2023 YEAR END REPORT
Management’s Discussion and Analysis
and
Consolidated Financial Statements
For the Twelve Months Ended December 31, 2023
(AUDITED)
FILO CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2023
(Amounts in Canadian Dollars unless otherwise indicated)
This management’s discussion and analysis (“MD&A”) of Filo Corp. (“Filo” or the “Company”) should be read in
conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and related
notes therein (“2023 Financial Statements”). The financial information in this MD&A is reported in Canadian dollars
unless otherwise indicated and is partly derived from the Company’s consolidated financial statements prepared
in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IFRS Accounting Standards”). The effective date of this MD&A is March 20, 2024. Additional
information about the Company and its business activities is available on SEDAR+ at www.sedarplus.ca and the
Company’s website www.filocorp.com.
The Company’s common shares trade on the Toronto Stock Exchange under the symbol "FIL", the NASDAQ First North
Growth Market under the symbol "FIL" and on the OTCQX under the symbol “FLMMF”.
Effective June 23, 2023, the Company’s name was changed to Filo Corp., formerly Filo Mining Corp., to better align
with the Company’s strategic vision. Some of the statements in this MD&A are forward-looking statements that are
subject to risk factors set out in the cautionary note contained herein.
CORE BUSINESS AND STRATEGY
Filo is a mineral exploration company, focused on its 100% controlled Filo del Sol project (“Filo del Sol” or the “Filo
del Sol Project”), which is comprised of two adjacent land holdings: the Filo del Sol property located in San Juan
Province, Argentina, and the Tamberias property, located in Region III, Chile. The Filo del Sol Project is located in the
emerging Vicuña District, located between the prolific Maricunga and El Indio mining districts. The region is an
established mining jurisdiction and hosts a number of large-scale mining operations. The project area is covered under
the Mining Integration and Complementation Treaty between Chile and Argentina, which provides the framework for
the development of cross border mining projects.
The Company’s strategy is to create value for its shareholders by expanding and increasing the confidence in and
continuity of the resources and reserves at the Filo del Sol Project through further exploration, and by advancing
engineering and other studies that are required to prepare the Filo del Sol Project for eventual development.
2023 HIGHLIGHTS
During 2023, the Company successfully delivered its most extensive drilling campaign to date, completing 37,188m of
resource drilling and 1,597 metres of geotechnical drilling. The Company’s interpretation of the high-grade Aurora
Zone has improved dramatically and drilling has continued to expand the footprint of the Filo del Sol deposit via
numerous small and large step-out holes. Calendar year (and subsequent to) highlights included:
• Assay results announced for holes FSDH097, FSDH098 and FSDH100, which span a total distance of 1.6km,
expand the Filo deposit to the west along the entire distance between the holes drilled. FSDH100 is an example
of the successful Aurora Zone step-out drilling conducted by the Company, adding over 500m in depth beyond
the current resource pit shell and extending the western margin of the deposit by 250m;
• Assay results announced for holes FDSH086, FSDH089 and FSDH095 highlight the precious metals-rich nature
of the Filo deposit. All three holes encountered the high-grade silver zone, and hole FSDH086 intersected a
new phase of the porphyry, encountering high-grade porphyry-style mineralization with unusually higher gold
grades and copper hosted by a chalcopyrite-bornite assemblage. Located at the northwestern edge of the
Aurora Zone, the results demonstrate the significant potential that exists at Filo to find new styles of
mineralization;
• Assay results announced for holes FSDH093 and FSDH094, which were collared 500m apart, filled critical high-
grade gaps in the Company’s interpretation as well as extending Aurora to the northeast. The high-grade
1
porphyry zone at depth in hole FSDH093 is similar to, and over 300m away from, the intersection of hole
FSDH086;
• Assay results announced for hole FSDH084 resulted in the second-best hole from a grade-thickness
perspective ever drilled at the Filo del Sol Project. The results of hole FSDH084 confirmed the continuity of
high-grade mineralization within the Aurora Zone, including the high-grade Breccia 41 Zone;
• Assay results from holes FSDH087, FSDH090 and FSDH091 support the idea of continuous mineralization
across the 1.3km distance between the Aurora and Bonita Zones. Additional holes in this area are underway,
some of which have been completed with assays pending, which will provide critical information on the
continuity of mineralization from Tamberias in the south to Bonita in the north (a distance of over five
kilometres);
• Assay results for hole FSDH091 resulted in the first intersection of high-grade mineralization near the Bonita
Zone, and the first instance of consistent grades greater than 1% CuEq outside the Aurora Zone. FSDH091
included a high-grade section averaging 1.15% CuEq over 212m. At over 1km north of the Aurora Zone, the
results from this hole opened up an entirely new area to explore for high-grade mineralization;
•
•
In June 2023, the Company closed a $130.0 million private placement, raising funds at market prices with
limited dilution and with strong support from existing shareholders and institutional investors;
In June 2023, the Company announced a corporate name change to “Filo Corp.” to better align with the
Company’s strategic vision.
Q4 2023 DRILLING AND ASSAY RESULTS
Drilling and assay results disclosed by the Company during and subsequent to the year ended December 31, 2023
are summarized in the following table:
Hole-ID
FSDH068A
incl.
incl.
incl.
FSDH069A
incl.
and incl.
incl.
FSDH070A
incl.
incl.
FSDH071
incl.
incl.
incl.
FSDH072
incl.
incl.
FSDH073
incl.
incl.
FSDH074
incl.
From
(m)
To
(m)
18.0 1,794.0
94.0
54.0
394.0 1,514.0
574.0 1,298.2
138.0 1,434.5
404.0
435.0
498.0 1,096.0
792.0
886.0
282.0 1,338.5
369.7 1,040.0
540.0
712.0
292.0 1,320.0
580.0
408.0
514.0
574.0
776.0 1,013.5
484.0 1,712.0
650.0 1,472.0
998.0 1,328.0
404.5 1,388.4
600.0 1,214.0
756.0 1,028.0
278.0 1,300.0
644.0 1,160.0
Length
(m)
1,776.0
40.0
1,120.0
724.2
1,296.5
31.0
598.0
94.0
1,056.5
670.4
172.0
1,028.0
172.0
60.0
237.5
1,228.0
822.0
330.0
983.9
614.0
272.0
1,022.0
516.0
Cu
(%)
0.45
0.65
0.59
0.69
0.60
0.00
0.92
1.78
0.54
0.63
0.75
0.78
1.44
2.18
1.04
0.55
0.68
0.88
0.62
0.74
0.92
0.49
0.61
Au
(g/t)
0.30
0.92
0.38
0.45
0.38
0.27
0.57
1.37
0.38
0.41
0.47
0.47
0.82
1.64
0.68
0.33
0.42
0.61
0.32
0.41
0.52
0.19
0.21
Ag
(g/t)
4.0
8.1
5.3
6.8
13.9
127.0
19.3
26.3
4.0
5.3
5.9
6.7
12.6
16.9
6.0
4.4
4.4
2.3
4.0
3.2
3.2
4.4
3.2
CuEq1
(%)
0.70
1.39
0.92
1.08
1.00
1.51
3.01
0.86
0.97
1.15
1.16
2.14
3.53
1.49
0.83
1.02
1.35
0.89
1.06
1.33
0.66
0.79
2
Hole-ID
incl.
FSDH075
incl.
and incl.
incl.
FSDH076
incl.
and incl.
and incl.
FSDH077
plus
FSDH078
plus
plus
FSDH079
FSDH080
incl.
incl.
incl.
and incl.
FSDH081
FSDH082
FSDH083
incl.
and incl.
FSDH084
incl.
and incl.
incl.
incl.
FSDH085
Plus
incl.
incl.
FSDH086
incl.
and incl.
and incl.
and incl.
FSDH087
incl.
incl.
and incl.
and incl.
and incl.
incl.
incl.
and incl.
To
(m)
From
(m)
840.0 1,092.0
197.1 1,562.0
268.0
197.1
796.0 1,562.0
910.4 1,202.0
180.0 1,543.0
850.9
496.0
952.0 1,120.0
1264.0 1,490.0
194.0
920.2
348.0
422.0
579.0
76.0
122.0 1,347.5
122.0 1,058.0
216.0
122.0
148.0
126.0
882.0
494.0
242.0
192.0
192.0
404.0
334.0
392.0
516.0
68.0
418.7 1,549.8
560.0
672.0
970.0 1,180.0
170.0 1,575.8
394.0
440.0
616.0 1,258.0
827.8
772.0
812.0
778.0
26.0
18.0
320.0 1,199.0
658.0 1,114.4
667.0
658.0
400.0 1,414.0
438.0
410.0
532.8
567.5
618.0 1,414.0
1,370.0 1,414.0
42.0 1,472.0
292.0 1,472.0
194.0
190.0
233.0
232.0
304.0
300.0
442.0
350.0
374.0
358.0
440.0
436.0
940.0
937.5
Length
(m)
252.0
1,364.9
70.9
766.0
291.6
1,363.0
354.9
168.0
226.0
2.0
516.2
14.0
30.0
63.0
8.0
1,225.5
936.0
94.0
22.0
388.0
50.0
Au
Cu
(g/t)
(%)
0.23
0.65
0.12
0.31
0.19
0.33
0.13
0.40
0.18
0.52
0.35
0.48
0.40
0.63
0.48
0.52
0.55
0.42
0.05 10.35
0.11
0.11
1.28
1.16
0.77
0.01
0.66
0.87
0.40
0.25
0.29
0.39
0.33
0.42
0.42
1.02
0.35
2.25
0.36
0.39
0.13
0.16
No significant values
1,131.1
112.0
210.0
1,405.8
46.0
642.0
55.8
34.0
8.0
879.0
456.4
9.0
1,014.0
28.0
34.7
796.0
44.0
1,430.0
1,180.0
4.0
1.0
4.0
92.0
16.0
4.0
2.5
0.43
0.52
0.61
0.62
0.01
1.01
2.98
3.68
0.98
0.32
0.38
0.33
0.66
0.01
0.51
0.77
1.14
0.40
0.46
1.41
2.04
4.49
0.75
2.97
1.58
2.00
0.15
0.17
0.22
0.43
0.38
0.70
2.73
3.73
3.15
0.13
0.14
0.07
0.39
0.21
0.17
0.46
0.83
0.16
0.17
0.33
1.02
4.10
0.40
1.81
0.41
0.48
Ag
(g/t)
3.6
2.9
15.4
1.3
1.2
3.9
10.0
1.1
1.2
0.5
0.9
0.5
34.6
27.8
8.9
8.9
11.3
5.8
1.0
20.7
7.2
2.8
6.2
2.1
23.2
310.2
20.6
92.8
110.5
433.8
6.0
5.8
156.8
9.3
87.0
69.0
4.2
7.5
4.3
3.7
49.9
6.6
147.0
11.3
50.1
33.0
145.2
CuEq1
(%)
0.85
0.42
0.60
0.51
0.66
0.77
1.01
0.88
0.87
0.20
2.10
1.59
0.61
0.67
0.77
1.38
2.51
0.83
0.32
0.57
0.70
0.80
1.13
1.70
5.79
7.37
7.09
0.47
0.53
1.76
1.02
1.24
1.14
1.81
0.55
0.61
2.09
2.84
8.77
1.14
4.73
2.17
3.63
3
Hole-ID
FSDH088
incl.
FSDH089
incl.
incl.
and incl.
and incl.
incl.
FSDH090
incl.
and incl.
and incl.
and incl.
FSDH091
incl.
and incl.
and incl.
incl.
FSDH093
incl.
incl.
and incl.
FSDH094
incl.
and incl.
FSDH095
incl.
and incl.
FSDH097
incl.
incl.
incl.
incl.
and incl.
FSDH098
FSDH100
incl.
FSGT006
incl.
From
(m)
To
(m)
66.0 1,058.0
436.0 1,018.0
677.0
136.0
416.0
328.0
350.0
336.0
394.0
386.0
677.0
452.0
452.0
538.0
100.0 1,618.5
130.0
108.0
272.0
268.7
539.1
540.0
665.0 1,322.0
168.0 1,536.0
200.0
185.5
504.0
508.0
672.8 1,510.0
872.0 1,084.0
338.8 1,788.0
492.0 1,144.0
804.0 1,080.0
1,674.0 1,750.0
192.0 1,490.0
416.0
364.0
748.0
444.0
496.0
122.0
294.0
274.0
332.0
427.1
368.0 1,445.0
368.0 1,126.0
521.0
372.0
474.0
450.0
474.0
466.0
944.0
707.0
410.0 1,363.8
887.3
256.0
360.0
340.0
48.0
36.0
44.0
40.0
Length
(m)
992.0
582.0
541.0
88.0
14.0
8.0
225.0
86.0
1,518.5
22.0
3.3
0.9
657.0
1,368.0
14.5
4.0
837.2
212.0
1,449.2
652.0
276.0
76.0
1,298.0
52.0
304.0
374.0
20.0
95.1
1,077.0
758.0
149.0
24.0
8.0
237.0
953.8
631.3
20.0
12.0
4.0
Cu
Ag
Au
(%)
(g/t)
(g/t)
0.36
3.7
0.32
0.41
5.4
0.38
0.61
49.2
0.65
0.18
278.5
0.77
0.04
754.4
1.60
0.14
904.7
0.54
1.00
3.8
0.94
1.22
6.9
1.34
0.31
10.3
0.11
0.07
490.8
0.06
2.64
127.2
0.92
2.66
132.6
2.04
0.44
2.0
0.14
0.40
2.5
0.19
0.42
30.2
0.97
1.94
9.8
1.20
0.53
1.9
0.21
0.84
2.2
0.40
0.41
5.0
0.21
0.55
8.6
0.25
0.66
6.7
0.31
0.63
2.5
0.26
0.59
15.0
0.40
0.59
252.4
0.47
0.84
9.4
0.53
0.41
69.3
0.38
0.38
0.31 1,209.9
0.79
2.8
0.59
0.52
22.4
0.25
0.53
31.0
0.30
0.35
128.0
0.10
0.36
366.8
0.15
0.44
725.2
0.19
0.73
3.0
0.60
0.31
2.1
0.13
0.38
5.8
0.35
95.8
0.42
0.29
14.1
5.21
0.07
18.8
0.09 10.25
CuEq1
(%)
0.63
0.73
1.51
1.72
2.26
0.48
4.43
5.31
0.56
0.56
2.90
0.70
1.15
0.61
0.81
0.95
0.84
1.01
3.15
1.30
1.30
1.24
0.89
1.03
1.20
0.42
0.68
(1) Copper Equivalent is calculated based on US$ 3.00/lb Cu, US$ 1,500/oz Au and US$ 18/oz Ag, with 80%
metallurgical recoveries assumed for all metals. The formula is: CuEq % = Cu % + (0.7292 * Au g/t) +
(0.0088 * Ag g/t)
4
Additional information on these drilling results is disclosed in the Company’s press releases. As of the date of this
MD&A, additional holes have been completed with assays pending, which include:
• FSDH101
• FSDH102
• FSDH104
• FSDH105
• FSDH106
• FSDH108
• FSDH111
Assay results for completed holes will be released as they are received, analyzed, and confirmed by the Company.
OUTLOOK
Drilling continues to be the Company’s primary focus with nine drill rigs operating at site. The planned 2024 drilling
program is expected to be the Company’s most ambitious program to date, including 40,000m of drilling planned with
a renewed focus on exploration growth with multiple step-out targets from zones of known mineralization.
Drilling will remain a mix of both large and small step-outs in all directions from the Aurora Zone, as well as resource
definition drilling within it. The Company continues to maintain a strong focus on improving drill productivity through
a variety of initiatives.
Data collected from the current campaign is being used to develop a comprehensive geological model which will guide
further exploration and form the basis of an eventual update to the Mineral Resource estimate. The Company is
continuing preliminary metallurgical testwork on the sulphide mineralization, as well as environmental and social
baseline programs in support of future project permitting.
The Company’s plans and timelines are subject to equipment and staff availability, along with being able to operate
safely and effectively and in accordance with the Company's health and safety protocols.
BHP ANTI-DILUTIVE TOP-UP RIGHTS AND SHAREHOLDING
On February 7, 2023, the Company closed a non-brokered private placement to BHP Western Mining Resources
International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), whereby the Company
issued 43,711 common shares to BHP for gross proceeds of $1,084,907 (the "Anti-dilution Top-Up").
The Anti-dilution Top-Up was undertaken pursuant to the terms of the March 11, 2022 private placement (the "Private
Placement"), whereby BHP was granted certain anti-dilutive rights, allowing BHP to top-up and maintain its pro rata
ownership interest in the Company from time to time (see news releases dated February 28, 2022 and March 11,
2022).
BHP also participated in the Company’s $130 million private placement, completed on June 14, 2023, increasing their
ownership of Filo to approximately 6%.
RESULTS FROM OPERATIONS
Year ended December 31,
2023
2022
Net loss (000’s)
Total assets (000’s)
Loss per share, basic and diluted
$
$
115,113 $
68,961 $
124,389
85,964
0.90 $
0.57 $
2021
32,419
30,660
0.29
Filo is an exploration company and, as such, its net losses are largely driven by its exploration and project
investigation activities. There is no expectation of generating operating profits until it develops a commercially
viable mineral deposit.
5
Key financial results for the last eight quarters are provided in the table below.
Three Months Ended
Dec-23
Sep-23
Jun-23
Mar-23
Dec-22
Sep-22
Jun-22
Mar-22
Exploration costs ($000's)
36,286
36,657
35,879
34,309
25,604
19,915
22,136
14,869
Operating loss ($000’s)
40,689
39,745
39,430
39,254
28,608
26,238
23,666
17,013
Net loss ($000’s)
32,157
23,379
29,664
29,914
21,008
20,040
13,513
14,400
Net loss per share, basic and
diluted ($)
0.25
0.18
0.24
0.24
0.17
0.16
0.11
0.12
Costs increased during the three months and year ended December 31, 2023 as compared to 2022 with increased
drilling and related activities being undertaken by the Company. Other relevant factors, such as the financial
position of the Company, other corporate initiatives, and the scope of planned exploration/project work, could
affect the level of exploration activities, operating loss, and net loss in any particular period.
For the three months and year ended December 31, 2023, Filo incurred net losses of $32.2 million and $115.1
million, respectively (2022 – $21.0 million and $69.0 million) including operating losses of $40.7 million and $159.1
million, respectively (2022 – $28.6 million and $95.5 million) and net gains of $7.6 million and $38.6 million,
respectively, from the use of marketable securities (2022 – $8.4 million and $25.0 million). Exploration and project
investigation costs are generally the most significant expenses for the Company and for the three months and
year ended December 31, 2023, they accounted for approximately 89% and 90% of the operating losses,
respectively (2022 – 90% and 86%). The Company expenses its exploration costs through the consolidated
statement of comprehensive loss, except for mineral property option payments and mineral property acquisition
costs, which are capitalized.
Exploration and project investigation expenses for the three months and year ended December 31, 2023 were
$36.3 million and $143.1 million, respectively, which increased relative to expenses of $25.6 million and $82.5
million incurred during the comparative periods in 2022. The period-over-period increases are primarily the result
of a larger drilling program being undertaken. The Company completed resource drilling of 9,961m and 37,188m
during the three months and year ended December 31, 2023, respectively, compared to 6,060m and 19,954m
drilled in 2022, increases of 64% and 86%.
The detailed categories of exploration and project investigation expenses are as follows:
Year ended December 31,
Land holding and access costs
Drilling, fuel, camp costs and field supplies
Roadwork, travel and transport
Conceptual and engineering studies
Consultants, geochemistry and geophysics
Environmental and community relations
VAT and other taxes
Write-down of VAT receivable
Office, field and administrative salaries, overhead and other
administrative costs
COVID-19-related health and safety
Share-based compensation
2023
$
224,843 $
75,891,640
20,681,907
5,946,832
4,121,064
2,614,673
2022
905,932
42,030,383
13,529,981
320,280
1,511,590
1,784,545
23,505,911
10,950,266
-
2,812,565
8,612,891
2,557
1,528,634
6,069,360
837,321
1,771,712
$
143,130,952 $
82,523,935
6
Excluding share-based compensation expense, general and administration costs for the three months and year
ended December 31, 2023 totalled $3.6 million and $9.3 million, respectively (2022 – $1.4 million and $5.3 million).
