Sudbury Breccia associated with Footwall rocks of the Sudbury Igneous Complex which both represent potential controls on mineralization.
No exploration work was completed to date in 2024 on the Post Creek Property. The claims have sufficient work credits to keep them in good standing until 2027. No material expenditures or activities are contemplated on the Post Creek property at this time.
Halcyon Property
The Halcyon property is located 35 kilometres northeast of Sudbury in the Parkin and Aylmer townships and consists of 63 unpatented mining cells for a total of 864 hectares. Halcyon is adjacent to the Post Creek property and is approximately 2 kilometres north of the producing Podolsky Mine of FNX Mining. The property was acquired through an option agreement and as at the date of this MD&A, the Company holds a 100% interest in the Halcyon property and is obligated to pay advances on a net smelter return of $8,000 per annum, which will be deducted from any payments to be made under the net smelter return.
No exploration work was completed on the Halcyon Property to date in 2024. The claims are in good standing through 2027. No material expenditures or activities are contemplated on the Halcyon property at this time.
Quetico Property
The Quetico property is located within the Thunder Bay Mining District of Ontario and in January 2024 consisted of 99 claim cells in two blocks. Cells were acquired to assess: (a) the Quetico Sub-province corridor, which hosts intrusions with Ni-Cu-Co-PGM mineralization related to a late 2690 Ma Archean magmatic event; and (b) the Neoproterozoic (1100 Ma MCR) magmatic event and related intrusions.
No work was carried out on the Quetico property in 2024. The last remaining claims expired on April 26, 2024.
Financial Capability
The Company, being in the exploration stage, is subject to risks and challenges similar to companies in a comparable stage of exploration and development. These risks include the challenges of securing adequate capital for exploration and advancement of the Company’s material projects, operational risks inherent in the mining industry, and global economic and metal price volatility, and there is no assurance management will be successful in its endeavors. As at September 30, 2024, the Company had no source of operating cash flows, nor any credit line currently in place.
As at September 30, 2024, the Company had working capital (calculated as total current assets less total current liabilities) of $15,092,693 (December 31, 2023 – $14,999,619) and reported an accumulated deficit of $135,712,148 (December 31, 2023 – $104,566,816).
As at September 30, 2024, the Company had $17,358,377 in available cash (December 31, 2023 – $19,245,628). There are no sources of operating cash flows. The properties in which the Company currently has an interest are in the pre-revenue stage. As such, the Company is dependent on external financing to fund its activities. In order to carry out the planned development and cover administrative costs, the Company will need to use its existing working capital and raise additional amounts as needed. Subject to any changes in the Company’s operational plan, the Company has the funds to complete its planned mineral resource estimate for the Selkirk Mine, and to advance underground exploration drilling and studies at the Selebi Mines into the first half of 2025. Although the Company has been successful in its past fundraising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future.
Selected Financial Information and Financial Position
The following amounts are derived from the Company’s unaudited condensed interim consolidated financial statements prepared under US GAAP.
| In Canadian dollars, except number of shares issued and outstanding | Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
| Income Statement | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net (loss) | (12,004,960 | ) | (7,684,834 | ) | (31,145,332 | ) | (22,199,513 | ) | ||||||||
| Weighted average number of common shares outstanding – basic and diluted | 185,708,588 | 135,730,527 | 163,300,132 | 125,150,919 | ||||||||||||
| Basic and diluted (loss) per share | (0.06 | ) | (0.06 | ) | (0.19 | ) | (0.18 | ) | ||||||||
| Balance Sheet | September 30, 2024 | December 31, 2023 | ||||||
| Additional paid-in capital | 144,789,145 | 116,069,973 | ||||||
| Common Shares outstanding | 185,708,588 | 149,300,920 | ||||||
| Total assets | 37,292,068 | 37,974,205 | ||||||
| Current liabilities | 5,579,816 | 5,891,289 | ||||||
| Non-current financial liabilities(1) | 18,990,747 | 18,192,547 | ||||||
Note:
| (1) | Non-current financial liabilities include long-term debt and lease liabilities. |
| 11 |
Net Loss
The net loss of $31,145,332 for the nine months ended September 30, 2024 was higher by $8,945,819 compared to the prior year comparable period net loss of $22,199,513 largely due to increased exploration activities relating to the Botswana assets, the interest expense on a three-year term loan (the “Term Loan”) with Cymbria Corporation (“Cymbria”), and an increase in share-based payments.
