MURCHISON MINERALS LTD.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2023 AND 2022
(Expressed in Canadian Dollars)
Independent Auditor’s Report
To the Shareholders of Murchison Minerals Ltd.
Opinion
We have audited the consolidated financial statements of Murchison Minerals Ltd. and its
subsidiary (the “Company”), which comprise the consolidated statements of financial position as at
December 31, 2023 and 2022, and the consolidated statements of loss and comprehensive loss,
consolidated statements of changes in shareholders’ equity and consolidated statements of cash
flows for the years then ended, and notes to the consolidated financial statements, including a
summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Company as at December 31, 2023 and 2022,
and its consolidated financial performance and its consolidated cash flows for the years then ended
in accordance with International Financial Reporting Standards (“IFRS”).
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 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. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the consolidated financial statements, which indicates that the
Company incurred a net loss during the year ended December 31, 2023 and is not generating
positive cash flows from operations. As stated in Note 1, these events or conditions, along with
other matters as set forth in Note 1, indicate that material uncertainties exist that cast significant
doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Page 1
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. 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.
Except for the matter described in the Material uncertainty related to going concern section, we
have determined that there were no additional key audit matters to communicate in our report.
Other information
Management is responsible for the other information. The other information comprises
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 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.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. 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, 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 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.
Page 2
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
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 judgement 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 risks 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.
Page 3
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 of the audit resulting in this independent auditor’s report is Jessica DiRito.
McGovern Hurley LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Ontario
February 27, 2024
Page 4
MURCHISON MINERALS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
As at December 31,
ASSETS
Current Assets
Cash
Amounts receivable and prepaid expenses (Note 6)
Total current assets
Property and equipment (Note 7)
Total assets
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities (Note 13)
Loans payable (Note 15)
Flow-through share premium liability (Notes 9 and 14)
Total current liabilities
Loans payable (Note 15)
Total liabilities
SHAREHOLDERS’ EQUITY
Share capital (Note 9)
Reserves (Notes 10 and 11)
Deficit
Total shareholders’ equity
2023
2022
$
1,823,972 $
393,495
1,706,952
870,515
2,217,467
2,577,467
134,545
183,777
$
2,352,012 $
2,761,244
$
91,939 $
10,578
82,360
357,895
51,578
-
184,877
409,473
13,356
21,685
198,233
431,158
43,424,724
2,188,718
(43,459,663)
41,612,477
2,411,789
(41,694,180)
2,153,779
2,330,086
Total liabilities and shareholders’ equity
$
2,352,012 $
2,761,244
Nature and Continuance of Operations (Note 1)
Commitments and Contingencies (Note 14)
Approved on Behalf of the Board:
"signed"
"signed"
Jean-Charles Potvin
Director
Denis Arsenault
Director
The accompanying notes are an integral part of these consolidated financial statements
- 1 -
MURCHISON MINERALS LTD.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in Canadian Dollars)
For the years ended December 31,
EXPENSES
Exploration expenses (Note 8)
Professional fees
Management fees and salaries (Note 13)
Office and general
Regulatory and transfer agent
Investor relations
Share-based payments (Notes 11 and 13)
Loss before other income and expenses
Interest income
Other income
Flow-through share premium (Notes 9 and 14)
Loss on investment
$
2023
2022
1,495,359 $
58,952
456,715
94,451
50,703
407,283
177,366
5,662,334
80,804
534,201
116,202
88,487
464,311
570,874
2,740,829
7,517,213
(47,538)
(6,750)
(97,558)
-
(62,003)
(33,000)
(1,321,035)
841
Loss for the year
$
2,588,983
$
6,102,016
Loss per share - basic and diluted
$
0.01 $
0.03
Weighted average number of common shares
outstanding - basic and diluted
228,279,877
192,181,756
The accompanying notes are an integral part of these consolidated financial statements
- 2 -
MURCHISON MINERALS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Expressed in Canadian Dollars)
For the years ended December 31, 2023 and 2022
Balance, December 31, 2021
Net loss for the year
Issuance of common shares (net of issue costs)
Issuance of stock options / share-based compensation
Issuance of warrants
Exercise of warrants
Expiry of warrants
Balance, December 31, 2022
Balance, December 31, 2022
Loss for the year
Issuance of common shares (net of issue costs)
Issuance of stock options / share-based compensation
Issuance of warrants
Expiry of warrants
Expiry of stock options
Balance, December 31, 2023
Reserves
Equity settled
share-based
payments
reserve
Share
Capital
Warrants
reserve
Deficit
Total
$ 35,881,469
-
5,400,626
-
-
330,382
-
$ 1,162,025
-
-
570,874
-
-
-
$ 41,612,477
$ 1,732,899
$ 41,612,477
-
1,812,247
-
-
-
-
$ 1,732,899
-
-
177,366
-
-
(144,610)
$
714,327 $ (35,976,108) $
-
-
-
678,889
(330,382)
(383,944)
(6,102,016)
-
-
-
-
383,944
1,781,713
(6,102,016)
5,400,626
570,874
678,889
-
-
$
$
678,890 $ (41,694,180) $
2,330,086
678,890 $ (41,694,180) $
-
-
-
423,063
(678,890)
-
(2,588,983)
-
-
-
678,890
144,610
2,330,086
(2,588,983)
1,812,247
177,366
423,063
-
-
$ 43,424,724
$ 1,765,655
$
423,063 $ (43,459,663) $
2,153,779
The accompanying notes are an integral part of these consolidated financial statements
- 3 -
MURCHISON MINERALS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
For the years ended December 31
CASH (USED IN) PROVIDED BY:
OPERATING ACTIVITIES
Loss for the year
Share-based payments
Flow-through share premium
Loss on investment
Amortization
Net change in non-cash working capital items:
Amounts receivable and prepaid expenses
Accounts payable and accrued liabilities
2023
2022
$ (2,588,983) $ (6,102,016)
570,874
(1,321,035)
841
47,470
177,366
(97,558)
-
49,232
(2,459,943)
(6,803,866)
477,020
(265,956)
(551,119)
146,590
Net cash flows used in operating activities
(2,248,879)
(7,208,395)
INVESTING ACTIVITIES
Acquisition of property and equipment
Proceeds from sale of marketable securities
Net cash flows used in investing activities
FINANCING ACTIVITIES
Issuance of units
Exercise of warrants
Units issuance costs
Loan repayments
Net cash flows provided by financing activities
NET CHANGE IN CASH
CASH, BEGINNING OF THE YEAR
CASH, END OF THE YEAR
SUPPLEMENTAL CASH FLOW INFORMATION
Finders’ warrants issued
Property and equipment purchase financed through loan
-
-
-
(70,383)
1,743
(68,640)
2,537,008
-
(121,780)
(49,329)
5,191,429
2,284,026
(266,841)
(16,700)
2,365,899
7,191,954
117,020
1,706,952
(85,081)
1,792,033
$ 1,823,972
$ 1,706,952
$
24,573
-
$
31,120
50,000
The accompanying notes are an integral part of these consolidated financial statements
- 4 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
1.
NATURE AND CONTINUANCE OF OPERATIONS
Murchison Minerals Ltd. (the "Company" or “Murchison”) was incorporated under the Canada Business Corporations Act on
July 25, 2001. The principal business of the Company is the acquisition, exploration and evaluation of mineral property
interests. The primary office is located at 5063 North Service Road, Suite 100, Burlington, Ontario, Canada, L7L 5H6.
The consolidated financial statements were approved by the Board of Directors on February 27, 2024.
The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that planned
exploration and evaluation programs will result in profitable mining operations. The continuance of the Company is dependent
upon completion of the acquisition of the exploration and evaluation properties, the discovery of economically recoverable
reserves, confirmation of the Company's interest in the underlying mineral claims, the ability of the Company to obtain
necessary financing to complete the development and future profitable production or, alternatively, upon disposition of such
property at a profit. Changes in future conditions could require material write downs of the carrying values of the Company's
assets.
Although the Company has taken steps to verify title to its exploration and evaluation properties, in accordance with industry
standards for the current stage of exploration of such property, these procedures do not guarantee the Company's title. Property
title may be subject to unregistered prior agreements and noncompliance with regulatory and, environmental requirements. The
Company's assets may also be subject to increases in taxes and royalties, renegotiation of contracts, currency exchange
fluctuations and restrictions and political uncertainty.
As at December 31, 2023, the Company has a cumulative deficit of $43,459,663 (December 31, 2022 - $41,694,180),
continuing losses and is not yet generating positive cash flows from operations. These factors indicate the existence of a
material uncertainty that may cast significant doubt about the Company’s ability to continue its operations as a going concern.
These consolidated financial statements were prepared on a going-concern basis in accordance with International Financial
Reporting Standards ("IFRS"). Funding for operations has been obtained primarily through private share offerings. Future
operations are dependent upon the Company's ability to finance expenditure requirements and upon the achievement of
profitable operations. Management believes it will be successful in raising the necessary funding to continue operations in the
normal course of operations; however, there is no assurance that these funds will be available on terms acceptable to the
Company or at all. These consolidated financial statements do not include adjustments to the amounts and classification of
assets and liabilities that might be necessary should the Company be unable to continue operations. Such adjustments could be
material.
2.
SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These consolidated financial statements, including comparatives, have been prepared in accordance with IFRS.
Basis of presentation
These consolidated financial statements have been prepared on a historical cost basis. In addition, these consolidated financial
statements have been prepared using the accrual basis of accounting except for cash flow information.
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MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of consolidation
Subsidiaries are entities over which the Company has control, where control is defined to exist when the Company is exposed
to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are de-consolidated from
the date control ceases.
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. All
intercompany transactions, balances, income and expenses are eliminated upon consolidation.
The following companies have been consolidated within these consolidated financial statements:
Company
Murchison Minerals Ltd.
Flemish Gold Corp.
Exploration and evaluation properties
Registered
Principal activity
Ontario, Canada
Ontario, Canada
Parent company
Exploration company
The acquisition costs of exploration and evaluation properties are expensed in the consolidated statements of loss in the period
incurred, as permitted under IFRS 6, Exploration for and Evaluation of Mineral Resources.
The acquisition costs of exploration and evaluation properties include the cash consideration and the estimated fair market
value of share-based payments issued for such property interests.
Exploration costs are expensed in the period incurred. Option payments which are solely at the Company’s discretion are
recorded as acquisition costs as they are made. Administrative expenditures are expensed in the period incurred.
Government grants and assistance
The Company expects to be entitled to a refundable tax credit on qualified mining exploration expenses incurred in the province
of Quebec and to a refundable duties credit for losses, which are estimated and recorded against the exploration and evaluation
expenses to which they relate.
Government grants and assistance are transfers of resources to an entity by government in return for past or future compliance
with certain conditions relating to the operating activities of the entity. Government assistance is action by government designed
to provide an economic benefit that is specific to an entity or range of entities qualifying under certain criteria.
Government grants and assistance are recognized where there is a reasonable assurance that the grants and assistance will be
received, and conditions will be complied with. Government grants and assistance are recognized as an offset to the expenses
to which they relate.
Property and equipment
Property and equipment are carried at cost, less accumulated amortization and accumulated impairment losses.
The cost of an item of property and equipment consists of the purchase price, any costs directly attributable to bringing the
asset to the location and condition necessary for 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. Repairs and maintenance costs are charged to profit or loss during the
period in which they are incurred. An asset's residual value, useful life and amortization method are reviewed, and adjusted if
appropriate, on an annual basis.
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MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and equipment (Continued)
An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the
net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.
Where an item of property and equipment consists of major components with different useful lives, the components are
accounted for as separate items of property and equipment. Expenditures incurred to replace a component of an item of property
and equipment that is accounted for separately, including major inspection and overhaul expenditures, are capitalized.
Amortization is recognized based on the cost of an item of property and equipment, less its estimated residual value, over its
estimated useful life at the following rates:
Detail
Exploration equipment
Computer equipment
Buildings
Financial instruments
Rate
3 years
5 years
20 years
Method
Straight-line
Straight-line
Straight-line
Financial assets at amortized cost are financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured using the effective interest method, less any impairment losses.