The increases are due primarily to higher general office and public company maintenance costs, such as stock
exchange and regulatory fees and insurance costs. Salaries and benefits increased by $1.2 million and $2.1 million
during the three months and year ended December 31, 2023, due primarily to executive and head office personnel
additions.
Total share-based compensation expense for the three months and year ended December 31, 2023, was $1.1 and
$8.2 million, respectively (2022 – $2.0 million and $9.5 million). Share based compensation is a non-cash cost
which reflects the amortization of the estimated fair value of share options over their vesting period. The fair value
of share options is calculated using the Black-Scholes pricing model, which relies heavily on the Company’s share
price and historical share price volatility. Due to the material increase in the Company’s share price and volatility
since 2021, the calculated fair value of the Company’s share options has increased considerably, resulting in a
higher share option value and resultant share-based compensation expense being recognized. The actual future
value to the option holders may differ materially from these estimates as it depends on the trading price of the
Company’s shares if and when the options are exercised. In addition, as the granting of options and their vesting
is at the discretion of the Board, the related expense is unlikely to be uniform across quarters or financial years.
Interest income for the three months and year ended December 31, 2023 was $1.6 million and $5.1 million,
respectively (2022 – $0.8 million and $1.8 million). Interest income has increased due to the increase in the
Company’s average cash balance combined with increases in the interest rates offered by the financial institutions
with which the Company holds funds.
During the three months and year ended December 31, 2023, the Company recognized net monetary gains of
$1.3 million and $1.5 million, respectively (2022 – loss of $0.1 million and gain of $0.5 million) in relation to the
application of hyperinflationary accounting for the Company’s Argentinian subsidiary. The monetary gains and
losses recognized are the result of changes in the Argentinian price indices and changes to the Company’s net
monetary position during the three months and year ended December 31, 2023. Further discussion regarding the
application of hyperinflationary accounting has been provided in the note 4 to the 2023 Financial Statements.
From time to time, the Company acquires and transfers marketable securities as a mechanism to facilitate
intragroup funding transfers between its Canadian headquarters and its Argentinian operating subsidiary. As a
result of these funding transactions, for the three months and year ended December 31, 2023, the Company
recognized gains of $7.6 million and $38.6 million, respectively (2022 – $8.4 million and $25.0 million) on the use
of marketable securities for such purposes, which represents the net benefit of having used this funding
mechanism over traditional methods. The period-over-period increase is primarily the result of increased funding
provided to the Argentinian subsidiary to facilitate the Company’s expanded drilling program.
Other foreign exchange for the three months and year ended December 31, 2023 totalled losses of $0.8 million
and $29,073, respectively (2022 – loss of $0.2 million and gain of $0.5 million), which is the result of the impact
appreciation of the US dollar relative to the Canadian dollar on the Company’s US dollar-denominated cash and
cash equivalents, from the time of when the US dollars were purchased through December 31, 2023.
In other comprehensive income, the Company reported foreign exchange translation losses of $0.1 million and
$0.5 million for the three months and year ended December 31, 2023, respectively (2022 – gains of $0.6 million
and $0.5 million) on translation of subsidiary company accounts from their respective functional currencies to the
Canadian dollar presentation currency. For the three months and year ended December 31, 2023, the impact of
hyperinflation amounted to loss of $1.7 million and a gain of $3.8 million, respectively (2022 – gains of $0.4 million
and $0.8 million) which consists of adjustments recognized on the continuing inflation of opening non-monetary
balances during the period and the ongoing translation of the Company’s Argentinian subsidiary into the Canadian
dollar presentation currency.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2023, the Company had cash and cash equivalents of $108.1 million and net working capital of
$87.0 million, compared to cash and cash equivalents of $74.9 million and net working capital of $60.3 million as at
December 31, 2022. The increase in the Company’s cash and cash equivalents and net working capital is due the non-
7
brokered private placement completed in June 2023 which resulted in net proceeds of $129.1 million, plus the net
$1.1 million BHP Top-Up and $4.9 million in gross proceeds received by the Company in relation to the exercise of
stock options during the year ended December 31, 2023. These cash inflows were offset by funds used in operations
and for general corporate purposes, plus amounts used in the acquisition of mineral properties ($1.0 million) and
equipment and facilities for the Filo del Sol Project ($5.5 million).
The Company will continue to deploy the majority of its treasury to fund ongoing advancement of the Filo del Sol
Project and, to a lesser extent, for working capital and general corporate purposes.
The Company does not currently generate income from operations. The Company has sufficient working capital for
the Company to fund operations for the near term. However, the Company will need further funding to support the
advancement of the Filo del Sol Project towards development and to meet general corporate and working capital
requirements. Historically, capital requirements have been funded through equity financing. While management is
confident that additional sources of funding will be secured to fund potential future expenditures, factors that could
affect the availability of financing include the progress and results of ongoing project exploration and evaluation
activities at the Company’s Filo del Sol Project, the state of international debt and equity markets, investor perceptions
and expectations of the global copper, gold, and/or silver markets. Based on the amount of funding raised, the
Company’s planned initiatives and other work programs may be postponed, or otherwise revised, as necessary.
RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances with related parties.
During the year ended December 31, 2023, the Company engaged with NGEx Minerals Ltd. (“NGEx Minerals”), a
related party to the Company by way of directors, officers and shareholders in common.
Related party services
The Company has an ongoing cost sharing arrangement with NGEx Minerals. Under the terms of this arrangement,
the Company provides management, technical and/or administrative services (collectively, “Management Services”) to
NGEx Minerals and vice versa. These transactions were incurred in the normal course of operations, and are
summarized as follows:
Management Services to NGEx Minerals
$
436,784 $
902,414
Management Services from NGEx Minerals
(285,642)
(364,343)
Year ended
December 31,
2023
2022
Related party balances
The amounts due from (to) related parties, and the components of the consolidated statement of financial position in
which they are included, are as follows:
Receivables and other assets
Related Party
NGEx Minerals
December 31,
2023
52,858 $
December 31,
2022
186,449
$
Accounts payable and accrued liabilities
NGEx Minerals
(67,466)
(112,163)
8
Camp usage agreement
On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction with a wholly-owned
subsidiary of Josemaria Resources Inc., a former related party (“Josemaria”, a 100%-owned subsidiary of Lundin
Mining Corporation) whereby the Company extended its right to use Josemaria’s Batidero Camp in Argentina.
The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence of such notice the
agreement may be renewed for another year at the Company’s election. On March 7, 2024, Filo provided formal notice
of renewal for the period through April 1, 2025.
Key management compensation
The Company’s key management personnel have the authority and responsibility for overseeing, planning, directing
and controlling its activities and consist of the Board of Directors and members of the executive management team.
Total compensation expense for key management personnel, and the composition thereof, is as follows:
Salaries
Short-term employee benefits
Directors’ fees
Stock-based compensation
Incentive bonuses
Year ended
December 31,
2023
2022
$
1,900,000 $
1,346,667
32,309
391,642
6,056,367
1,678,750
32,369
233,056
6,910,772
1,165,000
$
10,059,068 $
9,687,864
MATERIAL ACCOUNTING POLICIES
The Company’s material accounting policies are described in Note 3 the consolidated financial statements for the
year ended December 31, 2023, as filed on SEDAR+ at www.sedarplus.ca.
New Accounting Pronouncements
As at December 31, 2023, there are no IFRS Accounting Standards or International Financial Reporting
Interpretations Committee interpretations that are not yet effective or early adopted that are expected to have
any impact on the Company.
CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards, such as
the underlying consolidated financial statements for the year ended December 31, 2023, requires management to
make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities and
expenditures. These estimates, assumptions and judgements are based on management’s best knowledge of the
relevant facts and circumstances taking into account previous experience. Actual results could differ and such
differences could be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are
based on historical experience and other facts and circumstances. Revisions to estimates, assumptions and
judgements, and the resulting effects on the carrying amounts of the Company’s assets and liabilities, are
accounted for prospectively. Information about estimates, assumptions, judgements and other sources of estimation
uncertainty as at December 31, 2023 that have a risk of resulting in a material adjustment to the carrying amounts
of assets and liabilities within the next year are provided below:
9
Valuation of mineral properties
The Company carries the acquisition costs of its mineral properties at cost less any provision for impairment.
At each reporting period, management applies judgement in assessing whether there are any indicators of
impairment relating to mineral properties. If any such indicator exists, then an impairment test is performed
by management, which also requires the Company to make significant judgments and estimates. Information
considered by management in assessing indicators of impairment may include the period for which the entity
has the right to conduct its exploration and project investigation activities, including expected renewals,
whether substantive expenditure on further exploration and project investigation of mineral properties is
budgeted, the evaluation of the results of exploration and project investigation activities up to the reporting
date and other information that may indicate that the carrying value of mineral properties may not be
recovered in full from successful development or sale of the asset. The judgments and estimates mentioned
above are subject to various risks and uncertainties, which may ultimately have an effect on the expected
recoverability of the carrying values of the mineral properties.
The Company has determined that no indicators of impairment exist for its mineral properties as of December
31, 2023.
FINANCIAL INSTRUMENTS
The Company’s financial instruments consist of cash, receivables and other assets, and trade payables and accrued
liabilities. The carrying values of the Company’s financial instruments are considered to be reasonable
approximations of fair value due to their anticipated short-term nature.
As at December 31, 2023, the Company’s financial instruments are exposed to the following financial risks,
including credit, liquidity and currency risks:
(i) Credit risks associated with cash are minimal as the Company deposits the majority of its cash with
large financial institutions that have been accorded a strong investment grade rating by a primary
rating agency.
(ii) Liquidity risks associated with the inability to meet obligations as they become due are minimized
through the management of its capital structure and by maintaining good relationships with significant
shareholders and creditors. The Company also closely monitors and reviews its costs to date and
actual cash flows on a monthly basis.
The maturities of the Company’s financial liabilities as at December 31, 2023, are as follows:
Total
Less than
1 year
1-5 years
More than
5 years
Accounts payable and
accrued liabilities
Total
$
22,442,523 $
22,442,523 $
$ 22,442,523 $ 22,422,523 $
- $
- $
-
-
(iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net financial
assets or liabilities which are denominated in currencies other than their respective functional
currencies.
At December 31, 2023, the Company’s largest foreign currency risk exposures existed at the level of
its Canadian headquarters, where the Company held a net financial asset position denominated in US
dollars having a Canadian dollar equivalent of approximately $65.9 million. A 10% change in the
foreign exchange rate between the US dollar and the Canadian dollar, the functional currency of Filo,
would give
financial
to an
position/comprehensive loss.
increase/decrease of approximately $6.6 million
rise
in
10
OUTSTANDING SHARE DATA
As at March 20, 2024, the Company had 130,733,167 common shares outstanding and 5,783,966 share options
outstanding under its share-based incentive plan.
FINANCIAL INFORMATION
The Company’s next scheduled financial report will be for the three months ended March 31, 2024, which is
expected to be published on or around May 8, 2024.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure controls and procedures (“DC&P”)
DC&P are designed to provide reasonable assurance that information required to be disclosed by the Company in
its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded,
processed, summarized and reported within the time periods specified in the securities legislation. They include
controls and procedures designed to ensure that information required to be disclosed by the Company in its annual
filings, interim filings or other reports filed or submitted under securities legislation is accumulated and
communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
There have not been any material changes in the Company’s DC&P during the year ended December 31, 2023.
Internal controls over financial reporting (“ICFR”)
The Company’s ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting
and preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. The
Company’s ICFR include policies and procedures that: pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and disposition of assets; provide reasonable assurance that
transactions are recorded as necessary to permit preparation of the financial statements in accordance with IFRS
Accounting Standards; that receipts and expenditures are being made only in accordance with authorization of
management and directors of the Company; and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial
statements.
Any system, no matter how well conceived or operated, has inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement
preparation and presentation and will not prevent all, or detect all, misstatements and frauds. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented
or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.
The design of any control system also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.
Management uses the Internal Control – Integrated Framework (2013 Framework) issued by the Committee of
Sponsoring Organizations for the Treadway Commission (COSO) in order to assess the effectiveness of the
Company’s ICFR.
There have not been any material changes in the Company’s internal controls during the year ended December
31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR.
11
RISKS AND UNCERTAINTIES
The operations of the Company are speculative due to the high-risk nature of its business, which includes the
acquisition, financing, exploration, development and operation of mineral and mining properties. There are a
number of factors that could negatively affect the Company’s business and the value of its common shares, and
these risk factors could materially affect the Company’s future operations and financial position and could cause
actual events to differ materially from those described in forward-looking statements relating to the Company.
Significant risk factors have been identified by the Company and are listed below. Further discussion and additional
risk factors are also available in the Company’s most recent annual information form, as filed on SEDAR+ at
www.sedarplus.ca. The following information pertains to the outlook and conditions currently known to the
Company that could have a material impact on the financial condition of the Company. Other factors may arise
that are not currently foreseen by management of the Company that may present additional risks in the future.
Current and prospective security holders of the Company should carefully consider these risk factors, as they could
materially affect the Company’s future operations and could cause actual events to differ materially from those
described in forward-looking statements relating to the Company.
Exploration and Development Risk
Mineral exploration, development and operations generally involve a high degree of risk that cannot be eliminated,
and which can adversely impact the Company’s success and financial performance. Exploration for and development
of mineral deposits involves a high degree of risk and few properties that are explored are ultimately developed into
producing mines.
Discovery of mineral deposits is dependent upon a number of factors, not the least of which are the technical skills of
the exploration personnel involved and the capital required for the programs. The cost of conducting programs may
be substantial and the likelihood of success is difficult to assess. There is no assurance that the Company’s mineral
exploration activities will result in any discoveries of new bodies of commercial ore. There is also no assurance that
even if commercial quantities of ore are discovered that a new ore body would be developed and brought into
commercial production. The commercial viability of a mineral deposit once discovered is dependent upon a number of
factors, some of which are discussed elsewhere in this MD&A, and include the particular attributes of the deposit (such
as size, grade, metallurgy, expected recovery rates of metals from the ore and proximity to infrastructure and labour),
the interpretation of geological data obtained from drilling and sampling, feasibility studies, the ability to acquire and
access land, the availability and cost of water and power, anticipated climatic conditions; cyclical metal prices;
fluctuations in inflation and currency exchange rates, higher input commodity and labour costs, commodity price
fluctuations, government regulations, including regulations relating to prices, taxes, royalties, land tenure and use,
allowable production, importing and exporting of minerals, and environmental protection. Most of the above factors
are beyond the control of the Company. Development projects will also be subject to the successful completion of final
feasibility studies, issuance of necessary permits and other governmental approvals and receipt of adequate financing,
as major expenses are typically required to locate and establish Mineral Reserves, to develop metallurgical processes
and to construct mining and processing facilities at a particular site. The exact effect of these factors cannot be
accurately predicted, but the combination of any of these factors may adversely affect the Company’s business.
The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration and
development of copper, gold, and silver projects and properties, including unusual and unexpected geologic
formations, seismic activity, rock slides, ground instabilities or failures, mechanical failures, precipitation, flooding and
other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction
of facilities, damage to life or property, environmental damage and possible legal liability.
As appropriate, the Company may seek to mitigate its exploration risk by diversifying its portfolio, or through the
establishment of joint ventures and option agreements with third parties.
Mineral Reserves and Mineral Resources Estimates
The Company’s reported Mineral Reserves and Mineral Resources are estimations only. No assurance can be given
that the estimated Mineral Reserves and Mineral Resources are accurate or that the indicated level of copper, gold,
silver or any other mineral will be recovered or produced. Actual mineralization or formations may be different from
12
those predicted. It may take many years from the initial phase of drilling before production is possible and during that
time the economic feasibility of exploiting a discovery may change. Market price fluctuations of copper, gold and silver
and certain other metals, as well as increased production and capital costs or reduced recovery rates, may render the
Company’s Mineral Reserves uneconomic to develop. Moreover, short-term operating factors relating to the Mineral
Reserves, such as the need for the orderly development of ore bodies, the processing of new or different ore grades,
the technical complexity of ore bodies, unusual or unexpected geological formations, ore dilution or varying
metallurgical and other ore characteristics may cause Mineral Reserves to be reduced. Estimated Mineral Reserves
may have to be recalculated based on fluctuations in the price of metals, or changes in other assumptions on which
they are based. Any of these factors may require the Company to reduce its Mineral Reserves and Mineral Resources,
which could have a negative impact on the Company’s business.
Failure to obtain or maintain necessary permits or government approvals or changes to applicable legislation could
also cause the Company to reduce its reserves. In addition, changes to mine plans could cause the Company to reduce
its Mineral Reserves. There is also no assurance that the Company will achieve indicated levels of copper, gold or silver
recovery or obtain the prices assumed in determining such Mineral Reserves.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no
assurance that they will ever be mined or processed profitably. Due to the uncertainty which may attach to Mineral
Resources, there is no assurance that all or any part of Measured or Indicated Mineral Resources will ever be converted
into Mineral Reserves; and no assurance that all or any part of an Inferred Mineral Resources exists or is economically
or legally mineable.
Permitting
The Company’s development and exploration activities are subject to permitting requirements in both Argentina and
Chile. In particular, comprehensive environmental assessments will be necessary for the Filo del Sol Project in
Argentina in order to obtain the necessary approval for each of the Filo del Sol Project stages, which assessment will
be conducted in compliance with Argentinian regulations. Project development may also require an environmental
impact assessment study in Chile. Following the receipt of environmental approvals, additional permits, licences,
authorizations, and certificates will be required to proceed to project construction, including, for example, mining water
and fuel delivery, sewage water treatment, hazardous waste plans, drilling and closure plans. Failure to obtain required
permits and/or to maintain compliance with permits once obtained could result in injunctions, fines, suspension or
revocation of permits and other penalties.
There can be no assurance that the Company will obtain all such permits and/or achieve or maintain full compliance
with such permits at all times. Activities required to obtain and/or achieve or maintain full compliance with such permits
can be costly and involve extended timelines.
Previously issued permits may be suspended or revoked for a variety of reasons, including through government or
court action. Failure to obtain and/or comply with required permits can have serious consequences, including: damage
to the Company’s reputation, stopping the Company from proceeding with the exploration and development of a
project, negatively impacting further development of a mine, and increasing the costs of development and litigation
or regulatory action against the Company, and may materially adversely affect the Company’s business, results of
operations or financial condition.
Infrastructure
Development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads,
bridges, power and water supplies are important determinants that affect costs. The Company’s ability to obtain a
secure supply of power and water at a reasonable cost depends on many factors, including: global and regional supply
and demand; political and economic conditions; problems that can affect local supplies; delivery; and relevant
regulatory regimes. Unusual or infrequent weather phenomena, sabotage or government, and other interference in
the maintenance or provision of such infrastructure could adversely affect the activities and profitability of the
Company.
Establishing such infrastructure will require significant resources, identification of adequate sources of raw materials
and supplies and necessary cooperation from national and regional governments, none of which can be assured. There
13
is no guarantee that the Company will secure these power, water and access rights going forward or on reasonable
terms.
Title Risk
The Company has investigated its right to explore and exploit its properties and, to the best of its knowledge, those
rights are in good standing. The results of the Company’s investigations should not be construed as a guarantee of
title. Other parties may dispute the title to a property, or the property may be subject to prior unregistered agreements
or liens and transfers or land claims by aboriginal, native, or indigenous peoples. The title may be affected by
undetected encumbrances or defects or governmental actions. The Company has not conducted surveys of all its
properties, and the precise area and location of claims or the properties may be challenged, and no assurances can
be given that there are no title defects affecting such properties. The rules governing mining concessions in Chile and
Argentina are complex and any failure by the Company to meet requirements would have a material adverse effect
on the Company. Any defects in the title to the Company’s properties could have a material and adverse effect on the
Company.
No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the
applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be
challenged or impugned by third parties. Although the Company has not had any problem renewing its licenses in the
past there is no guarantee that it will always be able to do so. Inability to renew a license could result in the loss of
any project located within that license.
The Company is earning an interest in the Tamberias property through an option agreement requiring property
payments and acquisition of title to the properties is completed only when the option conditions have been met. If the
Company does not satisfactorily complete these option conditions in the period laid out in the option agreements, the
Company’s title to the related property will not vest and the Company will have to write down its previously capitalized
costs related to that property.