Total Assets
Total assets as at September 30, 2024 decreased by $682,137 from the December 31, 2023 balance. Lower cash balances in the current period and depreciation of property, plant and equipment were largely offset by the purchase of spare parts from BCL.
Current Liabilities and Non-Current Financial Liabilities
Current liabilities as at September 30, 2024 decreased by $311,473 from December 31, 2023 due to a decrease in lease liabilities resulting from the repayment of interest and principal on the Syringa Lodge lease. Non-current financial liabilities as at September 30, 2024 increased by $798,200 from December 31, 2023 as a result of the accretion of costs associated with the Term Loan.
Overall Performance and Results of Operations
As at the date of this Report, the Company has not earned revenue nor proved the economic viability of its projects. The Company’s expenses are not subject to seasonal fluctuations or general trends other than factors affecting costs such as inflation and input prices. The Company’s expenses and cash requirements will fluctuate from period to period depending on the level of activity at the projects, which may be influenced by the Company’s ability to raise capital to fund these activities. Comparisons of activity made between periods should be viewed with this in mind. The Company’s quarterly results may be affected by many factors such as timing of exploration activity, share-based payment costs, capital raised, marketing activities and other factors that affect the Company’s exploration, evaluation and re-development activities.
The following table summarizes the Company’s Operations for the three-month and nine-month periods ended September 30, 2024 and September 30, 2023:
| Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 $ | September 30, 2023 $ | September 30, 2024 $ | September 30, 2023 $ | |||||||||||||
| Expenses | ||||||||||||||||
| General and administrative expenses | 2,314,273 | 1,936,140 | 6,657,082 | 6,250,925 | ||||||||||||
| Depreciation | 354,581 | 151,500 | 1,088,483 | 241,260 | ||||||||||||
| General exploration expenses | 7,318,600 | 4,330,412 | 18,598,362 | 13,252,757 | ||||||||||||
| Interest and bank charges | 10,557 | 17,035 | 26,831 | 34,865 | ||||||||||||
| Share-based payment | 933,619 | - | 1,712,843 | - | ||||||||||||
| DSUs granted, net | 164,193 | 252,119 | 408,590 | 558,524 | ||||||||||||
| Net foreign exchange loss | 146,359 | 153,014 | 360,361 | 256,917 | ||||||||||||
| 11,242,182 | 6,840,220 | 28,852,552 | 20,595,248 | |||||||||||||
| Interest (income) expense | (23,945 | ) | 126,623 | (24,398 | ) | 193,441 | ||||||||||
| Interest and accretion cost on debt | 786,723 | 717,991 | 2,317,178 | 1,410,824 | ||||||||||||
| Net loss for the period | 12,004,960 | 7,684,834 | 31,145,332 | 22,199,513 | ||||||||||||
| 12 |
| ● | General and administrative expenses increased by $378,133 and $406,157 for the three and nine months ended September 30, 2024, respectively, mainly due to higher travel and marketing costs as well as higher professional fees relating to additional regulatory reporting requirements in 2024. For the nine months ended September 30, 2024, $2,708,304 of the general and administrative expenses were related to management fees, office costs, insurance fees, consulting fees, and various other overhead expenses at the Mines (nine months ended September 30, 2023 - $2,694,115). | |
| ● | Depreciation increased by $203,081 and $847,223 for the three and nine months ended September 30, 2024, respectively, due to property, plant and equipment acquisitions in late 2023 which started to depreciate in 2024. | |
| ● | General exploration expenses increased by $2,988,188 and $5,345,605 for the three and nine months ended September 30, 2024, respectively, as the Company ramped-up drilling, geophysics, engineering, and other activities at the Mines over the year. | |
| ● | Share-based payments represents the Company’s long-term incentive program compensation granted to employees, directors, officers and consultants. Share-based payment was $933,619 and $1,712,843 for the three and nine months ended September 30, 2024, respectively, compared to nil in 2023. | |