A financial asset is classified as fair value through profit and loss (“FVPL”) if it is classified as held for trading or is designated
as such upon initial recognition. Financial assets are designated as FVPL if the Company manages such investments and makes
purchases and sale decisions based on their fair value in accordance with the Company’s documented risk management or
investment strategy. Realized and unrealized gains and losses are reflected in the consolidated statement of loss. Transaction
costs associated with FVPL financial assets are expensed as incurred, while transaction costs associated with all other financial
assets are included in the initial carrying amount of the asset.
Financial liabilities at amortized cost are recognized initially at fair value net of any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest and
any transaction costs over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability or (where appropriate) to the net carrying amount on initial
recognition. Financial liabilities are de-recognized when the obligations are discharged, cancelled or expired.
Impairment of financial assets:
The Company recognizes a loss allowance for expected credit losses on financial assets not reported as FVTPL. The amount
of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument. The Company recognizes lifetime ECLs for accounts receivable. The expected credit losses on
these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted
for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including time value of money where appropriate. For all other financial
instruments, the Company recognizes the loss allowance for that financial instrument at an amount equal to 12-month ECLs.
However, when there has been a significant increase in credit risk on these other financial instruments since
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MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
initial recognition, lifetime ECLs are recognized. Lifetime ECLs represent the expected credit losses that will result from all
possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represents the portion of
lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after
the reporting date.
Financial instruments recorded at fair value:
Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value
hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the
following levels:
•
•
•
Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
There are no financial instruments subsequently recorded at fair value.
Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets with finite lives to
determine whether there is any indication that those assets have suffered an impairment loss. Where such an indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount
is the higher of an asset’s fair value less cost to sell or its value in use. In addition, long-lived assets that are not amortized are
subject to a periodic impairment assessment. The Company evaluates impairment losses for potential reversals when events
or circumstances warrant such consideration.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks, on hand and short-term money market
investments with original maturities of 90 days or less which are readily convertible into a known amount of cash. The
Company’s cash and cash equivalents are invested with major financial institutions in business accounts and are available on
demand by the Company. When cash and cash equivalents include an amount to be incurred in relation to a flow-through
commitment, an amount equal to the minimum commitment is kept in a separate bank account. As at December 31, 2023 and
2022, the Company had no cash equivalents.
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MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Interest income
Interest income is recognized when it is probable that the economic benefits will flow to the Company and the amount of
income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected
life of the financial asset to that asset’s net carrying amount on initial recognition.
Provisions
A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is
probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be
reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are
lower than the unavoidable cost of meeting its obligations under the contract.
The Company had no material provisions as at December 31, 2023 and 2022.
Share-based payment transactions
The fair value of stock options granted to employees is recognized as an expense over the vesting period with a corresponding
increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes
(direct employee) or provides services similar to those performed by a direct employee, including directors of the Company.
The fair value is measured at the grant date and recognized over the period during which the options vest. The fair value of the
options granted is measured using the Black-Scholes option-pricing model, taking into account the terms and conditions upon
which the options were granted. At each reporting date, the amount recognized as an expense is adjusted to reflect the actual
number of stock options that are expected to vest.
Where the terms of an equity-settled award are modified, the minimum expense recognized is the expense as if the terms had
not been modified. An additional expense is recognized for any modification which increases the total fair value of the
share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Unexercised expired and modified stock option values are transferred to deficit.
Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received
in the statement of comprehensive loss. When the value of goods or services received in exchange for the share-based payment
cannot be reliably estimated, the transaction is measured at the fair value of the equity instrument granted.
Income taxes
Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit
or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively
enacted at period end, adjusted for amendments to tax payable with regards to previous years.
- 9 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes (Continued)
Deferred tax is for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible
for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount
of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the financial position reporting date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilized.
Equity
Share capital, stock options, warrants and broker units are classified as equity. Incremental costs directly attributable to the
issuance of shares, warrants and broker units are recognized as a deduction from equity and allocated between share capital
and warrants. Expired stock options and warrants are transferred to deficit.
Flow-through shares
The Company finances some exploration expenditures through the issuance of flow-through shares. The resource expenditure
deductions for income tax purposes are renounced to investors in accordance with the appropriate income tax legislation. When
the common shares are offered, the difference (“premium”) between the amount recognized in common shares and the amount
the investors pay for the shares is recognized as a flow-through share premium liability which is reversed into the consolidated
statement of loss when the eligible expenditures are incurred. The amount recognized as a flow-through share premium liability
represents the difference between the quoted price of the common shares and the amount the investor pays for the flow-through
shares. The liability is then reduced proportionally as the Company incurs eligible expenditures. The Company indemnifies the
subscribers of flow-through shares for additional taxes payable by the subscribers if the Company does not meet its expenditure
requirements.
Restoration, rehabilitation and environmental obligations
A legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise when environmental
disturbance is caused by the exploration, development or ongoing production of a property interest. Such costs arising from the
decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized
at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount
rates using a pretax rate that reflects the time value of money are used to calculate the net present value. These costs are charged
against profit or loss over the economic life of the related asset, through amortization using either a unit-of-production or the
straight-line method as appropriate. The related liability is adjusted for each period for the unwinding of the discount rate and
for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the
obligation. Costs for restoration of subsequent site damage that is created on an ongoing basis during production are provided
for at their net present values and charged against profits as extraction progresses.
The Company has no material restoration, rehabilitation and environmental costs as at December 31, 2023 and December 31,
2022 as the disturbance to date is minimal.
- 10 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loss per share
The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable
to common shareholders of the Company by the weighted average number of common shares outstanding during the period.
The diluted loss per share is determined by adjusting the loss attributable to common shareholders and the weighted average
number of common shares outstanding for the effects of all warrants, finders’ warrants and stock options outstanding that may
add to the total number of common shares. Diluted loss per share does not include the effect of stock options, warrants and
finders’ warrants as they are anti-dilutive. See Notes 10 and 11.
Warrants
Warrants are recognized at fair value on the date of grant and are measured using the Black-Scholes option pricing model.
Unexercised expired warrants are transferred to deficit.
Significant accounting judgments and estimates
The preparation of financial statements in conformity with IFRS requires the Company’s management to make judgments,
estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and
related notes to the financial statements. Although these estimates are based on management’s best knowledge of the amounts,
events or actions, actual results may differ from those estimates.
The areas which require management to make significant judgments, estimates and assumptions in determining carrying values
include, but are not limited to:
- Assets’ carrying values and impairment charges
In the determination of carrying values and impairment charges, management looks at the recoverable amount, being the
higher of value in use and fair value less costs to sell in the case of non-financial assets and at objective evidence, significant
or prolonged decline of fair value on financial assets indicating impairment. These determinations and their individual
assumptions require that management make a decision based on the best available information at each reporting period.
- Income and other taxes
The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining
the Company's provisions for taxes. There are many transactions and calculations for which the ultimate tax determination
is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based
on estimates of whether additional taxes will be due. The determination of the Company's income, value added, withholding
and other tax liabilities requires interpretation of complex laws and regulations. The Company's interpretation of taxation
law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related
filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.
- Share-based payments and warrants
Management determines costs for share-based payments and warrants using market-based valuation techniques. The fair
value of the market-based and performance-based non-vested share awards and warrants are determined at the date of grant
using generally accepted valuation techniques. Assumptions are made and judgment is used in applying valuation techniques.
These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future
employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments
and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates. The Company
currently estimates the expected volatility of its common shares based on historical volatility taking into consideration the
expected life of the options and warrants.
- 11 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant accounting judgments and estimates (continued)
- Tax credit receivable
The Tax credit receivable for resources for the current and prior periods are measured at the amount expected to be recovered
from the taxation authorities using the tax rates and tax laws that have been enacted or substantively enacted at the statement
of financial position date. Uncertainties exist with respect to the interpretation of tax regulations, including the mining duties
credit and the tax credit for resources for which certain expenditures could be disallowed by the taxation authorities in the
calculation of credits, and the amount and timing of their collection. The calculation of the Company’s mining duties credit
and tax credit for resources necessarily involves a degree of estimation and judgment in respect of certain items whose tax
treatment cannot be finally determined until a notice of assessments and payments has been received from the relevant
taxation authority. Differences arising between the actual results following the final resolution of some of these items and
the assumptions made. or future changes to such assumptions, could necessitate adjustments to the mining duties credit and
tax credit for resources and the exploration and evaluation expenses in future periods.
- Contingencies
See Note 14.
New and future accounting policies
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or
after January 1, 2023. These were applied by the Company as of their effective date. Many are not applicable or do not have a
significant impact to the Company and have been excluded.
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or
after January 1, 2024. Many are not applicable or do not have a significant impact to the Company and have been excluded.
The Company will adopt these pronouncements as of their effective date and is currently assessing the impacts of adoption.
IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to
the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments
clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at
the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer
of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion
option meeting the definition of an equity instrument. The amendments are effective for annual periods beginning on January
1, 2024.
3. CAPITAL MANAGEMENT
The Company manages its capital with the following objectives:
•
•
to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of future growth
opportunities, and pursuit of accretive acquisitions; and
to maximize shareholder return through enhancing the share value.
The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its
objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by
issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is
reviewed by management and the Board of Directors on an ongoing basis.
- 12 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
3. CAPITAL MANAGEMENT
The Company considers its capital to consist of equity, comprising share capital, reserves and deficit which at December 31,
2023 totalled $2,153,779 (December 31, 2022 - $2,330,086). The Company manages capital through its financial and
operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on
operating expenditures, and other investing and financing activities. The forecast is regularly updated based on its exploration
and development activities. Selected information is regularly provided to the Board of Directors of the Company. The
Company’s capital management objectives, policies and processes have remained unchanged during the years ended December
31, 2023 and 2022. The Company is not subject to any capital requirements imposed by a regulator or lending institution.
4.
FINANCIAL RISK FACTORS
The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest
rate, foreign exchange rate and commodity price risk).
Risk management is carried out by the Company’s management team under policies approved by the Board of Directors. The
Board of Directors also provides regular guidance for overall risk management. There have been no changes in the risks,
objectives, policies and procedures during the years ended December 31, 2023 and 2022.
Credit risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit
risk is primarily attributable to cash balances and amounts receivable. Cash is held with reputable banks, from which
management believes the risk of loss to be remote. Financial instruments included in amounts receivable consist of sales tax
receivable and refundable tax credits from government authorities in Canada. Management believes that the credit risk
concentration with respect to financial instruments included in amounts receivable is remote.
Liquidity risk
The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when
due. As at December 31, 2023, the Company had a cash balance of $1,823,972 (December 31, 2022 - $1,706,952) to settle
accounts payable, accrued liabilities and loans payable of $115,873 (December 31, 2022 - $431,158). All of the Company’s
financial liabilities generally have contractual maturities of less than 30 days and are subject to normal trade terms, except for
the loans payable as disclosed in Note 15.
Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and
commodity prices.
Interest rate risk
The Company has cash balances and no interest-bearing debt other than the loans payable at a fixed interest rate. The
Company’s current policy is to invest excess cash in certificates of deposit or interest bearing accounts at major Canadian
chartered banks. The Company periodically monitors the investments it makes and is satisfied with the creditworthiness of its
Canadian chartered banks. Management believes that interest rate risk is minimal.
- 13 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
4.
FINANCIAL RISK FACTORS (Continued)
Commodity price risk
Commodity price risk could adversely affect the Company. In particular, the Company’s future profitability and viability of
development depends upon the world market price of commodities. Commodity prices have fluctuated widely in recent years.
There is no assurance that, even as commercial quantities of base and/or precious metals may be produced in the future, a
profitable market will exist for them. A decline in the market price of commodities may also require the Company to reduce
its mineral resources, which could have a material and adverse effect on the Company’s value. As at December 31, 2023, the
Company is not a commodities producer. As a result, commodity price risk may affect the completion of future equity
transactions such as equity offerings and the exercise of stock options and warrants. This may also affect the Company’s
liquidity and its ability to meet its ongoing obligations.
Sensitivity analysis
Based on management’s knowledge and experience, the Company believes the following movements are “reasonably possible”
over a one-year period:
(i) Based on cash balances earning interest at December 31, 2023, a 1% change in interest rates would result in a
corresponding interest income change of approximately $18,000 for the one-year period.
5.
