2023 YEAR END REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
AND
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
(AUDITED)
NGEX MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2023
(Amounts in Canadian Dollars unless otherwise indicated)
The following management’s discussion and analysis (“MD&A”) of NGEx Minerals Ltd. (“NGEx Minerals” or the
“Company”) should be read in conjunction with the consolidated financial statements for the year ended December
31, 2023 and related notes therein. The financial information in this MD&A is reported in Canadian dollars unless
otherwise indicated and is derived from the Company’s annual consolidated financial statements prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board (“IFRS Accounting Standards”). The effective date of this MD&A is March 22, 2024. Additional information
about the Company and its business activities is available on SEDAR+ at www.sedarplus.ca and the Company’s website
www.ngexminerals.com.
Some of the statements in this MD&A are forward-looking statements that are subject to risk factors set out in the
cautionary note contained herein.
CORE BUSINESS
NGEx Minerals is a mineral exploration company with copper-gold and gold exploration projects in Argentina and Chile.
The Company’s strategy is to create value for its shareholders through prudent management and deployment of its
capital resources, by expanding and increasing the quality of its mineral resources through successful exploration and
acquisitions, and by advancing engineering and other studies that are required to prepare its projects for eventual
development by the Company, in collaboration with its partners, as applicable, or by third parties. The overall objective
is to position the Company as a top tier mineral exploration-development investment opportunity.
The Company has a strong management team and board with extensive experience in the resource sector, particularly
in Chile and Argentina. The board and management team have an appropriate mix of geological, engineering, financial,
and business skills to advance the Company’s projects and to generate value for its shareholders.
The Company’s most advanced asset is its Los Helados copper-gold deposit, located in Region III of Chile (“Los
Helados”, the “Los Helados Property” or the “Los Helados Project”). The Company is the majority (approximately 69%)
partner and operator of the Los Helados Project, which is subject to a Joint Exploration Agreement (the “JEA”) with
its partner (approximately 31%), Nippon Caserones Resources LLC (“NCR”). NCR is a subsidiary of JX Nippon Mining
and Metals Corporation, a Tokyo-based mining and smelting company that also has an indirect 49% ownership interest
in the Caserones Mine, located approximately 17km from Los Helados. The remaining 51% controlling interest in the
Caserones Mine is held by Lundin Mining Corporation.
The Company recently updated its estimated Mineral Resources for the Los Helados Project, with an effective date of
October 31, 2023, which is summarized in the following table. The Company’s Mineral Resources as reported in this
MD&A have been prepared in accordance with the CIM Definition Standards that are incorporated by reference in NI
43-101. In this MD&A, Mineral Resources may be referred to interchangeably as “Mineral Resource Estimates” or
“Mineral Resource Estimations”.
1
Los Helados Mineral Resources (0.33% CuEq Cutoff)
Tonnage
Resource Grade
Contained Metal
Class
(billion
tonnes)
Indicated
Inferred
2.08
1.08
Cu
(%)
0.40
0.34
Au
(g/t)
Ag
(g/t)
CuEq
(%)
0.15
0.10
1.5
1.5
0.51
0.42
Cu
(billion
lbs)
18.4
8.2
Au
(million
oz)
10.2
3.6
Ag
(million
oz)
97.5
50.2
The key assumptions, parameters, and methods used to develop these Mineral Resource Estimates are contained in
the 43-101 technical report entitled “Technical Report on the Los Helados and Lunahuasi Projects, Chile and Argentina”,
dated December 13, 2023 (the “Technical Report”), prepared by Luke Evans, M.Sc., P.Eng., SLR Consulting (Canada)
Ltd., and Giovanni Di-Prisco, Ph.D., P.Geo., Terra Mineralogical Services lnc. This report is available on the Company’s
website at www.ngexminerals.com or under the Company’s profile at www.sedarplus.ca.
In addition, the Company owns a 100% interest in the Lunahuasi project, a high-grade copper-gold-silver discovery
located in San Juan Province, Argentina (“Lunahuasi” or the “Lunahuasi Project”). Lunahuasi is an exploration project
located in the emerging Vicuña District, which hosts several sizeable copper-gold deposits, such as the Caserones
Mine, the Josemaria deposit, the Filo del Sol deposit, and the Company’s Los Helados Project. Lunahuasi lies along
the same major north-northeast structural trend that controls the Filo del Sol deposit located approximately 6 km to
the south and Los Helados located approximately 9 km to the north. The maiden drill campaign completed at Lunahuasi
during the first half of 2023 resulted in the discovery of a significant new zone of high-grade copper, gold and silver
mineralization, which includes some of the highest copper grades drilled to date in the Vicuña District and intersected
globally in recent years. This mineralization is interpreted to be indicative of a nearby porphyry copper-gold system
and following up on these initial findings will be a focus for the Company moving forward.
The Company’s common shares traded on the TSX Venture Exchange under the symbol "NGEX" until February 21,
2024, at which point they were voluntarily delisted in order for the Company’s common shares to trade on the Toronto
Stock Exchange under the same symbol effective February 22, 2024. In addition, the Company’s common shares
began trading on the OTCQX under the symbol “NGXXF” on March 8, 2024.
2023 OPERATING HIGHLIGHTS AND OUTLOOK
Maiden Drill Campaign at Lunahuasi Makes Newest Vicuña District Discovery; 2023-2024 Follow-up
Program Delivers Continued Success
In early 2023, the Company launched and completed its maiden drill program at the Lunahuasi Project (the “Maiden
Lunahuasi Program”), which successfully identified a major new high-grade copper-gold-silver discovery in the
emerging Vicuña metals district. The Maiden Lunahuasi Program, which ran from January to May, completed a total
of 4,912 metres of diamond drilling and discovered a series of quartz-sulphide veins carrying high values of copper,
gold and silver, which is currently interpreted to be the outer halo of a yet to be discovered porphyry copper centre
expected to occur in close proximity.
A total of eight holes were completed during the Maiden Lunahuasi Program, comprised of two holes from the plateau
situated at the upper part of the system (DPDH001 and DPDH003) and six in the valley (DPDH002, DPDH004,
DPDH005, DPDH006, DPDH007, DPDH008), which is approximately 750 meters below the plateau. All six of the holes
completed in the valley returned multiple high-grade vein intersections, highlighted by:
DPDH002, which returned 60.0m at 7.52% copper equivalent (“CuEq”) from 212.0 metres and 10.0m at
7.08% CuEq from 574.0 metres;
DPDH005, which returned 33.4m at 3.50% CuEq from 636.0 metres; and
2
DPDH007, which returned 90.0m at 4.05% CuEq from 74.0 metres and 20.8m at 8.08% CuEq from 439.2
metres.
Following the discovery of high-grade vein mineralization at Lunahuasi in its first ever drill campaign at the project,
the Company promptly initiated a follow-up program for the 2023-2024 exploration season, which began in mid-
October 2023 (the “2023-2024 Lunahuasi Program”) with two drill rigs. The 2023-2024 Lunahuasi Program has initially
focused on defining and expanding the zone of high-grade mineralization intersected during the Maiden Lunahuasi
Program.
The 2023-2024 Lunahuasi Program has now operated with four diamond rigs since mid-November 2023, and to date
complete assay results for four holes of the current season have been received, analyzed and released by the Company.
These initial results have confirmed the presence of a significant mineralized system at Lunahuasi and have begun to
delineate its size, with the continued intersection of long, bonanza-grade intervals in and around the initial discovery
hole. The initial results are highlighted by:
DPDH009, which returned 128.3m at 4.01% CuEq from 144.0 metres, including 62.0m at 6.98% CuEq from
144.0 metres, which in itself included 26.1m at 13.36% CuEq from 168.9 metres;
DPDH010, which returned 102.0m at 4.56% CuEq from 192.0m, including 62.6m at 5.84% CuEq from 226.0
metres, which in itself included 9.4m at 12.10% CuEq from 232.0 metres; and
DPDH014, which returned 184.2m at 4.61% CuEq from 166.0m, including 71.9m at 9.63% CuEq from 171.2
metres, which in itself included 23.0m at 23.02% CuEq from 220.0 metres.
Composited intervals from all disclosed Lunahuasi holes up to the date of this MD&A can be found in the Company’s
most recent annual information form (“AIF”), as filed on SEDAR+ at www.sedarplus.ca.
The Company’s current interpretation is that the veins and the surrounding alteration zone were created by one or
more porphyry copper-gold systems. The grades and thickness of the mineralization observed within drill holes
completed at Lunahuasi are positive indicators of the strength and potential of the system that is the source of these
high-grade structures.
The 2023-2024 Lunahuasi Program is currently planned to continue with four diamond rigs through to its conclusion
in the second quarter of 2024, targeting the completion of approximately 15,000 metres of drilling for the season.
Assay results from the ongoing drilling will be released once received and analyzed by the Company.
Expansion of Los Helados High-grade Zones
In May 2023, the Company concluded its 2022-2023 field and drill campaign at Los Helados (the “Los Helados
Program”), located in Region III, Chile, which commenced in November 2022 to further define the geometry and size
of the Fenix and Alicanto Zones, high-grade hydrothermal breccias that were identified at the project in early 2022.
These zones are distinct from, and in addition to, the high-grade Condor Zone at the core of the deposit, around which
the Los Helados Mineral Resource is centered. The Los Helados Program completed a total of 10,450 metres of diamond
drilling in 11 holes, and successfully extended the Fenix and Alicanto Zones.
Of particular note, holes completed in the Fenix Zone have returned some of the highest grades ever encountered at
Los Helados. Namely, LHDH081-2 intersected 343.8m at 0.90% CuEq, including 63.8m at 1.25% CuEq, LHDH081-3
intersected 234.0m at 0.90% CuEq, including 28.0m at 1.49% CuEq, and LHDH084 intersected 390.0m at 1.13%
CuEq. Intersections from the recently drilled holes in the Fenix and Alicanto Zones have also returned notable
molybdenum (Mo) grades, which significantly exceed the averages observed at the deposit to date. Composited drill
hole intervals from the Los Helados Program can be found in the Company’s most recent AIF, as filed on SEDAR+ at
www.sedarplus.ca.
3
The results from the recent Los Helados Program, along with assays from the immediately preceding program
undertaken during 2022, were ultimately incorporated into an update to the Mineral Resource Estimate for the project,
as discussed in the following section. Within the update to the Los Helados Mineral Resource Estimates, the Company
successfully converted the recently discovered Fenix and Alicanto Zones from exploration potential to Indicated and
Inferred Resources, which illustrates the positive accretive impact that new satellite zone discoveries may yield on the
Los Helados Mineral Resource.
With respect to the potential for additional satellite zone discoveries at Los Helados, the Company completed a
comprehensive targeting exercise, which used detailed geophysical survey data collected and geological mapping
completed during the Los Helados Program, and generated a number of new drill-ready targets with signatures similar
to those associated with the Condor, Fenix, and Alicanto Zones. However, with substantial exploration work now
underway at the Lunahuasi Project, the Company has decided to defer further exploration at Los Helados in order to
focus its field personnel and resources at Lunahuasi at this time.