Ability to Operate Year-round
The Company conducts year-round operations at the Filo del Sol Project. Risks and uncertainties associated with the
Company’s ability to successfully operate year-round include, but are not limited to, the Company’s financial position,
the nature, duration or extent of weather and other natural events and the availability of personnel, logistical support
and key contractors to provide services in challenging winter conditions.
There can be no assurances that the Company’s preparation and winterization efforts adequately anticipated, and
safeguarded against, all the challenges of conducting exploration programs during the South American winter in the
high Andes.
Dependence on Single Project
The Filo del Sol Project is currently the Company’s sole project and therefore, any adverse development with respect
to the Filo del Sol Project will have a material adverse effect on the Company.
Economic and Political Instability in Argentina
The Filo del Sol Project is predominantly located in San Juan Province, Argentina. There are risks relating to an
uncertain or unpredictable political and economic environment in Argentina, and there may be material adverse
consequences with respect to the Company and its operations as a result of the political or economic instability in
Argentina.
In a runoff to the election held on November 19, 2023, Javier Milei, defeated center-left candidate and the incumbent
finance minister, Sergio Massa, to become Argentina’s President. Since taking office on December 10, 2023, President
Milei has introduced sweeping economic reforms, including devaluation of the country’s official peso exchange rate
against the United States dollar, removing several government subsidies, reducing the size of the government and
proposing an omnibus bill with numerous articles which was withdrawn after failing to obtain sufficient support from
Congress. Economic and political uncertainty in Argentina continues to persist as of the date of this MD&A as the
14
nature, extent or scope of changes to be introduced by President Milei and enacted, if any, and the resulting impacts,
are undeterminable at this time.
Changes in local and federal administrations may also imply changes to current programs and policies affecting the
Company’s business and operations. Both Argentina’s President and its Congress have considerable power to make
decisions and determining government policies and actions that relate to the Argentinian economy. Furthermore, some
of the measures proposed by the government may also generate political and social opposition, which may in turn
prevent the government from adopting its proposed measures.
The Company cannot foresee the measures that could be taken by any future administration, national or provincial,
and the effects that such measures could have on the Argentinian economy and in Argentina’s ability to meet its
financial obligations, that could adversely affect the Company’s business, financial condition and results of operations.
Foreign Operations Risk
The Company conducts exploration activities in foreign countries, including Argentina and Chile. Each of these countries
exposes the Company to risks that may not otherwise be experienced if all operations were located in Canada. The
risks vary from country to country and can include, but are not limited to, civil unrest or war, national border disputes,
terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates, expropriation or
nationalization without adequate compensation, changes to royalty and tax regimes, high rates of inflation, labour
unrest and difficulty in understanding and complying with the regulatory and legal framework respecting ownership
and maintenance of mineral properties, as well as the revocation or suspension of previously issued mining permits.
Changes in mining or investment policies or shifts in political attitudes may also adversely affect the Company’s existing
assets and operations. Real and perceived political risk may also affect the Company’s ability to finance exploration
programs and attract joint venture or option partners, and future mine development opportunities. Chile is typically
viewed as a favourable mining jurisdiction; however, certain Canadian issuers have recently experienced regulatory
action with regards to Chilean operations, specifically with respect to increased permitting timelines.
Numerous countries have introduced changes to mining regimes that reflect increased government control or
participation in the mining sector, including, but not limited to, changes of law affecting foreign ownership, mandatory
government participation, taxation and royalties, exploration licensing, export duties, and repatriation of income or
return of capital. There can be no assurance that industries, which are deemed of national or strategic importance in
countries in which the Company has assets, including mineral exploration, will not be nationalized. There is a risk that
further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in
policy that alter laws regulating the mining industry could have a material adverse effect on the Company. There can
be no assurance that the Company’s assets in these countries will not be subject to nationalization, requisition or
confiscation, whether legitimate or not, by an authority or body.
In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in
Canada. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately predict
such developments or changes in laws or policy or to what extent any such developments or changes may have a
material adverse effect on the Company.
Non-compliance with applicable laws, regulations and permitting requirements (including allegations of such) may
result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease
or be curtailed or causing the withdrawal of permits or mining licenses, and the imposition of corrective measures
requiring material capital expenditure or remedial action resulting in materially increased cost of compliance,
reputational damage and potentially impaired ability to secure future approvals and permits. The Company may be
required to compensate third parties for loss or damage and may have civil or criminal fines or penalties imposed for
violations of applicable laws or regulations.
Environmental and Socio-Political Risks
Present or future laws and regulations with respect to environmental protection standards or corporate social
responsibility may affect the Company’s operations. Environmental legislation is evolving in a manner that requires
15
stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors
and employees. There is no assurance that regulatory and environmental approvals will be obtained on a timely basis
or at all. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the
Company’s operations. The cost of compliance with changes in governmental regulations has the potential to reduce
the profitability of operations or to preclude entirely the economic development of a property.
Regulation governing development of mining operations with the potential to affect glaciers continues to evolve in
both Chile and Argentina. The Argentinian Congress has passed legislation designed to protect the country’s glaciers.
This law would restrict development on and around glaciers. The detailed regulations that will govern implementation
of the law have not yet been written but this legislation could affect the Company’s ability to develop parts of the
Company’s properties in Argentina, including the Filo del Sol Project.
The Company is currently engaged in exploration with limited environmental impact. Future environmental costs may
increase due to changing requirements or costs associated with exploration and the developing, operating and closing
of mines, as well as with respect to changing requirements for disclosure and compliance. The Company is subject to
environmental regulation in the various jurisdictions in which it operates. Failure to comply with these laws, regulations
and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial
authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the
exploration or development of mineral properties may also be required to compensate those suffering loss or damage
by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable
laws or regulations. Furthermore, environmental hazards may exist on the properties on which the Company holds
interests which are unknown to the Company at present and which have been caused by previous or existing owners
or operators of the properties.
Programs may also be delayed or prohibited in some areas due to technical factors, new legislative constraints, social
opposition or local government capacity or willingness to issue permits to explore in a timely manner. In parts of
Argentina, there is environmental opposition to both mineral exploration and mining. Accordingly, there may be a
certain degree of anti-mining sentiment that could potentially affect the risk of successfully exploring and developing
the Company’s assets in those provinces.
Climate Change and Carbon Pricing
Climate change is a top priority for many countries and jurisdictions around the world and governments and regulators
continue to implement and develop new rules and regulations to control carbon gas or “green-house” gas emissions
attributable to climate change. As part of their efforts to shift to lower-carbon economies, governments have
implemented carbon pricing, a mechanism that harnesses market forces to address climate change by creating financial
incentives to lower emissions. Some of these mechanisms include the implementation of taxes on fuel sales, emissions
trading schemes, and fossil fuel extraction fees, all of which are expected to play an ongoing role in global efforts to
address climate change. The cost of compliance with various climate change regulations will ultimately be determined
by the regulations themselves and by the markets that evolve for carbon credits and offsets and, as a result, the
financial impact, if any, on the Company’s operations cannot yet be fully understood.
The potential physical impacts of climate change due to extreme weather events on the Company’s operations are
also highly uncertain and may be particular to the unique geographic circumstances associated with the Company’s
projects and operations. Due to changes in global climate conditions, many scientists predict an increase in the
frequency of extreme weather events such as severe and unpredictable rain and snowfall precipitation, winds, floods,
droughts, and other types of extreme weather conditions and events. Such events could disrupt the Company’s
operations and development activities; impact the Company’s equipment and infrastructure; impede access to the
Company’s projects and properties; or threaten the health and safety of the Company’s employees and contractors.
Negative Operating Cash Flow
The Company is an exploration stage company and has not generated cash flow from operations. The Company is
devoting significant resources to the exploration and acquisition of its properties; however, there can be no assurance
16
that it will generate positive cash flow from operations in the future. The Company expects to continue to incur
negative consolidated operating cash flow and losses until such time as it achieves commercial production at a
particular project. The Company currently has negative cash flow from operating activities.
The Company’s exploration projects have no operating history upon which to base estimates of future cash flows.
Substantial expenditures are required to develop mineral projects. It is possible that actual costs and future economic
returns may differ materially from Filo’s estimates. There can be no assurance that the underlying assumed levels of
expenses for any project will prove to be accurate. Further, it is not unusual in the mining industry for new mining
operations to experience unexpected problems during start-up, resulting in delays and requiring more capital than
anticipated. There can be no assurance that Filo’s projects will move beyond the exploration stage and be put into
production, achieve commercial production or that Filo will produce revenue, operate profitably or provide a return on
investment in the future. Mineral exploration involves considerable financial and technical risk. There can be no
assurance that the funds required for exploration and future development can be obtained on a timely basis. There
can be no assurance that Filo will not suffer significant losses in the near future or that Filo will ever be profitable.
Uncertainty of Long-term Funding and Dilution of Shareholders’ Interests in the Company
The exploration and development of mineral properties requires a substantial amount of capital and may depend on
the Company’s ability to obtain financing through joint ventures, debt financing, equity financing or other means.
General market conditions which may be impacted by geopolitics or international conflict, volatile metals prices, a
claim against the Company, a significant disruption to the Company’s business, or other factors may make it difficult
to secure the necessary financing in the long term. There is no assurance that the Company will be successful in
obtaining required financing as and when needed on acceptable terms. Failure to obtain any necessary additional
financing may result in delaying or indefinite postponement of exploration or development or even a loss of property
interest. If the Company needs to raise additional funds, such financing may substantially dilute the economic and
voting rights of the Company’s shareholders and reduce the value of their investment. Since the Company’s capital
needs depend on market conditions and other factors beyond its control, it cannot predict or estimate the amount,
timing or nature of any such future offering of securities. Thus, holders of Common Shares of the Company bear the
risk of any future offerings reducing the market price of the Common Shares and diluting their shareholdings in the
Company.
Metal Price Risk
The Company’s portfolio of properties and investments have exposure to predominantly copper, gold, and silver prices.
Commodity prices fluctuate widely and are affected by numerous factors beyond the Company’s control, such as the
sale or purchase of metals by various central banks and financial institutions, interest rates, exchange rates, inflation
or deflation, fluctuation in the value of the US$ and foreign currencies, global and regional supply and demand, and
the political and economic conditions of major metals-producing and metals-consuming countries throughout the
world. The prices of these metals greatly affect the value of the Company, the price of the Common Shares and the
potential value of its properties and investments. This, in turn, greatly affects its ability to form joint ventures, option
agreements and the structure of any joint ventures formed. This is due, at least in part, to the underlying value of the
Company’s assets at different metals prices.
Tax, Royalties and Other Charges
The Company runs its business in different countries and strives to run its business in as tax efficient a manner as
possible. The Company is potentially subject to taxes (including income taxes and mineral taxes), various fees and
royalties imposed by various levels of government across the jurisdictions in which it operates. The laws imposing
these taxes, fees and royalties and the manner in which they are administered may in the future be changed or
interpreted in a manner that materially and adversely affects our business, financial position and results of operations.
Repatriation of earnings to Canada from other countries may be subject to withholding taxes or restricted by currency
controls. The Company has no control over withholding tax rates.
17
Health and Safety Hazards
Mineral exploration and operations involve health and safety hazards that could adversely affect the Company’s
reputation, business and future operations. By nature, exploration and mining activities present a variety of hazards
and associated health and safety risks. Workers involved in the Company’s operations are subject to many inherent
health and safety risks and hazards, including, but not limited to, rock falls, slides or bursts, equipment or structural
fires, falls of ground, floods, chemical and biological hazards, mineral dusts, atmospheric hazards including low oxygen
levels, gases and fumes, high altitude work, use of explosives, noise, electricity, fixed and moving equipment, civil
disturbances and criminal activity, which could result in occupational illness or health issues, personal injury, and loss
of life, and/or facility and workforce evacuation. Even though robust health and safety controls and risk mitigation
measures are in place across the Company’s sites, health and safety incidents may occur. The overall management of
health and safety is governed in accordance with the requirements of the Company’s Responsible Mining Development
Policy. While significant effort is made to control and eliminate potential health and safety risks, these risks cannot be
eliminated and may adversely affect the Company’s reputation, business, and future operations. Incidents resulting in
serious injury or death, or those having a negative impact on surrounding communities (real or perceived) could result
in litigation, civil or criminal sanctions, regulatory action (including, but not limited to suspension of operations and/or
fines and penalties), increased community tensions, or otherwise adversely affect the Company’s reputation and ability
to meet its objectives.
Pandemic Virus Outbreaks
Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases could have
a material adverse effect on the Company by causing operational and supply chain delays and disruptions, labour
shortages and shutdowns, social unrest, breach of material contracts and customer agreements, government or
regulatory actions or inactions, changes in tax laws, payment deferrals, increased insurance premiums, decreased
demand for base and precious metals, declines in the price of base and precious metals, delays in permitting or
approvals, governmental disruptions, capital markets volatility, or other unknown but potentially significant impacts.
In addition, governments may impose strict emergency measures in response to the threat or existence of an infectious
disease, which could have a material adverse effect on the Company’s business.
OFF-BALANCE SHEET ARRANGEMENTS
During the year ended December 31, 2023, there were no material off-balance sheet transactions which have not
been recorded in the Company’s consolidated financial statements. The Company has not entered into any specialized
financial arrangement to minimize its currency risk.
QUALIFIED PERSONS AND TECHNICAL INFORMATION
The scientific and technical disclosure for the Filo del Sol Project included in this MD&A have been reviewed and
approved by Bob Carmichael, B.A.Sc., P. Eng. (BC) and/or Jamie Beck, B.A.Sc., P.Eng. Mr. Carmichael is Filo's Vice-
President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral
Projects. (“NI 43-101”). Mr. Beck is Filo’s President and Chief Executive Officer and is also a Qualified Person under
NI 43-101.
The field programs were carried out under the supervision of the Mr. Carmichael. Samples were cut at Filo’s Batidero
camp near the project site by company personnel. Beginning in the 2020/2021 season, whole core was transported to
a new core processing facility located near Rodeo, Argentina, and all sampling activities were carried out there.
Diamond drill core was sampled in two metre intervals (except where shortened by geological contacts) using a rock
saw for sulphide mineralization. Oxide mineralization was cut with a core splitter in order to prevent dissolution of
water-soluble copper minerals during the wet sawing process. Core diameter is a mix of PQ, HQ and NQ depending
on the depth of the drill hole. Samples were bagged and tagged at camp, and packaged for shipment by truck to
Mendoza, Argentina. RC Samples were collected at the drill site by company personnel with initial splitting carried out
at a facility near the drill sites and final splitting completed at the Batidero camp.
Samples were delivered to the ALS preparation laboratory in Mendoza where they were crushed and a 500g split was
pulverized to 85% passing 200 mesh. The prepared samples were sent to either the ALS assay laboratory in Santiago,
18
Chile or Lima, Peru for copper, gold and silver assays and multi-element ICP and sequential copper analyses. ALS is
an accredited laboratory which is independent of the Company. Gold assays were by fire assay fusion with AAS finish
on a 30 g sample. Copper and silver were assayed by atomic absorption following a four-acid digestion. Samples were
also analyzed for 36 elements with ICP-ES up to drillhole FSDH053. Starting in August 2021 with drillhole FSDH054,
the multielement analyses were changed to ME-MS61 which offers ultra low detection limits for 48 elements. A
sequential copper leach analysis was completed on each sample with copper greater than 500 ppm (0.05%). Copper
and gold standards as well as blanks and duplicates (field, preparation and analysis) were randomly inserted into the
sampling sequence for quality control. On average, 9% of the submitted samples are quality control samples. No data
quality problems were indicated by the quality assurance/quality control program.
Mineralized zones within the Filo del Sol deposit are typically flat-lying, or bulk porphyry-style zones and drilled widths
are interpreted to be very close to true widths.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and
“forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking
information” or “forward-looking statements”) concerning the business, operations, financial performance and
condition of Filo. The forward-looking information contained in this MD&A is based on information available to the
Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company does
not intend, and does not assume any obligation, to update this forward-looking information. Generally, any statements
that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance, (often, but not always, identified by words or phrases such as "plans",
"expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", “projects” ,
“estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”,
“possible”, "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements
that certain actions, events, conditions or results “will”, "may", "could", "would", “should”, "might" or "will be taken",
"will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not statements of
historical fact and may be forward-looking statements.
All statements other than statements of historical fact may be forward-looking statements. Forward-looking information
is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or implied by such forward-looking information, including
but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding Mineral
Resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated
resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment,
timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental
impact on operations as well as other risks, and uncertainties and other factors, including, without limitation, those
referred to in the “Risks and Uncertainties” section of the MD&A and in the Company’s most recent Annual Information
Form, under the heading “Risks Factors”, and elsewhere, which may cause the actual results, level of activity,
performance or achievements of the Company to be materially different from those expressed or implied by such
forward-looking information.
The Company believes that the expectations reflected in the forward-looking statements and information included in
this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such
forward-looking statements and information should not be unduly relied upon. This statement and information is as
of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to
the assumptions used in the pre-feasibility study for the Filo del Sol Project, the assumptions used in the Mineral
Reserves and Resources estimates for the Filo del Sol Project, including, but not limited to, geological interpretation,
grades, metal price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions,
as applicable; ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade
and continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and
services needed for exploration and development of mineral properties; and that activities will not be adversely
disrupted or impeded by exploration, development, operating, regulatory, political, community, economic and/or
19
environmental risks. In addition, this MD&A may contain forward-looking statements or information pertaining to: the
potential exploration results or anticipated outcomes of infill or step-out drilling planned at Filo del Sol; exploration
and development plans and expenditures, including but not limited to its plans to add rigs its ongoing drilling campaign,
the sequencing or prioritization of drill targets, and a transition to year-round operations; the ability of the Company’s
operating protocol to continue to meet government mandated health and safety guidelines enabling it to conduct its
field programs as planned; the ultimate size and scope of its field programs and the Company’s ability to achieve the
objectives thereof; the size and scope of its field programs and the Company’s ability to achieve the objectives thereof;
the impact of the Company’s winterization efforts at Filo del Sol, and whether such efforts will enable year-round
operations and have adequately anticipated the challenges of winter operation, including but not limited to weather
and potential supply chain disruptions; the anticipated use of proceeds from the Private Placement; the timing or
results of an upgrade to the Mineral Resources estimate at Filo del Sol, including the inputs used therein; opportunities
to improve project economics; the success of future exploration activities; potential for resource expansion; potential
for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to
Mineral Reserves or Resources through exploration; expectations with respect to the conversion of inferred resources
to an indicated resources classification; ability to execute the planned work programs; estimation of commodity prices,
Mineral Reserves and Resources, estimations of costs, and permitting timelines; ability to obtain surface rights and
property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of
mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on
insurance coverage; and other risks and uncertainties.
Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that
the current price of and demand for commodities will be sustained or will improve, the supply of commodities will
remain stable, that the general business and economic conditions will not change in a material adverse manner, that
financing will be available if and when needed on reasonable terms and that the Company will not experience any
material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed
as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual
results to differ materially from those contained in forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to
be accurate, as the Company’s actual results and future events could differ materially from those anticipated in such
statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and elsewhere,
and in the “Risk Factors” section of the Company’s most recent Annual Information Form, which is available under the
Company’s profile on SEDAR+ at www.sedarplus.ca. All of the forward-looking information contained in this document
is qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking
information due to the inherent uncertainty thereof.
Statements relating to "Mineral Resources" are deemed to be forward looking information, as they involve the implied
assessment, based on certain estimates and assumptions, that the Mineral Resources described can be profitably
produced in the future.
20
FILO CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2023
(Amounts in Canadian Dollars unless otherwise indicated)
This management’s discussion and analysis (“MD&A”) of Filo Corp. (“Filo” or the “Company”) should be read in
conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and related
notes therein (“2023 Financial Statements”). The financial information in this MD&A is reported in Canadian dollars
unless otherwise indicated and is partly derived from the Company’s consolidated financial statements prepared
in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IFRS Accounting Standards”). The effective date of this MD&A is March 20, 2024. Additional
information about the Company and its business activities is available on SEDAR+ at www.sedarplus.ca and the
Company’s website www.filocorp.com.
The Company’s common shares trade on the Toronto Stock Exchange under the symbol "FIL", the NASDAQ First North
Growth Market under the symbol "FIL" and on the OTCQX under the symbol “FLMMF”.