CATEGORIES OF FINANCIAL INSTRUMENTS
Financial assets:
Amortized cost
Cash
Financial liabilities:
Amortized cost
Accounts payable and accrued liabilities
Loans payable
December
2023
December
2022
$
1,823,972 $
1,706,952
$
91,939 $
23,934
357,895
73,263
As of December 31, 2023 and December 31, 2022, the fair value of all the Company's current financial instruments
approximates the carrying value, due to their short-term nature.
6.
AMOUNTS RECEIVABLE AND PREPAID EXPENSES
Sales tax receivable
Tax credits receivable
Prepaid expenses and other receivables
December 31, December 31,
2023
2022
$
87,250 $
188,118
118,127
558,810
260,242
51,463
$
393,495 $
870,515
- 14 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
7.
PROPERTY AND EQUIPMENT
Cost
Balance, December 31, 2021
Additions
Balance, December 31, 2022
Computer
equipment
Buildings
Exploration
equipment
Total
- $
6,602
48,866 $
50,000
107,173 $
63,781
156,039
120,383
6,602 $
98,866 $
170,954 $
276,422
Balance, December 31, 2023
6,602 $
98,866 $
170,954 $
276,422
Amortization
Balance, December 31, 2021
Additions
Balance, December 31, 2022
Additions
- $
(1,210)
(4,591) $
(3,065)
(40,584) $
(43,195)
(45,175)
(47,470)
(1,210) $
(7,656) $
(83,779) $
(92,645)
(1,320)
(4,940)
(42,972)
(49,232)
Balance, December 31, 2023
(2,530) $
(12,596) $ (126,751) $ (141,877)
Net book value, December 31, 2022
Net book value, December 31, 2023
5,392 $
91,210
4,072 $
86,270
$
$
87,175 $ 183,777
44,203 $ 134,545
Exploration equipment with a net book value of $5,781 as at December 31, 2023 (December 2022 - $19,657) is used as
security for the loans payable described in Note 15.
8.
EXPLORATION AND EVALUATION PROPERTIES
Brabant Lake Property – Saskatchewan
As at December 31, 2023 and 2022, the Company holds a 100% interest in certain claims forming the Brabant Lake property
in Saskatchewan.
HPM Property - Quebec
As at December 31, 2023 and 2022, the Company holds a 100% interest in certain claims forming the HPM property in Quebec.
Barraute-Landrienne Property - Quebec
On April 28, 2021, the Company entered into an agreement with Gestion Aline Leclerc Inc. (“GAL”) granting Murchison an
option to earn 100% in 75 mineral claims, by making payments totaling $500,000 and property expenditures of $1.0 million
over a 6-year period. The first payment of $20,000 was due and paid on April 28, 2022. GAL would retain a royalty of 1% of
net smelter returns (NSR) on future production. The 1% NSR could be acquired anytime by the Company for $1.0 million. On
February 3, 2023, the Company terminated the GAL agreement.
- 15 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
8.
EXPLORATION AND EVALUATION PROPERTIES (Continued)
The following table sets out the exploration expenses for the years ended December 31, 2023 and 2022:
HPM
Drilling
Geology and prospecting
Geophysics
Metallurgy
Acquisition and staking
General administrative and permitting
Amortization
Tax credits receivable
Total HPM
Brabant Lake
Amortization
Drilling
General administrative
Geology
Geophysics
Government assistance – Drilling incentive
Acquisition and staking
Total Brabant Lake
Barraute-Landrienne
Geology
Geophysics
Option payment
Acquisition and staking
Tax credits receivable
Total Barraute-Landrienne
Total Exploration Expenses
2023
129,153
445,645
313,490
-
73,606
120,578
29,096
(108,957)
1,002,611
2023
18,816
-
4,000
270,080
170,686
-
8,242
471,824
2023
3,737
-
-
18,387
(1,200)
20,924
1,495,359
$
$
$
$
$
$
$
2022
3,046,072
1,407,200
1,032,296
4,937
16,232
101,852
18,466
(267,873)
5,359,182
2022
27,794
60,870
3,500
112,546
107,979
(50,000)
7,150
269,839
2022
3,510
8,728
20,000
1,075
-
33,313
5,662,334
$
$
$
$
$
$
$
Government Assistance and Tax Credits
The Company is entitled to a credit on duties refundable for losses under the Quebec Mining Duties Act. This credit on duties
refundable for losses on mineral exploration expenses incurred in the Province of Quebec at the rate of 8% has been applied
against the costs incurred. These amounts have been recorded as a reduction of the HPM exploration expenditures.
Also, the Company is entitled to the refundable tax credit for resources for mineral companies on qualified expenditures
incurred in the Province of Quebec. The refundable tax credit for resources may reach 35% or 38.75% of qualified expenditures
incurred. This tax credit has been applied against the costs incurred. These amounts have also been recorded as a reduction of
the HPM exploration expenditures. The Company has recorded $110,157 in expected tax credits against exploration activity
for the year ended December 31, 2023 (December 31, 2022 - $267,873). As at December 31, 2023, the Company is carrying a
tax credit receivable balance of $188,118 (December 31, 2022 - $260,242). During the year ended December 31, 2023, the
Company received $182,282 in tax credits applied against the receivable (December 31, 2022 - $nil).
The Saskatchewan Targeted Mineral Exploration Incentive (“TMEI”) supports the diversification of Saskatchewan's mineral
sector by encouraging exploration for base metals, precious metals, and diamonds as well as other components such as airborne
geophysical data and complementary ground-based geoscience investigations.
- 16 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
8.
EXPLORATION AND EVALUATION PROPERTIES (Continued)
The TMEI provides up to $150,000 financial assistance in the form of a grant to eligible exploration companies that undertake
exploration drilling for base metals, precious metals, or diamonds. For the year ended December 31, 2023, the Company
received $nil (2022 - $50,000) under the TMEI assistance program.
9.
SHARE CAPITAL
(a) Authorized Share Capital
The Company’s authorized share capital consists of an unlimited number of common shares.
(b)
Issued
Balance - December 31, 2021
Exercise of warrants-net of issue costs (i)
Private placement (ii)
Issue costs – private placement (ii)
Flow-Through Premium (ii)
Warrants issued (i)(ii)
Balance – December 31, 2022
Balance - December 31, 2022
Private placement (iii) (iv)
Issue costs – private placement (iii)(iv)
Flow-Through Premium (iii)(iv)
Warrants issued (iii)(iv)
Balance – December 31, 2023
Number
Amount
153,609,785
17,682,550
46,919,622
-
-
-
218,211,957
Number
218,211,957
42,561,065
-
-
-
260,773,022
$
$
$
$
35,881,469
2,465,961
5,353,589
(249,753)
(1,129,139)
(709,650)
41,612,477
Amount
41,612,477
2,537,008
(121,780)
(179,918)
(423,063)
43,424,724
(i) Between January 10 and February 10, 2022, 7,025,000 warrants exercisable at $0.12 and expiring on January 23 and
February 13, 2022 were exercised for gross proceeds of $843,000.
Between March 23 and April 15, 2022, following the implementation of a warrant exercise incentive program, 10,657,550
warrants at a price of $0.12 were exercised for gross proceeds of $1,278,906. As part of the incentive program, the Company
issued 5,328,775 incentive warrants exercisable at $0.18 until April 15, 2023.
The fair value of the incentive warrants was estimated at $85,260 using the Black-Scholes option model pricing with the
following assumptions: expected dividend yield of 0%, expected volatility of 82%, risk-free interest rate of 2.27%, expected
life of 1 year and share price of $0.10 and reflected as a cost of issue.
(ii) On June 30, 2022, the Company completed a non-brokered private placement and issued 10,166,666 units at a price of $0.09
per unit, 20,195,002 Quebec flow-through units at a price of $0.105 and 16,557,954 charity flow-through units at a price of
$0.14 for aggregate gross proceeds of $5,353,589. An amount of $1,129,139 was allocated to flow-through share premium.
- 17 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
9.
SHARE CAPITAL (Continued)
Each unit, Quebec flow-through unit and charity flow-through unit was comprised of one common share of the Company and
one-half of a common share purchase warrant. Each whole warrant is exercisable to acquire one additional common share at
a price of $0.18 for a period of 18 months expiring December 30, 2023. In the event that, the 20-day volume weighted average
price of the common shares on the TSX Venture Exchange is greater than $0.225 ($0.24 for the unit), the Company may give
notice to the holders of the warrants that the expiry time of the warrants has been accelerated and the warrants will expire on
the 30th business day following the date of such notice to subscribe for and purchase the number common shares of the Company
set forth above on the basis of one common share at a price of $0.18 for each warrant exercised.
The fair value of the warrants was estimated at $593,270 using the Black-Scholes option model pricing with the following
assumptions: expected dividend yield of 0%, expected volatility of 115%, risk-free interest rate of 3.10%, expected life of 1.5
year and share price of $0.08. Issue costs of $30,760 were allocated to the warrants.
Finder’s fees totaling $149,150 were paid under the private placement and 1,230,471 finders’ warrants valued at $31,120 with
the same terms as described above. Two directors of the Company acquired 7,944,444 units and 142,857 flow-through units
respectively for aggregate gross proceeds of $730,000.
(iii) On July 26, 2023, the Company completed a non-brokered private placement and issued 9,000,000 units at a price of $0.06
per unit, 11,500,715 Quebec flow-through units at a price of $0.07 and 2,383,850 national flow-through units at a price of
$0.065 for aggregate gross proceeds of $1,500,000. A director of the Company acquired 7,000,000 units for gross proceeds
of $420,000. An amount of $126,280 was allocated to flow-through share premium.
Each unit, Quebec flow-through unit and national flow-through unit was comprised of one common share of the Company and
one-half of a common share purchase warrant. Each whole warrant is exercisable to acquire one additional common share at
a price of $0.10 for a period of 24 months expiring July 26, 2025.
The fair value of the warrants was estimated at $236,690 using the Black-Scholes option model pricing with the following
assumptions: expected dividend yield of 0%, expected volatility of 108%, risk-free interest rate of 4.65%, expected life of 2.0
years and share price of $0.05. Issue costs of $12,160 were allocated to the warrants.
Finder’s fees totaling $57,005 were paid under the private placement and 636,994 finders’ warrants valued at $13,173 with the
same terms as described above were issued.
(iv) On December 28, 2023, the Company completed a non-brokered private placement and issued 9,040,000 units at a price of
$0.05 per unit and 10,636,500 national flow-through units at a price of $0.055 for aggregate gross proceeds of $1,037,008. A
director of the Company acquired 8,500,000 units for gross proceeds of $425,000. An amount of $53,638 was allocated to
flow-through share premium.
Each unit and national flow-through unit was comprised of one common share of the Company and one-half of a common
share purchase warrant. Each whole warrant is exercisable to acquire one additional common share at a price of $0.08 for a
period of 24 months expiring December 28, 2025.
The fair value of the warrants was estimated at $185,770 using the Black-Scholes option model pricing with the following
assumptions: expected dividend yield of 0%, expected volatility of 117%, risk-free interest rate of 3.92%, expected life of 2.0
years and share price of $0.04. Issue costs of $9,660 were allocated to the warrants.
- 18 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
9.
SHARE CAPITAL (Continued)
Finder’s fees totaling $41,250 were paid under the private placement and 518,190 finders’ warrants valued at $11,400 were
issued. Each whole warrant is exercisable to acquire one additional common share at a price of $0.055 for a period of 24
months expiring December 28, 2025. Issue costs of $2,150 were allocated to the finders’ warrants.
10. WARRANTS AND FINDERS’ WARRANTS
The following summarizes the warrants and finders’ warrants activity for the years ended December 31, 2023 and 2022:
Balance - December 31, 2021
Exercised
Expired
Issued
Balance – December 31, 2022
Balance - December 31, 2022
Issued
Expired
Number of
Warrants
Grant Date Weighted Average
Fair Value
Exercise Price
$
$
$
38,307,385
(17,682,550)
(20,624,835)
30,019,054
30,019,054
30,019,054
22,435,717
(30,019,054)
714,327
(330,382)
(383,944)
678,890
678,890
678,890
423,063
(678,890)
$
$
0.12
0.12
0.12
0.18
0.18
0.18
0.09
0.18
Balance – December 31, 2023
22,435,717
$
423,063
$
0.09
As at December 31, 2023, the Company had warrants and finders’ warrants outstanding as follows:
Date of Issue
July 26, 2023
December 28, 2023
December 28, 2023
Number of
Warrants
Exercise
Price
($)
Fair Value
($)
12,079,277
518,190
9,838,250
22,435,717
0.10
0.055
0.08
237,703
9,250
176,110
423,063
Expiry Date
July 26, 2025
December 28, 2025
December 28, 2025
Remaining
Contractual Life
(years)
1.57
2.00
2.00
1.77
11.