Substantial Improvement to Los Helados Mineral Resource Achieved by Recent Years’ Drilling
In December 2023, the Company completed the Technical Report, which included an update to the Mineral Resource
Estimates for Los Helados (the “2023 MRE”). The 2023 MRE, with an effective date of October 31, 2023, is summarized
in the resource table provided in the “Core Business” section above. Relative to the previous Mineral Resource
Estimates from 2019 (the “2019 MRE”) the update has resulted in notable improvements to grades, contained metal
and overall tonnage. Highlighted changes are summarized in the following table:
2019 MRE
2023 MRE
2023 MRE
vs.
2019 MRE
Unit
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Tonnage
Grade
Metal
Content
Billion
Tonnes
Cu
(%)
Au
(g/t)
Ag
(g/t)
CuEq
(%)
Cu
(million lbs)
Au
(million oz)
Ag
(million oz)
2.10
0.83
2.08
1.08
-1%
+30%
0.38
0.32
0.40
0.34
+6%
+7%
0.15
0.10
0.15
0.10
+2%
+4%
1.37
1.32
1.46
1.45
+6%
+10%
0.481
0.391
0.51
0.42
+7%
+8%
17,600
5,800
18,426
8,152
+5%
+41%
10.1
2.7
10.2
3.6
+1%
+33%
92.5
35.1
97.5
50.2
+5%
+43%
1 Copper equivalent for the comparative 2019 MRE was based on $3.00/lb copper, $1,300/oz gold and $23/oz silver,
and includes a provision for selling costs and metallurgical recoveries corresponding to three zones defined by depth
below surface. The formulas used were: CuEq % = Cu % + 0.6264*Au (g/t) + 0.0047*Ag (g/t) for the Upper Zone
(surface to ~250m); Cu % + 0.6366*Au (g/t) + 0.0077*Ag (g/t) for the Intermediate Zone (~250m to ~600m); Cu%
+ 0.6337*Au (g/t) + 0.0096*Ag (g/t) for the Deep Zone (>~600m). The key assumptions, parameters, and methods
used in determining the 2019 MRE are contained in the 43-101 technical report for the Los Helados Project, entitled
“Technical Report on the Los Helados Porphyry Copper-Gold Deposit, Chile”, dated August 6, 2019 and authored by F.
Devine, P.Geo., G. Zandonai, RMCMC, and G. Di Prisco, P.Geo. This report is available under the Company’s profile at
www.sedarplus.ca.
4
2 Copper equivalent for the 2023 MRE was based on $3.90/lb copper, $1,800/oz gold and $20/oz silver, and includes a
provision for selling costs and metallurgical recoveries corresponding to three zones defined by depth below surface.
The formulas used were: CuEq % = Cu % + 0.681008*Au (g/t) + 0.002989*Ag (g/t) for the Upper Zone (surface to
~250m); Cu % + 0.692039*Au (g/t) + 0.004877*Ag (g/t) for the Intermediate Zone (~250m to ~600m); Cu% +
0.688852*Au (g/t) + 0.006068*Ag (g/t) for the Deep Zone (>~600m). The key assumptions, parameters, and methods
used in determining the 2023 MRE are contained in the Technical Report, which is available on the Company’s website
at www.ngexminerals.com or under the Company’s profile at www.sedarplus.ca.
In addition to these substantial improvements, the 2023 MRE also now includes 510 million tonnes grading 0.72%
CuEq within the Indicated Resource category at a 0.6% CuEq cut-off. Another insight gained from the 2023 MRE was
that the Inferred Resource related to the Fenix Zone could be converted into an Indicated Resource with relatively
minimal additional drilling, which is an opportunity to further improve the quality of the Mineral Resources at Los
Helados in a cost-effective manner.
Although the Company has no current plans to undertake significant exploration work at Los Helados at this time as
substantially all its resources are diverted to the Lunahuasi Project, it continues to review and analyze the unique value
proposition presented by the Los Helados Project within the broader landscape of the Vicuña District. Namely, Los
Helados is the most advanced exploration project in the district, and hosts a robust Mineral Resource Estimate with
grades exceeding those of nearby development and operating projects. The Company will continue its analysis of Los
Helados with the objective of optimizing the value realized for its shareholders.
2023 CORPORATE HIGHLIGHTS
Changes to the Board of Directors and Executive Management Team
At the Annual General and Special Meeting of Shareholders on June 27, 2023, Mr. Alessandro Bitelli was elected to the
Company’s Board of Directors, in replacement of Mr. David Mullen, who did not stand for re-election.
Mr. Bitelli brings extensive expertise to the Board as a Chartered Professional Accountant of British Columbia, with a
career spanning over 40 years in the mining industry and public accounting. Throughout his career, Mr. Bitelli held the
position of Chief Financial Officer ("CFO") in multiple public companies and has been an integral part of the senior
management teams of various Lundin Group of Companies from 2007 to 2023, most recently, serving as CFO of Lundin
Gold Inc. from 2016 to 2023. Additionally, and most notably, Mr. Bitelli served as CFO for Red Back Mining Inc., a gold
mining company with operations in Africa, from 2007 to 2010, which was acquired by Kinross for $9.2 billion in 2010.
Mr. Bitelli also serves as a non-executive director on three other publicly listed companies.
In addition, on September 5, 2023, the Company’s Board of Directors appointed Mr. Brent Bonney as Vice President,
Corporate Development & Investor Relations.
Mr. Bonney was previously the Vice President of Corporate Development for Maverix Metals Inc. ("Maverix"), a
precious-metals focused royalty company that was acquired by Triple Flag Precious Metals Corp. in 2023. Prior to
Maverix, Mr. Bonney was a member of the investment banking group with Scotiabank Global Banking and Markets for
10 years, specializing in mergers and acquisitions, asset divestitures, strategic investments, and equity and debt
financing, particularly in the metals and mining sector. Mr. Bonney holds a Bachelor of Commerce (Honours) in Finance
from the University of British Columbia.
Private Placement
On August 11, 2023, the Company closed a non-brokered private placement, pursuant to which the Company sold an
aggregate of 13,178,460 common shares at a price of $6.50 per common share, generating aggregate gross proceeds
of $85.7 million (the “Financing”). Share issuance costs related to the Financing totaled $2.4 million, and included
professional fees, regulatory fees, and 5% finders’ fees payable in cash on approximately $20.6 million of the gross
proceeds from the Financing.
5
As part of the Financing, Nemesia S.à.r.l. (“Nemesia”) purchased 4,307,692 common shares pursuant to the terms
outlined above, for gross proceeds of $28.0 million. Nemesia, Zebra Holdings and Investments S.à.r.l (“Zebra”) and
Lorito Holdings S.à.r.l. (“Lorito”) are companies controlled by a trust settled by the late Adolf H. Lundin, and report
their respective security holdings in the Company as joint actors, as the term is defined by Canadian securities
regulations, and are related parties by virtue of their combined shareholding in the Company in excess of 20%.
In addition, as part of the Financing, directors of the Company purchased a total of 465,000 common shares pursuant
to the terms outlined above, for gross proceeds of $3.0 million.
The common shares issued under the Financing were subject to a hold period, which expired on December 12, 2023.
The Company anticipates that it will deploy the majority of its treasury and capital resources, including the net proceeds
resulting from the Financing, towards furthering exploration programs in Chile and Argentina, as well as for general
corporate and working capital purposes.
RESULTS FROM OPERATIONS
Year Ended
Net loss ($000’s)
Loss per share, basic and diluted ($)
Total assets ($000’s)
Dec-23
Dec-22
Dec-21
37,718
0.21
81,293
32,415
0.20
32,312
5,457
0.04
25,733
NGEx Minerals is a junior exploration company and, as such, its net losses are largely driven by its exploration and
project investigation activities and there is no expectation of generating operating profits until it identifies and develops
a commercially viable mineral deposit.
Key financial results for the last eight quarters are provided in the table below.
Three Months Ended
Dec-23
Sep-23
Jun-23
Mar-23
Dec-22
Sep-22
Jun-22
Mar-22
Exploration costs ($000's)
9,795
4,469
10,898
15,122
6,038
4,539
9,765
8,582
Operating loss ($000’s)
11,714
8,675
12,116
16,483
8,384
6,243
10,497
9,296
Net loss ($000’s)
8,614
4,218
9,719
15,167
8,020
6,068
9,651
8,676
Net loss per share, basic and
diluted ($)
0.04
0.02
0.06
0.09
0.04
0.04
0.06
0.06
NGEx Minerals incurred a net loss of $37.7 million for the year ended December 31, 2023 (2022: $32.4 million),
including an operating loss of $49.0 million (2022: $34.4 million). As a result of the Company’s accounting policy
to expense its exploration costs through the consolidated statement of comprehensive loss, except for mineral
property option payments and mineral property acquisition costs, exploration and project investigation costs are
the most significant expenditure category of the Company and for the year ended December 31, 2023, accounted
for approximately 82% of the operating loss (2022: 84%). Due to the geographic location of the Company’s
mineral properties, the Company’s business activities generally fluctuate with the seasons, through increased
exploration activities during the summer months in South America. As a result, a general recurring trend is the
increase in exploration expenditures, and therefore net losses, for the fourth quarter and first quarter of a fiscal
year, relative to the second and third quarters. In addition, other relevant factors, such as the financial position
of the Company, other corporate initiatives, as well as the type and scope of planned exploration or project work,
could affect the level of exploration activities and net loss in a particular period.
6
Exploration and project investigation costs for the year ended December 31, 2023, were $40.3 million (2022:
$28.9 million). The increase for the year ended December 31, 2023, is due primarily to the significant drill
campaigns undertaken at Los Helados and Lunahuasi during the year, namely the Los Helados Program, the
Maiden Lunahuasi Program, and the 2023-2024 Lunahuasi Program, as discussed in the “2023 Operating Highlights
and Outlook” section above. By comparison, for the year ended December 31, 2022, the Company was also active
at Los Helados and Lunahuasi, however the nature and scope of the work undertaken was relatively less extensive,
resulting in lower exploration and project investigation costs. Namely, at Los Helados, the Company completed a
small drill program in the first half of 2022 and launched the Los Helados Program in November 2022, and at
Lunahuasi the Company completed preparations in advance of the planned start to the Maiden Lunahuasi Program
in early 2023. However, the combined scope of these 2022 initiatives was significantly less than the extensive
drilling and field work that was completed at both Los Helados and Lunahuasi during the year ended December
31, 2023. While the Company also undertook drilling at its Valle Ancho properties in the Province of Catamarca,
Argentina, during the year ended December 31, 2022, this was only a relatively small reconnaissance program.