Effective June 23, 2023, the Company’s name was changed to Filo Corp., formerly Filo Mining Corp., to better align
with the Company’s strategic vision. Some of the statements in this MD&A are forward-looking statements that are
subject to risk factors set out in the cautionary note contained herein.
CORE BUSINESS AND STRATEGY
Filo is a mineral exploration company, focused on its 100% controlled Filo del Sol project (“Filo del Sol” or the “Filo
del Sol Project”), which is comprised of two adjacent land holdings: the Filo del Sol property located in San Juan
Province, Argentina, and the Tamberias property, located in Region III, Chile. The Filo del Sol Project is located in the
emerging Vicuña District, located between the prolific Maricunga and El Indio mining districts. The region is an
established mining jurisdiction and hosts a number of large-scale mining operations. The project area is covered under
the Mining Integration and Complementation Treaty between Chile and Argentina, which provides the framework for
the development of cross border mining projects.
The Company’s strategy is to create value for its shareholders by expanding and increasing the confidence in and
continuity of the resources and reserves at the Filo del Sol Project through further exploration, and by advancing
engineering and other studies that are required to prepare the Filo del Sol Project for eventual development.
2023 HIGHLIGHTS
During 2023, the Company successfully delivered its most extensive drilling campaign to date, completing 37,188m of
resource drilling and 1,597 metres of geotechnical drilling. The Company’s interpretation of the high-grade Aurora
Zone has improved dramatically and drilling has continued to expand the footprint of the Filo del Sol deposit via
numerous small and large step-out holes. Calendar year (and subsequent to) highlights included:
• Assay results announced for holes FSDH097, FSDH098 and FSDH100, which span a total distance of 1.6km,
expand the Filo deposit to the west along the entire distance between the holes drilled. FSDH100 is an example
of the successful Aurora Zone step-out drilling conducted by the Company, adding over 500m in depth beyond
the current resource pit shell and extending the western margin of the deposit by 250m;
• Assay results announced for holes FDSH086, FSDH089 and FSDH095 highlight the precious metals-rich nature
of the Filo deposit. All three holes encountered the high-grade silver zone, and hole FSDH086 intersected a
new phase of the porphyry, encountering high-grade porphyry-style mineralization with unusually higher gold
grades and copper hosted by a chalcopyrite-bornite assemblage. Located at the northwestern edge of the
Aurora Zone, the results demonstrate the significant potential that exists at Filo to find new styles of
mineralization;
• Assay results announced for holes FSDH093 and FSDH094, which were collared 500m apart, filled critical high-
grade gaps in the Company’s interpretation as well as extending Aurora to the northeast. The high-grade
1
porphyry zone at depth in hole FSDH093 is similar to, and over 300m away from, the intersection of hole
FSDH086;
• Assay results announced for hole FSDH084 resulted in the second-best hole from a grade-thickness
perspective ever drilled at the Filo del Sol Project. The results of hole FSDH084 confirmed the continuity of
high-grade mineralization within the Aurora Zone, including the high-grade Breccia 41 Zone;
• Assay results from holes FSDH087, FSDH090 and FSDH091 support the idea of continuous mineralization
across the 1.3km distance between the Aurora and Bonita Zones. Additional holes in this area are underway,
some of which have been completed with assays pending, which will provide critical information on the
continuity of mineralization from Tamberias in the south to Bonita in the north (a distance of over five
kilometres);
• Assay results for hole FSDH091 resulted in the first intersection of high-grade mineralization near the Bonita
Zone, and the first instance of consistent grades greater than 1% CuEq outside the Aurora Zone. FSDH091
included a high-grade section averaging 1.15% CuEq over 212m. At over 1km north of the Aurora Zone, the
results from this hole opened up an entirely new area to explore for high-grade mineralization;
•
•
In June 2023, the Company closed a $130.0 million private placement, raising funds at market prices with
limited dilution and with strong support from existing shareholders and institutional investors;
In June 2023, the Company announced a corporate name change to “Filo Corp.” to better align with the
Company’s strategic vision.
Q4 2023 DRILLING AND ASSAY RESULTS
Drilling and assay results disclosed by the Company during and subsequent to the year ended December 31, 2023
are summarized in the following table:
Hole-ID
FSDH068A
incl.
incl.
incl.
FSDH069A
incl.
and incl.
incl.
FSDH070A
incl.
incl.
FSDH071
incl.
incl.
incl.
FSDH072
incl.
incl.
FSDH073
incl.
incl.
FSDH074
incl.
From
(m)
To
(m)
18.0 1,794.0
94.0
54.0
394.0 1,514.0
574.0 1,298.2
138.0 1,434.5
404.0
435.0
498.0 1,096.0
792.0
886.0
282.0 1,338.5
369.7 1,040.0
540.0
712.0
292.0 1,320.0
580.0
408.0
514.0
574.0
776.0 1,013.5
484.0 1,712.0
650.0 1,472.0
998.0 1,328.0
404.5 1,388.4
600.0 1,214.0
756.0 1,028.0
278.0 1,300.0
644.0 1,160.0
Length
(m)
1,776.0
40.0
1,120.0
724.2
1,296.5
31.0
598.0
94.0
1,056.5
670.4
172.0
1,028.0
172.0
60.0
237.5
1,228.0
822.0
330.0
983.9
614.0
272.0
1,022.0
516.0
Cu
(%)
0.45
0.65
0.59
0.69
0.60
0.00
0.92
1.78
0.54
0.63
0.75
0.78
1.44
2.18
1.04
0.55
0.68
0.88
0.62
0.74
0.92
0.49
0.61
Au
(g/t)
0.30
0.92
0.38
0.45
0.38
0.27
0.57
1.37
0.38
0.41
0.47
0.47
0.82
1.64
0.68
0.33
0.42
0.61
0.32
0.41
0.52
0.19
0.21
Ag
(g/t)
4.0
8.1
5.3
6.8
13.9
127.0
19.3
26.3
4.0
5.3
5.9
6.7
12.6
16.9
6.0
4.4
4.4
2.3
4.0
3.2
3.2
4.4
3.2
CuEq1
(%)
0.70
1.39
0.92
1.08
1.00
1.51
3.01
0.86
0.97
1.15
1.16
2.14
3.53
1.49
0.83
1.02
1.35
0.89
1.06
1.33
0.66
0.79
2
Hole-ID
incl.
FSDH075
incl.
and incl.
incl.
FSDH076
incl.
and incl.
and incl.
FSDH077
plus
FSDH078
plus
plus
FSDH079
FSDH080
incl.
incl.
incl.
and incl.
FSDH081
FSDH082
FSDH083
incl.
and incl.
FSDH084
incl.
and incl.
incl.
incl.
FSDH085
Plus
incl.
incl.
FSDH086
incl.
and incl.
and incl.
and incl.
FSDH087
incl.
incl.
and incl.
and incl.
and incl.
incl.
incl.
and incl.
To
(m)
From
(m)
840.0 1,092.0
197.1 1,562.0
268.0
197.1
796.0 1,562.0
910.4 1,202.0
180.0 1,543.0
850.9
496.0
952.0 1,120.0
1264.0 1,490.0
194.0
920.2
348.0
422.0
579.0
76.0
122.0 1,347.5
122.0 1,058.0
216.0
122.0
148.0
126.0
882.0
494.0
242.0
192.0
192.0
404.0
334.0
392.0
516.0
68.0
418.7 1,549.8
560.0
672.0
970.0 1,180.0
170.0 1,575.8
394.0
440.0
616.0 1,258.0
827.8
772.0
812.0
778.0
26.0
18.0
320.0 1,199.0
658.0 1,114.4
667.0
658.0
400.0 1,414.0
438.0
410.0
532.8
567.5
618.0 1,414.0
1,370.0 1,414.0
42.0 1,472.0
292.0 1,472.0
194.0
190.0
233.0
232.0
304.0
300.0
442.0
350.0
374.0
358.0
440.0
436.0
940.0
937.5
Length
(m)
252.0
1,364.9
70.9
766.0
291.6
1,363.0
354.9
168.0
226.0
2.0
516.2
14.0
30.0
63.0
8.0
1,225.5
936.0
94.0
22.0
388.0
50.0
Au
Cu
(g/t)
(%)
0.23
0.65
0.12
0.31
0.19
0.33
0.13
0.40
0.18
0.52
0.35
0.48
0.40
0.63
0.48
0.52
0.55
0.42
0.05 10.35
0.11
0.11
1.28
1.16
0.77
0.01
0.66
0.87
0.40
0.25
0.29
0.39
0.33
0.42
0.42
1.02
0.35
2.25
0.36
0.39
0.13
0.16
No significant values
1,131.1
112.0
210.0
1,405.8
46.0
642.0
55.8
34.0
8.0
879.0
456.4
9.0
1,014.0
28.0
34.7
796.0
44.0
1,430.0
1,180.0
4.0
1.0
4.0
92.0
16.0
4.0
2.5
0.43
0.52
0.61
0.62
0.01
1.01
2.98
3.68
0.98
0.32
0.38
0.33
0.66
0.01
0.51
0.77
1.14
0.40
0.46
1.41
2.04
4.49
0.75
2.97
1.58
2.00
0.15
0.17
0.22
0.43
0.38
0.70
2.73
3.73
3.15
0.13
0.14
0.07
0.39
0.21
0.17
0.46
0.83
0.16
0.17
0.33
1.02
4.10
0.40
1.81
0.41
0.48
Ag
(g/t)
3.6
2.9
15.4
1.3
1.2
3.9
10.0
1.1
1.2
0.5
0.9
0.5
34.6
27.8
8.9
8.9
11.3
5.8
1.0
20.7
7.2
2.8
6.2
2.1
23.2
310.2
20.6
92.8
110.5
433.8
6.0
5.8
156.8
9.3
87.0
69.0
4.2
7.5
4.3
3.7
49.9
6.6
147.0
11.3
50.1
33.0
145.2
CuEq1
(%)
0.85
0.42
0.60
0.51
0.66
0.77
1.01
0.88
0.87
0.20
2.10
1.59
0.61
0.67
0.77
1.38
2.51
0.83
0.32
0.57
0.70
0.80
1.13
1.70
5.79
7.37
7.09
0.47
0.53
1.76
1.02
1.24
1.14
1.81
0.55
0.61
2.09
2.84
8.77
1.14
4.73
2.17
3.63
3
Hole-ID
FSDH088
incl.
FSDH089
incl.
incl.
and incl.
and incl.
incl.
FSDH090
incl.
and incl.
and incl.
and incl.
FSDH091
incl.
and incl.
and incl.
incl.
FSDH093
incl.
incl.
and incl.
FSDH094
incl.
and incl.
FSDH095
incl.
and incl.
FSDH097
incl.
incl.
incl.
incl.
and incl.
FSDH098
FSDH100
incl.
FSGT006
incl.
From
(m)
To
(m)
66.0 1,058.0
436.0 1,018.0
677.0
136.0
416.0
328.0
350.0
336.0
394.0
386.0
677.0
452.0
452.0
538.0
100.0 1,618.5
130.0
108.0
272.0
268.7
539.1
540.0
665.0 1,322.0
168.0 1,536.0
200.0
185.5
504.0
508.0
672.8 1,510.0
872.0 1,084.0
338.8 1,788.0
492.0 1,144.0
804.0 1,080.0
1,674.0 1,750.0
192.0 1,490.0
416.0
364.0
748.0
444.0
496.0
122.0
294.0
274.0
332.0
427.1
368.0 1,445.0
368.0 1,126.0
521.0
372.0
474.0
450.0
474.0
466.0
944.0
707.0
410.0 1,363.8
887.3
256.0
360.0
340.0
48.0
36.0
44.0
40.0
Length
(m)
992.0
582.0
541.0
88.0
14.0
8.0
225.0
86.0
1,518.5
22.0
3.3
0.9
657.0
1,368.0
14.5
4.0
837.2
212.0
1,449.2
652.0
276.0
76.0
1,298.0
52.0
304.0
374.0
20.0
95.1
1,077.0
758.0
149.0
24.0
8.0
237.0
953.8
631.3
20.0
12.0
4.0
Cu
Ag
Au
(%)
(g/t)
(g/t)
0.36
3.7
0.32
0.41
5.4
0.38
0.61
49.2
0.65
0.18
278.5
0.77
0.04
754.4
1.60
0.14
904.7
0.54
1.00
3.8
0.94
1.22
6.9
1.34
0.31
10.3
0.11
0.07
490.8
0.06
2.64
127.2
0.92
2.66
132.6
2.04
0.44
2.0
0.14
0.40
2.5
0.19
0.42
30.2
0.97
1.94
9.8
1.20
0.53
1.9
0.21
0.84
2.2
0.40
0.41
5.0
0.21
0.55
8.6
0.25
0.66
6.7
0.31
0.63
2.5
0.26
0.59
15.0
0.40
0.59
252.4
0.47
0.84
9.4
0.53
0.41
69.3
0.38
0.38
0.31 1,209.9
0.79
2.8
0.59
0.52
22.4
0.25
0.53
31.0
0.30
0.35
128.0
0.10
0.36
366.8
0.15
0.44
725.2
0.19
0.73
3.0
0.60
0.31
2.1
0.13
0.38
5.8
0.35
95.8
0.42
0.29
14.1
5.21
0.07
18.8
0.09 10.25
CuEq1
(%)
0.63
0.73
1.51
1.72
2.26
0.48
4.43
5.31
0.56
0.56
2.90
0.70
1.15
0.61
0.81
0.95
0.84
1.01
3.15
1.30
1.30
1.24
0.89
1.03
1.20
0.42
0.68
(1) Copper Equivalent is calculated based on US$ 3.00/lb Cu, US$ 1,500/oz Au and US$ 18/oz Ag, with 80%
metallurgical recoveries assumed for all metals. The formula is: CuEq % = Cu % + (0.7292 * Au g/t) +
(0.0088 * Ag g/t)
4
Additional information on these drilling results is disclosed in the Company’s press releases. As of the date of this
MD&A, additional holes have been completed with assays pending, which include:
• FSDH101
• FSDH102
• FSDH104
• FSDH105
• FSDH106
• FSDH108
• FSDH111
Assay results for completed holes will be released as they are received, analyzed, and confirmed by the Company.
OUTLOOK
Drilling continues to be the Company’s primary focus with nine drill rigs operating at site. The planned 2024 drilling
program is expected to be the Company’s most ambitious program to date, including 40,000m of drilling planned with
a renewed focus on exploration growth with multiple step-out targets from zones of known mineralization.
Drilling will remain a mix of both large and small step-outs in all directions from the Aurora Zone, as well as resource
definition drilling within it. The Company continues to maintain a strong focus on improving drill productivity through
a variety of initiatives.
Data collected from the current campaign is being used to develop a comprehensive geological model which will guide
further exploration and form the basis of an eventual update to the Mineral Resource estimate. The Company is
continuing preliminary metallurgical testwork on the sulphide mineralization, as well as environmental and social
baseline programs in support of future project permitting.
The Company’s plans and timelines are subject to equipment and staff availability, along with being able to operate
safely and effectively and in accordance with the Company's health and safety protocols.
BHP ANTI-DILUTIVE TOP-UP RIGHTS AND SHAREHOLDING
On February 7, 2023, the Company closed a non-brokered private placement to BHP Western Mining Resources
International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), whereby the Company
issued 43,711 common shares to BHP for gross proceeds of $1,084,907 (the "Anti-dilution Top-Up").
The Anti-dilution Top-Up was undertaken pursuant to the terms of the March 11, 2022 private placement (the "Private
Placement"), whereby BHP was granted certain anti-dilutive rights, allowing BHP to top-up and maintain its pro rata
ownership interest in the Company from time to time (see news releases dated February 28, 2022 and March 11,
2022).
BHP also participated in the Company’s $130 million private placement, completed on June 14, 2023, increasing their
ownership of Filo to approximately 6%.
RESULTS FROM OPERATIONS
Year ended December 31,
2023
2022
Net loss (000’s)
Total assets (000’s)
Loss per share, basic and diluted
$
$
115,113 $
68,961 $
124,389
85,964
0.90 $
0.57 $
2021
32,419
30,660
0.29
Filo is an exploration company and, as such, its net losses are largely driven by its exploration and project
investigation activities. There is no expectation of generating operating profits until it develops a commercially
viable mineral deposit.
5
Key financial results for the last eight quarters are provided in the table below.
Three Months Ended
Dec-23
Sep-23
Jun-23
Mar-23
Dec-22
Sep-22
Jun-22
Mar-22
Exploration costs ($000's)
36,286
36,657
35,879
34,309
25,604
19,915
22,136
14,869
Operating loss ($000’s)
40,689
39,745
39,430
39,254
28,608
26,238
23,666
17,013
Net loss ($000’s)
32,157
23,379
29,664
29,914
21,008
20,040
13,513
14,400
Net loss per share, basic and
diluted ($)
0.25
0.18
0.24
0.24
0.17
0.16
0.11
0.12
Costs increased during the three months and year ended December 31, 2023 as compared to 2022 with increased
drilling and related activities being undertaken by the Company. Other relevant factors, such as the financial
position of the Company, other corporate initiatives, and the scope of planned exploration/project work, could
affect the level of exploration activities, operating loss, and net loss in any particular period.
For the three months and year ended December 31, 2023, Filo incurred net losses of $32.2 million and $115.1
million, respectively (2022 – $21.0 million and $69.0 million) including operating losses of $40.7 million and $159.1
million, respectively (2022 – $28.6 million and $95.5 million) and net gains of $7.6 million and $38.6 million,
respectively, from the use of marketable securities (2022 – $8.4 million and $25.0 million). Exploration and project
investigation costs are generally the most significant expenses for the Company and for the three months and
year ended December 31, 2023, they accounted for approximately 89% and 90% of the operating losses,
respectively (2022 – 90% and 86%). The Company expenses its exploration costs through the consolidated
statement of comprehensive loss, except for mineral property option payments and mineral property acquisition
costs, which are capitalized.
Exploration and project investigation expenses for the three months and year ended December 31, 2023 were
$36.3 million and $143.1 million, respectively, which increased relative to expenses of $25.6 million and $82.5
million incurred during the comparative periods in 2022. The period-over-period increases are primarily the result
of a larger drilling program being undertaken. The Company completed resource drilling of 9,961m and 37,188m
during the three months and year ended December 31, 2023, respectively, compared to 6,060m and 19,954m
drilled in 2022, increases of 64% and 86%.
The detailed categories of exploration and project investigation expenses are as follows:
Year ended December 31,
Land holding and access costs
Drilling, fuel, camp costs and field supplies
Roadwork, travel and transport
Conceptual and engineering studies
Consultants, geochemistry and geophysics
Environmental and community relations
VAT and other taxes
Write-down of VAT receivable
Office, field and administrative salaries, overhead and other
administrative costs
COVID-19-related health and safety
Share-based compensation
2023
$
224,843 $
75,891,640
20,681,907
5,946,832
4,121,064
2,614,673
2022
905,932
42,030,383
13,529,981
320,280
1,511,590
1,784,545
23,505,911
10,950,266
-
2,812,565
8,612,891
2,557
1,528,634
6,069,360
837,321
1,771,712
$
143,130,952 $
82,523,935
6
Excluding share-based compensation expense, general and administration costs for the three months and year
ended December 31, 2023 totalled $3.6 million and $9.3 million, respectively (2022 – $1.4 million and $5.3 million).
The increases are due primarily to higher general office and public company maintenance costs, such as stock
exchange and regulatory fees and insurance costs. Salaries and benefits increased by $1.2 million and $2.1 million
during the three months and year ended December 31, 2023, due primarily to executive and head office personnel
additions.
Total share-based compensation expense for the three months and year ended December 31, 2023, was $1.1 and
$8.2 million, respectively (2022 – $2.0 million and $9.5 million). Share based compensation is a non-cash cost
which reflects the amortization of the estimated fair value of share options over their vesting period. The fair value
of share options is calculated using the Black-Scholes pricing model, which relies heavily on the Company’s share
price and historical share price volatility. Due to the material increase in the Company’s share price and volatility
since 2021, the calculated fair value of the Company’s share options has increased considerably, resulting in a
higher share option value and resultant share-based compensation expense being recognized. The actual future
value to the option holders may differ materially from these estimates as it depends on the trading price of the
Company’s shares if and when the options are exercised. In addition, as the granting of options and their vesting
is at the discretion of the Board, the related expense is unlikely to be uniform across quarters or financial years.