STOCK OPTIONS
The Company maintains a stock option plan whereby certain key employees, officers, directors and consultants may be granted
stock options for common shares of the Company. The maximum number of common shares that is issuable under the plan
was fixed at 10% of the number of common shares issued and outstanding (a maximum of 5% of the number of common shares
issued and outstanding may be held by any one person). Options expire after a maximum period of five years following the
date of grant. Vesting provisions are determined at the time of each grant.
- 19 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
11.
STOCK OPTIONS (Continued)
The following summarizes the stock option activity for the years ended December 31, 2023 and 2022:
Balance - December 31, 2021
Granted (i)(ii)(iii)
Balance – December 31, 2022
Balance - December 31, 2022
Expired
Granted (iv)
Balance – December 31, 2023
Number of
Stock Options
Weighted Average
Exercise Price
14,280,000
7,215,000
21,495,000
21,495,000
(1,110,000)
4,725,000
$
$
$
0.11
0.10
0.10
0.10
0.16
0.05
25,110,000
$
0.09
(i) On January 24, 2022, the Company granted 200,000 stock options exercisable at $0.135 for 5 years to a consultant of the
Company. The grant date fair value of these options of $19,600 was estimated using the Black Scholes valuation model with
the following weighted average assumptions: share price - $0.135, risk free interest rate – 1.63%, expected volatility – 96%,
expected dividend yield – 0%, expected forfeiture rate of – 0% and expected life – 5 years. The options vesting provisions were
1/3 immediately, 1/3 in 9 months and 1/3 in 18 months and $17,059 fair value was recorded as share-based payment on the
consolidated statement of loss for the year ended December 31, 2022 and the balance of $2,541 for the year ended December
31, 2023.
(ii) On July 29, 2022, the Company granted 4,700,000 stock options exercisable at $0.09 for 5 years to directors, officers,
employees and consultants of the Company. The grant date fair value of these options of $314,900 was estimated using the
Black Scholes valuation model with the following weighted average assumptions: share price - $0.09, risk free interest rate –
2.66%, expected volatility – 99%, expected dividend yield – 0%, expected forfeiture rate of – 0% and expected life – 5 years.
The options vested immediately and the fair value was recorded as share-based payment on the consolidated statement of loss
for the year ended December 31, 2022.
(iii) On December 15, 2022, the Company granted 2,315,000 stock options exercisable at $0.12 for 5 years to directors, officers,
employees and consultants of the Company. The grant date fair value of these options of $210,665 was estimated using the
Black Scholes valuation model with the following weighted average assumptions: share price - $0.12, risk free interest rate –
2.90%, expected volatility – 101%, expected dividend yield – 0%, expected forfeiture rate of – 0% and expected life – 5 years.
The options vested immediately and the fair value was recorded as share-based payment on the consolidated statement of loss
for the year ended December 31, 2022.
(iv) On December 29, 2023, the Company granted 4,725,000 stock options exercisable at $0.05 for 5 years to directors, officers,
employees and consultants of the Company. The grant date fair value of these options of $174,825 was estimated using the
Black Scholes valuation model with the following weighted average assumptions: share price - $0.05, risk free interest rate –
3.17%, expected volatility – 120%, expected dividend yield – 0%, expected forfeiture rate of – 0% and expected life – 5 years.
The options vested immediately and the fair value was recorded as share-based payment on the consolidated statement of loss
for the year ended December 31, 2023.
- 20 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
11.
STOCK OPTIONS (Continued)
As at December 31, 2023, the Company had incentive stock options issued to directors, officers, employees and key consultants
of the Company outstanding as follows:
Date of Grant
March 6, 2019
December 23, 2019
December 31, 2020
April 14, 2021
May 25, 2021
July 2, 2021
October 11, 2021
December 20, 2021
January 24, 2022(1)
July 29, 2022
December 15, 2022
December 29, 2023
Options
Outstanding(1)
Exercise
Price ($)
Grant Date
Fair Value ($)
Expiry Date
Weighted Average
Remaining
Contractual Life
(years)
645,000
3,300,000
3,700,000
200,000
500,000
200,000
1,000,000
3,625,000
200,000
4,700,000
2,315,000
4,725,000
25,110,000
0.095
0.085
0.095
0.095
0.095
0.095
0.08
0.13
0.135
0.09
0.12
0.05
0.09
59,340
244,200
284,900
9,800
26,000
10,800
59,000
351,625
19,600
314,900
210,665
175,825
1,765,655
March 6, 2024
December 23, 2024
December 31, 2025
April 14, 2026
May 25, 2026
July 2, 2026
October 11, 2026
December 20, 2026
January 24, 2027
July 29, 2027
December 15, 2027
December 29, 2028
0.18
0.98
2.00
2.29
2.40
2.50
2.78
2.97
3.07
3.58
3.96
5.00
3.05
(1) All options are exercisable.
12.
INCOME TAXES
(a) Provision for income taxes
Major items causing the Company’s income tax to differ from the combined Canadian federal and provincial statutory rate of
26.5% (2020 – 26.5%) were as follows:
Combined Canadian statutory income tax rate
Loss before income taxes
Expected income tax recovery based on the statutory rate
Adjustment to expected income tax benefit:
Permanent differences and other
Deferred tax assets not recognized
Deferred income tax provision (recovery)
2023
$
26.5%
(2,588,984)
2022
$
26.5%
(6,102,016)
(686,000)
(1,617,000)
15,000
671,000
-
151,000
1,466,000
-
- 21 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
12.
INCOME TAXES (Continued)
(b) Deferred income tax
Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:
Capital losses
Non-capital losses
Resource properties
Share issue costs
Other
2023
$
20,209,000
21,302,000
6,488,000
440,000
160,000
2022
$
20,209,000
19,917,000
5,575,000
513,000
110,000
Total
48,599,000
46,324,000
(c) As at December 31, 2023, the Company had approximately $6,488,000 (2022 - $5,575,000) of Canadian development and
exploration expenses and foreign exploration and development expenses, which, under certain circumstances, may be utilized
to reduce taxable income of future years.
(d) Tax loss carry-forwards
As at December 31, 2023, the Company had approximately $21,302,000 of non-capital losses in Canada, which may be used
to reduce taxable income in future years. These losses expire from 2025 to 2043.
Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will
be available against which the Company can use the benefits.
13. RELATED PARTY TRANSACTIONS
a) Remuneration of directors and officers was as follows:
Salaries and benefits
Share-based payments
2023
2022
$ 575,000
137,825
$
544,723
355,305
$ 712,825
$
900,028
For the year ended December 31, 2023, the salaries and benefits above include $187,500 (2022 - $275,000) for fees invoiced
by a corporation controlled by the CEO of the Company for his services as CEO and also include $140,600 (2022 - $183,323)
for fees invoiced by a corporation controlled by the CFO of the Company for his services as CFO. Included in accounts
payable and accrued liabilities at December 31, 2023 is $10,500 (2022 - $nil) owed to the CFO and $nil (2022 - $13,325) owed
to the CEO. The amounts payable are unsecured, non-interest bearing and have no fixed terms of repayment.
- 22 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
13. RELATED PARTY TRANSACTIONS (Continued)
b) Private Placements
As part of the private placement completed on December 28, 2023, a director of the Company acquired 8,500,000 common
share units for gross proceeds of $425,000.
As part of the private placement completed on July 26, 2023, a director of the Company acquired 7,000,000 common share
units for gross proceeds of $420,000.
As part of the private placement completed on June 30, 2022, a director of the Company acquired 7,944,444 common share
units for gross proceeds of $715,000 and another director acquired 142,857 flow-through units for gross proceeds of $15,000.
c) Warrant Incentive Program
In January 2022, two directors exercised 4,187,500 warrants at a price of $0.12 for aggregate gross proceeds of $502,500. Also,
as part of the warrant exercise incentive program implemented on March 17, 2022, officers and directors of the Company
exercised 9,436,550 warrants at a price of $0.12 for gross proceeds of $1,132,386. As part of this incentive program, the
Company issued 4,718,275 warrants to the officers and directors exercisable at $0.18 until April 15, 2023. The fair value of
these incentive warrants was $75,492.
14. COMMITMENTS AND CONTINGENCIES
Management Contracts
The Company entered into consulting and employment agreements for the services of its key executives. Under the
agreements, additional payments totalling $1,381,300 are be made upon the occurrence of a change of control. As a triggering
event has not taken place, the contingent payments have not been reflected in the consolidated financial statements. The
commitment upon termination of the agreements is $380,650, in aggregate. The minimum commitment due within one year
under the terms of the agreements is $690,600, in aggregate.
Flow-Through Indemnification
As at December 31, 2023, the Company has to incur $776,069 in qualifying exploration expenditures by December 31, 2024
to meet its flow-through commitments. At this time, management anticipates meeting that obligation and as a result, no
additional provisions are required.
The flow-through agreements require the Company to renounce certain tax deductions for Canadian exploration expenditures
incurred on the Company’s mineral properties to flow-through participants. The Company indemnified the subscribers for any
related tax amounts that become payable by the subscribers as a result of the Company not meeting its expenditure
commitments.
- 23 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
14. COMMITMENTS AND CONTINGENCIES
Flow-Through Indemnification (Continued)
Balance, December 31, 2021
Flow-through funds raised and premium recorded as a liability
Flow-through expenditures incurred and reduction of liability
Balance, December 31, 2022
Flow-through funds raised and premium recorded as a liability
Flow-through expenditures incurred and reduction of liability
Balance, December 31, 2023
Flow-through
funding and
expenditure
requirements
$
1,215,325
4,438,589
(5,653,914)
-
1,545,008
(768,939)
776,069
Flow-
through
share
premium
liability
$
191,896
1,129,139
(1,321,035)
-
179,918
(97,558)
82,360
Environmental
The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the
environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company
believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and
expects to make in the future, expenditures to comply with such laws and regulations.
15.
LOANS PAYABLE
In June 2021, the Company financed the purchase of an exploration vehicle in the amount of $43,586. The loan bears an
interest rate of 7.89% and is repayable over 60 monthly payments of $881 and is secured by the vehicle. The balance payable
at December 31, 2023 was $23,934 of which $10,578 is due within the next 12 months.
On October 1, 2022, the Company entered into an agreement to purchase an accommodation building in Saskatchewan for
$50,000. Under the agreement, the Company paid $3,000 per month from October 2022 to September 2023 and a lump sum of
$14,000 was due on October 1, 2023. The final lump sum payment was paid on November 2, 2023 upon title transfer of the
building.
Undiscounted payments over successive years are as follows:
2024
2025-2026
Total contractual cash flows
Less: interest
$
$
Vehicle
10,578
15,867
26,445
(2,511)
Obligation at December 31, 2023
$
23,934
- 24 -
MURCHISON MINERALS LTD.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(Expressed in Canadian Dollars)
16. RECLASSIFICATION OF THE PRIOR YEAR’S DATA FOR PRESENTATION
Certain of the 2022 comparative amounts have been reclassified to conform to the 2023 form of presentation. The change in
presentation was made to provide more relevant information to the users of the financial statements and better conform to the
IAS 1 presenting expenses based on their function. Some of the prior year expenses have been reclassified to adopt to the
current year presentation.
End of Notes to Financial Statements
- 25 -
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2023
This Management’s Discussion and Analysis (“MD&A”) is intended to supplement the consolidated
financial statements and notes of Murchison Minerals Ltd. (the “Company” or “Murchison”) for the year
ended December 31, 2023 with comparatives for the same period a year earlier. The consolidated financial
statements including comparative figures have been prepared by the Company in accordance with
International Financial Reporting Standards (“IFRS”) applicable to preparation of financial statements. This
MD&A should be read in conjunction with the Company’s audited consolidated financial statements and
accompanying notes for the year ended December 31, 2023, which are available on the Company’s
website (www.murchisonminerals.com). This MD&A covers the most recently completed financial year end
and the subsequent period up to February 27, 2024. The information is presented in Canadian dollars
unless stated otherwise.