Excluding share-based compensation, administration costs for the year ended December 31, 2023 totaled $5.1
million (2022: $3.1 million). Share-based compensation, a non-cash cost, reflects the amortization of the estimated
fair value of options over their vesting period and is based to a large degree on the Company’s share price and its
volatility. The actual future value to the option holders may differ materially from these estimates as it depends
on the trading price of the Company’s shares if and when the options are exercised. In addition, as the granting
of options and their vesting is at the discretion of the Board, the related expense is unlikely to be uniform across
quarters or financial years.
Administration costs, exclusive of share-based compensation costs, for the year ended December 31, 2023, were
significantly higher than the 2022 comparative year primarily due to higher compensation costs. For the year
ended December 31, 2023, the Company granted short-term incentive awards to certain employees and officers,
and the Company also had a higher average personnel headcount and base compensation levels, to provide
incremental resources and support in response to the Company’s recent growth. In addition, professional fees for
the year ended December 31, 2023, were higher due to increased legal and financial consultation incurred to
explore strategic options with respect to potential transactions and financing. Lastly, for the year ended December
31, 2023, the Company also incurred higher office and general administration costs due to a greater focus on
improving information technology (IT) security, as well as the impact of the Company’s share price appreciation
during 2022, which has resulted in higher annual stock exchange and regulatory fees in 2023.
The Company recognized a net monetary gain of $637,663 during the year ended December 31, 2023 (2022:
$54,798), in relation to the application of hyperinflationary accounting for the Company’s Argentine subsidiaries.
The monetary gain recognized is the result of changes in the Argentine price indices and changes to the net
monetary position of the Company’s Argentine operating subsidiaries during the year. Further discussion regarding
the application of hyperinflationary accounting has been provided in the notes to the consolidated financial
statements.
From time to time, the Company acquires and transfers marketable securities as a mechanism to facilitate
intragroup funding transfers between its Canadian parent and its Argentine operating subsidiaries. During the year
ended December 31, 2023, the Company recognized a gain of $9.0 million (2022: $2.0 million) on the use of
marketable securities for this purpose, which represents the net benefit of having used this funding mechanism
over traditional methods. The increase in the gain is predominantly the result of more funding provided to its
Argentine subsidiaries during the year ended December 31, 2023, relative to 2022.
No tax recovery is recognized as a result of the nature of the Company’s activities and the lack of reasonably
expected taxable profits in the near term.
7
In other comprehensive loss, the Company reported a foreign currency translation loss of $929,853 for the year
ended December 31, 2023 (2022: gain of $310,220) on translation of subsidiary company accounts from their
functional currency to the Canadian dollar presentation currency. For the year ended December 31, 2023, the gain
is primarily the result of fluctuations of the Canadian dollar relative to the Chilean peso over the year. In addition,
for the year ended December 31, 2023, the impacts of hyperinflation amounted a loss of $1,318,175 (2022:
84,302), which consists of adjustments recognized on the continuing inflation of opening non-monetary balances
during the year and the ongoing translation of the Company’s Argentine subsidiary into the Canadian dollar
presentation currency. The increase in the loss during 2023 is primarily due to the significant devaluation of the
Argentine peso relative to the Canadian dollar during the year.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2023, the Company had cash of $59.5 million and net working capital of $69.7 million compared
to cash of $23.2 million and net working capital of $20.2 million as at December 31, 2022. The Company’s cash and
net working capital increased during the year ended December 31, 2023, due primarily to net proceeds received from
the Financing, as discussed in the “2023 Corporate Highlights” section above, and to $1,527,892 in gross proceeds
received pursuant to the exercise of stock options (2022: $495,847). The cash inflows have been partially offset by
$15.0 million used for the purchase of short-term investments and funds used in operations, including mineral property
and surface access rights payments, and for general corporate purposes.
Credit Facilities
On September 28, 2022, the Company obtained an unsecured US$ 3.0 million credit facility (the “2022 Facility”) from
Zebra and Lorito to provide financial flexibility to fund ongoing exploration and for general corporate purposes. Zebra
and Lorito are related parties of the Company as discussed in the “2023 Corporate Highlights” section above.
As consideration for the 2022 Facility, Zebra and Lorito received 12,500 common shares upon execution thereof, and
were entitled to receive an additional 200 common shares each month, for every US$ 50,000 in principal outstanding,
prorated accordingly for the number of days outstanding. During the year ended December 31, 2023, the Company
made no draws against the 2022 Facility, which matured on September 28, 2023, with no amounts drawn or
outstanding. No interest was payable in cash during its term.
All common shares issued in conjunction with the facilities were subject to a four-month hold period under applicable
securities laws.
RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances with related parties.
Other than those related party transactions identified elsewhere in this MD&A, the Company may, from time to time,
engage with Filo Corp. (“Filo”), a related party by way of directors, officers and shareholders in common, and MOAR
Consulting Inc. (“MOAR”), an exploration consulting firm, of which a director of the Company is the president.
Related party services
The Company has cost sharing arrangements with Filo. Under the terms of these arrangements, the Company may,
from time to time, provide management, technical, administrative and/or financial services (collectively, “Management
Services”) to Filo, and vice versa. In addition, the Company may, from time to time, engage MOAR to provide
exploration consultation. These transactions were incurred in the normal course of operations, and are summarized
as follows:
8
Management Services to Filo
Management Services from Filo
Exploration Consultation from MOAR
Related party balances
Year ended
December 31,
2022
364,343
(902,414)
(12,750)
2023
285,642
(436,784)
(11,825)
The amounts due from (to) related parties, and the components of the consolidated statement of financial position in
which they are included, are as follows:
Receivables and other assets
Accounts payable and accrued liabilities
Key management compensation
Related Party
December 31,
2023
December 31,
2022
Filo
Filo
67,466
(52,858)
112,163
(186,449)
The Company’s key management personnel have the authority and responsibility for overseeing, planning, directing
and controlling its activities and consist of the Board of Directors and members of the executive management team.
Total compensation expense for key management personnel, and the composition thereof, is as follows:
Salaries and other payments
Short-term employee benefits
Directors fees
Stock-based compensation
Short-term incentive bonuses
Year ended
December 31,
2022
572,667
17,514
92,458
1,983,771
690,000
3,356,410
2023
912,411
26,825
97,000
3,074,327
1,122,000
5,232,563
MATERIAL ACCOUNTING POLICIES
The Company’s material accounting policies are described in Note 3 to the consolidated financial statements for
the year ended December 31, 2023, as filed on SEDAR+ at www.sedarplus.ca.
New Accounting Pronouncements
The IASB and/or the IFRS Interpretations Committee have issued new standards and amendments, or
interpretations to existing standards, which were not yet effective and not applied by the Company as at December
31, 2023.
9
IAS 1, Presentation of Financial Statements
The IASB published Non-current Liabilities with Covenants (Amendments to IAS 1) to clarify how covenants with
which an entity must comply within 12 months after the reporting period affect the classification of the related
liability. Effectively, liabilities are to be classified as either current or non-current, depending on the rights that
exist at the end of the reporting period. Liabilities should be classified as non-current if the entity has a substantive
right to defer settlement for at least 12 months at the end of the reporting period. These amendments are effective
January 1, 2024, with early adoption permitted. Retrospective application is required on adoption.
IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures
The IASB has also issued amendments to IAS 7 and IFRS 7 to include disclosure requirements of qualitative and
quantitative details regarding supplier/vendor finance arrangements that will assist users of financial statements
in evaluating any resulting effects to the reporting entity’s liabilities and cash flows. The amendments are effective
for annual periods beginning on or after January 1, 2024.
The Company does not expect adoption of these amendments to have a material impact on its consolidated
financial statements.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards, such as
the underlying consolidated financial statements for the year ended December 31, 2023, requires management to
make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities and
expenditures. These estimates, assumptions and judgements are based on management’s best knowledge of the
relevant facts and circumstances taking into account previous experience. Actual results could differ and such
differences could be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are
based on historical experience and other facts and circumstances. Revisions to estimates, assumptions and
judgements, and the resulting effects on the carrying amounts of the Company’s assets and liabilities, are
accounted for prospectively. Information about estimates, assumptions, judgements and other sources of
estimation uncertainty as at December 31, 2023 that have a risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next year are provided below:
Valuation of mineral properties – The Company carries the acquisition costs of its mineral properties at cost
less any provision for impairment. At each reporting date, the Company reviews its mineral properties for indicators
of impairment, which requires the Company to exercise key judgements, including but not limited to, the
Company’s right to explore the mineral property, whether the Company has further plans or budgets for
substantive expenditures for the ongoing exploration and evaluation of the mineral property, the impact of
exploration and evaluation results to date with respect to the mineral property, and the likelihood that the carrying
value of the mineral property will be recovered in the future through development or sale of the asset. If indicators
of impairment are identified, the Company would further review the carrying values of the applicable mineral
properties to determine if their carrying values may exceed their fair value, which also requires the Company to
make significant judgments and estimates. The judgments and estimates mentioned above are subject to various
risks and uncertainties, which may ultimately have an effect on the expected recoverability of the carrying values
of the mineral properties.
The Company has determined that no indicators of impairment exist for its mineral properties as of December 31,
2023.
10
FINANCIAL INSTRUMENTS
As at December 31, 2023, the Company’s financial instruments consist of cash, receivables and other assets,
short-term investments, trade payables and accrued liabilities, and the amounts due to its exploration partner,
NCR. Other than for the amounts due to its exploration partner, the carrying values of the Company’s financial
instruments are considered to be reasonable approximations of fair value due to their short-term nature. For
amounts due to its exploration partner, the Company revalues the liability from time to time based on revisions to
the timing and amounts of expected future settlement, which the Company believes is a reasonable approximation
of fair value. Between revaluations, the liability is accreted.
As at December 31, 2023, the Company’s financial instruments are exposed to the following financial risks,
including credit, liquidity and currency risks:
(i) Credit risks associated with cash is mitigated by the Company’s practice of holding the majority of its
cash with Canadian financial institutions that have been accorded a strong investment grade rating
by a primary rating agency or received adequate deposit insurance coverage.
(ii) Liquidity risks associated with the inability to meet obligations as they become due are minimized
through the management of its capital structure and by maintaining good relationships with significant
shareholders and creditors, such as Nemesia, Zebra and Lorito. The Company also closely monitors
and reviews its costs to date and actual cash flows on a monthly basis.
The maturities of the Company’s financial liabilities as at December 31, 2023 are as follows:
Total
Less than
1 year
1-5 years
More than
5 years
Accounts payable and
accrued liabilities
Due to exploration partner
Total
7,189,838
4,432,169
7,189,838
-
11,622,007
7,189,838
-
-
-
-
4,432,169
4,432,169
In accordance with the terms of a Joint Exploration Agreement between the Company and the partner,
NCR, the Company is required to fund NCR’s share of exploration expenditures related to the La Rioja
properties (the “Obligation”). The undiscounted value of the Obligation remained US$ 3.4 million as
of December 31, 2023, and has no defined timeline for settlement. The Obligation has been discounted
at an annual effective rate of 8%, and recorded at its present value having the Canadian dollar
equivalent of $634,740 at December 31, 2023 (2022: $630,460). The figure provided in the preceding
table represents the Canadian dollar equivalent of the liability on an undiscounted basis.
(iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net financial
assets or liabilities which are denominated in currencies other than their respective functional
currencies.
As at December 31, 2023, the Company’s largest foreign currency risk exposure existed at the level
of its Canadian headquarters, where the Company held a net financial asset position denominated in
US dollars having a Canadian dollar equivalent of approximately $8.6 million. A 10% change in the
foreign exchange rate between the US dollar, and the Canadian dollar, NGEx Minerals’ functional
financial
currency, would give rise to
position/comprehensive loss.
increases/decreases of approximately $860,000
in
11
OUTSTANDING SHARE DATA
As at March 22, 2024, the Company had 187,677,658 common shares outstanding and 11,838,332 share options
outstanding under its share-based incentive plan.
RISKS AND UNCERTAINTIES
The operations of the Company are speculative due to the high-risk nature of its business, which includes the
acquisition, financing, exploration, development and operation of mineral and mining properties. There are a
number of factors that could negatively affect the Company’s business and the value of its common shares, and
these risk factors could materially affect the Company’s future operations and financial position and could cause
actual events to differ materially from those described in forward-looking statements relating to the Company.
Significant risk factors have been identified by the Company and are listed below. Further discussion and additional
risk factors are also available in the Company’s most recent AIF, as filed on SEDAR+ at www.sedarplus.ca. The
following information pertains to the outlook and conditions currently known to the Company that could have a
material impact on the financial condition of the Company. Other factors may arise that are not currently foreseen
by management of the Company that may present additional risks in the future. Current and prospective security
holders of the Company should carefully consider these risk factors, as they could materially affect the Company’s
future operations and could cause actual events to differ materially from those described in forward-looking
statements relating to the Company.
Exploration and Development Risk
Mineral exploration, development and operations generally involve a high degree of risk that cannot be eliminated,
and which can adversely impact the Company’s success and financial performance. Exploration for, and
development of, mineral deposits involve a high degree of risk and few properties that are explored are ultimately
developed into producing mines.
Discovery of mineral deposits is dependent upon a number of factors, not the least of which are the technical
skills of the exploration personnel involved and the capital required for the programs. The cost of conducting
programs may be substantial and the likelihood of success is difficult to assess. There is no assurance that the
Company’s mineral exploration activities will result in any discoveries of new bodies of commercial ore. There is
also no assurance that even if commercial quantities of ore are discovered that a new ore body would be developed
and brought into commercial production. The commercial viability of a mineral deposit once discovered is
dependent upon a number of factors, some of which are discussed elsewhere in this MD&A, and include the
particular attributes of the deposit (such as size, grade, metallurgy, expected recovery rates of metals from the
ore and proximity to infrastructure and labour), the interpretation of geological data obtained from drilling and
sampling; feasibility studies; the cost of water and power; anticipated climatic conditions; cyclical metal prices;
fluctuations in inflation and currency exchange rates; higher input commodity and labour costs; commodity price
fluctuations; government regulations, including regulations relating to prices, taxes, royalties, land tenure and
use, allowable production, importing and exporting of minerals, and environmental protection. Most of the above
factors are beyond the control of the Company. Development projects will also be subject to the successful
completion of final feasibility studies, issuance of necessary permits and other governmental approvals and receipt
of adequate financing, as major expenses are typically required to locate and establish Mineral Reserves, to
develop metallurgical processes and to construct mining and processing facilities at a particular site. The exact
effect of these factors cannot be accurately predicted, but the combination of any of these factors may adversely
affect the Company’s business.
The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration and
development of copper, gold, and silver projects and properties, including unusual and unexpected geologic
formations, seismic activity, rock slides, ground instabilities or failures, mechanical failures, precipitation, flooding
12
and other conditions involved in the drilling and removal of material, any of which could result in damage to, or
destruction of, facilities, damage to life or property, environmental damage and possible legal liability.
As appropriate, the Company may seek to mitigate its exploration risk by diversifying its portfolio, or through the
establishment of joint ventures and option agreements with third parties.
Mineral Resource Estimates
The Company’s reported Mineral Resources are estimations only. No assurance can be given that the estimated
Mineral Resources are accurate or that the indicated level of copper, gold, silver or any other mineral can ultimately
be recovered or produced. By their nature, Mineral Resource Estimations are imprecise and depend, to a certain
extent, upon statistical inferences, which may ultimately prove unreliable because, among other factors, they are
based on limited sampling, and, consequently, are uncertain because the samples may not be representative.
Actual mineralization or formations may be different from those predicted. Mineral Resource Estimations may
require revision (either up or down). There are numerous uncertainties inherent in estimating Mineral Resources,
including many factors beyond the Company’s control. Such estimation is a subjective process, and the accuracy
of any Mineral Resource Estimate is a function of the quantity and quality of available data and of the assumptions
made and judgments used in engineering and geological interpretation. There can be no assurance that recoveries
in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions. In particular, factors
that may affect Mineral Resource Estimates include:
changes in interpretations of mineralization geometry and continuity of mineralization zones;
input parameters used to constrain mining shapes and slopes;
metallurgical and mining recoveries;
operating and capital cost assumptions;
metal price and exchange rate assumptions;
confidence in modifying factors, including assumptions that surface rights to allow infrastructure to be
constructed will be forthcoming;
delays or other issues in reaching agreements with local or regulatory authorities and stakeholders;
changes in land tenure requirements or permitting requirements from those discussed in the report; and
changes in the environmental regulations or laws governing the property.
Changes in key assumptions and parameters could result in a restatement of Mineral Resource Estimates. Mineral
Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no assurance
that they will ever be mined or processed profitably. Due to the uncertainty which may attach to Mineral Resources,
there is no assurance that all or any part of Measured or Indicated Mineral Resources will ever be converted into
Mineral Reserves. Any material reductions in estimates of Mineral Resources could have a material adverse effect
on the Company’s results of operations and financial condition.
It may take many years from the initial phase of drilling before production is possible and during that time the
economic outlook and feasibility of exploiting a discovery may change, due to changes in factors such as, but not
limited to, the market price of copper, gold and silver and certain other metals, production and capital costs, or
reduced recovery rates. Such changes may have negative impacts on the merit of continued exploration and
development related to the Company’s Mineral Resources and may therefore have negative effects on its business.
Permitting
The Company’s development and exploration activities are subject to permitting requirements in both Argentina
and Chile. In particular, comprehensive environmental assessments will be necessary in Chile for any future
development of Los Helados, and similarly in Argentina for Valle Ancho and Lunahuasi. Following the receipt of
environmental approvals, additional permits, licences, authorizations, and certificates will be required to proceed
to project construction, including, for example, mining water and fuel delivery, sewage water treatment, hazardous
waste plans, drilling and closure plans. Failure to obtain required permits and/or to maintain compliance with
13
permits once obtained could result in injunctions, fines, suspension or revocation of permits and other penalties.
There can be no assurance that the Company will obtain all such permits and/or achieve or maintain full compliance
with such permits at all times. Activities required to obtain and/or achieve or maintain full compliance with such
permits can be costly and involve extended timelines. Previously issued permits may be suspended or revoked for
a variety of reasons, including through government or court action. Failure to obtain and/or comply with required
permits can have serious consequences, including: damage to the Company’s reputation, stopping the Company
from proceeding with the development of a project, negatively impacting further development of a mine, and
increasing the costs of development and litigation or regulatory action against the Company and/or its directors
and officers, and may materially adversely affect the Company’s business, results of operations or financial
condition.
Foreign Operations Risk
The Company conducts exploration activities in foreign countries, including Argentina and Chile. Each of these
countries exposes the Company to risks that may not otherwise be experienced if all operations were located in
Canada. The risks vary from country to country and can include, but are not limited to, civil unrest or war, national
border disputes, terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates,
expropriation or nationalization without adequate compensation, changes to royalty and tax regimes, high rates
of inflation, labour unrest and difficulty in understanding and complying with the regulatory and legal framework
respecting ownership and maintenance of mineral properties, as well as the revocation or suspension of previously
issued mining permits. Changes in mining or investment policies or shifts in political attitudes may also adversely
affect the Company’s existing assets and operations. Real and perceived political risk may also affect the
Company’s ability to finance exploration programs and attract joint venture or option partners, and future mine
development opportunities. Chile is typically viewed as a favourable mining jurisdiction; however, certain Canadian
issuers have recently experienced regulatory action with regards to Chilean operations, specifically with respect
to increased permitting timelines.
Numerous countries have introduced changes to mining regimes that reflect increased government control or
participation in the mining sector, including, but not limited to, changes of law affecting foreign ownership,
mandatory government participation, taxation and royalties, exploration licensing, export duties, and repatriation
of income or return of capital. There can be no assurance that industries, which are deemed of national or strategic
importance in countries in which the Company has assets, including mineral exploration, will not be nationalized.
There is a risk that further government limitations, restrictions or requirements, not presently foreseen, will be
implemented. Changes in policy that alter laws regulating the mining industry could have a material adverse effect
on the Company. There can be no assurance that the Company’s assets in these countries will not be subject to
nationalization, requisition or confiscation, whether legitimate or not, by an authority or body.
In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in
Canada. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately
predict such developments or changes in laws or policy or to what extent any such developments or changes may
have a material adverse effect on the Company.
Non-compliance with applicable laws, regulations and permitting requirements (including allegations of such) may
result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to
cease or be curtailed or causing the withdrawal of permits or mining licenses, and the imposition of corrective
measures requiring material capital expenditure or remedial action resulting in materially increased cost of
compliance, reputational damage and potentially impaired ability to secure future approvals and permits. The
Company may be required to compensate third parties for loss or damage and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations.
14
Recurrent economic crisis and governmental intervention in the economy
During an economic crisis from 2001 to 2003 and again in 2014 and 2020, Argentina defaulted on foreign debt
repayments and on the repayment on a number of official loans to multinational organizations.
The Argentine government exercises substantial control over the economy and may increase its level of
intervention in certain areas of the economy, including through the regulation of market conditions and prices. In
the past, the Argentine government has increased state intervention in the economy, including through
expropriation and nationalization measures, price controls, exchange controls, establishment of minimum salary
levels and mandatory employee benefits and restrictions on capital flows. In the future, the level of intervention
in the economy by the Argentine government may continue or increase, including in response to social unrest,
through expropriation, nationalization, intervention, forced renegotiation or modification of existing contracts, new
taxation policies, establishment of price controls, changes in laws, regulations and policies affecting foreign trade
and investment. These measures may adversely affect Argentina’s economy and, in turn, the Company’s business,
results of operations and financial condition.
Economic and Political Instability in Argentina
Some of the Company’s mineral properties, such as Valle Ancho and Lunahuasi, are located in Argentina. There
are risks relating to an uncertain or unpredictable political and economic environment in Argentina, and there may
be material adverse consequences with respect to the Company and its operations as a result of the political or
economic instability in Argentina.