| ● | DSUs granted, net, or deferred share units, represents the Company’s long-term incentive program compensation granted to directors of the Company, net of period end mark to market adjustments. The decrease of $87,926 and $149,934 for the three and nine months ended September 30, 2024, respectively, is due to downward mark to market adjustments on outstanding units resulting from a decrease in the Company’s share price, partially offset by an increase in size of the Board of Directors. | |
| ● | Interest income and expense represents interest income earned on cash and cash equivalent deposits and interest expense on the Company’s lease liabilities. Net interest income increased by $150,568 and $217,839 for the three and nine months ended September 30, 2024, respectively, as the Company held higher cash balances arising from the June 2024 Financing in guaranteed investment certificates. Further, the final installment on the drilling equipment lease was paid in April 2024, resulting in lower interest expense for the current year periods. | |
| ● | Interest and financing cost on debt comprises the accrued interest on the Company’s debt instruments, as well as the accretion of related transaction costs and fees. The increase of $68,732 and $906,354 for the three and nine months ended September 30, 2024, respectively, relates to the additional $5.9 million of principal on the Term Loan that was added in December 2023. |
Cash Flows
The following table summarizes the Company’s cash flows:
Nine months ended September 30, | ||||||||
2024 $ | 2023 $ | |||||||
| Cash flows | ||||||||
| Operating activities | (27,749,262 | ) | (24,294,641 | ) | ||||
| Investing activities | 65,868 | (3,297,177 | ) | |||||
| Financing activities | 26,136,270 | 31,424,264 | ||||||
| Increase (decrease) in cash before effects of exchange rate changes | (1,547,124 | ) | 3,832,446 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (340,127 | ) | (142,141 | ) | ||||
| Change in cash and cash equivalents for the period | (1,887,251 | ) | 3,690,305 | |||||
| Cash and cash equivalents at the beginning of the period | 19,245,628 | 5,162,991 | ||||||
| Cash and cash equivalents at the end of the period | 17,358,377 | 8,853,296 | ||||||
Operating Activities
Net cash used in operating activities YTD 2024 increased by $3,454,621 compared to YTD 2023, a result of a ramp-up in drilling, geophysics, engineering, and other activities at the Mines over the year.
| 13 |
Investing Activities
Key investing activities relate to the acquisition of property, plant and equipment. Net cash used in investing activities YTD 2024 decreased by $3,231,309 compared to YTD 2023. The higher spending in YTD 2023 was related to the upfront purchase of tools and parts for the three drills which were leased in 2023.
Financing Activities
Net cash provided by financing activities YTD 2024 decreased by $5,287,994 compared to YTD 2023. During the first nine months of 2023, the Company obtained a term loan for gross proceeds of approximately $15.0 million and closed private placements for gross proceeds of approximately $24.0 million, using a portion of those funds to repay a $7.0 million promissory note from Pinnacle Island LP. During the first nine months of 2024, the Company closed private placements for gross proceeds of approximately $27.5 million, and had no additional borrowings.
Liquidity
Capital Resources
As at September 30, 2024, the Company had $17,358,377 in available cash (December 31, 2023 – $19,245,628). The Company has no sources of operating cash flows. Subject to any changes in the Company’s operational plan, the Company has the funds to complete its planned mineral resource estimate for the Selkirk Mine, and to advance underground exploration drilling and studies at the Selebi Mines into the first half of 2025. Given the Company’s current financial position and the ongoing exploration and evaluation expenditures, the Company will need to raise additional capital through the issuance of equity or other available financing alternatives to continue funding its operating, exploration and evaluation activities, and re-development of its mineral properties. Although the Company has been successful in its past fund-raising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future.