OVERALL PERFORMANCE
Description of Business
Murchison is a Canadian
based exploration company focused on nickel-copper-cobalt exploration at the
100%-owned Haut-Plateau Manicouagan (“HPM”) project in Quebec and the exploration and development
silver-lead-gold deposit (the “Deposit”) located
of the 100%-owned Brabant-McKenzie VMS copper-zinc
on the Brabant McKenzie project (“BMK”) in north
central Saskatchewan. The Company expects to acquire
additional properties as attractive opportunities are identified. The Company does not have any projects
‐
that generate revenue at this time. The Company’s ability to carry out its business plan in the future rests
entirely on its ability to secure equity and other financings or realize cash from the sale of assets.
‐
‐
Trends
The financing, exploration and development of any properties the Company holds or may acquire in the
future will be subject to a number of factors including the commodity prices for minerals, applicable laws
and regulations, political conditions, currency fluctuations, the hiring of qualified people, and obtaining
necessary services in jurisdictions where the Company operates. The current trends relating to these
factors could change at any time and negatively affect the Company’s operations and business. Apart
from these, the risk factors noted under the heading “Uncertainties and Risk Factors” and “Forward Looking
Statement” included in this MD&A, management is not aware of any other trends, commitments, events or
uncertainties that would have a material effect on the Company’s business, financial condition or results
of operations.
OUTLOOK
Murchison considers both the HPM and BMK projects to be top tier under valued exploration projects both
with significant scale to host numerous deposits in areas that remain considerably underexplored.
Murchison is the dominant land holder for both projects with both already containing significant sulphide
mineralization and numerous showings located through the properties.
The HPM project’s entire 951 km2 land package is highly prospective to host nickel-copper-cobalt
mineralization, particularly at Barre de Fer (“BDF”) and Syrah where significant mineralization has already
been encountered. The HPM project continues to show tremendous promise with its numerous
gossanous nickel-copper-cobalt-bearing outcrops spatially linked to airborne electro-magnetic (EM)
anomalies.
Innu Takuaikan Uashat mak Mani-utenam (ITUM) - the Innu Government of the Innu First Nation of
Uashat mak Mani-utenam, located near Sept-Îles has communicated its opposition to any natural
resource or development projects proceeding in its traditional territory without its prior consent. Murchison
has met with representatives of the ITUM to establish a framework which is mutually beneficial to all
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
parties. The Government of Quebec has confirmed Murchison has the legal right to explore the mineral
claims comprising the HPM Project. The recent opposition from the ITUM is based on social acceptability,
and an ITUM claim over sovereignty of the mineral rights within their traditional territory. Murchison will
continue to engage with First Nations and abide by all laws and regulations governing exploration in the
province of Quebec.
The BMK project which hosts the Brabant-McKenzie VMS Deposit is considered by the Company to be
an emerging VMS district. The Deposit remains open along strike and at depth – expansion of the current
resource at the BMK Deposit is a primary objective for the 2024 winter exploration program. The
exploration programs from 2020 and 2021 successfully discovered VMS mineralization at the Betty and
Main Lake targets which confirms the viability that project hosts multiple VMS mineralized systems. The
Company is excited to continue exploring these prospects as well as other targets such as T2T and Tom2.
The polymetallic BMK Deposit is considered a high-grade VMS deposit with high zinc and silver grades.
The Deposit is ideally located only 2 km away from a highway and grid power. The Deposit comes to
surface, with a current strike length of 1.1 km and has been tested down to approximately 700 metres
depth. Preliminary metallurgical work completed in 2021 delivered exceptional results. As noted by recent
work completed by subject matter expert, Dr. Stephen Piercy, Professor at Memorial University, NFLD, the
BMK Deposit has high zinc grades typical of a zone refined VMS deposit and zone refined deposits are
closely associated with a copper stockwork zone. Drilling to date at the BMK Deposit has yet to discover
the copper rich stockwork zone, however, recent geophysical surveys completed at BMK have identified
an area of interest 400 m to the southwest of the main zone of mineralization. Discovery of the copper
stockwork zone is a high priority for the 2024 winter exploration program. The Company continues to
expand its investor relations activities with the objective of getting wider recognition of the Company’s
exploration activities to current and potential investors. This is also achieved by Murchison attending
several resource specific conferences and using social media.
Advancing exploration at the mineral properties will require substantially more financial resources. The
Company raised approximately $2.5 million in 2023 via two private placements. The Company will need
to raise additional funds in 2024 for additional exploration and beyond.
Management’s main objective is to advance its current projects and maximize their potential via the use of
different exploration techniques available. The long-term goal remains to develop the Company’s
properties and achieve commercial production. The Company may enter into partnerships in order to fully
exploit the production potential of its exploration assets.
A drill program has been initiated in January 2024 with the purpose of testing areas proximal to the currently
defined BMK Deposit for the potential copper stockwork zone. Three areas of interest will be test: 1) CST
target, a geophysical anomaly lying 400 m along strike to the south of the BMK Deposit. The anomaly
shares a similar geophysical signature to the BMK Deposit, in terms of size and conductance. 2) BMK
South: an area just to the south of the BMK Deposit which represents possible expansion on the current
dimensions. 3) BMK North: an area to the north of the current BMK Deposit where previous drilling has
intersected some of the best copper grades on the project.
2
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
MINERAL PROPERTIES – EXPLORATION ACTIVITIES
HPM PROPERTY – QUEBEC
The 2022 drill campaign was a major success with significant mineralization intersected in multiple holes
at BDF extending the mineralization along strike and at depth. During the program, drilling encountered
the most significant intercept to date with BDF22-002 intersecting 121.2 m interval at 1.36% NiEq (or
4.07% CuEq) – including 21.0 m at 3.21% NiEq (or 9.59% CuEq) (see November 29, 2022 press release).
Mineralization has now been intersected at BDF down to 475 m, over a strike length of 370 m and over a
width of 200 m in multiple lens up individually up to 48 m thick (see January 17, 2023 press release). The
zone of mineralization remains open in all directions and the Company is eager to continue to expand
mineralization through subsequent drill programs. Below table highlights the results from the first 2 drill
holes at the BDF target.
2022 Drill Campaign As s ay Re s ults for BDF22-001 & 002
Hole
From
(m)
89.95
To (m) Le ngth*
(m)
18.05
108
Ni % Cu % Co % NiEq.
%**
1.86
1.44 0.44
0.10
Include s
Include s
96.5
97.8
108
11.5
1.98 0.56
0.13
2.53
105.9
8.1
2.69 0.69
0.18
3.41
122
132.85
10.85
0.29 0.24
0.03
0.44
180.5
189
196.5
219.2
267
336.9
Include s
283.4
299.5
8.5
22.7
69.9
16.1
0.62 0.37
0.05
0.88
0.23 0.11
0.02
0.32
0.50 0.23
0.04
0.68
0.92 0.43
0.07
1.26
123.8
245
121.2
1.02 0.56
0.07
1.36
Include s
134.1
144.2
10.1
2.08 1.17
0.14
2.78
Include s
Including
152
152
196
44
1.58 0.71
0.11
2.05
180.8
28.8
2.21 0.99
0.15
2.86
Including
152.5
173.5
21
2.45 1.22
0.16
3.21
BDF22-001
BDF22-002
CuEq.
%**
5.00
6.80
9.16
1.18
2.36
0.85
1.83
3.38
4.07
8.31
6.14
8.55
9.59
Including 177.05
180.8
Include s
207.5
218
3.75
10.5
2.85 0.57
0.19
3.45
10.30
1.30 0.80
0.09
1.76
303.55 357.50
53.95
0.22 0.10
0.02
0.30
5.26
0.88
Reported as core length, true thicknes s is not known. **Nickel Equivalent (NiEq) & Copper Equivalent (CuEq) values were
calculated us ing the following USD metal prices from Sept 12, 2022: $10.84/ lb Nickel, $3.63/ lb Copper, and $23.56/ lb
Cobalt. NiEq.% was calculated us ing Ni%+((Cu Price/ Ni Price)*Cu%)+((Co Price/ Ni Price)*Co%). CuEq.% was calculated
us ing Cu%+((Ni Price/ Cu Price)*Ni%)+((Co Price/ Cu Price)*Co%). 100% percent recovery is as s umed for equivalent
calculations however it s hould be noted that 100% recovery is not to be expected for final recovery and true recovery may
differ s ignificantly from element to element. Pleas e note that copper equivalent is in s ubs titution for nickel equivalent and
not in addition to.
The drilling at Syrah target which lies approximately 300 m to the northwest of the BDF Zone successfully
intersected significant disseminated sulphide mineralization. The best intercept in hole SYR22-001
intersected 277.3 m grading 0.22% NiEq or 0.70% CuEq (see February 7, 2023 press release).
Mineralization intersected at Syrah confirms the presence of a large magmatic sulphide system but does
not explain the conductive geophysical anomaly. The Company is confident the disseminated
3
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
mineralization intersected is a key vectoring tool towards discovery of more massive to semi-massive
mineralization within the target area.
Following up on the success of the 2022 exploration drill campaign (highlights of the 2022 work are below)
where the Company intersected significant mineralization in multiple holes, the Company launched a
detailed review of all exploration data completed to date over the winter of 2023. The detailed review was
made with assistance from technical advisor Dr. Peter Lightfoot included assessing all the drill results to
date, data from the large scale 2022 airborne electromagnetic survey (VTEM) and all other historical data
to identify areas for additional drill testing and prospecting follow-up. Reviewing the data culminated in
identifying a 5 km prospective trend named the “BDF Trend” where notable surface nickel mineralization
corresponding with geophysical anomalies have already been discovered (see May 24, 2023 press
release). The BDF Trend was identified as a high-priority target for additional geophysical surveying prior
to additional diamond drilling to assist in refined drill targeting. Additionally, 34 high priority targets for
immediate prospecting follow-up were also identified using an unbiased statistical approach (see August
16, 2023 press release).
On August 16, 2023, the Company commenced a combined prospecting and ground geophysical survey
at the HPM project (see August 16, 2023 press release). The ground geophysical survey is focused on the
BDF zone as well as the Syrah target in relation to identifying additional drill targets within the BDF Trend.
The geophysical survey is a specialized electromagnetic survey utilizing helium-cooled super conductive
technology (SQUID) which is capable of imaging highly conductive bodies such as magmatic nickel
sulphide deposits at depth. Prospecting utilizing two teams of two was completed alongside the
geophysical survey and was targeting the majority of the identified 34 targets.
The Company also completed backpack drilling on the 100% owned Lac Paradis prospect. Lac Paradis
prospect is located approximately 120 km southwest of the HPM project area where claims were acquired
by the Company in January of 2022. The backpack drill results confirmed nickel mineralization discovered
on surface in 2003 and the area remains highly unexplored. The best result of the backpack drill core
sampling was 1.55 m grading 1.43% NiEq or 4.65% CuEq including 0.37m grading 5.01% NiEq or 16.25%
CuEq (see February 7, 2023 press release). The Company considers the Lac Paradis prospect results
encouraging and is planning additional prospecting work on the property.
The 2023 prospecting and geophysical campaign was temporarily paused to facilitate negotiations with
the ITUM (see August 31,, 2023 press release) and is anticipated to be completed in 2024.
BRABANT LAKE PROPERTY – SASKATCHEWAN
The Brabant Lake property is 100% owned by Murchison is strategically located along Highway 102
approximately 175 km northeast of the town of La Ronge and near major infrastructure, including grid
power. The Brabant Lake property consists of the BMK VMS Deposit and multiple known mineralized
showings and identified geophysical conductors over approximately 37 km strike length of favourable
geological trend, all of which remain under-explored and mostly untested. The 664 km2 property shares
geological characteristics, including similar age, with the Flin Flon and Lynn Lake volcanogenic massive
sulphide (VMS) mining camps in Manitoba.
The BMK Deposit currently hosts an NI 43-101 compliant resource estimate (September 4, 2018) with 2.1
Mt indicated resources at 7.08% Zn, 0.69% Cu, 0.49% Pb, 0.23 g/t Au, 39.6 g/t Ag and 7.6 Mt additional
inferred resources at 4.46% Zn, 0.57% Cu, 0.19% Pb, 0.1 g/t Au, 18.42 g/t Ag. The resource utilized a
3.5% ZnEq cut off based on metal prices of US$1.20/lb zinc, $2.50/lb copper, $1.00/lb lead, $16.00/oz
silver and $1200/oz/gold, and a US$ exchange rate of $1.25. The Deposit remains open in multiple
directions.