In a runoff to the election held on November 19, 2023, Javier Milei defeated center-left candidate and the
incumbent finance minister, Sergio Massa, to become Argentina’s President. Since taking office on December 10,
2023, President Milei has introduced sweeping economic reforms, including devaluation of the country’s official
peso exchange rate against the United States dollar, removing several government subsidies, reducing the size of
the government and proposing an omnibus bill with numerous articles, which was ultimately withdrawn after
failing to obtain sufficient support from Congress. Economic and political uncertainty in Argentina continues to
persist as of the date of this MD&A as the nature, extent or scope of changes to be introduced by President Milei
and enacted, if any, and the resulting impacts are undeterminable at this time, which may include, but are not
limited to, changes to the gains resulting from the Company’s use of marketable securities as a funding mechanism
of its operations in Argentina
Changes in local and federal administrations may also imply changes to current programs and policies affecting
the Company’s business and operations. Both Argentina’s President and its Congress have considerable power to
make decisions and determining government policies and actions that relate to the Argentine economy.
Furthermore, some of the measures proposed by the government may also generate political and social opposition,
which may in turn prevent the government from adopting its proposed measures.
The Company cannot foresee the measures that could be taken by any future administration, national or provincial,
and the effects that such measures could have on the Argentine economy and in Argentina’s ability to meet its
financial obligations, that could adversely affect the Company’s business, financial condition and results of
operations.
Economic and Political Uncertainty in Chile
Evolving Constitutional and Legislative Landscape in Chile
On December 17, 2023, Chileans rejected a draft constitution proposed to replace its current text, representing
the second draft rejected by voters in as many years, with the first having occurred in a national referendum held
in September 2022. Drafting of new constitutions and the resulting votes have occurred over a period of political
15
and legislative uncertainty in Chile which began in late 2019 and has been underscored by frequent widescale
public demonstrations demanding, among other things, constitutional, social and legal reforms.
With the results of two recent plebiscites now confirming the status quo, President Boric indicated that a third
constitutional process will not be undertaken prior to the end of his term in 2026. The foregoing notwithstanding,
as of the date of this MD&A, the Company cannot anticipate whether there will be any constitutional or legislative
changes in Chile in the future. Any constitutional or legislative changes in Chile that impact management of the
country’s natural resources, or labor and social security legislation, among other matters, could affect the
Company’s business, financial condition and results of operations in Chile, specifically in relation to the Los Helados
Project.
Uncertain Fiscal Policies Impacting Mining
On August 10, 2023, Law No. 21,591, also known as the Mining Royalty Law, was published in the Official Gazette
of Chile, which eliminated the specific mining tax and established a new mining royalty tax. The new royalty tax
comprises two main components: an ad valorem component which is only applicable to larger mining operations
meeting certain annual sale thresholds, and a tax levied on mining operating margins. The new law also established
maximum tax burdens on mining businesses.
While the recent changes to mining taxes and royalties in Chile have no immediately measurable impact on the
Company’s business, they do highlight the ability of the government to introduce tax and royalty reforms which
could materially affect the Company’s business interests in Chile, such as the Los Helados Project. Other changes
could be considered or proposed in the future, including but not limited to increases to mining or income taxes,
new royalties, changes to value added taxes, or increases or removal of maximum tax limits for mining companies.
Such changes in the future could affect the Company’s business, financial condition and results of operations in
Chile.
Health and Safety Hazards
Mineral exploration and operations involve health and safety hazards that could adversely affect the Company’s
reputation, business and future operations. By nature, exploration and mining activities present a variety of
hazards and associated health and safety risks. Workers involved at the Company’s sites are subject to many
inherent health and safety risks and hazards, including, but not limited to, rock falls, slides or bursts, equipment
or structural fires, falls of ground, floods, chemical and biological hazards, mineral dusts, atmospheric hazards
including low oxygen levels, gases and fumes, high altitude work, use of explosives, noise, electricity, fixed and
moving equipment, civil disturbances and criminal activity, which could result in occupational illness or health
issues, personal injury, loss of life, and/or facility and workforce evacuation. Even though robust health and safety
controls and risk mitigation measures are in place across the Company’s operations, health and safety incidents
may occur. The overall management of health and safety is governed in accordance with the requirements of the
Company’s Responsible Mining Development Policy. While significant effort is made to control and eliminate
potential health and safety risks, these risks cannot be eliminated and may adversely affect the Company’s
reputation, business, and future operations.
Incidents resulting in serious injury or death, or those having a negative impact on surrounding communities (real
or perceived) could result in litigation, civil or criminal sanctions, regulatory action (including, but not limited to
suspension of operations and/or fines and penalties), increased community tensions, or otherwise adversely affect
the Company’s reputation and ability to meet its objectives.
Environmental and Socio-Political Risks
Present or future laws and regulations with respect to environmental protection standards or corporate social
responsibility may affect the Company’s operations. Environmental legislation is evolving in a manner that has
trended towards stricter standards and enforcement, increased fines and penalties for non-compliance, more
16
stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies
and their officers, directors and employees. There is no assurance that regulatory and environmental approvals
will be obtained on a timely basis or at all. There is no assurance that future changes in environmental regulation,
if any, will not adversely affect the Company’s operations. The cost of compliance with changes in governmental
regulations has the potential to reduce the profitability of operations or to preclude entirely the economic
development of a property.
Regulations governing development of mining operations with the potential to affect glaciers continues to evolve
in both Chile and Argentina. Argentina’s Congress has passed legislation designed to protect the country’s glaciers.
This law would restrict development on and around glaciers. The detailed regulations that will govern
implementation of the law have not yet been written but this legislation could affect the Company’s ability to
develop parts of the Company’s properties in Argentina, including Valle Ancho and Lunahuasi.
The Company is currently engaged in exploration with limited environmental impact. Future environmental costs
may increase due to changing requirements or costs associated with exploration and the developing, operating
and closing of mines, as well as with respect to changing requirements for disclosure and compliance. The
Company is subject to environmental regulation in the various jurisdictions in which it operates. Failure to comply
with these laws, regulations and permitting requirements may result in enforcement actions, including orders
issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective
measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged
in mining operations or in the exploration or development of mineral properties may also be required to
compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines
or penalties imposed for violations of applicable laws or regulations. Furthermore, environmental hazards may
exist on the properties on which the Company holds interests which are unknown to the Company at present and
which have been caused by previous or existing owners or operators of the properties.
Programs may also be delayed or prohibited in some areas due to technical factors, new legislative constraints,
social opposition or local government capacity or willingness to issue permits to explore in a timely manner.
In Argentina, including in La Rioja Province, there has been from time to time environmental opposition to both
mineral exploration and mining. Accordingly, there may be a certain degree of anti-mining sentiment that could
potentially affect the risk of successfully exploring and developing the Company’s assets in those provinces.
In Chile, the current administration is discussing changes with respect to the environmental legal framework,
which may affect the environmental and socio-political landscape in the country. In addition, the Chilean Congress
is also considering legislation designed to protect the country’s glaciers. No such changes have yet been introduced
into the current draft of the constitution and accordingly, no proposed legislation has been approved as of the
date of this MD&A. However, any changes ultimately adopted into the Chilean constitution or enacted into new
legislation by Chile which impact its environmental and socio-political landscape could affect the Company’s ability
to develop the Los Helados Project, the costs associated therewith, or more generally, the Company’s business,
financial condition and results of operations.
In Argentina, Congress has passed legislation designed to protect the country’s glaciers. This law would restrict
development on and around glaciers. The detailed regulations that will govern implementation of the law have
not yet been written but this legislation could affect the Company’s ability to develop parts of the Company’s
properties in Argentina. There is no assurance that future changes in regulations designed to protect the country’s
glaciers, or broader changes to Argentina’s environmental protection regulations, if any, will not adversely affect
the Company’s ability to develop its mineral properties in Argentina, including the Lunahuasi Project, the costs
associated therewith, or more generally, the Company’s business, financial condition and results of operations.
17
Uncertainty of Long-Term Funding and Dilution of Shareholders’ Interests in the Company
The exploration and development of mineral properties requires a substantial amount of capital and may depend
on the Company’s ability to obtain financing through joint ventures, debt financing, equity financing or other
means. General market conditions which may be impacted by geopolitics or international conflict, volatile metals
prices, a claim against the Company, a significant disruption to the Company’s business, or other factors may
make it difficult to secure the necessary financing in the long term. There is no assurance that the Company will
be successful in obtaining required financing as and when needed on acceptable terms. Failure to obtain any
necessary additional financing may result in delaying or indefinite postponement of exploration or development or
even a loss of property interest. If the Company needs to raise additional funds, such financing may substantially
dilute the economic and voting rights of the Company’s shareholders and reduce the value of their investment.
Since the Company’s capital needs depend on market conditions and other factors beyond its control, it cannot
predict or estimate the amount, timing or nature of any such future offering of securities. Thus, holders of common
shares of the Company bear the risk of any future offerings reducing the market price of the common shares and
diluting their shareholdings in the Company.
Metal Price Risk
The Company’s portfolio of properties and investments have exposure to predominantly copper, gold, and silver
prices. Commodity prices fluctuate widely and are affected by numerous factors beyond the Company’s control,
such as the sale or purchase of metals by various central banks and financial institutions, interest rates, exchange
rates, inflation or deflation, fluctuation in the value of the US dollar and foreign currencies, global and regional
supply and demand, and the political and economic conditions of major metals-producing and metals-consuming
countries throughout the world. The prices of these metals greatly affect the value of the Company, the price of
the common shares of the Company and the potential value of its properties and investments. This, in turn, greatly
affects its ability to form joint ventures, option agreements and the structure of any joint ventures formed. This
is due, at least in part, to the underlying value of the Company’s assets at different metals prices.
Title Risk
The Company has investigated its right to explore and exploit its properties and, to the best of its knowledge,
those rights are in good standing. The results of the Company’s investigations should not be construed as a
guarantee of title. Other parties may dispute the title to a property, or the property may be subject to prior
unregistered agreements or liens and transfers or land claims by aboriginal, native, or indigenous peoples. The
title may be affected by undetected encumbrances or defects or governmental actions. The Company has not
conducted surveys of all of its properties, and the precise area and location of claims or the properties may be
challenged, and no assurances can be given that there are no title defects affecting such properties. The rules
governing mining concessions in Chile and Argentina are complex and any failure by the Company to meet
requirements would have a material adverse effect on the Company. Any defects in the title to the Company’s
properties could have a material and adverse effect on the Company.
No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the
applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be
challenged or impugned by third parties. Although the Company has not had any problem renewing its licenses in
the past there is no guarantee that it will always be able to do so. Inability to renew a license could result in the
loss of any project located within that license.