Going Concern
For the three months ended September 30, 2024, the Company incurred a loss of $12,004,960 and reported an accumulated deficit of $135,712,148 as at September 30, 2024 (December 31, 2023 – $104,566,816). At the end of Q3 2024, the Company required additional funds to continue its planned operations and meet its future obligations, commitments and forecasted expenditures through September 30, 2025. Management is aware, in making its assessment, of material uncertainties related to events and conditions that may cast a substantial doubt upon the Company’s ability to continue as a going concern, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The accompanying Financial Statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities, and the reported expenses and comprehensive loss that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material. In assessing whether a going concern assumption is appropriate, management considers all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period.
Financings
During the nine months ended September 30, 2024, the Company completed the following financing transactions:
On June 14, 2024, the Company closed the first tranche of the June 2024 Financing, pursuant to which the Company issued an aggregate 19,234,614 Units at a price of $0.78 per Unit (the “Issue Price”) for aggregate gross proceeds of $15,002,999. Each Unit is comprised of one common share of the Company (each, a “Common Share”) and one common share purchase warrant of the Company (each, a “Warrant”).
Each Warrant entitles the holder thereof to acquire one Common Share for a period expiring 60 months following the date of issuance (the “Expiry Date”) at a price of $1.10 per Common Share. If, at any time prior to the Expiry Date, the volume-weighted average trading price of the Common Shares is at least $2.00 per Common Share for a period of 20 trading days, the Company may, at its option, accelerate the Expiry Date with 30 days’ notice to the Warrant holders.
On June 21, 2024, the Company closed the second tranche of the June 2024 Financing and issued an additional 16,021,795 Units at the Issue Price for gross proceeds of $12,497,000. Together with proceeds from the first tranche, the total size of the June 2024 Financing is approximately $27.5 million.
The net proceeds of the June 2024 Financing will be used by the Company to advance the exploration and development of the Mines in Botswana and for general corporate and working capital purposes. See “Use of Proceeds” for more details.
| 14 |
On December 14, 2023, the Company closed a financing (the “December 2023 Financing”) comprised of a brokered private placement of units (the “Private Placement”) and an amended Term Loan. The Private Placement was entered into by the Company with Cormark Securities Inc. and BMO Capital Markets, as co-lead agents, and Canaccord Genuity Corp., Fort Capital Securities Ltd. and Paradigm Capital Inc. Under the Private Placement, the Company issued an aggregate of 13,133,367 Common Shares at a price of $1.20 per Common Share for aggregate gross proceeds of $15,760,040. The principal amount of the Term Loan was increased by $5,882,353 (the “Additional Principal Amount”) from $15,000,000 to $20,882,353. The Additional Principal Amount was subject to an original issue discount of approximately 15% and was advanced by Cymbria to the Company as a single advance of $5,000,000. The net proceeds from the December 2023 Financing were $19,743,845 after fees and expenses, which are being used to advance the exploration and evaluation of the Mines and for general corporate and working capital purposes. As at September 30, 2024, all of the net proceeds of the December 2023 Financing had been expended as planned.
Use of Proceeds
The following table provides a summary of the principal use of proceeds of the June 2024 Financing and the December 2023 Financing.