4
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
Murchison has recompiled all the historic data from the project and has begun remodeling the Deposit.
The modelling has been focused on defining locations to expand the Deposit particularly at depth and
along strike. The modelling work is also focused on locations to upgrade the Deposit through expansion
of high-grade zones. The most recent drill program conducted at the Deposit in March 2021 intersected
significant mineralization in hole BM21-004 which assayed 9.07% zinc, 0.81% copper, 0.26% lead, 0.11
g/t gold and 35.11 g/t silver over 15.35 m (80 to 95% true thickness) with the intercept approximately 50 m
outside of the indicated resources and indicates significant opportunity to define additional high-grade
mineralization within the core of the Deposit.
In May 2022, Murchison appointed Dr. Steven Piercey a renowned global VMS geologist as a technical
advisor. Murchison geologists accompanied by Dr. Piercey then completed a relogging and resampling
campaign on historic BMK core (see June 7, 2023 press release). This relogging work identified the host
stratigraphy at BMK to be mixed mafic and felsic volcanoclastic hosted within a back-arc basin. These
environments are similar to other jurisdictions such as the Bathurst mining camp and are known to contain
some of the largest VMS deposits. This reinterpretation provides additional justification for the presence
of additional VMS mineralization within the BMK project area. Murchison then staked an additional 75 km2
of mineral claims to encompass the entire identified prospective trend.
It was also identified that the BMK Deposit currently lacks a copper rich feeder zone which is typical of
VMS deposits which have similar zinc grades. Typical felsic volcanoclastic VMS deposits with very high
zinc grades are often formed through “zone refinement” which indicates that the Deposit should contain a
considerable copper rich zone. This copper rich zone has yet to be found and is a high priority exploration
target for Murchison.
The Company has commenced a reinterpretation of all historical geophysical data collected to date. This
geophysical data reinterpretation led to the identification of the high priority CST target (see June 27, 2023
press release). The CST target consists of large electromagnetic conductive geophysical anomaly located
from a reinterpretation of 2017 HeliSAM data and lies only 400 metres south of the Deposit at a depth of
600 metres. Murchison commenced a ground electromagnetic as well as borehole electromagnetic
geophysical survey in November 2023 to provide increased resolution of the CST target in anticipation of
drilling testing in the winter of 2024 (see November 8, 2023 press release). This target is highly prospective
to host the copper stockwork zone due to close proximity to the BMK Deposit and is top priority drill target
for Murchison. Murchison received the results of the geophysical survey in January 2024 (see Jan 22nd,
2023 press release) which has confirmed the CST target as a high priority drill target.
The reinterpretation will also focused on defining additional drill targets at the Main Lake and Betty Zone
areas where VMS alteration and mineralization was intersected in 2020 and 2021 respectively. The most
recent drilling at Main Lake intersected encouraging sulphide mineralization in hole ML21-002 intersecting
two lens of sulphide mineralization. The first interval assayed 0.84% zinc, 0.36% copper and 8.5 g/t silver
over 3.59 m (149.5 to 153.15m) and includes 0.47 m of 3.6% zinc, 0.2% copper and 6.6 g/t silver. The
second interval assayed 1.27% zinc, 0.03% copper, and 14.75 g/t silver over 4.08 m (176.5 to 180.59m)
and includes 1.01 m of 4.71% zinc, 0.04% copper and 21.2 g/t silver. At the Betty Zone, 4 holes were
completed in 2021 with the best intercept to date in hole BZ21-002 which assayed 4.40% zinc, 1.33%
copper, 12.95 g/t silver from 280.73 to 281.65 m (0.92 m) including 0.42 m at 3.76% zinc, 2.40% copper,
21.70 g/t silver and 0.12 g/t gold.
In January of 2024 the Company commenced a Winter Exploration Program at the BMK Project (See
January 22nd News Release). The Program is comprised of diamond drilling totaling approximately 3,500
m and is expected to be completed by mid-March. Cyr Drilling of Sunnyside, Manitoba was selected as
the drill contractor. The objective of the Program is the discovery of the copper-rich stockwork zone
predicted – due to the high-grade nature – to be associated with the formation of the of the BMK VMS
Deposit. The Program will focus on testing three target areas: CST, BMK North and BMK South
Extensions.
5
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
Qualified Persons
The scientific and technical disclosures included in this MD&A have been reviewed by John Shmyr, P.Geo.,
VP Exploration, a registered member of the Professional Engineers and Geoscientists of Saskatchewan
and current holder of a special authorization with the Ordre des Géologues du Québec. Mr. Shmyr is a
Qualified Person as defined by National Instrument 43-101.
Access to Properties
The Company’s access to its properties is dependent on climate and weather conditions. The Brabant
Lake property in Saskatchewan is accessible all year round. All projects in Québec can be accessed from
January to September as weather limits the activities during other times of the year.
ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS
The following table sets out the exploration expenses for the years ended December:
2023
2022
HPM, Quebec
Drilling
Geology and prospecting
Geophysics
Metallurgy
Acquisition and staking
General Administrative and permitting
Amortization
Tax credits receivable
Total HPM
Brabant Lake, Saskatchewan
Amortization
Drilling
General Administrative
Geology
Geophysics
Mineral Property & Staking
Drilling (less government assistance)
Total Brabant Lake
Barraute-Landrienne, Quebec
Geology
Geophysics
Option Payment
Acquisition and staking
Tax credits receivable
$
129,153
445,645
313,490
-
73,606
120,578
29,096
(108,957)
$ 1,002,611
$
$
$
18,816
-
4,000
270,080
170,686
8,242
-
471,824
3,737
-
-
18,387
(1,200)
$
$
$
$
$
3,046,072
1,407,200
1,032,296
4,937
16,232
101,852
18,466
(267,873)
5,359,182
27,794
60,870
3,500
112,546
107,979
7,150
(50,000)
269,839
3,510
8,728
20,000
1,075
-
Total Barraute-Landrienne
$
20,924
$
33,313
Total exploration expenses
$ 1,495,359
$ 5,662,334
6
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
RESULTS OF OPERATIONS
For the year ended December 31, 2023, the Company incurred a loss of $2,588,983 (2022 - $6,102,016).
The decrease of $3,513,033 is mainly related to the following factors: 1. lower exploration expenses of
$4,166,975 (2023 - $1,495,359 vs 2022 - $5,662,334) as the Company completed drilling at HPM in 2022
as well more prospecting and geophysical programs than in 2023. At Brabant Lake, the Company spent
an additional $201,985 in 2023 mainly on geological and geophysical compilations and reviews; 2. lower
management fees and salaries of $77,486 (2023 - $456,715 vs 2022 - $534,201) as the CEO’s
compensation and management’s bonuses paid decreased in 2023; 3. lower investor relations expenses
of $57,028 (2023 - $407,283 vs 2022 - $464,311) as less conferences were attended and less investor
meetings took place; 4. lower non-cash share-based payments of $393,508 (2023 - $177,366 vs
2022 - $570,874) as more stock options with a higher total fair value were granted in 2022, offset by;
5. lower non-cash flow-through share premium of $1,223,477 (2023 - $97,558 vs 2022 - $1,321,035) as
higher exploration expenses in 2022 generated a higher flow-through share income recognized.
SELECTED ANNUAL INFORMATION
The following table sets out financial performance highlights for the last three years and was prepared in
accordance with IFRS.
December 31, 2023
December 31, 2022
December 31, 2021
Interest Income
Operating Expenses (1)
Loss
Basic and Diluted loss
per share
Total Assets
Exploration Expenses
$47,538
$2,563,463
$2,588,983
$0.01
$2,352,012
$1,495,359
$62,003
$6,946,339
$6,102,016
$0.03
$2,761,244
$5,662,334
$4,958
$4,730,597
$4,762,730
$0.04
$2,224,877
$4,099,155
(1) The exploration expenses are included in operating expenses and share-based payments are excluded from operating
expenses.
The interest income fluctuation from year to year is the direct result of the cash balance available in each
of the years. The timing of equity financing and ensuing exploration and operating expenses are the main
factors affecting the level of cash generating interest from time to time. The variation in the interest rates
also has an impact on the interest income. The higher loss in 2022 was directly related to the increased
exploration activities at HPM during the year (2023 - $1,002,611 vs 2022 - $5,359,182 vs 2021 -
$2,164,074). The total assets in 2023, 2022 and 2021 included $1.8 million, $1.71 million and $1.79 million
in cash respectively.
7
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
SELECTED QUARTERLY RESULTS
Total Assets
Current Assets
Non-current Assets
Total Liabilities
Interest Income
Loss
Loss Per Share (1)
(i) Loss per share remains the same on a diluted basis
Fourth
Quarter 2023
$
2,352,012
2,217,467
134,545
198,233
11,045
643,435
0.00
Total Assets
Current Assets
Non-current Assets
Total Liabilities
Interest Income
Loss
Loss Per Share (1)
Fourth
Quarter 2022
$
2,761,244
2,577,467
183,777
431,158
18,791
782,667
0.00
Third
Quarter 2023
$
1,918,073
1,771,020
146,853
227,916
10,286
725,386
0.00
Third
Quarter 2022
$
5,147,487
4,999,079
148,408
2,247,213
34,236
3,484,165
0.02
Second
Quarter 2023
$
1,328,429
1,169,268
159,161
216,327
10,613
643,545
0.00
Second
Quarter 2022
$
7,741,981
7,643,354
98,627
1,644,959
7,010
1,277,497
0.00
First
Quarter 2023
$
2,027,924
1,856,455
171,469
273,366
15,594
576,617
0.00
First
Quarter 2022
$
3,435,443
3,325,327
110,116
232,085
1,966
557,687
0.01
Due to the nature of the business, the cash balance generating interest income is subject to fluctuations
from quarter to quarter. The timing of equity financing and ensuing exploration and operating expenses
are the main factors affecting the level of funds invested from time to time. The variation in interest rates
also has an impact on the interest income. In 2023 and 2022, the Company had $47,538 and 62,003 of
interest income mainly due to high interest rates.
In 2023, the Company raised an aggregate $2,537,008 via two private placements. Field exploration was
completed at HPM with prospecting and geophysics and in house historical data reviews were the focus
for BMK. In the first half of 2022, the Company raised $6,632,495 via a private placement ($5,353,589)
and the exercise of warrants ($1,278,906). During Q2/22 and Q3/22, the Company’s exploration at the
HPM project consisted of airborne geophysics, field reconnaissance and drilling and amounted to
$5,030,188.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2023, the Company had a cash of $1,823,972 and working capital (excluding flow-
through share premium liability) of $2,114,950 (2022 – $1,706,952 and $2,167,994, respectively). The
Company’s excess cash, when available, is deposited into interest-bearing accounts or invested in
redeemable GICs with major Canadian chartered banks.
As at December 31, 2023, the Company had amounts receivable and prepaid expenses totaling $393,495
which included sales tax receivable of $87,250, tax credits receivable of $188,118, prepaid expenses and
other receivables of $118,127.
During 2022, the Company acquired an accommodation building in Saskatchewan at a cost of $50,000 of
which $36,000 was payable in 12 monthly payments of $3,000 (from October 2022 to September 2023)
and a final lump sum of $14,000 on October 1, 2023. The purchase bore no interest and the final payment
of $14,000 was paid November 2, 2023 upon title transfer of the building.
8
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
During 2021, the Company purchased an exploration vehicle in the amount of $43,586. This amount was
financed via a loan bearing an annual interest rate of 7.89% and is repayable over 60 monthly payments
of $881. The balance payable at December 31, 2023 was $23,934.
The December 31, 2023, consolidated financial statements were prepared in accordance with accounting
principles applicable to a going concern, which assumes that the Company will be able to realize its assets
and discharge liabilities in the normal course of business. The Company’s ability to continue as a going
concern is always dependent on its ability to raise new funds to meet its obligations and continue its
exploration activities.
Equity Financing
The Company’s exploration projects are at an early stage and it has not yet been determined whether any
of its properties contain economically recoverable ore. As a result, the Company has no current sources
of revenue and has relied on the issuance of shares to generate the funds required to further its projects.