Joint Ventures
The Company holds an approximate 69.1% ownership interest in the Los Helados Property, and a 60.0% interest
in the La Rioja properties, with the remaining respective interests of approximately 30.9% and 40.0% held by its
joint exploration partner, NCR, pursuant to the JEA. While the Company is the operator of these assets, it may be
subject to limitations and obligations under the JEA which may result in the Company’s inability to pursue certain
18
strategic initiatives or undertake the operations it would if it were the sole owner. The Company’s operations at
the Los Helados Project and the La Rioja properties are subject to the risks normally associated with the conduct
of jointly-held projects and joint ventures, which may include, but are not limited to: disagreement or conflict with
the partner on how to develop and operate the mine efficiently; inability or unwillingness of the partner to meet
its obligations to the joint venture or third parties; the partner having economic or business interests or goals that
are, or become, inconsistent with the Company’s business interests or goals; bankruptcy of the partner; disputes
or disagreement arising between the Company and its partner regarding operational or strategic decisions such
as project financing, resource allocation, development milestones and offtake matters; litigation regarding joint
venture matters; or breach, default or incompliance of the partner in respect of the JEA. The existence or
occurrence of one or more of the foregoing circumstances and events could have a material adverse impact on
the profitability, future cash flows, earnings, results of operations and financial condition of the Los Helados Project
or the Company as a whole.
Surface Access
Argentina
In Argentina, mining rights, differ from the surface property rights. The Argentine Mining Code sets out rules
under which surface rights and easements can be granted for a mining operation, and covers aspects including
land occupation, rights-of-way, access routes, transport routes, rail lines, water usage and any other infrastructure
needed for operations. In general, compensation must be paid to the affected landowner in proportion to the
amount of damage or inconvenience incurred. However, no provisions or regulations have been enacted as to the
nature or amount of the compensation payment. In instances where no agreement can be reached with the
landowner, the Argentine Mining Code provides the mining right holder with the right to request the expropriation
of the required property.
The Company has surface access rights but does not own any surface rights at the Lunahuasi Project or the La
Rioja properties. The owners are the respective provincial states. However, in 2021 a group of claimants, known
as the Lancaster Group, filed an opposition to the access easements allegedly based on their capacity as owners
of a ranch covering the area of the Lunahuasi Project and La Rioja properties. As of the date of this MD&A, and
to the knowledge of the Company, the Lancaster Group has not provided legal evidence of their ownership claims,
such as registration of the surface land on the Real Estate Registry of the Province of San Juan and there is no
legal evidence of their ownership. If the Lancaster Group were able to provide evidence of ownership of the land
it is likely that the Administrative Court of Mines would uphold their right to compensation for use of the land for
the time not covered by the statute of limitations. Access to the properties has not been affected for the Company.
From time to time, a land possessor may dispute the Company’s surface access rights and, as a result, the
Company may be barred from its legal temporary occupation rights. Surface access issues have the potential to
result in the delay of planned exploration programs, and these delays may be significant. Such delays may have
a material adverse effect on the Company.
The Company may require additional surface rights and property interests to further develop or exploit the Mineral
Resources on its properties, which will require negotiations with private landowners for the additional ownership
and/or surface rights for the Company to fully operate. Surface rights may also be regulated and restricted by
applicable law. There is no assurance that the Company will be able to obtain the required surface rights or
negotiate successfully with private landowners to allow it to develop its properties and establish commercial mining
operations on a timely basis. To the extent additional surface rights are available, they may only be acquired at
significantly increased prices, potentially adversely impacting financial performance of the Company.
Chile
Per the provisions outlined in the Chilean Mining Code, the mining concession is a right, distinct and independent
from the ownership of the surface property, even if it has the same owner. Therefore, a mining concessionaire
19
(such as the Company) must have a property, contractual or legal right to carry out mining activities over surface
land, each as further detailed below.
a) Property rights: where the mining concessionaire owns the superficial property, it can carry out mining
activities without the need to obtain authorization from third-party owners.
b) Contractual rights: the following contracts, among others, are noteworthy:
i.
ii.
Lease: agreement with the owner of the surface property, which allows the mining concessionaire
to carry out mining activities and to appropriate what is extracted.
Land use authorization: agreement with the owner of the surface property, which allows the
mining concessionaire to access the property and proceed with prospection and exploration
activities.
c) Legal rights: easements, in accordance with the provisions set forth in the Chilean Mining Code where a
titleholder of a mining concession, whether for exploration or exploitation, shall have the right to constitute
easements over the surface land to enable the comfortable exploration or exploitation of its concessions.
These easements may be:
i.
ii.
Voluntary: the owner of the surface land agrees to the easement and enters into an easement
agreement with the mining concessionaire, regulating, among other things, the location, purpose
and duration of the easement, together with the compensation the mining concessionaire shall
pay the surface landowner for the use of his land.
Judicial: if the owner of the surface land does not agree to the easement, the mining
concessionaire may file a claim to the civil courts. If the mining concessionaire fulfills certain
requirements (effective potential for exploration and/or exploitation of mineral substances), the
civil courts shall grant the easement, indicating the easement’s location, purpose, duration and
corresponding compensation. The easement is temporary and will cease to exist once the mining
concession’s exploitation or development is completed.
The Company has surface access rights but does not own any surface rights at the Los Helados Project. The
owners of the surface rights are in agreement with the Company’s subsidiaries in conducting activities on their
ground and the Company has entered into agreements with the owners providing for access to the Los Helados
Project.
From time to time, a land possessor may dispute the Company’s surface access rights and, as a result, the
Company may be barred from its legal temporary occupation rights. Surface access issues have the potential to
result in the delay of planned exploration programs, and these delays may be significant. Such delays may have
a material adverse effect on the Company.
The Company may require additional surface rights and property interests to further develop or exploit the
resources on its properties, which will require negotiations with private landowners for the additional ownership
and/or surface rights for the Company to fully operate. Surface rights may also be regulated and restricted by
applicable law. There is no assurance that the Company will be able to obtain the required surface rights or
negotiate successfully with private landowners to allow it to develop its properties and establish commercial mining
operations on a timely basis. To the extent additional surface rights are available, they may only be acquired at
significantly increased prices, potentially adversely impacting financial performance of the Company.
20
Conflicts of Interest
Some of the directors, officers and employees of the Company are also directors, officers or employees of other
companies that are similarly engaged in the business of acquiring, exploring and developing natural resource
properties. Of particular note, certain individuals also serve as directors or officers of Filo and are subject to the
terms of the shared services arrangements. Such associations may give rise to conflicts of interest from time to
time. One of the consequences will be that corporate opportunities presented to a director or employee/officer of
the Company may be offered to another Company or companies with which the director or employee/officer is
associated and may not be presented or made available to the Company. The directors and employees/officers of
the Company are required by law to act honestly and in good faith with a view to the best interests of the
Company, to disclose any interest that they may have in any project or opportunity of the Company, and to abstain
from voting on such matter. Conflicts of interest that arise will be subject to and governed by the procedures
prescribed by the Company’s Code of Business Conduct and Ethics and the Canada Business Corporations Act.
Significant Shareholders
As of the date of this MD&A, the Company’s current largest shareholder is Nemesia, a private company controlled
by a trust settled by the late Adolf H. Lundin (the “Lundin Family Trusts”). Nemesia currently holds 69,848,987
common shares of the Company, which represents approximately 37.2% of the Company’s issued and outstanding
common shares.
Companies controlled by the Lundin Family Trusts, such as Nemesia, Zebra, Lorito, Lorito Floreal S.à.r.l (“Lorito
Floreal”), Lorito Arole S.à.r.l (“Lorito Arole”) and Lorito Orizons S.à.r.l (“Lorito Orizons”), are considered as joint
actors, as the term is defined by Canadian securities regulations, and have historically held significant portions of
the Company’s issued and outstanding common shares, individually or collectively.
As a result of its significant shareholding in the Company, Nemesia is subject to certain requirements under
Canadian securities laws with respect to reporting and trading in the Company’s common shares, as well as with
respect to certain transactions. The Company does not control these entities, and their interests may differ from
those of other shareholders. As long as Nemesia, along with the other companies controlled by the Lundin Family
Trusts, maintain significant interests in NGEx Minerals, they may exert certain influence with respect to matters
that are determined by the votes of shareholders. As a result of the significant holdings of these entities,
individually or in the aggregate, there is a risk that the Company’s common shares are less liquid and trade at a
relative discount compared to circumstances where these entities did not have the ability to influence or determine
matters affecting NGEx Minerals. Additionally, there is a risk that their significant interests in NGEx Minerals
discourages transactions involving a change of control of NGEx Minerals, including transactions in which an
investor, as a holder of the Company’s securities, would otherwise receive a premium for its securities in the
Company over the then-current market price.
Global Financial Conditions Can Reduce Share Prices and Limit Access to Financing
The economic viability of the Company’s business plan is impacted by the Company’s ability to obtain financing.
The economic conditions and outlook of the jurisdictions in which the Company’s projects reside, and more
generally global economic conditions, may impact the general availability of financing through public and private
debt and equity markets, as well as through other avenues.
Significant political, market, economic, natural or manmade events may have wide-reaching effects and, to the
extent they are not accurately anticipated or priced into markets, may result in sudden periods of market volatility
and correction. Periods of market volatility and correction may have an adverse impact on economic growth and
outlook, as well as lending and capital markets activity, all of which may impact the Company’s ability to secure
adequate financing on favourable terms, or at all.
21
Global financial conditions continue to be characterized as volatile. In recent years, global markets have been
adversely impacted by various macro-level events, such as the COVID-19 pandemic and the Russia-Ukraine war,
and the related government responses. This has resulted in inflation causing rising fuel, energy, and transportation
costs and variable demand. As global events evolve, there is no guarantee that credit market conditions will not
worsen. A general risk-adverse approach to investing, decreases in consumer spending and increases in the
unemployment rate and consumer debt levels, which may become more predominant as a result of market turmoil,
may limit the Company’s ability to obtain future equity financing. Inability to obtain financing at all, or on
acceptable terms, may have a material adverse effect on the Company’s business, financial condition, results of
operations, cash flows or prospects.
Other events may also result in volatility and disruption to global supply chains, operations, mobility of people,
patterns of consumption and service, and financial markets, and therefore potentially have a negative impact on
the Company’s ability to secure financing on favourable terms, or at all, its access to its projects, or its ability to
execute its business initiatives, including its field programs. Such events may include catastrophic events, either
on a global scale or in the specific jurisdictions where the Company has its projects, and include, but are not
limited to, financial crises, such as that which occurred globally in 2008, earthquakes, tsunamis, floods, typhoons,
fires, power disruptions, other natural or manmade disasters, terrorist attacks, wars, riots, civil unrest or other
conflicts, outbreaks of a public health crises, including epidemics, pandemics or outbreaks of new infectious
diseases or viruses, as well as related and attendant events.
Furthermore, general market, political and economic conditions, including, for example, inflation, interest and
currency exchange rates, structural changes in the global mining industry, global supply and demand for
commodities, political developments, legislative or regulatory changes, social or labour unrest and stock market
trends will affect the Company’s operating environment and its operating costs, profit margins and share price.