Interest income for the three months and year ended December 31, 2023 was $1.6 million and $5.1 million,
respectively (2022 – $0.8 million and $1.8 million). Interest income has increased due to the increase in the
Company’s average cash balance combined with increases in the interest rates offered by the financial institutions
with which the Company holds funds.
During the three months and year ended December 31, 2023, the Company recognized net monetary gains of
$1.3 million and $1.5 million, respectively (2022 – loss of $0.1 million and gain of $0.5 million) in relation to the
application of hyperinflationary accounting for the Company’s Argentinian subsidiary. The monetary gains and
losses recognized are the result of changes in the Argentinian price indices and changes to the Company’s net
monetary position during the three months and year ended December 31, 2023. Further discussion regarding the
application of hyperinflationary accounting has been provided in the note 4 to the 2023 Financial Statements.
From time to time, the Company acquires and transfers marketable securities as a mechanism to facilitate
intragroup funding transfers between its Canadian headquarters and its Argentinian operating subsidiary. As a
result of these funding transactions, for the three months and year ended December 31, 2023, the Company
recognized gains of $7.6 million and $38.6 million, respectively (2022 – $8.4 million and $25.0 million) on the use
of marketable securities for such purposes, which represents the net benefit of having used this funding
mechanism over traditional methods. The period-over-period increase is primarily the result of increased funding
provided to the Argentinian subsidiary to facilitate the Company’s expanded drilling program.
Other foreign exchange for the three months and year ended December 31, 2023 totalled losses of $0.8 million
and $29,073, respectively (2022 – loss of $0.2 million and gain of $0.5 million), which is the result of the impact
appreciation of the US dollar relative to the Canadian dollar on the Company’s US dollar-denominated cash and
cash equivalents, from the time of when the US dollars were purchased through December 31, 2023.
In other comprehensive income, the Company reported foreign exchange translation losses of $0.1 million and
$0.5 million for the three months and year ended December 31, 2023, respectively (2022 – gains of $0.6 million
and $0.5 million) on translation of subsidiary company accounts from their respective functional currencies to the
Canadian dollar presentation currency. For the three months and year ended December 31, 2023, the impact of
hyperinflation amounted to loss of $1.7 million and a gain of $3.8 million, respectively (2022 – gains of $0.4 million
and $0.8 million) which consists of adjustments recognized on the continuing inflation of opening non-monetary
balances during the period and the ongoing translation of the Company’s Argentinian subsidiary into the Canadian
dollar presentation currency.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2023, the Company had cash and cash equivalents of $108.1 million and net working capital of
$87.0 million, compared to cash and cash equivalents of $74.9 million and net working capital of $60.3 million as at
December 31, 2022. The increase in the Company’s cash and cash equivalents and net working capital is due the non-
7
brokered private placement completed in June 2023 which resulted in net proceeds of $129.1 million, plus the net
$1.1 million BHP Top-Up and $4.9 million in gross proceeds received by the Company in relation to the exercise of
stock options during the year ended December 31, 2023. These cash inflows were offset by funds used in operations
and for general corporate purposes, plus amounts used in the acquisition of mineral properties ($1.0 million) and
equipment and facilities for the Filo del Sol Project ($5.5 million).
The Company will continue to deploy the majority of its treasury to fund ongoing advancement of the Filo del Sol
Project and, to a lesser extent, for working capital and general corporate purposes.
The Company does not currently generate income from operations. The Company has sufficient working capital for
the Company to fund operations for the near term. However, the Company will need further funding to support the
advancement of the Filo del Sol Project towards development and to meet general corporate and working capital
requirements. Historically, capital requirements have been funded through equity financing. While management is
confident that additional sources of funding will be secured to fund potential future expenditures, factors that could
affect the availability of financing include the progress and results of ongoing project exploration and evaluation
activities at the Company’s Filo del Sol Project, the state of international debt and equity markets, investor perceptions
and expectations of the global copper, gold, and/or silver markets. Based on the amount of funding raised, the
Company’s planned initiatives and other work programs may be postponed, or otherwise revised, as necessary.
RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances with related parties.
During the year ended December 31, 2023, the Company engaged with NGEx Minerals Ltd. (“NGEx Minerals”), a
related party to the Company by way of directors, officers and shareholders in common.
Related party services
The Company has an ongoing cost sharing arrangement with NGEx Minerals. Under the terms of this arrangement,
the Company provides management, technical and/or administrative services (collectively, “Management Services”) to
NGEx Minerals and vice versa. These transactions were incurred in the normal course of operations, and are
summarized as follows:
Management Services to NGEx Minerals
$
436,784 $
902,414
Management Services from NGEx Minerals
(285,642)
(364,343)
Year ended
December 31,
2023
2022
Related party balances
The amounts due from (to) related parties, and the components of the consolidated statement of financial position in
which they are included, are as follows:
Receivables and other assets
Related Party
NGEx Minerals
December 31,
2023
52,858 $
December 31,
2022
186,449
$
Accounts payable and accrued liabilities
NGEx Minerals
(67,466)
(112,163)
8
Camp usage agreement
On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction with a wholly-owned
subsidiary of Josemaria Resources Inc., a former related party (“Josemaria”, a 100%-owned subsidiary of Lundin
Mining Corporation) whereby the Company extended its right to use Josemaria’s Batidero Camp in Argentina.
The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence of such notice the
agreement may be renewed for another year at the Company’s election. On March 7, 2024, Filo provided formal notice
of renewal for the period through April 1, 2025.
Key management compensation
The Company’s key management personnel have the authority and responsibility for overseeing, planning, directing
and controlling its activities and consist of the Board of Directors and members of the executive management team.
Total compensation expense for key management personnel, and the composition thereof, is as follows:
Salaries
Short-term employee benefits
Directors’ fees
Stock-based compensation
Incentive bonuses
Year ended
December 31,
2023
2022
$
1,900,000 $
1,346,667
32,309
391,642
6,056,367
1,678,750
32,369
233,056
6,910,772
1,165,000
$
10,059,068 $
9,687,864
MATERIAL ACCOUNTING POLICIES
The Company’s material accounting policies are described in Note 3 the consolidated financial statements for the
year ended December 31, 2023, as filed on SEDAR+ at www.sedarplus.ca.
New Accounting Pronouncements
As at December 31, 2023, there are no IFRS Accounting Standards or International Financial Reporting
Interpretations Committee interpretations that are not yet effective or early adopted that are expected to have
any impact on the Company.
CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards, such as
the underlying consolidated financial statements for the year ended December 31, 2023, requires management to
make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities and
expenditures. These estimates, assumptions and judgements are based on management’s best knowledge of the
relevant facts and circumstances taking into account previous experience. Actual results could differ and such
differences could be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are
based on historical experience and other facts and circumstances. Revisions to estimates, assumptions and
judgements, and the resulting effects on the carrying amounts of the Company’s assets and liabilities, are
accounted for prospectively. Information about estimates, assumptions, judgements and other sources of estimation
uncertainty as at December 31, 2023 that have a risk of resulting in a material adjustment to the carrying amounts
of assets and liabilities within the next year are provided below:
9
Valuation of mineral properties
The Company carries the acquisition costs of its mineral properties at cost less any provision for impairment.
At each reporting period, management applies judgement in assessing whether there are any indicators of
impairment relating to mineral properties. If any such indicator exists, then an impairment test is performed
by management, which also requires the Company to make significant judgments and estimates. Information
considered by management in assessing indicators of impairment may include the period for which the entity
has the right to conduct its exploration and project investigation activities, including expected renewals,
whether substantive expenditure on further exploration and project investigation of mineral properties is
budgeted, the evaluation of the results of exploration and project investigation activities up to the reporting
date and other information that may indicate that the carrying value of mineral properties may not be
recovered in full from successful development or sale of the asset. The judgments and estimates mentioned
above are subject to various risks and uncertainties, which may ultimately have an effect on the expected
recoverability of the carrying values of the mineral properties.
The Company has determined that no indicators of impairment exist for its mineral properties as of December
31, 2023.
FINANCIAL INSTRUMENTS
The Company’s financial instruments consist of cash, receivables and other assets, and trade payables and accrued
liabilities. The carrying values of the Company’s financial instruments are considered to be reasonable
approximations of fair value due to their anticipated short-term nature.
As at December 31, 2023, the Company’s financial instruments are exposed to the following financial risks,
including credit, liquidity and currency risks:
(i) Credit risks associated with cash are minimal as the Company deposits the majority of its cash with
large financial institutions that have been accorded a strong investment grade rating by a primary
rating agency.
(ii) Liquidity risks associated with the inability to meet obligations as they become due are minimized
through the management of its capital structure and by maintaining good relationships with significant
shareholders and creditors. The Company also closely monitors and reviews its costs to date and
actual cash flows on a monthly basis.
The maturities of the Company’s financial liabilities as at December 31, 2023, are as follows:
Total
Less than
1 year
1-5 years
More than
5 years
Accounts payable and
accrued liabilities
Total
$
22,442,523 $
22,442,523 $
$ 22,442,523 $ 22,422,523 $
- $
- $
-
-
(iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net financial
assets or liabilities which are denominated in currencies other than their respective functional
currencies.
At December 31, 2023, the Company’s largest foreign currency risk exposures existed at the level of
its Canadian headquarters, where the Company held a net financial asset position denominated in US
dollars having a Canadian dollar equivalent of approximately $65.9 million. A 10% change in the
foreign exchange rate between the US dollar and the Canadian dollar, the functional currency of Filo,
would give
financial
to an
position/comprehensive loss.
increase/decrease of approximately $6.6 million
rise
in
10
OUTSTANDING SHARE DATA
As at March 20, 2024, the Company had 130,733,167 common shares outstanding and 5,783,966 share options
outstanding under its share-based incentive plan.
FINANCIAL INFORMATION
The Company’s next scheduled financial report will be for the three months ended March 31, 2024, which is
expected to be published on or around May 8, 2024.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure controls and procedures (“DC&P”)
DC&P are designed to provide reasonable assurance that information required to be disclosed by the Company in
its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded,
processed, summarized and reported within the time periods specified in the securities legislation. They include
controls and procedures designed to ensure that information required to be disclosed by the Company in its annual
filings, interim filings or other reports filed or submitted under securities legislation is accumulated and
communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
There have not been any material changes in the Company’s DC&P during the year ended December 31, 2023.
Internal controls over financial reporting (“ICFR”)
The Company’s ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting
and preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. The
Company’s ICFR include policies and procedures that: pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and disposition of assets; provide reasonable assurance that
transactions are recorded as necessary to permit preparation of the financial statements in accordance with IFRS
Accounting Standards; that receipts and expenditures are being made only in accordance with authorization of
management and directors of the Company; and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial
statements.
Any system, no matter how well conceived or operated, has inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement
preparation and presentation and will not prevent all, or detect all, misstatements and frauds. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented
or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.
The design of any control system also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.
Management uses the Internal Control – Integrated Framework (2013 Framework) issued by the Committee of
Sponsoring Organizations for the Treadway Commission (COSO) in order to assess the effectiveness of the
Company’s ICFR.
There have not been any material changes in the Company’s internal controls during the year ended December
31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR.
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RISKS AND UNCERTAINTIES
The operations of the Company are speculative due to the high-risk nature of its business, which includes the
acquisition, financing, exploration, development and operation of mineral and mining properties. There are a
number of factors that could negatively affect the Company’s business and the value of its common shares, and
these risk factors could materially affect the Company’s future operations and financial position and could cause
actual events to differ materially from those described in forward-looking statements relating to the Company.
Significant risk factors have been identified by the Company and are listed below. Further discussion and additional
risk factors are also available in the Company’s most recent annual information form, as filed on SEDAR+ at
www.sedarplus.ca. The following information pertains to the outlook and conditions currently known to the
Company that could have a material impact on the financial condition of the Company. Other factors may arise
that are not currently foreseen by management of the Company that may present additional risks in the future.
Current and prospective security holders of the Company should carefully consider these risk factors, as they could
materially affect the Company’s future operations and could cause actual events to differ materially from those
described in forward-looking statements relating to the Company.
Exploration and Development Risk
Mineral exploration, development and operations generally involve a high degree of risk that cannot be eliminated,
and which can adversely impact the Company’s success and financial performance. Exploration for and development
of mineral deposits involves a high degree of risk and few properties that are explored are ultimately developed into
producing mines.
Discovery of mineral deposits is dependent upon a number of factors, not the least of which are the technical skills of
the exploration personnel involved and the capital required for the programs. The cost of conducting programs may
be substantial and the likelihood of success is difficult to assess. There is no assurance that the Company’s mineral
exploration activities will result in any discoveries of new bodies of commercial ore. There is also no assurance that
even if commercial quantities of ore are discovered that a new ore body would be developed and brought into
commercial production. The commercial viability of a mineral deposit once discovered is dependent upon a number of
factors, some of which are discussed elsewhere in this MD&A, and include the particular attributes of the deposit (such
as size, grade, metallurgy, expected recovery rates of metals from the ore and proximity to infrastructure and labour),
the interpretation of geological data obtained from drilling and sampling, feasibility studies, the ability to acquire and
access land, the availability and cost of water and power, anticipated climatic conditions; cyclical metal prices;
fluctuations in inflation and currency exchange rates, higher input commodity and labour costs, commodity price
fluctuations, government regulations, including regulations relating to prices, taxes, royalties, land tenure and use,
allowable production, importing and exporting of minerals, and environmental protection. Most of the above factors
are beyond the control of the Company. Development projects will also be subject to the successful completion of final
feasibility studies, issuance of necessary permits and other governmental approvals and receipt of adequate financing,
as major expenses are typically required to locate and establish Mineral Reserves, to develop metallurgical processes
and to construct mining and processing facilities at a particular site. The exact effect of these factors cannot be
accurately predicted, but the combination of any of these factors may adversely affect the Company’s business.
The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration and
development of copper, gold, and silver projects and properties, including unusual and unexpected geologic
formations, seismic activity, rock slides, ground instabilities or failures, mechanical failures, precipitation, flooding and
other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction
of facilities, damage to life or property, environmental damage and possible legal liability.
As appropriate, the Company may seek to mitigate its exploration risk by diversifying its portfolio, or through the
establishment of joint ventures and option agreements with third parties.
Mineral Reserves and Mineral Resources Estimates
The Company’s reported Mineral Reserves and Mineral Resources are estimations only. No assurance can be given
that the estimated Mineral Reserves and Mineral Resources are accurate or that the indicated level of copper, gold,
silver or any other mineral will be recovered or produced. Actual mineralization or formations may be different from
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those predicted. It may take many years from the initial phase of drilling before production is possible and during that
time the economic feasibility of exploiting a discovery may change. Market price fluctuations of copper, gold and silver
and certain other metals, as well as increased production and capital costs or reduced recovery rates, may render the
Company’s Mineral Reserves uneconomic to develop. Moreover, short-term operating factors relating to the Mineral
Reserves, such as the need for the orderly development of ore bodies, the processing of new or different ore grades,
the technical complexity of ore bodies, unusual or unexpected geological formations, ore dilution or varying
metallurgical and other ore characteristics may cause Mineral Reserves to be reduced. Estimated Mineral Reserves
may have to be recalculated based on fluctuations in the price of metals, or changes in other assumptions on which
they are based. Any of these factors may require the Company to reduce its Mineral Reserves and Mineral Resources,
which could have a negative impact on the Company’s business.
Failure to obtain or maintain necessary permits or government approvals or changes to applicable legislation could
also cause the Company to reduce its reserves. In addition, changes to mine plans could cause the Company to reduce
its Mineral Reserves. There is also no assurance that the Company will achieve indicated levels of copper, gold or silver
recovery or obtain the prices assumed in determining such Mineral Reserves.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no
assurance that they will ever be mined or processed profitably. Due to the uncertainty which may attach to Mineral
Resources, there is no assurance that all or any part of Measured or Indicated Mineral Resources will ever be converted
into Mineral Reserves; and no assurance that all or any part of an Inferred Mineral Resources exists or is economically
or legally mineable.
Permitting
The Company’s development and exploration activities are subject to permitting requirements in both Argentina and
Chile. In particular, comprehensive environmental assessments will be necessary for the Filo del Sol Project in
Argentina in order to obtain the necessary approval for each of the Filo del Sol Project stages, which assessment will
be conducted in compliance with Argentinian regulations. Project development may also require an environmental
impact assessment study in Chile. Following the receipt of environmental approvals, additional permits, licences,
authorizations, and certificates will be required to proceed to project construction, including, for example, mining water
and fuel delivery, sewage water treatment, hazardous waste plans, drilling and closure plans. Failure to obtain required
permits and/or to maintain compliance with permits once obtained could result in injunctions, fines, suspension or
revocation of permits and other penalties.
There can be no assurance that the Company will obtain all such permits and/or achieve or maintain full compliance
with such permits at all times. Activities required to obtain and/or achieve or maintain full compliance with such permits
can be costly and involve extended timelines.
Previously issued permits may be suspended or revoked for a variety of reasons, including through government or
court action. Failure to obtain and/or comply with required permits can have serious consequences, including: damage
to the Company’s reputation, stopping the Company from proceeding with the exploration and development of a
project, negatively impacting further development of a mine, and increasing the costs of development and litigation
or regulatory action against the Company, and may materially adversely affect the Company’s business, results of
operations or financial condition.
Infrastructure
Development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads,
bridges, power and water supplies are important determinants that affect costs. The Company’s ability to obtain a
secure supply of power and water at a reasonable cost depends on many factors, including: global and regional supply
and demand; political and economic conditions; problems that can affect local supplies; delivery; and relevant
regulatory regimes. Unusual or infrequent weather phenomena, sabotage or government, and other interference in
the maintenance or provision of such infrastructure could adversely affect the activities and profitability of the
Company.
Establishing such infrastructure will require significant resources, identification of adequate sources of raw materials
and supplies and necessary cooperation from national and regional governments, none of which can be assured. There
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is no guarantee that the Company will secure these power, water and access rights going forward or on reasonable
terms.
Title Risk
The Company has investigated its right to explore and exploit its properties and, to the best of its knowledge, those
rights are in good standing. The results of the Company’s investigations should not be construed as a guarantee of
title. Other parties may dispute the title to a property, or the property may be subject to prior unregistered agreements
or liens and transfers or land claims by aboriginal, native, or indigenous peoples. The title may be affected by
undetected encumbrances or defects or governmental actions. The Company has not conducted surveys of all its
properties, and the precise area and location of claims or the properties may be challenged, and no assurances can
be given that there are no title defects affecting such properties. The rules governing mining concessions in Chile and
Argentina are complex and any failure by the Company to meet requirements would have a material adverse effect
on the Company. Any defects in the title to the Company’s properties could have a material and adverse effect on the
Company.
No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the
applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be
challenged or impugned by third parties. Although the Company has not had any problem renewing its licenses in the
past there is no guarantee that it will always be able to do so. Inability to renew a license could result in the loss of
any project located within that license.
The Company is earning an interest in the Tamberias property through an option agreement requiring property
payments and acquisition of title to the properties is completed only when the option conditions have been met. If the
Company does not satisfactorily complete these option conditions in the period laid out in the option agreements, the
Company’s title to the related property will not vest and the Company will have to write down its previously capitalized
costs related to that property.
Ability to Operate Year-round
The Company conducts year-round operations at the Filo del Sol Project. Risks and uncertainties associated with the
Company’s ability to successfully operate year-round include, but are not limited to, the Company’s financial position,
the nature, duration or extent of weather and other natural events and the availability of personnel, logistical support
and key contractors to provide services in challenging winter conditions.
There can be no assurances that the Company’s preparation and winterization efforts adequately anticipated, and
safeguarded against, all the challenges of conducting exploration programs during the South American winter in the
high Andes.
Dependence on Single Project
The Filo del Sol Project is currently the Company’s sole project and therefore, any adverse development with respect
to the Filo del Sol Project will have a material adverse effect on the Company.
Economic and Political Instability in Argentina
The Filo del Sol Project is predominantly located in San Juan Province, Argentina. There are risks relating to an
uncertain or unpredictable political and economic environment in Argentina, and there may be material adverse
consequences with respect to the Company and its operations as a result of the political or economic instability in
Argentina.