| Principal Purpose | Estimated $’000 | Amounts $’000 | ||||||
| June 2024 Financing | ||||||||
| Activities relating to the Selebi Mines | 20,700 | (2) | 7,405 | |||||
| Activities relating to the Selkirk Mine | 500 | (3) | 257 | |||||
| General corporate and working capital | 6,100 | (4) | 1,397 | |||||
| 27,300 | 9,059 | |||||||
| December 2023 Financing | ||||||||
| Activities relating to the Selebi Mines | 11,520 | (5) | 11,520 | |||||
| Activities relating to the Selkirk Mine | 400 | (6) | 400 | |||||
| General corporate and working capital | 7,839 | (7) | 7,839 | |||||
| 19,759 | 19,759 | |||||||
Notes:
| (1) | The use of the June Financing proceeds has been updated as of September 30, 2024 to reflect any changes in planned activities, as outlined below. | |
| (2) | Represents approximately: (i) $18,000,000 for the advancement of the Selebi Mines towards an economic study; (ii) $1,370,000 for mining licence extension payment; and (iii) $1,361,062 for the last installment of the purchase price of the Syringa Lodge. | |
| (3) | Represents the cost to advance the Selkirk Mine towards a mineral resource estimate and exploration activities on the Prospecting Licences. | |
| (4) | Represents approximately: (i) $1,044,118 allocated to the payment of interest on the Term Loan; and (ii) $5,055,882 allocated to general corporate expenses. | |
| (5) | Represents approximately: (i) $8,325,000 for the advancement of the Selebi Mines towards a NI 43-101 compliant mineral resource estimate; (ii) $1,400,000 for mining licence extension payment; and (iii) $1,795,000 in local management, consulting, accounting, finance, human resources and health/safety/environmental/security. | |
| (6) | Represents certain geophysics and geology costs, care and maintenance and prospecting licences. | |
| (7) | Represents approximately: (i) $2,080,000 allocated to the payment of interest on the Term Loan; and (ii) $5,759,000 allocated to general corporate expenses. |
Working Capital
As at September 30, 2024, the Company had a positive working capital of $15,092,693 (December 31, 2023 – $14,999,619). The marginal increase in working capital is mainly due to an increase in spare parts inventory, partially offset by a decrease in lease liabilities.
Contractual Obligations and Contingencies
Selebi Mines
As per the Selebi APA, the aggregate purchase price payable to the seller for the Selebi Mines is the sum of USD 56,750,000 which amount shall be paid in three instalments:
| ● | USD 1,750,000 payable on the closing date, and payment of care and maintenance funding contributions in respect of the Selebi Mines from March 22, 2021 to the closing date of USD 5,178,747. These payments have been made. |
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| ● | USD 25,000,000 upon the earlier of: (a) approval by the Botswana Ministry of Mineral Resources, Green Technology and Energy Security (“MMRGTES”) of the Company’s Section 42 and Section 43 applications (for the further extension of the mining licence and conversion of the mining licence into an operating licence, respectively); and (b) on the expiry date of the study phase, January 31, 2026, which pursuant to the Selebi APA has been extended for one year from the original expiry date of January 31, 2025. This extension follows successful completion by the Company of the work and investment milestones required by the Selebi APA. |
| ● | The third instalment of USD 30,000,000 is payable on the completion of mine construction and production start-up by the Company on or before January 31, 2030, but not later than four years after the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 applications. |
As per the terms and conditions of the Selebi APA, the Company has the option to cancel the second and third payments and return the Selebi Mines to the liquidator if the Company determines that the Selebi Mines are not economical. The Company also has an option to pay in advance the second and third payments if the Company determines that the Selebi Mines are economical. The Company’s accounting policy is to measure and record contingent consideration when the conditions associated with the contingency are met. As of September 30, 2024, none of the conditions of the second and third instalments have been met, hence these amounts are not accrued in the Financial Statements.
In addition to the Selebi APA, the purchase of the Selebi Mines is also subject to a contingent compensation agreement as well as a royalty agreement with the liquidator.
Phikwe South and the Southeast Extension
In August 2023, the Company announced that it had entered into a binding commitment letter with the liquidator of BCL to acquire a 100% interest in two additional deposits, Phikwe South the Southeast Extension, located adjacent to and immediately north of the Selebi North historical workings. The acquisition of the Phikwe South and the Southeast Extension deposits is subject to customary closing conditions and is expected to close in Q4 2024.
The upfront cost to the Company to acquire these additional mineral properties is US$1,000,000. In addition, the Company has agreed to additional work commitments of US$5,000,000 in the aggregate over the next four years. As a result of the extension of the Selebi mining licence, the remaining asset purchase obligations of the Company outlined in the Selebi APA will each increase by 10%, US$5,500,000 in total, while the trigger events remain unchanged.
Selkirk Mine
In regard to the Selkirk Mine, the purchase agreement does not provide for a purchase price or initial payment for the purchase of the assets. The Selkirk purchase agreement provides that if the Company elects to develop Selkirk first, the payment of the second Selebi instalment of US$25 million would be due upon the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 applications (for the further extension of the Selkirk mining licence and conversion of the Selkirk mining licence into an operating licence, respectively). For the third Selebi instalment of US$30 million, if Selkirk were commissioned earlier than Selebi, the payment would trigger on Selkirk’s commission date.