Uncertainty or adverse changes relating to government regulation, economic and foreign policy matters, and other
world events have the potential to adversely affect the performance of and outlook for the Canadian and global
economies, which in turn may affect the ability of the Company to access financing on favourable terms or at all.
The occurrence of negative sentiment or events in the Canadian and broader global economy could have a material
adverse effect on the Company’s business, financial condition, results of operations, cash flows or prospects.
Currency Risk
The Company transacts business in a number of currencies including but not limited to the US Dollar, the Argentine
peso and the Chilean peso. The Argentine peso in particular has had significant fluctuations in value relative to
the US and Canadian dollars. Ongoing economic uncertainty in Argentina as well as unpredictable changes to
foreign exchange rules may result in fluctuations in the value of the Argentine peso that are greater than those
experienced in the recent past. Fluctuations in exchange rates may have a significant effect on the cash flows of
the Company. Future changes in exchange rates could materially affect the Company’s results in either a positive
or a negative direction. The Company does not currently engage in foreign currency hedging activities.
Information Systems and Cyber Security
The Company's operations depend on IT systems. These IT systems could be subject to network disruptions
caused by a variety of sources, including computer viruses, security breaches and cyber-attacks, as well as
disruptions resulting from incidents such as cable cuts, damage to physical plants, natural disasters, terrorism,
fire, power loss, vandalism and theft. The Company's operations also depend on the timely maintenance, upgrade
and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate
the risks of failures. Any of these and other events could result in information system failures, delays and/or
increase in capital expenses. The failure of information systems or a component of information systems could,
depending on the nature of any such failure, adversely impact the Company's reputation and results of operations.
Although to date the Company has not experienced any material losses relating to cyber-attacks or other
information security breaches, there can be no assurance that the Company will not incur such losses in the future.
The Company's risk and exposure to these matters cannot be fully mitigated because of, among other things, the
22
evolving nature of these threats. As a result, cyber security and the continued development and enhancement of
controls, processes and practices designed to protect systems, computers, software, data and networks from
attack, damage or unauthorized access remain a priority. As cyber threats continue to evolve, the Company may
be required to expend additional resources to continue to modify or enhance protective measures or to investigate
and remediate any security vulnerabilities.
QUALIFIED PERSON AND TECHNICAL INFORMATION
The scientific and technical disclosure included in this MD&A have been reviewed and approved by Bob Carmichael, P.
Eng. (BC). Mr. Carmichael is the Company's Vice-President of Exploration and a Qualified Person under National
Instrument 43-101 Standards of Disclosure for Mineral Projects. (“NI 43-101”).
Mineral Resource Estimates for the Los Helados Project have an effective date of October 31, 2023. The key
assumptions, parameters, and methods used to estimate this Mineral Resource Estimate are contained in the 43-101
technical report entitled “Technical Report on the Los Helados and Lunahuasi Projects, Chile and Argentina”, dated
December 13, 2023 (the “Technical Report”), prepared by Luke Evans, M.Sc., P.Eng., SLR Consulting (Canada) Ltd.,
and Giovanni Di-Prisco, Ph.D., P.Geo., Terra Mineralogical Services lnc. This report is available on the Company’s
website at www.ngexminerals.com or under the Company’s profile at www.sedarplus.ca
Mineral Resources are reported using a CuEq cutoff grade. Copper equivalent is calculated using US$ 3.90/lb copper,
US$ 1,800/oz gold and US$ 20/oz silver, and includes a provision for selling costs and metallurgical recoveries
corresponding to three zones defined by depth below surface. The formulas used are: CuEq% = Cu% + 0.681008*Au
(g/t) + 0.002989*Ag (g/t) for the Upper Zone (surface to ~ 250 m); Cu% + 0.692039*Au (g/t) + 0.004877*Ag (g/t)
for the Intermediate Zone (~250 m to ~600 m); Cu% + 0.688852*Au (g/t) + 0.006068*Ag (g/t) for the Deep Zone
(> ~600 m).
Copper equivalent values reported for the Los Helados Program were based on US$ 3.50/lb Cu, US$ 1,700/oz Au and
US$ 20/oz Ag. Copper equivalent values reported for the Maiden Lunahuasi Program and the 2023-2024 Lunahuasi
Program were based on US$ 3.00/lb Cu, US$ 1,500/oz Au and US$ 18/oz Ag. Respective assumed metal recoveries
and CuEq formulae are as presented in the footnote to the associated tables of summarized drill results (see “2023
Operating Highlights and Outlook” section above).
The Company’s Mineral Resources as reported in this MD&A have been prepared in accordance with the CIM Definition
Standards that are incorporated by reference in NI 43-101.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and
forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking
information” or “forward-looking statements”) concerning the business, operations, financial performance and
condition of NGEx Minerals. The forward-looking information contained in this MD&A is based on information available
to the Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company
does not intend, and does not assume, any obligation, to update this forward-looking information. Generally, any
statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance, (often, but not always, identified by words or phrases such
as "plans", "expects" or "does not expect", "is expected", "budgets", "scheduled", "estimates", "forecasts", "intends",
“projects”, “targets”, “assumes”, “strategy”, “goals”, “objectives”, “potential”, “possible”, "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events, conditions
or results “will”, "may", "could", "would", “should”, "might" or "will be taken", "will occur" or "will be achieved" or the
negative connotations thereof and similar expressions) are not statements of historical fact and may be forward-
looking statements.
23
All statements other than statements of historical fact may be forward-looking statements. Forward-looking information
is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or implied by such forward-looking information, including
but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding Mineral
Resource Estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, changes in share
price; unanticipated resource grades, infrastructure, results of exploration activities, cost overruns, availability of
materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and
unanticipated environmental impact on operations as well as other risks, and uncertainties and other factors, including,
without limitation, those referred to in the “Risks and Uncertainties” section of the MD&A, and elsewhere, such as in
the Company’s most recent AIF, as filed on SEDAR+ at www.sedarplus.ca, which may cause the actual results, level
of activity, performance or achievements of the Company to be materially different from those expressed or implied
by such forward-looking information.
The Company believes that the expectations reflected in the forward-looking statements and information included in
this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such
forward-looking statements and information should not be unduly relied upon. This statement and information is as
of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to:
the assumptions used in the Mineral Resources estimates for the Los Helados Project, including, but not limited to,
geological interpretation and grades; assumptions made in the interpretation of drill results, geology, grade and
continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and services
needed for exploration and development of mineral properties; and that activities will not be adversely disrupted or
impeded by exploration, development, operating, regulatory, political, community, economic and/or environmental
risks. In addition, this MD&A may contain forward-looking statements or information pertaining to: exploration and
development plans and expenditures, including the size, scope, nature, timing and foci of the Company’s future
exploration programs, particularly at Los Helados and Lunahuasi; whether current interpretation of the exploration
and/or drill results to date at Los Helados or Lunahuasi will be confirmed by future work, including statements regarding
prospectivity of exploration properties, the accuracy of a geological model, the ability to extend and define of the
Fenix, Alicanto and Condor Zones at Los Helados, the ability of future drilling to convert exploration potential to a
Mineral Resource Estimate or to upgrade material from one category of Mineral Resource to another, the scale, grade,
or significance of the system that is the source of the high-grade mineralization intersected at Lunahuasi, or the
Company’s ability to locate it; the future uses of the Company’s cash and working capital; the success of future
exploration activities; potential for the discovery of new mineral deposits or expansion of existing mineral deposits;
ability to build shareholder value; expectations with regard to adding to Mineral Resources through exploration;
expectations with respect to the conversion of Inferred Resources to an Indicated Resource classification, or the
conversion of Indicated Resources to a Measured Resource classification; ability to execute the planned work
programs; estimation of commodity prices, Mineral Resources, estimations of costs, and permitting time lines; ability
to obtain surface rights and property interests; currency exchange rate fluctuations; requirements for additional
capital; government regulation of mining activities; environmental risks; unanticipated reclamation expenses; title
disputes or claims; limitations on insurance coverage; assumptions that the Company will be able to carry out
exploration program at Lunahuasi as planned; fluctuations in the current price of and demand for commodities;
material adverse changes in general business and economic conditions, particularly in Argentina with respect to
uncertainty around exchange rate and other economic policies potentially affecting the Company, as well as other
factors associated with ongoing financial instability in Argentina; and other risks and uncertainties.
Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that
the current price of and demand for commodities will be sustained or will improve, the supply of commodities will
remain stable, that the general business and economic conditions will not change in a material adverse manner, that
financing will be available if and when needed on reasonable terms and that the Company will not experience any
material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed
as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual
results to differ materially from those contained in forward-looking information, there may be other factors that cause
24
results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove
to be accurate, as the Company’s actual results and future events could differ materially from those anticipated in
such statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and
elsewhere. All of the forward-looking information contained in this document is qualified by these cautionary
statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent
uncertainty thereof.
Statements relating to "Mineral Resources" are deemed to be forward-looking information, as they involve the implied
assessment, based on certain estimates and assumptions, that the Mineral Resources described can be profitably
produced in the future.
25
Independent auditor’s report
To the Shareholders of NGEx Minerals Ltd.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of NGEx Minerals Ltd. and its subsidiaries (together, the Company) as at
December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of financial position as at December 31, 2023 and 2022;
the consolidated statements of comprehensive loss for the years then ended;
the consolidated statements of cash flows for the years then ended;
the consolidated statements of changes in equity for the years then ended and; and
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
PricewaterhouseCoopers LLP
PwC Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada, V6C 3S7
T.: +1 604 806 7000, F.: +1 604 806 7806, Fax to mail: ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2023. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Assessment of impairment indicators of mineral
properties
Our approach to addressing the matter included the
following procedures, among others:
• Obtained, for all mining claims, by reference to
government registries as applicable and
vouching payments of required fees, evidence
to support the right to explore the area.
• Read board minutes and obtained budget
approvals to evidence continued and planned
substantive expenditures for the ongoing
exploration and evaluation of the mineral
properties, which included evaluating results of
management’s current-year work programs and
management’s longer-term plans.
•
Assessed whether there is other information
that may indicate that the carrying amount may
not be recovered from successful development
or sale of the asset, by considering evidence
obtained in other areas of the audit.
Refer to note 3(b) – Critical accounting estimates,
assumptions and judgments, note 3(d) – Mineral
properties and exploration expenditure, note 3(e) –
Impairment of non-financial assets and note 7 –
Mineral properties to the consolidated financial
statements.
The carrying value of mineral properties amounted
to $3.8 million as at December 31, 2023 which all
related to the Los Helados project. At each
reporting date, management reviews the
Company’s mineral properties for indicators of
impairment, which requires management to
exercise key judgments, including but not limited to
(i) the Company’s right to explore the mineral
properties, (ii) whether the Company has further
plans or budgets for substantive expenditures for
the ongoing exploration and evaluation of the
mineral properties, (iii) the impact of exploration
and evaluation results to date with respect to the
mineral properties, and (iv) the likelihood that the
carrying value of the mineral properties will be
recovered in the future through development or sale
of the assets. If indicators of impairment are
identified, management would further review the
carrying values of the applicable mineral properties
to determine if their carrying values exceed their fair
value. No impairment indicators were identified by
management as at December 31, 2023.