In a runoff to the election held on November 19, 2023, Javier Milei, defeated center-left candidate and the incumbent
finance minister, Sergio Massa, to become Argentina’s President. Since taking office on December 10, 2023, President
Milei has introduced sweeping economic reforms, including devaluation of the country’s official peso exchange rate
against the United States dollar, removing several government subsidies, reducing the size of the government and
proposing an omnibus bill with numerous articles which was withdrawn after failing to obtain sufficient support from
Congress. Economic and political uncertainty in Argentina continues to persist as of the date of this MD&A as the
14
nature, extent or scope of changes to be introduced by President Milei and enacted, if any, and the resulting impacts,
are undeterminable at this time.
Changes in local and federal administrations may also imply changes to current programs and policies affecting the
Company’s business and operations. Both Argentina’s President and its Congress have considerable power to make
decisions and determining government policies and actions that relate to the Argentinian economy. Furthermore, some
of the measures proposed by the government may also generate political and social opposition, which may in turn
prevent the government from adopting its proposed measures.
The Company cannot foresee the measures that could be taken by any future administration, national or provincial,
and the effects that such measures could have on the Argentinian economy and in Argentina’s ability to meet its
financial obligations, that could adversely affect the Company’s business, financial condition and results of operations.
Foreign Operations Risk
The Company conducts exploration activities in foreign countries, including Argentina and Chile. Each of these countries
exposes the Company to risks that may not otherwise be experienced if all operations were located in Canada. The
risks vary from country to country and can include, but are not limited to, civil unrest or war, national border disputes,
terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates, expropriation or
nationalization without adequate compensation, changes to royalty and tax regimes, high rates of inflation, labour
unrest and difficulty in understanding and complying with the regulatory and legal framework respecting ownership
and maintenance of mineral properties, as well as the revocation or suspension of previously issued mining permits.
Changes in mining or investment policies or shifts in political attitudes may also adversely affect the Company’s existing
assets and operations. Real and perceived political risk may also affect the Company’s ability to finance exploration
programs and attract joint venture or option partners, and future mine development opportunities. Chile is typically
viewed as a favourable mining jurisdiction; however, certain Canadian issuers have recently experienced regulatory
action with regards to Chilean operations, specifically with respect to increased permitting timelines.
Numerous countries have introduced changes to mining regimes that reflect increased government control or
participation in the mining sector, including, but not limited to, changes of law affecting foreign ownership, mandatory
government participation, taxation and royalties, exploration licensing, export duties, and repatriation of income or
return of capital. There can be no assurance that industries, which are deemed of national or strategic importance in
countries in which the Company has assets, including mineral exploration, will not be nationalized. There is a risk that
further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in
policy that alter laws regulating the mining industry could have a material adverse effect on the Company. There can
be no assurance that the Company’s assets in these countries will not be subject to nationalization, requisition or
confiscation, whether legitimate or not, by an authority or body.
In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in
Canada. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately predict
such developments or changes in laws or policy or to what extent any such developments or changes may have a
material adverse effect on the Company.
Non-compliance with applicable laws, regulations and permitting requirements (including allegations of such) may
result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease
or be curtailed or causing the withdrawal of permits or mining licenses, and the imposition of corrective measures
requiring material capital expenditure or remedial action resulting in materially increased cost of compliance,
reputational damage and potentially impaired ability to secure future approvals and permits. The Company may be
required to compensate third parties for loss or damage and may have civil or criminal fines or penalties imposed for
violations of applicable laws or regulations.
Environmental and Socio-Political Risks
Present or future laws and regulations with respect to environmental protection standards or corporate social
responsibility may affect the Company’s operations. Environmental legislation is evolving in a manner that requires
15
stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors
and employees. There is no assurance that regulatory and environmental approvals will be obtained on a timely basis
or at all. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the
Company’s operations. The cost of compliance with changes in governmental regulations has the potential to reduce
the profitability of operations or to preclude entirely the economic development of a property.
Regulation governing development of mining operations with the potential to affect glaciers continues to evolve in
both Chile and Argentina. The Argentinian Congress has passed legislation designed to protect the country’s glaciers.
This law would restrict development on and around glaciers. The detailed regulations that will govern implementation
of the law have not yet been written but this legislation could affect the Company’s ability to develop parts of the
Company’s properties in Argentina, including the Filo del Sol Project.
The Company is currently engaged in exploration with limited environmental impact. Future environmental costs may
increase due to changing requirements or costs associated with exploration and the developing, operating and closing
of mines, as well as with respect to changing requirements for disclosure and compliance. The Company is subject to
environmental regulation in the various jurisdictions in which it operates. Failure to comply with these laws, regulations
and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial
authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the
exploration or development of mineral properties may also be required to compensate those suffering loss or damage
by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable
laws or regulations. Furthermore, environmental hazards may exist on the properties on which the Company holds
interests which are unknown to the Company at present and which have been caused by previous or existing owners
or operators of the properties.
Programs may also be delayed or prohibited in some areas due to technical factors, new legislative constraints, social
opposition or local government capacity or willingness to issue permits to explore in a timely manner. In parts of
Argentina, there is environmental opposition to both mineral exploration and mining. Accordingly, there may be a
certain degree of anti-mining sentiment that could potentially affect the risk of successfully exploring and developing
the Company’s assets in those provinces.
Climate Change and Carbon Pricing
Climate change is a top priority for many countries and jurisdictions around the world and governments and regulators
continue to implement and develop new rules and regulations to control carbon gas or “green-house” gas emissions
attributable to climate change. As part of their efforts to shift to lower-carbon economies, governments have
implemented carbon pricing, a mechanism that harnesses market forces to address climate change by creating financial
incentives to lower emissions. Some of these mechanisms include the implementation of taxes on fuel sales, emissions
trading schemes, and fossil fuel extraction fees, all of which are expected to play an ongoing role in global efforts to
address climate change. The cost of compliance with various climate change regulations will ultimately be determined
by the regulations themselves and by the markets that evolve for carbon credits and offsets and, as a result, the
financial impact, if any, on the Company’s operations cannot yet be fully understood.
The potential physical impacts of climate change due to extreme weather events on the Company’s operations are
also highly uncertain and may be particular to the unique geographic circumstances associated with the Company’s
projects and operations. Due to changes in global climate conditions, many scientists predict an increase in the
frequency of extreme weather events such as severe and unpredictable rain and snowfall precipitation, winds, floods,
droughts, and other types of extreme weather conditions and events. Such events could disrupt the Company’s
operations and development activities; impact the Company’s equipment and infrastructure; impede access to the
Company’s projects and properties; or threaten the health and safety of the Company’s employees and contractors.
Negative Operating Cash Flow
The Company is an exploration stage company and has not generated cash flow from operations. The Company is
devoting significant resources to the exploration and acquisition of its properties; however, there can be no assurance
16
that it will generate positive cash flow from operations in the future. The Company expects to continue to incur
negative consolidated operating cash flow and losses until such time as it achieves commercial production at a
particular project. The Company currently has negative cash flow from operating activities.
The Company’s exploration projects have no operating history upon which to base estimates of future cash flows.
Substantial expenditures are required to develop mineral projects. It is possible that actual costs and future economic
returns may differ materially from Filo’s estimates. There can be no assurance that the underlying assumed levels of
expenses for any project will prove to be accurate. Further, it is not unusual in the mining industry for new mining
operations to experience unexpected problems during start-up, resulting in delays and requiring more capital than
anticipated. There can be no assurance that Filo’s projects will move beyond the exploration stage and be put into
production, achieve commercial production or that Filo will produce revenue, operate profitably or provide a return on
investment in the future. Mineral exploration involves considerable financial and technical risk. There can be no
assurance that the funds required for exploration and future development can be obtained on a timely basis. There
can be no assurance that Filo will not suffer significant losses in the near future or that Filo will ever be profitable.
Uncertainty of Long-term Funding and Dilution of Shareholders’ Interests in the Company
The exploration and development of mineral properties requires a substantial amount of capital and may depend on
the Company’s ability to obtain financing through joint ventures, debt financing, equity financing or other means.
General market conditions which may be impacted by geopolitics or international conflict, volatile metals prices, a
claim against the Company, a significant disruption to the Company’s business, or other factors may make it difficult
to secure the necessary financing in the long term. There is no assurance that the Company will be successful in
obtaining required financing as and when needed on acceptable terms. Failure to obtain any necessary additional
financing may result in delaying or indefinite postponement of exploration or development or even a loss of property
interest. If the Company needs to raise additional funds, such financing may substantially dilute the economic and
voting rights of the Company’s shareholders and reduce the value of their investment. Since the Company’s capital
needs depend on market conditions and other factors beyond its control, it cannot predict or estimate the amount,
timing or nature of any such future offering of securities. Thus, holders of Common Shares of the Company bear the
risk of any future offerings reducing the market price of the Common Shares and diluting their shareholdings in the
Company.
Metal Price Risk
The Company’s portfolio of properties and investments have exposure to predominantly copper, gold, and silver prices.
Commodity prices fluctuate widely and are affected by numerous factors beyond the Company’s control, such as the
sale or purchase of metals by various central banks and financial institutions, interest rates, exchange rates, inflation
or deflation, fluctuation in the value of the US$ and foreign currencies, global and regional supply and demand, and
the political and economic conditions of major metals-producing and metals-consuming countries throughout the
world. The prices of these metals greatly affect the value of the Company, the price of the Common Shares and the
potential value of its properties and investments. This, in turn, greatly affects its ability to form joint ventures, option
agreements and the structure of any joint ventures formed. This is due, at least in part, to the underlying value of the
Company’s assets at different metals prices.
Tax, Royalties and Other Charges
The Company runs its business in different countries and strives to run its business in as tax efficient a manner as
possible. The Company is potentially subject to taxes (including income taxes and mineral taxes), various fees and
royalties imposed by various levels of government across the jurisdictions in which it operates. The laws imposing
these taxes, fees and royalties and the manner in which they are administered may in the future be changed or
interpreted in a manner that materially and adversely affects our business, financial position and results of operations.
Repatriation of earnings to Canada from other countries may be subject to withholding taxes or restricted by currency
controls. The Company has no control over withholding tax rates.
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Health and Safety Hazards
Mineral exploration and operations involve health and safety hazards that could adversely affect the Company’s
reputation, business and future operations. By nature, exploration and mining activities present a variety of hazards
and associated health and safety risks. Workers involved in the Company’s operations are subject to many inherent
health and safety risks and hazards, including, but not limited to, rock falls, slides or bursts, equipment or structural
fires, falls of ground, floods, chemical and biological hazards, mineral dusts, atmospheric hazards including low oxygen
levels, gases and fumes, high altitude work, use of explosives, noise, electricity, fixed and moving equipment, civil
disturbances and criminal activity, which could result in occupational illness or health issues, personal injury, and loss
of life, and/or facility and workforce evacuation. Even though robust health and safety controls and risk mitigation
measures are in place across the Company’s sites, health and safety incidents may occur. The overall management of
health and safety is governed in accordance with the requirements of the Company’s Responsible Mining Development
Policy. While significant effort is made to control and eliminate potential health and safety risks, these risks cannot be
eliminated and may adversely affect the Company’s reputation, business, and future operations. Incidents resulting in
serious injury or death, or those having a negative impact on surrounding communities (real or perceived) could result
in litigation, civil or criminal sanctions, regulatory action (including, but not limited to suspension of operations and/or
fines and penalties), increased community tensions, or otherwise adversely affect the Company’s reputation and ability
to meet its objectives.
Pandemic Virus Outbreaks
Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases could have
a material adverse effect on the Company by causing operational and supply chain delays and disruptions, labour
shortages and shutdowns, social unrest, breach of material contracts and customer agreements, government or
regulatory actions or inactions, changes in tax laws, payment deferrals, increased insurance premiums, decreased
demand for base and precious metals, declines in the price of base and precious metals, delays in permitting or
approvals, governmental disruptions, capital markets volatility, or other unknown but potentially significant impacts.
In addition, governments may impose strict emergency measures in response to the threat or existence of an infectious
disease, which could have a material adverse effect on the Company’s business.
OFF-BALANCE SHEET ARRANGEMENTS
During the year ended December 31, 2023, there were no material off-balance sheet transactions which have not
been recorded in the Company’s consolidated financial statements. The Company has not entered into any specialized
financial arrangement to minimize its currency risk.
QUALIFIED PERSONS AND TECHNICAL INFORMATION
The scientific and technical disclosure for the Filo del Sol Project included in this MD&A have been reviewed and
approved by Bob Carmichael, B.A.Sc., P. Eng. (BC) and/or Jamie Beck, B.A.Sc., P.Eng. Mr. Carmichael is Filo's Vice-
President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral
Projects. (“NI 43-101”). Mr. Beck is Filo’s President and Chief Executive Officer and is also a Qualified Person under
NI 43-101.
The field programs were carried out under the supervision of the Mr. Carmichael. Samples were cut at Filo’s Batidero
camp near the project site by company personnel. Beginning in the 2020/2021 season, whole core was transported to
a new core processing facility located near Rodeo, Argentina, and all sampling activities were carried out there.
Diamond drill core was sampled in two metre intervals (except where shortened by geological contacts) using a rock
saw for sulphide mineralization. Oxide mineralization was cut with a core splitter in order to prevent dissolution of
water-soluble copper minerals during the wet sawing process. Core diameter is a mix of PQ, HQ and NQ depending
on the depth of the drill hole. Samples were bagged and tagged at camp, and packaged for shipment by truck to
Mendoza, Argentina. RC Samples were collected at the drill site by company personnel with initial splitting carried out
at a facility near the drill sites and final splitting completed at the Batidero camp.
Samples were delivered to the ALS preparation laboratory in Mendoza where they were crushed and a 500g split was
pulverized to 85% passing 200 mesh. The prepared samples were sent to either the ALS assay laboratory in Santiago,
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Chile or Lima, Peru for copper, gold and silver assays and multi-element ICP and sequential copper analyses. ALS is
an accredited laboratory which is independent of the Company. Gold assays were by fire assay fusion with AAS finish
on a 30 g sample. Copper and silver were assayed by atomic absorption following a four-acid digestion. Samples were
also analyzed for 36 elements with ICP-ES up to drillhole FSDH053. Starting in August 2021 with drillhole FSDH054,
the multielement analyses were changed to ME-MS61 which offers ultra low detection limits for 48 elements. A
sequential copper leach analysis was completed on each sample with copper greater than 500 ppm (0.05%). Copper
and gold standards as well as blanks and duplicates (field, preparation and analysis) were randomly inserted into the
sampling sequence for quality control. On average, 9% of the submitted samples are quality control samples. No data
quality problems were indicated by the quality assurance/quality control program.
Mineralized zones within the Filo del Sol deposit are typically flat-lying, or bulk porphyry-style zones and drilled widths
are interpreted to be very close to true widths.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and
“forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking
information” or “forward-looking statements”) concerning the business, operations, financial performance and
condition of Filo. The forward-looking information contained in this MD&A is based on information available to the
Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company does
not intend, and does not assume any obligation, to update this forward-looking information. Generally, any statements
that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance, (often, but not always, identified by words or phrases such as "plans",
"expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", “projects” ,
“estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”,
“possible”, "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements
that certain actions, events, conditions or results “will”, "may", "could", "would", “should”, "might" or "will be taken",
"will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not statements of
historical fact and may be forward-looking statements.
All statements other than statements of historical fact may be forward-looking statements. Forward-looking information
is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or implied by such forward-looking information, including
but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding Mineral
Resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated
resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment,
timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental
impact on operations as well as other risks, and uncertainties and other factors, including, without limitation, those
referred to in the “Risks and Uncertainties” section of the MD&A and in the Company’s most recent Annual Information
Form, under the heading “Risks Factors”, and elsewhere, which may cause the actual results, level of activity,
performance or achievements of the Company to be materially different from those expressed or implied by such
forward-looking information.
The Company believes that the expectations reflected in the forward-looking statements and information included in
this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such
forward-looking statements and information should not be unduly relied upon. This statement and information is as
of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to
the assumptions used in the pre-feasibility study for the Filo del Sol Project, the assumptions used in the Mineral
Reserves and Resources estimates for the Filo del Sol Project, including, but not limited to, geological interpretation,
grades, metal price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions,
as applicable; ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade
and continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and
services needed for exploration and development of mineral properties; and that activities will not be adversely
disrupted or impeded by exploration, development, operating, regulatory, political, community, economic and/or
19
environmental risks. In addition, this MD&A may contain forward-looking statements or information pertaining to: the
potential exploration results or anticipated outcomes of infill or step-out drilling planned at Filo del Sol; exploration
and development plans and expenditures, including but not limited to its plans to add rigs its ongoing drilling campaign,
the sequencing or prioritization of drill targets, and a transition to year-round operations; the ability of the Company’s
operating protocol to continue to meet government mandated health and safety guidelines enabling it to conduct its
field programs as planned; the ultimate size and scope of its field programs and the Company’s ability to achieve the
objectives thereof; the size and scope of its field programs and the Company’s ability to achieve the objectives thereof;
the impact of the Company’s winterization efforts at Filo del Sol, and whether such efforts will enable year-round
operations and have adequately anticipated the challenges of winter operation, including but not limited to weather
and potential supply chain disruptions; the anticipated use of proceeds from the Private Placement; the timing or
results of an upgrade to the Mineral Resources estimate at Filo del Sol, including the inputs used therein; opportunities
to improve project economics; the success of future exploration activities; potential for resource expansion; potential
for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to
Mineral Reserves or Resources through exploration; expectations with respect to the conversion of inferred resources
to an indicated resources classification; ability to execute the planned work programs; estimation of commodity prices,
Mineral Reserves and Resources, estimations of costs, and permitting timelines; ability to obtain surface rights and
property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of
mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on
insurance coverage; and other risks and uncertainties.
Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that
the current price of and demand for commodities will be sustained or will improve, the supply of commodities will
remain stable, that the general business and economic conditions will not change in a material adverse manner, that
financing will be available if and when needed on reasonable terms and that the Company will not experience any
material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed
as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual
results to differ materially from those contained in forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to
be accurate, as the Company’s actual results and future events could differ materially from those anticipated in such
statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and elsewhere,
and in the “Risk Factors” section of the Company’s most recent Annual Information Form, which is available under the
Company’s profile on SEDAR+ at www.sedarplus.ca. All of the forward-looking information contained in this document
is qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking
information due to the inherent uncertainty thereof.
Statements relating to "Mineral Resources" are deemed to be forward looking information, as they involve the implied
assessment, based on certain estimates and assumptions, that the Mineral Resources described can be profitably
produced in the future.
20
Independent auditor’s report
To the Shareholders of Filo Corp.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Filo Corp. and its subsidiaries (together, the Company) as at December 31, 2023
and 2022, and its financial performance and its cash flows for the years then ended in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board
(IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of financial position as at December 31, 2023 and 2022;
the consolidated statements of comprehensive loss for the years then ended;
the consolidated statements of cash flows for the years then ended;
the consolidated statements of changes in equity for the years then ended; and
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
PricewaterhouseCoopers LLP
PwC Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T.: +1 604 806 7000, F.: +1 604 806 7806, Fax to mail: ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2023. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Assessment of impairment indicators of mineral
properties
Our approach to addressing the matter included the
following procedures, among others:
Refer to note 3(b) – Critical accounting estimates,
assumptions and judgments, note 3(d) – Mineral
properties and exploration expenditure, note 3(f) –
Impairment of non-financial assets and note 7 –
Mineral properties to the consolidated financial
statements.
The total book value of mineral properties
amounted to $10.1 million as at December 31,
2023. At each reporting period, management
applies judgment in assessing whether there are
any indicators of impairment relating to mineral
properties. If any such indicator exists, then an
impairment test is performed by management.
Information considered by management in
assessing indicators of impairment may include
(i) the period for which the entity has the right to
conduct its exploration and project investigation
activities, including expected renewals; (ii) whether
substantive expenditure on further exploration and
project investigation of mineral properties is
budgeted; (iii) the evaluation of the results of
exploration and project investigation activities up to
the reporting date; and (iv) other information that
may indicate that the carrying value of mineral
properties may not be recovered in full from
successful development or sale of the asset. No
impairment indicators were identified by
management as at December 31, 2023.
Assessed the period for which the entity has
the right to conduct its exploration and project
investigation activities, including expected
renewals, by agreeing the Company’s list of
mining titles to government agency websites,
and other regulatory bodies, as applicable, and
vouching payments of required fees on a
sample basis.