Private Placement
On July 26, 2023, the Company completed non-brokered private placement and issued 9,000,000 units at
a price of $0.06 per unit, 11,500,715 Quebec flow-through units at a price of $0.07 and 2,383,850 flow-
through units at a price of $0.065 for aggregate gross proceeds of $1.5 million.
Each unit, Quebec flow-through unit and flow-through unit was comprised of one common share of the
Company and one-half of a common share purchase warrant. Each whole warrant is exercisable to
acquire one additional common share at a price of $0.10 for a period of 24 months expiring July 26, 2025.
Finder’s fees totaling $57,005 were paid under the private placement and 636,994 finders’ warrants were
issued.
On December 28, 2023, the Company completed a non-brokered private placement and issued 9,040,000
units at a price of $0.05 per unit and 10,636,500 national flow-through units at a price of $0.055 for
aggregate gross proceeds of $1,037,008.
Each unit and national flow-through unit was comprised of one common share of the Company and one-
half of a common share purchase warrant. Each whole warrant is exercisable to acquire one additional
common share at a price of $0.08 for a period of 24 months expiring December 28, 2025.
Finder’s fees totaling $41,250 were paid under the private placement and 518,190 finders’ warrants were
issued. Each whole finders’ warrant is exercisable to acquire one additional common share at a price of
$0.055 for a period of 24 months expiring December 28, 2025.
Warrants
On April 15, 2023, 5,328,775 warrants exercisable at $0.18 expired unexercised. On December 30, 2023,
24,690,279 warrants exercisable at $0.18 also expired unexercised.
As part of the private placement closed on July 26, 2023, the Company issued 12,079,277 warrants
(including 636,994 finders’ warrants) at a price of $0.10 for a period of 24 months expiring July 26, 2025.
As part of the private placement closed on December 28, 2023, the Company issued 10,356,440 warrants
(including 518,190 finders’ warrants) expiring on December 28, 2025. The 9,838,250 warrants issued to
shareholders are exercisable at a price of $0.08 while the finders’ warrants are exercisable at a price of
$0.055. All warrants and finders’ warrants expire in 24 months on December 28, 2025.
Stock Options
On January 10, 2023, 710,000 stock options exercisable at $0.19 expired unexercised and on October 31,
2023, 400,000 stock options exercisable at $0.10 also expired.
9
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
On December 29, 2023, the Company granted 4,725,000 stock options exercisable at $0.05 for 5 years to
directors, officers, employees and consultants of the Company.
General
The Company’s ability to successfully acquire mineral projects or recover amounts expended on mineral
properties is conditional on its ability to secure financing when required. The Company expects to meet
additional financing requirements through equity financing. The Company may seek other alternatives for
financing in the future depending on market conditions and exploration results; however, there can be no
assurance that such financing attempts will be successful. The impact on our business and the cost and
availability of financing remains uncertain and could affect our overall liquidity.
Commitments and Obligations
Management Contracts
The Company entered into consulting and employment agreements for the services of its key executives.
Under the agreements, additional payments totalling $1,381,300 are be made upon the occurrence of a
change of control. As a triggering event has not taken place, the contingent payments have not been
reflected in the consolidated financial statements. The commitment upon termination of the agreements is
$380,650, in aggregate. The minimum commitment due within one year under the terms of the agreements
is $690,600, in aggregate.
Flow-Through Indemnification
As at December 31, 2023, the Company has to incur $776,069 in qualifying exploration expenditures by
December 31, 2024 to meet its flow-through commitments. At this time, management anticipates meeting
that obligation and as a result, no additional provisions are required.
The flow-through agreements require the Company to renounce certain tax deductions for Canadian
exploration expenditures incurred on the Company’s mineral properties to flow-through participants. The
Company indemnified the subscribers for any related tax amounts that become payable by the subscribers
as a result of the Company not meeting its expenditure commitments.
Environmental
The Company's mining and exploration activities are subject to various laws and regulations governing the
protection of the environment. These laws and regulations are continually changing and generally
becoming more restrictive. The Company believes its operations are materially in compliance with all
applicable laws and regulations. The Company has made, and expects to make in the future, expenditures
to comply with such laws and regulations.
Property Option Agreement
On April 28, 2021, the Company optioned certain claims forming the Barraute-Landrienne property
whereby Murchison can earn 100% in 75 mineral claims covering 2,377 hectares, by making payments
totaling $500,000 and property expenditures of $1.0 million over a 6-year period. On February 3, 2023,
the Company terminated the option agreement.
The Company has no long-term contractual obligations other than the loans payable as disclosed above.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
10
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
TRANSACTIONS WITH RELATED PARTIES
a)
Remuneration of directors and the officers was as follows:
Salaries and benefits
Share-based payments
2023
2022
$ 575,000
137,825
$ 544,723
355,305
$ 712,825
$ 900,028
For the year ended December 31, 2023, the salaries and benefits above include $187,500 (2022 -
$275,000) for fees invoiced by a corporation controlled by the CEO of the Company for his services as
CEO and also include $140,600 (2022 - $183,323) for fees invoiced by a corporation controlled by the
CFO of the Company for his services as CFO. Included in accounts payable and accrued liabilities at
December 31, 2023 is $10,500 (2022 - $nil) owed to the CFO and $nil (2022 - $13,325) owed to the CEO.
The amounts payable are unsecured, non-interest bearing and have no fixed terms of repayment.
b) Private Placements
As part of the private placement completed on December 28, 2023, a director of the Company acquired
8,500,000 common share units for gross proceeds of $425,000.
As part of the private placement completed on July 26, 2023, a director of the Company acquired 7,000,000
common share units for gross proceeds of $420,000.
As part of the private placement completed on June 30, 2022, a director of the Company acquired
7,944,444 common share units for gross proceeds of $715,000 and another director acquired 142,857
flow-through units for gross proceeds of $15,000.
c) Warrant Incentive Program
In January 2022, two directors exercised 4,187,500 warrants at a price of $0.12 for aggregate gross
proceeds of $502,500. Also, as part of the warrant exercise incentive program implemented on March 17,
2022, officers and directors of the Company exercised 9,436,550 warrants at a price of $0.12 for gross
proceeds of $1,132,386. As part of this incentive program, the Company issued 4,718,275 warrants to the
officers and directors exercisable at $0.18 until April 15, 2023. The fair value of these incentive warrants
was $75,492.
PROPOSED TRANSACTIONS
The Company continues to evaluate quality exploration projects and financing opportunities. There are no
transactions currently pending.
CHANGES IN ACCOUNTING POLICIES
New and future accounting policies
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods
commencing on or after January 1, 2023. Many are not applicable or do not have a significant impact to
the Company and have been excluded. The Company is currently assessing the impact of these standards
on the consolidated financial statements.
During the year ended December 31, 2023, the Company adopted IAS 1 – Presentation of Financial
Statements (“IAS 1”) (as amended in January 2020) to provide a more general approach to the
11
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.
The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a
company’s right to defer settlement at the reporting date. The right needs to be unconditional and must
have substance. The amendments also clarify that the transfer of a company’s own equity instruments is
regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the
definition of an equity instrument. The amendments were effective for annual periods beginning on January
1, 2024. The Company has adopted IAS 1 and it had no material impact on the Company’s financial
statements.
FINANCIAL INSTRUMENTS
Financial assets:
Amortized cost
Cash and cash equivalents
Financial liabilities:
Amortized cost
Accounts payable and accrued liabilities
Loans payable
2023
2022
$ 1,823,972
$ 1,706,952
$
91,929
23,934
$
357,895
73,263
As of December 31, 2023 and 2022, the fair value of all the Company's financial instruments approximates
the carrying value, due to their short-term nature, except as for the investment which is presented at fair
value.
Significant accounting judgments and estimates:
The preparation of consolidated financial statements in conformity with IFRS requires the Company’s
management to make judgments, estimates and assumptions about future events that affect the amounts
reported in the consolidated financial statements and related notes to the financial statements. Although
these estimates are based on management’s best knowledge of the amount, event or actions, actual
results may differ from those estimates.
The areas that require management to make significant judgments, estimates and assumptions in
determining carrying values include, but are not limited to the following:
•
•
Assets’ carrying values and impairment charges
In the determination of carrying values and impairment charges, management looks at the higher of
recoverable amount or fair value less costs to sell in the case of assets and at objective evidence,
significant or prolonged decline of fair value on financial assets indicating impairment. These
determinations and their individual assumptions require that management make a decision based
on the best available information at each reporting period.
Income and other taxes
Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income
tax is recognized in profit or loss except to the extent that it relates to items recognized directly in
equity, in which case it is recognized in equity.
Current tax expense is the expected tax payable on the taxable income for the period, using tax
rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with
regards to previous years.
Deferred tax is provided using the statement of financial position liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for financial reporting
12
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
•
•
purposes and the amounts used for taxation purposes. The following temporary differences are not
provided for: goodwill not deductible for tax purposes and the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on
the expected manner of realization or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the financial position reporting date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will
be available against which the asset can be utilized.
Share-based payments and warrants
Management determines costs
for share-based payments using market-based valuation
techniques. The fair value of the market-based and performance-based non-vested share awards
are determined at the date of grant using generally accepted valuation techniques. Assumptions
are made and judgments used in applying valuation techniques. These assumptions and judgments
include estimating the future volatility of the stock price, expected dividend yield, future employee
turnover rates and future employee stock option exercise behaviors and corporate performance.
Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect
the fair value estimates. The Company currently estimates the expected volatility of its common
shares based on historical volatility taking into consideration the expected life of the options and
warrants.
Tax credits receivable
The Tax credit receivable for resources for the current and prior periods are measured at the amount
expected to be recovered from the taxation authorities using the tax rates and tax laws that have
been enacted or substantively enacted at the statement of financial position date. Uncertainties exist
with respect to the interpretation of tax regulations, including the mining duties credit and the tax
credit for resources for which certain expenditures could be disallowed by the taxation authorities in
the calculation of credits, and the amount and timing of their collection. The calculation of the
Company’s mining duties credit and tax credit for resources necessarily involves a degree of
estimation and judgment in respect of certain items whose tax treatment cannot be finally
determined until a notice of assessments and payments has been received from the relevant
taxation authority. Differences arising between the actual results following the final resolution of
some of these items and the assumptions made. or future changes to such assumptions, could
necessitate adjustments to the mining duties credit and tax credit for resources and the exploration
and evaluation expenses in future periods.
Capital Management:
The Company manages its capital with the following objectives:
•
•
to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding
of future growth opportunities, and pursuit of accretive acquisitions and
to maximize shareholders return through enhancing the share value.
The Company monitors its capital structure and makes adjustments according to market conditions in an
effort to meet its objectives given the current outlook of the business and industry in general. The Company
may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital
spending, or disposing of assets. The capital structure is reviewed by Management and the Board of
Directors on an ongoing basis.
13
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
The Company considers its capital to consist of equity, comprising share capital, reserves and deficit. The
Company manages capital through its financial and operational forecasting processes. The Company
reviews its working capital and forecasts its future cash flows based on operating expenditures, and other
investing and financing activities. The forecast is regularly updated based on its exploration and
development activities. Selected information is regularly provided to the Board of Directors of the
Company. The Company’s capital management objectives, policies and processes have remained
unchanged during the years ended December 31, 2023 and 2022. The Company is not subject to any
capital requirements imposed by a regulator or lending institution.
ADDITIONAL INFORMATION
Outstanding Shareholders’ Equity Data
As of February 27, 2024, the following are outstanding:
•
•
•
Common Shares
Stock Options
Warrants
260,773,022
25,110,000
22,435,717
Uncertainties and Risk Factors
An investment in the securities of the Company is highly speculative and involves numerous and significant
risks. Such investment should be undertaken only by investors whose financial resources are sufficient to
enable them to assume these risks and who have no need for immediate liquidity in their investment.
Prospective investors should carefully consider the risk factors that have affected, and which in the future
are reasonably expected to affect, the Company and its financial position.
In addition to the risks outlined below, Murchison has identified the extreme volatility occurring in the
financial markets as a significant risk for the Company. As a result of the market turmoil, investors are
moving away from assets they perceive as risky to those they perceive as less so. Companies like
Murchison are considered risk assets and as mentioned above are highly speculative. The volatility in the
markets and investor sentiment may make it difficult for the Company to access the capital markets to
raise the funds required for its future expenditures.