Right-of-Use Assets
On July 9, 2022, the Company executed a sales agreement with Tuli Tourism Pty Ltd. (the “Seller”) for the Syringa Lodge in Botswana and obtained possession of the property in August 2022. Pursuant to the agreement, the aggregate purchase price payable to the Seller shall be the sum of $3,213,404 (BWP 30,720,000), payable in three installments. A deposit of $482,011 (BWP 4,608,000) was paid in August 2022, and a second installment of $1,306,906 (BWP 13,056,000) was paid in July 2023. On September 12, 2024, the sales agreement was amended and the Company paid 50% of the final installment of $653,061 (BWP 6,528,000) with the remaining balance of $665,203 (BWP 6,528,000) due on November 30, 2024. Title of the asset transfers to the Company upon payment of the remaining balance. All other terms and conditions remained the same.
On March 14, 2023, the Company entered into a drilling equipment supply agreement with Forage Fusion Drilling Ltd. (“Forage”) of Hawkesbury, Ontario to purchase specific drilling equipment on a “rent to own” basis with the purchase price to be paid in monthly payments. Pursuant to the agreement, the aggregate purchase price payable to Forage is $2,942,000. A payment of $1,700,000 was paid in March 2023 to purchase all the tooling, diamonds and critical spares required for 32,000 metres of drilling. The balance, covering the purchase of the drills, was payable in twelve equal monthly instalments of $103,500. The equipment arrived at the site in July 2023 and is now 100% owned by PNRL.
Post Creek
Commencing August 1, 2015, the Company is obligated to pay advances on the Post Creek net smelter return of $10,000 per annum. To date in 2024, the Company paid $10,000, which will be deducted from any payments to be made under the net smelter return.
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Halcyon
Commencing August 1, 2015, the Company is obligated to pay advances on the Halcyon net smelter return of $8,000 per annum. To date in 2024, the Company paid $8,000, which will be deducted from any payments to be made under the net smelter return.
Contingencies
There are no environmental liabilities associated with the Mines as at the acquisition dates as all liabilities incurred prior to the acquisitions are the responsibility of the sellers, BCL and TNMC, respectively. The Company has an obligation for the rehabilitation costs arising subsequent to the acquisitions. As of September 30, 2024, management is not aware of or anticipating any contingent liabilities that could impact the financial position or performance of the Company related to its exploration and evaluation assets.
The Company’s exploration and evaluation assets are affected by the laws and environmental regulations that exist in the various jurisdictions in which the Company operates. It is not possible to estimate the future contingent liabilities and the impact on the Company’s operating results due to future changes in the Company’s re-development of its projects or future changes in such laws and environmental regulations.
Related Party Transactions
Key management personnel
Key management (defined as members of the Board of Directors and senior officers) compensation was related to the following:
September 30, 2024 $ | September 30, 2023 $ | |||||||
| Management fees, salaries and benefits | 2,596,401 | 2,679,450 | ||||||
| DSUs granted, net of fair value movements | 408,590 | 558,524 | ||||||
| Share-based payment | 1,014,619 | - | ||||||
| 4,019,610 | 3,237,974 | |||||||
Other related parties
As a result of the financing that closed on June 28, 2023 with Cymbria and EdgePoint Investment Group Inc., as portfolio manager on behalf of certain mutual funds managed by it (“EdgePoint”), and the increase of the Term Loan by the Additional Principal Amount on December 14, 2023 (the “EdgePoint Transactions”), Cymbria and certain other funds managed by EdgePoint (the “Financing Parties”) have acquired a total of 16,037,800 Common Shares, representing approximately 10.7% of the Company’s issued and outstanding shares at the time. The Financing Parties also acquired on closing an aggregate of 6,024,000 Warrants with a three-year term and an exercise price of $1.4375 which, if exercised, together with the shares acquired at closing, would result in the Financing Parties holding approximately 14.2% of the Company’s shares in the aggregate (calculated on a partially-diluted basis). As the result of the EdgePoint Transactions, the Financing Parties are related parties of the Company. For the three and nine months ended September 30, 2024, the Company paid interest of $524,912 (Q3 2023 - $390,411) and $1,563,324 (YTD 2023 - $390,411), respectively, to the Financing Parties.