Assessed whether substantive expenditure on
further exploration and project investigation of
mineral properties is budgeted by considering
the results of current year work programs and
management’s long-term plans, the Board of
Directors’ meeting minutes and approved
budgets.
Assessed the evaluation of the results of
exploration and project investigation activities
up to the reporting date by considering the
results of the current year work programs and
considering evidence obtained in other areas of
the audit.
Assessed whether there is other information
that may indicate that the carrying amount may
not be recovered from successful development
or sale of the asset, by considering evidence
obtained in other areas of the audit.
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter due to (i) the
significance of the mineral properties balance and
(ii) the subjectivity in performing audit procedures to
evaluate management’s indicators of impairment
assessment, which required management
judgment.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Ranbir Gill.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, British Columbia
March 20, 2024
Filo Corp.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
(Audited)
ASSETS
Current assets
Cash and cash equivalents
Receivables and other assets
Non-current assets
Equipment and facilities
Mineral properties
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade payables and accrued liabilities
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
Contributed surplus
Deficit
Accumulated other comprehensive income
(loss)
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
Note
December 31,
2023
December 31,
2022
5
6
7
8
$
108,120,145 $
1,317,138
109,437,283
4,876,795
10,075,286
14,952,081
124,389,364
74,915,331
831,388
75,746,719
480,760
9,736,629
10,217,389
85,964,108
22,442,523
22,442,523
15,450,886
15,450,886
425,437,833
21,229,653
(347,187,081)
2,466,436
101,946,841
287,955,759
15,499,303
(232,073,903)
(867,937)
70,513,222
$
124,389,364 $
85,964,108
The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board:
/s/Joyce Ngo
Director
/s/James Beck
Director
Filo Corp.
Consolidated Statements of Comprehensive Loss
(Expressed in Canadian Dollars)
(Audited)
Note
2023
Year ended
December 31,
2022
Expenses
Exploration and project investigation
10
$
143,130,952 $
82,523,935
General and administration:
Salaries and benefits
Share-based compensation
Management fees
Professional fees
Travel
Promotion and public relations
Office and general
Operating loss
Other (income) and expenses
Interest income
Net monetary gain
Gain on use of marketable securities
Other foreign exchange loss (gain)
Other non-income taxes
Net loss
9
4
14
5,391,704
6,681,874
726,980
551,762
217,699
866,520
1,550,083
3,327,768
7,688,403
198,900
221,385
264,767
338,817
961,835
159,117,574
95,525,810
(5,077,137)
(1,530,696)
(38,595,726)
29,073
1,170,090
(1,846,038)
(478,705)
(25,015,866)
(459,211)
1,235,341
115,113,178
68,961,331
Other comprehensive (income) loss
Items that may be subsequently reclassified to
net loss:
Foreign currency translation adjustment
Impact of hyperinflation
4
Comprehensive loss
Basic and diluted loss per common share
Weighted average common shares
outstanding
471,608
(3,805,981)
(458,688)
(774,380)
111,778,805 $
67,728,263
$0.90 $
0.57
$
$
127,473,242
120,914,843
The accompanying notes are an integral part of these consolidated financial statements.
2
Filo Corp.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
(Audited)
Cash flows used in operating activities
Net loss for the year
Items not involving cash
Share-based compensation
Net monetary loss
Unrealized foreign exchange loss (gain)
Depreciation
Net changes in working capital and other items
Receivables and other
Trade payables and accrued liabilities
Cash flows from (used in) financing activities
Proceeds from option exercises
Proceeds from equity financings, gross
Share issuance costs
Cash flows used in investing activities
Acquisition of equipment and facilities
Mineral properties and related expenditures
Effect of foreign exchange rate changes on
cash and cash equivalents
Increase in cash and cash equivalents during
the year
Cash and cash equivalents, beginning of the
year
Note
2023
Year ended
December 31,
2022
$
(115,113,178) $
(68,961,331)
9
6, 10
9
8
8
6
7
8,210,508
3,614,201
15,357
144,590
9,460,115
1,532,312
(460,321)
15,632
(674,603)
18,107,157
1,535,742
11,592,776
(85,695,968)
(45,285,075)
4,876,018
131,084,919
(959,021)
4,788,719
100,682,181
(286,700)
135,001,916
105,184,200
(5,521,937)
(989,436)
(6,511,373)
(289,671)
(1,118,190)
(1,407,861)
(9,589,761)
(2,992,917)
33,204,814
55,498,347
74,915,331
19,416,984
Cash and cash equivalents, end of the year
$
108,120,145 $
74,915,331
The accompanying notes are an integral part of these consolidated financial statements.
3
Filo Corp.
Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars)
(Audited)
Note
Number of
Shares
Share Capital
Contributed
Surplus
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Balance, January 1, 2022
Shares issued pursuant to Private
Placements
Share issuance costs
Share-based compensation
Shares issued pursuant to stock option
exercises
Net loss and other comprehensive loss
Balance, December 31, 2022
Shares issued pursuant to Private
Placements
Share issuance costs
Share-based compensation
Shares issued pursuant to stock option
exercises
Net loss and other comprehensive loss
8
8
9
9
8
8
9
9
115,042,939 $
180,266,718 $
8,544,029 $
(163,112,572)
$
(2,101,005) $
23,597,170
6,314,047
100,682,181
(286,700)
-
9,460,115
1,727,832
7,293,560
(2,504,841)
-
-
-
-
-
-
-
-
100,682,181
(286,700)
9,460,115
4,788,719
-
-
-
(68,961,331)
1,233,068
(67,728,263)
123,084,818 $ 287,955,759 $ 15,499,303 $
(232,073,903) $
(867,937) $
70,513,222
6,204,849
131,084,919
(959,021)
-
8,210,508
1,443,500
7,356,176
(2,480,158)
-
-
-
-
-
-
-
-
131,084,919
(959,021)
8,210,508
4,876,018
-
-
-
(115,113,178)
3,334,373
(111,778,805)
-
-
-
-
-
-
-
-
Balance, December 31, 2023
130,733,167 $ 425,437,833 $ 21,229,653 $
(347,187,081) $
2,466,436 $
101,946,841
The accompanying notes are an integral part of these consolidated financial statements.
4
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
1. NATURE OF OPERATIONS
Filo Corp. (the “Company” or “Filo”) was incorporated on May 12, 2016 under the Canada Business
Corporations Act. Effective June 23, 2023, the Company’s name was changed to Filo Corp., formerly
Filo Mining Corp., to better align with the Company’s strategic vision. The Company’s principal business
activities are the exploration and development of the Filo del Sol and Tamberias properties, which are
comprised of adjacent mineral titles in San Juan Province, Argentina and Region III, Chile. The
Company’s registered office is located at Suite 2200, 885 West Georgia Street, Vancouver, British
Columbia, V6C 3E8, Canada. The Company’s common shares trade on the Toronto Stock Exchange
under the symbol “FIL”. In addition, the Company’s common shares trade on the NASDAQ First North
Growth Market under the symbol "FIL" and on the OTCQX under the symbol “FLMMF”.
2. BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting
Standards”), on a going concern basis, which contemplates the realization of assets and settlement of
liabilities in the normal course of business. These consolidated financial statements are prepared on a
historical cost basis except for certain financial assets, which are measured at fair value.
These consolidated financial statements were authorized for issuance by the Board of Directors of the
Company on March 20, 2024.
3. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION
a) Consolidation
The consolidated financial statements of the Company include the following subsidiaries:
Subsidiaries
Filo Del Sol Holdings Inc.
(formerly “NGEx Filo Del Sol Holdings Inc.)
Filo Del Sol Chile Holdings Inc.
(formerly “NGEx Chile Holdings Inc.”)
Filo del Sol Uruguay S.A.
Frontera Holdings (Bermuda) IV Ltd.
Frontera Holdings (Bermuda) V Ltd.
Filo del Sol Exploración S.A.
Frontera Chile Limitada
Jurisdiction
Nature of operations
Canada
Holding company
Canada
Holding company
Uruguay
Bermuda
Bermuda
Argentina
Chile
Holding company
Holding company
Holding company
Exploration company
Exploration company
The Company consolidates an entity when it has control over that entity, is exposed, or has rights,
to variable returns from its involvement with that entity and has the ability to affect those returns
through its control over that entity.
All the Company’s subsidiaries are wholly owned and all intercompany balances, transactions,
including income and expenses arising from inter-company transactions are eliminated in preparing
the consolidated financial statements.
5
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
b) Critical accounting estimates, assumptions and judgements
The preparation of the consolidated financial statements in accordance with IFRS Accounting
Standards requires management to make estimates, assumptions and judgements that affect the
reported amounts of assets, liabilities and expenditures on the financial statements. These
estimates, assumptions and judgements are based on management’s best knowledge of the relevant
facts and circumstances taking into account previous experience. Actual results could differ and such
differences could be material. Estimates, assumptions and judgements are reviewed on an ongoing
basis and are based on historical experience and other facts and circumstances. Revisions to
estimates, assumptions and judgements, and the resulting effects on the carrying amounts of the
Company’s assets and liabilities, are accounted for prospectively. Information about estimates,
assumptions, judgments and other sources of estimation uncertainty as at December 31, 2023 that
have a risk of resulting in a material adjustment to the carrying amounts of assets and liabilities
within the next year are provided below:
Valuation of mineral properties
The Company carries the acquisition costs of its mineral properties at cost less any provision for
impairment. At each reporting period, management applies judgement in assessing whether
there are any indicators of impairment relating to mineral properties. If any such indicator exists,
then an impairment test is performed by management, which also requires the Company to make
significant judgments and estimates. Information considered by management in assessing
indicators of impairment may include the period for which the entity has the right to conduct its
exploration and project investigation activities, including expected renewals, whether substantive
expenditure on further exploration and project investigation of mineral properties is budgeted,
the evaluation of the results of exploration and project investigation activities up to the reporting
date and other information that may indicate that the carrying value of mineral properties may
not be recovered in full from successful development or sale of the asset. The judgments and
estimates mentioned above are subject to various risks and uncertainties, which may ultimately
have an effect on the expected recoverability of the carrying values of the mineral properties.
The Company has determined that no indicators of impairment exist for its mineral properties as
of December 31, 2023.
c) Foreign currency translation
These consolidated financial statements are presented in Canadian dollars, which is the Company’s
functional and presentation currency. The functional currencies of its material subsidiaries, which
have operations in Chile and Argentina, are the Chilean peso and the Argentinian peso,
respectively.
For the Company’s Argentinian subsidiary, which uses the Argentinian peso as its functional
currency and is affected by hyperinflationary accounting as described in Notes 3 and 4 below, the
results and financial position of this subsidiary are translated into the presentation currency using
the exchange rate prevailing at the date of the statement of financial position.
The results and financial position of all other subsidiaries that have a functional currency different
from the presentation currency are translated into the presentation currency as follows:
• Assets and liabilities for each statement of financial position presented are translated using
the exchange rate prevailing at the date of that statement of financial position;
•
Income, expenses, and other comprehensive income for each statement of comprehensive
income are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in
6
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
which case income and expenses are translated at the rate on the dates of the transactions);
and
• All resulting exchange differences are recognized as a separate component of equity and in
other comprehensive income.
d) Mineral properties and exploration expenditure
The Company capitalizes acquisition costs for property rights, including payments for exploration
rights and estimated fair value of exploration properties acquired as part of an acquisition.
Mineral exploration costs and maintenance payments are expensed prior to the determination that
a property has economically recoverable ore reserves. When it has been established that a mineral
property is considered to be sufficiently advanced to the development stage, with economic viability
and technical feasibility demonstrated, all further expenditures for the current year and subsequent
years are capitalized as incurred and subsequently amortized on a units of production based on
proven and probable reserves of the assets to which they relate.
e) Equipment and facilities
Equipment and facilities are carried at cost less accumulated depreciation and impairment losses.
The cost of an asset consists of its purchase price, any directly attributable costs of bringing the
asset to the working condition and location of its intended use and an initial estimate of the costs
of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably.
Depreciation of each asset is calculated using the straight-line method to allocate its cost less its
residual value over its estimated useful life. Depreciation of an asset begins when it is available for
use at the location, and in the condition, as intended by management.
The assets’ residual values, depreciation methods, and useful lives are reviewed, and adjusted if
appropriate, at each statement of financial position date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
When an asset is disposed of, the difference between the net sale proceeds and its carrying amount
is recognized as a gain or loss within net loss in the consolidated statement of comprehensive loss.
f) Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows (cash-generating units, or “CGU’s”). Value in use is determined as the
present value of future cash inflows expected to be derived from a CGU using a pre-tax discount
rate that reflects the current time value of money and the risks specific to that CGU.
Non-financial assets that have been previously impaired are reviewed for possible reversal of the
impairment at each reporting date.
7
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
g) Financial instruments
(i) Recognition
The Company measures and classifies its financial assets based on its business model for
managing its financial assets and the contractual cash flow characteristics of those financial
assets. Financial assets are classified into three measurement categories on initial recognition:
those measured at fair value through profit or loss, those measured at fair value through other
comprehensive income (“OCI”) and those measured at amortized cost.
Financial assets and liabilities at amortized cost are initially recognized at fair value plus or
minus transaction costs, respectively, and subsequently carried at amortized cost less any
impairment.
Investments in marketable securities, such as equity instruments of publicly listed entities, are
required to be measured at fair value through profit or loss, unless the Company makes an
irrevocable election to present subsequent changes in the fair value of such instruments
through OCI. The Company has not elected to measure any of its marketable securities
through OCI.
(ii) Derecognition
The Company derecognizes financial assets when the contractual rights to cash flows from the
financial assets expire, or when it transfers the financial assets and substantially all the
associated risk and rewards of ownership to another entity. A financial liability is derecognized
when the obligation under the liability is discharged, canceled or expired. Gains and losses on
derecognition of financial assets and liabilities are generally recognized in the consolidated
statement of comprehensive loss.
(iii) Impairment
The Company recognizes a loss allowance for expected credit losses on financial assets that
are measured at amortized cost based on a probability-weighted estimate of credit losses over
the expected life of the financial asset.
At each reporting date, the Company measures the loss allowance for the financial asset at
an amount equal to the lifetime expected credit losses if the credit risk on the financial asset
has increased significantly since initial recognition. If at the reporting date, the credit risk on
the financial asset has not increased significantly since initial recognition, the Company
measures the loss allowance for the financial asset at an amount equal to twelve month
expected credit losses. Impairment losses on financial assets carried at amortized cost are
reversed in subsequent periods if the expected credit losses are reversed after the impairment
was recognized.
h) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, and deposits held with financial institutions with
a fixed deposit term of three months or less, net of bank overdrafts.
i) Current and deferred income tax
The Company follows the liability method of accounting for income taxes. Under the liability method,
deferred income tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, unused tax losses and other income tax deductions. Deferred income tax
assets are recognized for deductible temporary differences, unused tax losses and other income tax
8
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
deductions to the extent that it is probable the Company will have taxable income against which
those deductible temporary differences, unused tax losses and other income tax deductions can be
utilized.
Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax
rates expected to apply when the related assets are realized or the liabilities are settled. The
measurement of deferred income tax assets and liabilities reflects the tax consequences that would
follow from the manner in which the Company expects, at the reporting date, to recover and settle
the carrying amounts of its assets and liabilities, respectively. The effect on deferred income tax
assets and liabilities of a change in tax rates is recognized in the period in which the change is
substantively enacted.
j) Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issuance of
new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
k) Share-based compensation
The Company has a share-based compensation plan, whereby it is authorized to grant share options
to officers, employees, directors, and other eligible persons. The fair value of the options is
measured at the date the options are granted, using the Black-Scholes option-pricing model with
assumptions for risk-free interest rates, dividend yields, volatility of the expected market price of
the common shares and an expected life of the options. The fair value less estimated forfeitures is
charged over the vesting period of the related options as an expense on its financial statements.
l) Provisions
Provisions for restructuring costs and legal claims are recognized when: the Company has a present
legal or constructive obligation as a result of past events; it is probable that an outflow of resources
will be required to settle the obligation; and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligations using the pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to the passage of
time is recognized as interest expense.
m) Leases
The Company recognizes a right-of-use asset, and corresponding lease liability, for almost all
leases, unless the lease term is 12 months or less or the underlying asset has a low value, in which
case, lease payments are recognized as an expense on a straight-line basis over the lease term or
another systematic basis, if deemed more representative.
n) Segment reporting
As the Company primarily focuses its activity on the exploration and development of mineral
properties, its operating and reportable segments are the Filo del Sol Project, comprised of the Filo
del Sol property and the Tamberias property, other general exploration and project generation
initiatives, and the Company’s corporate administration function. Operating segments are
components of an entity that engage in business activities from which they incur expenses and
whose operating results are regularly reviewed by a chief operating decision maker to make
resource allocation decisions and to assess performance. The Chief Executive Officer, the chief
operating decision-maker for the Company, obtains and reviews operating results of each operating
segment on a monthly basis.
9
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
o) Hyperinflation
The Company applies IAS 29, Financial Reporting in Hyperinflationary Economies, which outlines
the use of the hyperinflationary accounting, to consolidate and report its Argentinian operating
subsidiary.
The application of hyperinflationary accounting requires restatement of the Argentinian subsidiary’s
non-monetary assets and liabilities, shareholders’ equity and comprehensive loss items from the
transaction date when they were first recognized into the current purchasing power which reflects
a price index current at the end of the reporting period before being included in the consolidated
financial statements. To measure the impact of inflation on its financial position and results, the
Company has elected to use the Wholesale Price Index (Indice de Precios Mayoristas or “IPIM”) for
periods up to December 31, 2016, and the Retail Price Index (Indice de Precios al Consumidor or
“IPC”) thereafter. These price indices have been recommended by the Government Board of the
Argentinian Federation of Professional Councils of Economic Sciences (“FACPCE”).
As the consolidated financial statements of the Company have been previously presented in
Canadian dollars, a stable currency, the comparative period amounts do not require restatement.
4. HYPERINFLATION
Argentina was designated a hyperinflationary economy as of July 1, 2018 for accounting purposes.
The Company recognized a gain of $3,805,981 for the year ended December 31, 2023 (2022 –
$774,380) in relation to the impact of hyperinflation within other comprehensive (income) loss, which
is primarily the result of continued inflation during the year and the resulting adjustments recognized
on the net asset position of the Company’s Argentinian operating subsidiary.
As a result of changes in the IPC and changes to the Company’s net monetary position, the Company
recognized a net monetary gain of $1,530,696 for the year ended December 31, 2023 (2022 –
$478,705), to adjust transactions recorded during the year into a measuring unit current as of December
31, 2023.
The level of the IPC at December 31, 2023 was 3,533.2 (December 31, 2022 – 1,134.6), which
represents an increase of approximately 211% over the IPC at December 31, 2022, and an approximate
79% increase over the average level of the IPC during the year ended December 31, 2023.
5. RECEIVABLES AND OTHER ASSETS
Current
Taxes receivable
Other receivables
Prepaid expenses and deposits
December 31,
2023
December 31,
2022
$
50,096 $
133,304
1,133,738
28,427
334,091
468,870
$
1,317,138 $
831,388
10
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
6. EQUIPMENT AND FACILITIES
The Company’s equipment and facilities relate to mobile equipment and field facilities acquired or
constructed for its Filo del Sol property in Argentina. The Company depreciates these assets over their
useful lives of 10 years and classifies its depreciation expense as other administrative costs within
exploration and project investigation expense (note 10).