The Innu Takuaikan Uashat mak Mani-utenam (ITUM) - the Innu Government of the Innu First Nation of
Uashat mak Mani-utenam, located near Sept-Îles, Québec have communicated to the Company that part
of Murchison’s HPM Nickel-Copper-Cobalt exploration is located on their traditional territory and they do
not welcome mining exploration on this part of their traditional territory. While Murchison legally acquired
all of its mineral claims comprising the HPM Project and has abided by all laws and regulations governing
exploration activities, the opposition from the ITUM may impact the Company’s ability to continue work
unencumbered by social acceptability factors at the HPM Project.
Exploration, Development and Operating Risks
Mining operations generally involve a high degree of risk. The Company’s operations are subject to all the
hazards and risks normally encountered in the exploration, development and production of gold, precious
metals and other minerals, including unusual and unexpected geologic formations, seismic activity, rock
bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which
could result in damage to, or destruction of, mines and other producing facilities, damage to life or property,
environmental damage and possible legal liability. Although adequate precautions to minimize risk will be
taken, milling operations are subject to hazards such as equipment failure or failure of retaining dams
around tailings disposal areas which may result in environmental pollution and consequent liability.
14
MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
The exploration for and development of mineral deposits involves significant risks which even a
combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of a
mineral-bearing structure may result in substantial rewards, few properties which are explored are
ultimately developed into producing mines.
Major expenses may be required to locate and establish mineral reserves, to develop metallurgical
processes and to construct mining and processing facilities at a particular site. It is impossible to ensure
that the exploration or development programs planned by The Company will result in a profitable
commercial mining operation. Whether a gold or other mineral deposit will be commercially viable depends
on a number of factors, some of which are: the particular attributes of the deposit, such as quantity and
quality of mineralization and proximity to infrastructure; mineral prices which are highly cyclical; and
government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals and environmental protection. The exact effect of these factors cannot
be accurately predicted, but the combination of these factors may result in The Company not receiving an
adequate return on invested capital.
There is no certainty that the expenditures made by the Company towards the search and evaluation of
gold or other minerals will result in discoveries of commercial quantities of gold or other minerals.
Country Risk
The Company may conduct business in jurisdictions and some countries in which the title to its properties
may be uncertain or where access to infrastructure, or political stability, or security, among other things,
may be unknown, or known, and prevent, or severely compromise, the Company from carrying out
business. It may be that the Company accepts some or all of these risks, to the extent that they can be
determined at all, in favour of acquiring properties with exceptional exploration and development potential,
and may ultimately be prevented from exploring and developing those properties for any number of
reasons which may, or may not, be predictable, foreseeable, or manageable.
Current Economic Conditions
There are significant uncertainties regarding the price of precious metals and other minerals and the
availability of equity financing for the purposes of mineral exploration and development. The prices of
precious metals and other minerals have fluctuated substantially over the past several years. The
Company’s future performance is largely tied to the development of its current mineral properties and the
overall financial markets. Current financial markets are likely to be volatile for the remainder of the calendar
year, reflecting ongoing concerns about the stability of the global economy and global growth prospects.
As well, concern about global growth has led to sustained drops in the commodity markets for commodities
other than gold. As a result, the Company may have difficulties raising equity financing for the purposes
of mineral exploration and development, particularly without excessively diluting present shareholders of
the Company. These economic trends may limit the Company’s ability to develop and/or further explore
its mineral property interests.
Limited Operating History
The Company has a limited history of operations, is in the early stage of exploration and must be
considered a start-up company. As such, the Company is subject to many risks common to such
enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial
and other resources and lack of revenues. It is common in new mining operations to experience
unexpected problems and delays. In addition, delays in the commencement of mineral production often
occur. There is no assurance that the Company will be successful in achieving a return on shareholders’
investment or successfully establish mining operations and the likelihood of success must be considered
in light of its early stage of operations.
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MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
Reliability of Resource Estimates
There is no certainty that any mineral resources identified in the future on any of the Company’s properties
will be realized. Until a deposit is actually mined and processed the quantity of mineral resources and
grades must be considered as estimates only. In addition, the quantity of mineral resources may vary
depending on, among other things, metal prices. Any material change in quantity of mineral resources,
grade or stripping ratio may affect the economic viability of any project undertaken by the Company. In
addition, there can be no assurance that gold recoveries or other metal recoveries in small-scale laboratory
tests will be duplicated in a larger scale test under on-site conditions or during production.
Fluctuations in gold and other base or precious metals prices, results of drilling, metallurgical testing and
production and the evaluation of studies, reports and plans subsequent to the date of any estimate may
require revision of such estimate. Any material reductions in estimates of mineral resources could have a
material adverse effect on the Company’s results of operations and financial condition from time to time.
Insurance and Uninsured Risks
The Company’s business is subject to a number of risks and hazards generally, including adverse
environmental conditions, industrial accidents, labour disputes, unusual or unexpected geological
conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural
phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result
in damage to mineral properties or production facilities, personal injury or death, environmental damage
to The Company’s properties or the properties of others, delays in mining, monetary losses and possible
legal liability.
Although the Company may in the future maintain insurance to protect against certain risks in such
amounts as it considers to be reasonable, its insurance will not cover all the potential risks associated with
a mining company’s operations. The Company may also be unable to maintain insurance to cover these
risks at economically feasible premiums. Insurance coverage may not continue to be available or may not
be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental
pollution or other hazards as a result of exploration and production is not generally available to the
Company or to other companies in the mining industry on acceptable terms. The Company might also
become subject to liability for pollution or other hazards which may not be insured against or which the
Company may elect not to insure against because of premium costs or other reasons. Losses from these
events may cause the Company to incur significant costs that could have a material adverse effect upon
its financial performance and results of operations.
Environmental Risks and Hazards
All phases of the Company’s operations are subject to environmental regulation in the jurisdictions in which
it operates. These regulations mandate, among other things, the maintenance of air and water quality
standards and land reclamation. They also set forth limitations on the generation, transportation, storage
and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will
require stricter standards and enforcement, increased fines and penalties for non-compliance, more
stringent environmental assessments of proposed projects and a heightened degree of responsibility for
companies and their officers, directors and employees. There is no assurance that future changes in
environmental regulation, if any, will not adversely affect the Company’s operations. 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.
Government approvals and permits are currently and may in the future be required in connection with the
Company’s operations. To the extent such approvals are required and not obtained, the Company may be
curtailed or prohibited from continuing its exploration or mining operations or from proceeding with planned
exploration or development of mineral properties.
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MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement
actions thereunder, 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 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.
Amendments to current laws, regulations and permits governing operations and activities of mining and
exploration companies, or more stringent implementation thereof, could have a material adverse impact
on the Company and cause increases in exploration expenses, capital expenditures or production costs
or reduction in levels of production at producing properties or require abandonment or delays in
development of new mining properties.
Infrastructure
Mining, processing, development and exploration activities depend, to one degree or another, on adequate
infrastructure. Reliable roads, bridges, power sources and water supply are important determinants, which
affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or
other interference in the maintenance or provision of such infrastructure could adversely affect the
Company’s operations, financial condition and results of operations.
Land Title
No assurances can be given that there are no title defects affecting property or any other property interests
of the Company. Title insurance generally is not available, and the Company’s ability to ensure that it has
obtained secure claim to individual mineral properties or mining concessions may be severely constrained.
Furthermore, the Company has not conducted surveys of the claims in which it holds an interest and,
therefore, the precise area and location of such claims may be in doubt. Accordingly, the Company’s
mineral properties may be subject to prior unregistered liens, agreements, transfers or claims, including
native land claims, and title may be affected by, among other things, undetected defects. In addition, the
Company may be unable to operate its properties as permitted or to enforce its rights with respect to its
properties.
Competition
The mining industry is competitive in all of its phases. The Company faces strong competition from other
mining companies in connection with the acquisition of properties producing, or capable of producing,
precious and base metals. Many of these companies have greater financial resources, operational
experience and technical capabilities than the Company. As a result of this competition, the Company may
be unable to maintain or acquire additional attractive mining properties on terms it considers acceptable
or at all. Consequently, the Company’s revenues, operations and financial condition could be materially
adversely affected.
Additional Capital
The development and exploration of the Company’s properties will require substantial additional financing.
Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration,
development or production on any or all of the Company’s properties or even a loss of property interest.
The primary source of funding available to the Company consists of equity financing. There can be no
assurance that additional capital or other types of financing will be available if needed or that, if available,
the terms of such financing will be favourable to the Company.
Commodity Prices
The price of the Company’s common shares, the Company’s financial results and exploration,
development and mineral development activities may in the future be significantly adversely affected by
declines in the price of precious metals or other minerals. The price of precious metals and other minerals
fluctuates widely and is affected by numerous factors beyond the Company’s control such as the sale or
purchase of commodities by various central banks and financial institutions, interest rates, exchange rates,
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MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and
regional supply and demand, the political and economic conditions of major mineral-producing countries
throughout the world, and the cost of substitutes, inventory levels and carrying charges. Future serious
price declines in the market value of precious metals or other minerals could cause continued development
of and commercial production from the Company’s properties to be impracticable. Depending on the price
of precious metals and other minerals, cash flow from mining operations may not be sufficient and the
Company could be forced to discontinue production and may lose its interest in, or may be forced to sell,
some of its properties. Future production from the Company’s mineral exploration properties is dependent
upon the prices of precious metals and other minerals being adequate to make these properties economic.
In addition to adversely affecting the Company’s future resource or reserve estimates, if any, and its
financial condition, declining commodity prices can impact operations by requiring a reassessment of the
feasibility of a particular project. Such a reassessment may be the result of a management decision or may
be required under financing arrangements related to a particular project. Even if the project is ultimately
determined to be economically viable, the need to conduct such a reassessment may cause substantial
delays or may interrupt operations until the reassessment can be completed.
Government Regulation
The development and mineral exploration activities of the Company are subject to various laws governing
prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic
substances, land use, water use, land claims of local people and other matters. In addition, no assurance
can be given that new rules and regulations will not be enacted or that existing rules and regulations will
not otherwise be applied in a manner which could limit or curtail production or development in any of the
jurisdictions in which the Company operates. Amendments to other current laws and regulations governing
mineral exploration and development or more stringent implementation thereof could also have a
substantial adverse impact on the Company.
Dividend Policy
No dividends on the common shares have been paid by the Company to date. Payment of any future
dividends will be at the discretion of the Company’s board of directors after taking into account many
factors, including the Company’s operating results, financial condition and current and anticipated cash
needs.
Dilution to the Company Common Shares
As of February 27, 2024, the Company had 260,773,022 common shares and 47,545,717 convertible
securities issued and outstanding. The increase in the number of securities issued and outstanding and
the possibility of sales of such shares may have a depressive effect on the price of the common shares.
In addition, as a result of such additional securities, the voting power of the existing shareholders in the
Company will be diluted.
Key Executives
The Company is dependent on the services of key executives, including the directors of Murchison and a
small number of highly skilled and experienced executives and personnel. Due to the relatively small size
of the Company, the loss of these persons or the Company’s inability to attract and retain additional highly
skilled employees may adversely affect its business and future operations.
Conflicts of Interest
Certain directors and officers of the Company also serve as directors and/or officers of other companies
involved in natural resource exploration and development and consequently there exists the possibility for
such directors and officers to be in a position of conflict. Any decision made by any of such directors and
officers involving Murchison should be made in accordance with their duties and obligations to deal fairly
and in good faith with a view to the best interests of Murchison and its shareholders. In addition, each of
the directors is required to declare and refrain from voting on any matter in which such directors may have
a conflict of interest in accordance with the procedures set forth in the Canada Business Corporations Act
and other applicable laws.
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MURCHISON MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2023
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements based on the Company’s current expectations.
Forward-looking information can often be identified by forward looking words such as “anticipate”,
“believe”, “expect”, “goal”, “plan”, “intend”, “estimate” or similar words suggesting future outcomes, or other
expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or
performance.
These forward-looking statements are subject to risks, uncertainties and other factors that could cause
actual results to differ materially from those presented in this document. Accordingly, the Company
undertakes no obligation to update forward-looking statements if circumstances or management’s
estimates or opinions should change, unless required by law. Readers are cautioned not to place undue
reliance on forward-looking information.
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