On June 14, 2024, as part of the June 2024 Financing, EdgePoint further subscribed for 7,692,307 Units at $0.78 per Unit for gross proceeds of approximately $6.0 million. Each Unit is comprised of one Common Share and one Warrant. As of September 30, 2024, EdgePoint beneficially owns 23,833,224 Common Shares and 13,716,307 Warrants, representing approximately 12.8% of the issued and outstanding Common Shares (approximately 18.8% on a partially-diluted basis assuming the exercise of all Warrants held by EdgePoint). All warrants issued to EdgePoint as part of the June 2024 Financing include customary restrictions providing that EdgePoint will not exercise such number of warrants so as to bring its undiluted share ownership percentage above 20.0% of the Company’s issued and outstanding Common Shares without obtaining the requisite shareholder and TSXV approval.
In connection with the June 2024 Financing, certain insiders of the Company subscribed for an aggregate of 1,389,140 Units for gross proceeds of $1,083,529.
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Segmented Disclosure
The Company operates in one reportable operating segment being that of the acquisition, exploration and evaluation of mineral properties in three geographic segments being Botswana, Barbados and Canada. The Company’s geographic segments are as follows:
September 30, 2024 $ | December 31, 2023 $ | |||||||
| Current assets | ||||||||
| Canada | 16,175,522 | 15,894,177 | ||||||
| Barbados | 338,247 | 104,024 | ||||||
| Botswana | 4,158,740 | 4,892,707 | ||||||
| Total | 20,672,509 | 20,890,908 | ||||||
September 30, 2024 | December 31, 2023 | |||||||
| Property, plant and equipment | ||||||||
| Canada | 7,481 | 8,726 | ||||||
| Botswana | 7,756,566 | 8,479,773 | ||||||
| Total | 7,764,047 | 8,488,499 | ||||||
September 30, 2024 | December 31, 2023 | |||||||
| Exploration and evaluation assets | ||||||||
| Botswana | 8,855,512 | 8,594,798 | ||||||
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements as at September 30, 2024.
Share Capital Information
As of the date of this report, the fully diluted share capital of the Company, including Common Shares issuable upon exercise of securities of the Company exercisable for Common Shares, is as follows:
| Securities | Common Shares | |||
| Common Shares | 185,708,588 | |||
| Preferred shares(1) | 13,131 | |||
| DSUs | 1,847,244 | |||
| Warrants | 42,526,857 | |||
| Stock options | 17,369,821 | |||
| RSUs | 1,000,000 | |||
| Fully diluted share capital | 248,465,641 | |||
Note:
| (1) | The 118,186 outstanding preferred shares are convertible into Common Shares at a 9:1 ratio. |
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Item 6. Exhibits
| Exhibit No. | Description of Exhibit | |
| 31.1 | Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer | |
| 31.2 | Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer | |
| 104 | The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL |
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SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: December 20, 2024 | PREMIUM RESOURCES LTD. (Registrant) | |
| By: | /s/ Keith Morrison | |
| Name: | Keith Morrison | |
| Title: | Chief Executive Officer (principal executive officer) | |
| By: | /s/ Peter Rawlins | |
| Name: | Peter Rawlins | |
| Title: | Chief Financial Officer (principal financial officer) | |
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Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Keith Morrison, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q/A of Premium Resources Ltd.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
| Date: | December 20, 2024 | |
| By: | /s/ Keith Morrison | |
| Keith Morrison | ||
| Chief Executive Officer | ||
| (principal executive officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Peter Rawlins, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q/A of Premium Resources Ltd.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
| Date: | December 20, 2024 | |
| By: | /s/ Peter Rawlins | |
| Peter Rawlins | ||
| Chief Financial Officer | ||
| (principal financial officer) |