Adjustment for the impacts of hyperinflation
7,284
(673,156)
(248,912)
(64,302)
-
64,302
Cost
January 1, 2022
Additions
Adjustment for the impacts of hyperinflation
Reclassifications
December 31, 2022
Additions
Reclassifications
December 31, 2023
Accumulated depreciation
January 1, 2022
Depreciation
Adjustment for the impacts of hyperinflation
December 31, 2022
Depreciation
Adjustment for the impacts of hyperinflation
December 31, 2023
Net book amount
December 31, 2022
December 31, 2023
Works in progress
Equipment
Facilities
Equipment
Facilities
Total
$
31,780 $
136,567 $
- $
- $
-
6,578
82,111
5,852
-
(224,530)
-
-
-
207,560
31,572
224,530
168,347
289,671
44,002
-
$
38,358 $
- $
- $
463,662 $
502,020
1,048,762
2,801,913
1,383,450
287,812
(58,185)
-
5,521,937
(972,969)
-
$ 1,030,102 $ 2,128,757 $ 1,198,840 $
693,289 $ 5,050,988
$
$
$
- $
- $
- $
- $
-
-
-
-
-
-
-
(15,632)
(5,628)
(15,632)
(5,628)
- $
- $
- $
(21,260) $
(21,260)
-
-
-
-
(64,244)
(3,781)
(80,346)
(4,562)
(144,590)
(8,343)
- $
- $
(68,025) $
(106,168) $
(174,193)
$
38,358 $
- $
- $
442,402 $
480,760
1,030,102
2,128,757
1,130,815
587,121
4,876,795
11
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
7. MINERAL PROPERTIES
January 1, 2022
Additions
Adjustment for the impacts of
hyperinflation
Effect of foreign currency translation
Filo del Sol
Tamberias
$
3,493,825 $
4,569,093 $
-
1,118,190
118,962
-
-
436,559
Total
8,062,918
1,118,190
118,962
436,559
December 31, 2022
$
3,612,787 $
6,123,842 $
9,736,629
-
989,436
989,436
Additions
Adjustment for the impacts of
hyperinflation
Effect of foreign currency translation
-
(418,957)
(231,822)
-
(231,822)
(418,957)
December 31, 2023
$
3,380,965 $
6,694,321 $ 10,075,286
The Company’s primary mineral property assets are the Filo del Sol and Tamberias properties (together,
the “Filo del Sol Project”), which are comprised of adjacent mineral titles in San Juan Province, Argentina
and Region III, Chile, and are 100% controlled by Filo either through direct ownership or option
agreements.
Filo del Sol Property (San Juan Province, Argentina)
Sole ownership of the Filo del Sol property was acquired by Filo del Sol Exploracion S.A., a wholly owned
subsidiary of the Company, in October 2014, through the acquisition of its then joint exploration
partner’s 40% interest in the property.
Tamberias Property (Region III, Chile)
Through its wholly owned subsidiary, Frontera Chile Limitada, the Company is party to an option
agreement with Compania Minera Tamberias SCM (“Tamberias SCM”) whereby the Company can earn
a 100% interest in the Tamberias property by making certain scheduled option payments. In addition,
Tamberias SCM will retain a 1.5% net smelter royalty, which will be paid only after the Company has
recovered all its exploration and development costs.
Pursuant to a series of amendments to the terms of the remaining option payments payable under the
option agreement with Tamberias SCM, the last of which was executed on May 13, 2020 (the “Option
Amendments”), the remaining option payments were rescheduled and extended through to June 30,
2026. In June 2023, the Company made a US$750,000 payment pursuant to the Option Amendments
and as at December 31, 2023, the Company’s total remaining option payments were as follows:
Payment by:
June 30, 2024
June 30, 2025
June 30, 2026
TOTAL
Amount (US$)
950,000
1,050,000
12,000,000
14,000,000
12
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
In addition, in June 2022, the Company acquired a five-hectare claim block, which is located within
the broader Tamberias property area (the “Austral Claims”). Prior to the acquisition, the Austral
Claims were the only claim blocks within the Tamberias property footprint that were not owned or
controlled by the Company. The Austral Claims were acquired for a purchase price of US$400,000.
8. SHARE CAPITAL
The Company has authorized an unlimited number of voting common shares without par value.
On March 11, 2022, by way of a non-brokered private placement, the Company closed the sale of
6,270,000 common shares to BHP Western Mining Resources International Pty Ltd, a wholly owned
subsidiary of BHP Group Limited (collectively, "BHP"), at a price of $15.95 per common share for total
proceeds of $100 million (the “Private Placement”). Share issuance costs related to the Private
Placement totaled $268,751 and consisted of professional fees and regulatory fees. No finder's fee or
commissions were payable in connection with this Private Placement.
In connection with the Private Placement, BHP has been granted certain participation and top-up rights
(the “Top-Up Provision”), allowing BHP to maintain its ownership interest from time to time, provided
that such participation rights will not apply to any portion of BHP's ownership interest in excess of a
9.9% undiluted ownership level in the Company. In addition, the Company and BHP have formed a joint
advisory committee to share expertise, exploration concepts, and discuss future project development.
On February 7, 2023, the Company closed a non-brokered private placement to BHP in accordance with
the Top-Up Provision, whereby the Company sold 43,711 common shares to BHP for gross proceeds of
$1,084,907, less share issuance costs of $21,967.
On June 14, 2023, the Company closed a non-brokered private placement, whereby the Company sold
6,161,138 common shares at a price of $21.10 per common share for gross proceeds of $130,000,012,
less share issuance costs of $937,054 which include a 5% finder’s fee in cash on a portion of the private
placement. Upon closing of the non-brokered private placement, BHP owned approximately 6% of the
Company’s issued and outstanding common shares on an undiluted basis.
During 2023, 1,443,500 share options were exercised (2022 – 1,727,832; note 9), resulting in an
increase to share capital of $7,356,176 (2022 – $7,293,560). These exercises consisted of a cash portion
of $4,876,018 (2022 – $4,788,719) and a contributed surplus portion of $2,480,158 (2022 –
$2,504,841).
9. SHARE OPTIONS
a) Share option plan
The Company has a share option plan adopted by the Board of Directors on July 8, 2016 and
amended May 6, 2022, which reserves an aggregate of 10% of the issued and outstanding
shares of the Company for issuance upon the exercise of options granted. The granting, vesting
and terms of the share options are at the discretion of the Board of Directors. The majority of
the Company’s outstanding share options vest in thirds with one third vesting immediately upon
the date of grant, and the remaining two thirds vesting each on the first and second anniversary
of the date of grant.
13
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
b) Share options outstanding
Movements in the number of share options outstanding and their related weighted average
exercise prices are as follows:
Balance at January 1, 2022
Options granted
Exercised
Forfeited
Balance at December 31, 2022
Options granted
Exercised
Balance at December 31, 2023
Number of shares
issuable pursuant to
share options
Weighted
average exercise
price per share
6,237,598 $
1,540,000
(1,727,832)
(42,400)
6,007,366 $
381,600
(1,443,500)
4,945,466 $
3.47
17.17
2.77
14.06
7.11
19.59
3.38
9.16
The weighted average share price on the exercise date for the share options exercised during
the year ended December 31, 2023 was $22.56.
The Company uses the Black-Scholes option pricing model to estimate the fair value for all
options granted and the resulting stock-based compensation. The weighted average
assumptions used in this pricing model, and the resulting fair values per option, for the share
options granted during the years ended December 31, 2023 and 2022 were as follows:
Risk-free interest rate
Expected life
Expected volatility
Expected dividends
Fair value per option
Year ended
December 31,
2022
2.8%
4.8 years
62.9%
Nil
$9.29
2023
3.7%
4.0 years
66.5%
Nil
$10.39
14
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The following table details the share options outstanding and exercisable as at December 31,
2023:
Outstanding options
Exercisable options
Exercise
price
Options
outstanding
$
$
$
$
$
$
$
$
$
$
1.91
2.75
8.95
11.00
15.42
16.03
16.93
19.45
19.59
20.10
1,052,333
1,210,000
837,334
15,000
80,000
226,000
905,000
210,000
376,466
33,333
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price
1.6 $
0.8 $
2.6 $
2.4 $
3.7 $
3.7 $
3.6 $
3.2 $
4.3 $
3.5 $
1.91
2.75
8.95
11.00
15.42
16.03
16.93
19.45
19.59
20.10
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price
1.6 $
0.8 $
2.6 $
2.4 $
3.7 $
3.7 $
3.6 $
3.2 $
4.3 $
3.5 $
1.91
2.75
8.95
11.00
15.95
16.03
16.93
19.45
19.59
20.10
Options
exercisable
1,052,333
1,210,000
837,334
15,000
53,334
150,667
603,334
140,000
125,489
22,222
4,945,466
2.4 $
9.16
4,209,713
2.1 $
7.62
c) Share-based compensation
Exploration and project investigation (note 10)
$
1,528,634 $
1,771,712
General and administration
6,681,874
7,688,403
$
8,210,508 $
9,460,115
Year ended
December 31,
2023
2022
15
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
10. EXPLORATION AND PROJECT INVESTIGATION
All exploration and project investigation costs are related to the Filo del Sol Project. The Company
expensed the following exploration and project investigation costs, all incurred in relation to the Filo
del Sol Project:
Year ended
December 31,
2023
2022
Land holding and access costs
$
224,843 $
905,932
Drilling, fuel, camp costs and field supplies
Roadwork, travel and transport
Conceptual and engineering studies
Consultants, geochemistry and geophysics
Environmental and community relations
VAT and other taxes
Write-down of VAT receivable
Office, field and administrative salaries, overhead
and other administrative costs
COVID-19-related health and safety
Share-based compensation
75,891,640
20,681,907
5,946,832
4,121,064
2,614,673
23,505,911
-
8,612,891
2,557
1,528,634
42,030,383
13,529,981
320,280
1,511,590
1,784,545
10,950,266
2,812,565
6,069,360
837,321
1,771,712
$ 143,130,952 $ 82,523,935
Pursuant to statutory regulations, the Company is entitled to a refund of certain value added taxes
(“VAT”) paid in Argentina, however, the Company has deemed the collection of these funds to be
uncertain. As such the Company writes down its outstanding VAT receivable balances and will
continue to write down any increases to the VAT receivable balances in future periods. The
associated expense of these write downs is recognized in exploration and project investigation as
“VAT and other taxes”. Should the Company receive a future refund of amounts written down, the
corresponding impact will be credited against exploration and project investigation expense.
11. RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances
with related parties. During the year ended December 31, 2023, the Company engaged with NGEx
Minerals Ltd. (“NGEx Minerals”), a related party to the Company by way of directors, officers and
shareholders in common.
16
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
a) Related party services
The Company has an ongoing cost sharing arrangement with NGEx Minerals. Under the terms of
this arrangement, the Company provides management, technical, and/or administrative services
(collectively, “Management Services”) to NGEx Minerals and vice versa. These transactions were
incurred in the normal course of operations, and are summarized as follows:
Year ended
December 31,
2023
2022
Management Services to NGEx Minerals
$
436,784 $
902,414
Management Services from NGEx Minerals
(285,642)
(364,343)
b) Related party balances
The amounts due from (to) related parties, and the components of the consolidated statements of
financial position in which they are included, are as follows:
Receivables and other assets
Related Party
NGEx Minerals
December 31,
2023
52,858 $
December 31,
2022
186,449
$
Accounts payable and accrued liabilities
NGEx Minerals
(67,466)
(112,163)
c) Camp usage agreement
On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction
with a wholly-owned subsidiary of Josemaria Resources Inc., a former related party (“Josemaria”,
a 100%-owned subsidiary of Lundin Mining Corporation) whereby the Company extended its right
to use Josemaria’s Batidero Camp in Argentina.
The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence
of such notice the agreement may be renewed for another year at the Company’s election. On
March 7, 2024, Filo provided formal notice of renewal for the period through April 1, 2025.
17
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
d) Key management compensation
The Company’s key management personnel have the authority and responsibility for overseeing,
planning, directing and controlling its activities and consist of the Board of Directors and members
of the executive management team. Total compensation expense for key management personnel,
and the composition thereof, is as follows:
Salaries
Short-term employee benefits
Directors’ fees
Stock-based compensation
Incentive bonuses
Year ended
December 31,
2023
2022
$
1,900,000 $
1,346,667
32,309
391,642
6,056,367
1,678,750
32,369
233,056
6,910,772
1,165,000
$
10,059,068 $
9,687,864
12. INCOME TAXES
Income tax expense differs from the amount that would result from applying the Canadian federal and
provincial income tax rates to the loss for the year. These differences result from the following items:
Loss before taxes
Year ended
December 31,
2023
2022
$ 115,113,178 $
68,961,331
Combined Canadian federal and provincial statutory income
tax rates
Income tax recovery based on the above rate
27.00%
27.00%
31,080,558
18,619,559
Income tax benefits that have not been recognized and
other temporary differences
Non-deductible expense
Other permanent differences
(2,024,072)
(13,415,921)
(5,971,777)
(3,795,236)
12,606,780
9,301,551
Impacts of changes in foreign tax and currency rates
(39,582,271)
(13,806,839)
Differences between Canadian and foreign tax rates
3,890,782
3,096,886
Total income tax recovery
$
- $
-
18
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The Company’s unrecognized deductible temporary differences and unused tax losses for which no
deferred tax asset has been recognized consist of the following:
December 31,
2023
December 31,
2022
Non-capital losses carried forward
$
9,287,275
$
8,317,504
Mineral properties and related expenditures
Other
29,878,189
699,154
26,330,023
929,399
$
39,864,618 $
35,576,926
As at December 31, 2023, the non-capital loss carry-forwards and their respective expiration dates are
as follows:
Year
2024
2025
2026
2027
Canada
Argentina
Other
$
-
-
-
-
$
16,392
$
-
$
42,868
482,020
1,133,219
4,031,568
239,088
8,159
30,692
13,645
Total
16,392
281,956
490,179
1,163,911
32,901,783
2028 and onwards
28,856,570
$
28,856,570 $ 5,706,067 $
291,584 $ 34,854,221
13. SEGMENTED INFORMATION
The Company is principally engaged in the acquisition, exploration and development of mineral properties
in South America. The information regarding equipment and facilities, mineral properties and exploration
and project investigation costs presented in Notes 6, 7, and 10, respectively, represent the manner in
which management reviews its business performance. All the Company’s equipment and facilities, mineral
properties and exploration and project investigation costs relate to the Filo del Sol Project, which
straddles the border between the San Juan Province, Argentina and Region III, Chile and is comprised
of the Filo del Sol property and the Tamberias property. The net gains on the use of marketable securities
are allocated to the Filo del Sol Project, as they are the result of funding provided to the Company’s
Argentinian subsidiary in support of the project. Materially, all the Company’s administrative costs are
incurred by the Canadian parent, where materially all of the Company’s cash is held in the normal course
of business until it is required to be deployed to the Company’s South American subsidiaries in support
of ongoing and planned work programs.
19
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The following are summaries of the Company’s current and non-current assets, current liabilities, and
net losses by segment:
As at
December 31, Current assets
2023 Equipment and facilities
Mineral properties
Total assets
$
$
Filo del Sol
Project
Total
Corporate
3,153,544 $ 106,283,739 $ 109,437,283
4,876,795
4,872,213
10,075,286
10,075,286
18,101,043 $ 106,288,321 $ 124,389,364
4,582
-
Current liabilities
$
20,355,305 $
2,087,218 $
22,442,523
December 31, Current assets
$
2022 Equipment and facilities
Mineral properties
Total assets
4,055,924 $
480,760
9,736,629
71,690,795 $
-
-
$
14,273,313 $
71,690,795 $
75,746,719
480,760
9,736,629
85,964,108
Current liabilities
$
14,590,638 $
860,248 $
15,450,886
Year ended
December 31,
Filo del Sol
Project
2023
Exploration and project investigation
$ 143,130,952 $
Gain on use of marketable securities
(38,595,726)
General and administration and other
Corporate
Total
- $
143,130,952
-
(38,595,726)
items
Net loss
(360,606)
10,938,558
10,577,952
$ 104,174,620 $
10,938,558 $ 115,113,178
2022
Exploration and project investigation
$
82,523,935 $
Gain on use of marketable securities
(25,015,866)
- $
82,523,935
-
(25,015,866)
General and administration and other
items
Net loss
756,636
10,696,626
11,453,262
$ 58,264,705 $
10,696,626 $
68,961,331
14. USE OF MARKETABLE SECURITIES
From time to time, the Company may acquire and transfer marketable securities to facilitate intragroup
funding transfers between the Canadian parent and its Argentinian operating subsidiary.
The Company does not acquire marketable securities or engage in these transactions for speculative
purposes. In this regard, under this strategy, the Company generally uses marketable securities of
large, established companies, with high trading volumes and low volatility. Nonetheless, as the process
to acquire, transfer and ultimately sell the marketable securities occurs over several days, some
fluctuations do occur.
20
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
As the marketable securities are acquired with the intention of a near term sale, they are considered
financial instruments that are held for trading. Accordingly, all changes in the fair value of the
instruments, between acquisition and disposition, are recognized through profit or loss.
As a result of having utilized this mechanism for intragroup funding for the year ended December 31,
2023, the Company realized net gains of $38,595,726 (2022 – $25,015,866). The net gains for the
year ended December 31, 2023 were comprised of favorable foreign currency impacts of $42,116,850
(2022 – $27,414,923) and trading losses of $3,521,124 (2022 – $2,399,058), including the impact of
fees and commissions.
15. CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to safeguard its ability to continue as a going
concern in order to pursue the development of its mineral properties and to maintain a flexible
capital structure which optimizes the costs of capital at an acceptable risk. In the management and
definition of capital, the Company considers the items included in shareholders’ equity to be capital.
The Company manages the capital structure and makes adjustments, as necessary, in light of
changes in economic conditions and the risk characteristics of its assets. In order to maintain or
adjust the capital structure, the Company may attempt to issue new shares or debt instruments,
acquire or dispose of assets, or to bring in joint venture partners.
To facilitate the management of its capital requirements, the Company prepares annual expenditure
budgets that are updated as necessary depending on various factors, including, but not limited to,
successful capital deployment and general industry conditions. The annual and updated budgets
are approved by the Board of Directors.
16. FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS
The Company has estimated the fair values of its financial instruments based on appropriate
valuation methodologies. These values are not materially different from their carrying value.
The Company classifies the fair value of its financial instruments according to the following
hierarchy based on the amount of observable inputs used to value the instrument:
•
•
•
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the
assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The Company’s financial instruments consist of cash, receivables and other assets, and trade
payables and accrued liabilities. The carrying values of the Company’s financial instruments are
considered to be reasonable approximations of fair value due to their anticipated short-term nature.
As at December 31, 2023, the Company’s financial instruments are exposed to the following
financial risks, including credit, liquidity and currency risks:
(i) Credit risks associated with cash are minimal as the Company deposits the majority of its
cash with large financial institutions that have been accorded a strong investment grade
rating by a primary rating agency.
(ii) Liquidity risks associated with the inability to meet obligations as they become due are
minimized through the management of its capital structure as explained on Note 16 and
by maintaining good relationships with significant shareholders and potential creditors.
21
Filo Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The Company also closely monitors and reviews its costs to date and actual cash flows
on a monthly basis.
The maturities of the Company’s financial liabilities as at December 31, 2023 are as
follows:
Total
Less than
1 year
1-5 years
More than
5 years
Accounts payable and
accrued liabilities
Total
$
22,442,523 $
22,442,523 $
$ 22,442,523 $ 22,442,523 $
- $
- $
-
-
(iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net
financial assets or liabilities which are denominated in currencies other than their respective
functional currencies.
At December 31, 2023, the Company’s largest foreign currency risk exposures existed at
the level of its Canadian headquarters, where the Company held a net financial asset
position denominated in US dollars having a Canadian dollar equivalent of approximately
$65.9 million. A 10% change in the foreign exchange rate between the US dollar and the
Canadian dollar, the functional currency of Filo, would give rise to an increase/decrease
of approximately $6.6 million in financial position/comprehensive loss.
22
CORPORATE DIRECTORY
OFFICERS
Jamie Beck
President & CEO
Robert Carmichael
VP Exploration
Trevor D’Sa
VP Corporate Development & IR
Ian Gibbs
Chief Financial Officer
Arndt Brettschneider
VP Operations & Projects
DIRECTORS
Adam Lundin, Chair
Jamie Beck
Wojtek Wodzicki
Ron Hochstein
Erin Johnston
Carmel Daniele
William Lundin
Joyce Ngo
Peter O'Callaghan
AUDITORS
PricewaterhouseCoopers LLP
Vancouver, British Columbia, Canada
LEGAL COUNSEL
Cassels Brock & Blackwell LLP
Vancouver, British Columbia, Canada
CORPORATE OFFICE
Suite 2000 - 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3E8
Telephone: +1 604 689-7842
Fax: +1 604 689-4250
REGISTERED & RECORDS OFFICE
Suite 2200 - 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3E8
REGISTRAR AND TRANSFER AGENT
Computershare Trust Company of Canada
Vancouver, British Columbia
Canada
SHARE LISTINGS
TSX & Nasdaq First North
Growth Market: FIL
OTCQX: FLMMF
CUSIP No.: 31730E101
ISIN: CA31730E1016