We considered this a key audit matter due to (i) the
significance of the mineral properties balance and
(ii) the subjectivity in performing audit procedures to
evaluate management’s indicators of impairment
assessment, which required management
judgment.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Ranbir Gill.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, British Columbia
March 22, 2024
NGEx Minerals Ltd.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
ASSETS
Current assets:
Cash
Receivables and other assets
Short-term investments
Non-current assets:
Receivables and other assets
Equipment
Mineral properties
TOTAL ASSETS
LIABILITIES
Current liabilities:
Trade payables and accrued liabilities
Non-current liabilities:
Due to exploration partner
Accrued liabilities
Note
December 31,
2023
December 31,
2022
5
5
6
7
9
$ 59,502,617
2,140,961
15,229,918
76,873,496
$ 23,249,241
4,300,559
-
27,549,800
413,267
191,028
3,815,124
4,419,419
840,337
18,723
3,902,697
4,761,757
81,292,915
32,311,557
7,189,838
7,327,951
634,740
-
634,740
630,460
338,600
969,060
TOTAL LIABILITIES
7,824,578
8,297,011
SHAREHOLDERS’ EQUITY
Share capital
Contributed surplus
Deficit
Accumulated other comprehensive loss
TOTAL SHAREHOLDERS’ EQUITY
10
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY
Subsequent events (Note 1)
183,002,098
8,379,116
(113,376,603)
(4,536,274)
73,468,337
97,613,481
4,347,722
(75,658,411)
(2,288,246)
24,014,546
$ 81,292,915
32,311,557
The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board:
/s/Alessandro Bitelli
Director
/s/Wojtek A. Wodzicki
Director
NGEx Minerals Ltd.
Consolidated Statements of Comprehensive Loss
(Expressed in Canadian Dollars)
Expenses
Exploration and project investigation
General and administration:
Salaries and benefits
Share-based compensation
Management fees
Professional fees
Travel
Promotion and public relations
Office and general
Operating loss
Other expenses (income)
Interest income
Financing costs
Foreign exchange loss (gain)
Net monetary gain
Gain on use of marketable securities, net
Other losses
Other expenses
Net loss
Other comprehensive loss
Items that may be reclassified
subsequently to net loss:
Foreign currency translation
adjustment
Impact of hyperinflation
Comprehensive loss
Note
2023
Year ended
December 31,
2022
12
$ 40,283,371
$ 28,923,845
11c
4
16
9
4
3,089,407
3,592,030
188,080
489,228
152,698
372,540
820,444
48,987,798
(1,899,940)
71,382
102,376
(637,663)
(9,030,537)
11,475
113,301
37,718,192
1,872,580
2,353,238
169,540
212,163
107,704
438,943
341,479
34,419,492
(249,330)
50,303
(60,965)
(54,798)
(1,975,356)
212,531
73,385
32,415,262
929,853
1,318,175
$ 39,966,220
(310,220)
84,302
$ 32,189,344
Basic and diluted loss per common share
$ 0.21
$ 0.20
Weighted average common shares
outstanding
178,007,539
159,625,957
The accompanying notes are an integral part of these consolidated financial statements.
2
NGEx Minerals Ltd.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
Cash flows used in operating activities
Net loss for the year
$ (37,718,192)
$ (32,415,262)
Note
2023
Year ended
December 31,
2022
Adjustments to reconcile net loss to net operating
cash flows:
Depreciation
Share-based compensation
Finance costs
Foreign exchange loss (gain)
Net monetary loss
Other losses
Write-down of non-current taxes receivable
Interest income from short-term investment
Net changes in working capital and other items:
Receivables and other
Trade payables and accrued liabilities
Cash flows from (for) financing activities
Proceeds from equity financings
Share issuance costs
Drawdown of credit facility
Repayment of credit facility
Proceeds from option exercises
Payments made on behalf of exploration partner
Cash flows used in investing activities
Purchase of short-term investment
Acquisition of equipment
Mineral properties and related expenditures
11c
9
10
10
6
7
17,231
4,671,200
71,382
18,426
944,365
11,475
-
(229,918)
12,275
2,927,355
50,303
(35,756)
146,507
212,531
73,142
-
2,105,888
3,020,289
(27,087,854)
(3,159,149)
5,031,376
(27,156,678)
85,659,990
(2,439,071)
-
-
1,527,892
(43,793)
84,705,018
30,000,000
(635,780)
1,781,000
(1,769,950)
495,847
(36,254)
29,834,863
(15,000,000)
(189,419)
(133,923)
(15,323,342)
-
-
(126,220)
(126,220)
Effect of exchange rate change on cash
(6,040,446)
(302,766)
Increase in cash during the year
36,253,376
2,249,199
Cash, beginning of the year
$ 23,249,241 $ 21,000,042
Cash, end of the year
Non-cash financing activities (Note 8)
$ 59,502,617 $ 23,249,241
The accompanying notes are an integral part of these consolidated financial statements.
3
NGEx Minerals Ltd.
Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars)
Balance, January 1, 2022
Share-based compensation
Shares issued pursuant to the equity
financings
Share issuance costs
Shares issued pursuant to credit facility
Shares issued pursuant to stock option
exercises
Net loss and other comprehensive loss
Balance, December 31, 2022
Note
Number of
Shares
Share Capital
Contributed
Surplus
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
156,291,344
-
$ 67,523,831 $ 1,616,855
2,927,355
-
$ (43,243,149)
-
$ (2,514,164)
-
$ 23,383,373
2,927,355
15,000,000
-
15,352
30,000,000
(635,780)
33,095
-
-
-
-
-
-
-
-
-
30,000,000
(635,780)
33,095
816,834
-
172,123,530
692,335
-
(196,488)
-
$ 97,613,481 $ 4,347,722
-
(32,415,262)
495,847
(32,189,344)
$ (75,658,411) $ (2,288,246) $ 24,014,546
-
225,918
Balance, January 1, 2023
Share-based compensation
Shares issued pursuant to the equity
financings
Share issuance costs
Shares issued pursuant to stock option
exercises
Net loss and other comprehensive loss
Balance, December 31, 2023
11c
10
10
11b
172,123,530
-
$ 97,613,481 $ 4,347,722
4,671,200
-
$ (75,658,411)
-
$ (2,288,246)
-
$ 24,014,546
4,671,200
13,178,460
-
85,659,990
(2,439,071)
-
-
-
-
-
-
85,659,990
(2,439,071)
1,780,001
-
1,527,892
(39,966,220)
187,081,991 $ 183,002,098 $ 8,379,116 $ (113,376,603) $ (4,536,274) $ 73,468,337
-
(37,718,192)
-
(2,248,028)
2,167,698
-
(639,806)
-
The accompanying notes are an integral part of these consolidated financial statements.
4
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
1. NATURE OF OPERATIONS
NGEx Minerals Ltd. (the “Company” or “NGEx Minerals”) was incorporated on February 21, 2019, under
the laws of the Canada Business Corporations Act in connection with a plan of arrangement, which was
completed on July 17, 2019.
The Company’s principal business activities are the acquisition, exploration and development of mineral
properties located in South America. The Company’s registered office is located at Suite 2000, 885
West Georgia Street, Vancouver, British Columbia, V6C 3E8, Canada. The Company’s common shares
traded on the TSX Venture Exchange (the "TSXV") under the symbol "NGEX" until February 21, 2024,
at which point it was voluntarily delisted in order for the Company’s common shares to trade on the
Toronto Stock Exchange (the “TSX”) under the same symbol effective February 22, 2024. In addition,
the Company’s common shares began trading on the OTCQX® Best Market under the symbol “NGXXF”
on March 8, 2024.
2. BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards, as issued by the International Accounting Standards Board (“IFRS Accounting
Standards”), on a going concern basis, which contemplates the realization of assets and settlement of
liabilities in the normal course of business. These consolidated financial statements are prepared on a
historical cost basis except for certain financial assets, which are measured at fair value.
These consolidated financial statements were authorized for issuance by the Board of Directors of the
Company on March 22, 2024.
3. SUMMARY OF MATERIAL ACCOUNTING POLICIES
a) Consolidation
The consolidated financial statements of the Company include the following subsidiaries:
Subsidiaries
Suramina Resources Inc.
NGEx Argentina Holdings Inc.
NGEx RioEx Holdings Inc.
Frontera Holdings (Bermuda) I Ltd.
Frontera Holdings (Bermuda) II Ltd.
Frontera Holdings (Bermuda) III Ltd.
Urupampa S.A.
RioEx Uruguay S.A.
Minera Frontera del Oro SPA.
Desarrollo de Prospectos Mineros Peruanos S.A.C.
Pampa Exploracion S.A.
RioEx S.A.
Jurisdiction
Canada
Canada
Canada
Bermuda
Bermuda
Bermuda
Uruguay
Uruguay
Chile
Peru
Argentina
Argentina
Nature of operations
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Exploration company
Exploration Company
Exploration company
Exploration company
5
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The Company consolidates an entity when it has power over that entity, is exposed, or has rights, to
variable returns from its involvement with that entity and has the ability to affect those returns through
its power over that entity.
All the Company’s subsidiaries are wholly-owned and all intercompany balances, transactions, including
income and expenses arising from inter-company transactions, are eliminated in preparing the
consolidated financial statements.
b) Critical accounting estimates, assumptions and judgements
The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards
requires management to make estimates, assumptions and judgements that affect the reported
amounts of assets, liabilities and expenditures on the financial statements. These estimates,
assumptions and judgements are based on management’s best knowledge of the relevant facts and
circumstances taking into account previous experience. Actual results could differ and such differences
could be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are
based on historical experience and other facts and circumstances. Revisions to estimates, assumptions
and judgements, and the resulting effects on the carrying amounts of the Company’s assets and
liabilities, are accounted for prospectively. Information about estimates, assumptions, judgments and
other sources of estimation uncertainty as at December 31, 2023, that have a risk of resulting in a
material adjustment to the carrying amounts of assets and liabilities within the next year are provided
below:
Valuation of mineral properties – The Company carries the acquisition costs of its mineral properties
at cost less any provision for impairment. At each reporting date, the Company reviews its mineral
properties for indicators of impairment, which requires the Company to exercise key judgements,
including but not limited to, the Company’s right to explore the mineral property, whether the Company
has further plans or budgets for substantive expenditures for the ongoing exploration and evaluation of
the mineral property, the impact of exploration and evaluation results to date with respect to the mineral
property, and the likelihood that the carrying value of the mineral property will be recovered in the
future through development or sale of the asset. If indicators of impairment are identified, the Company
would further review the carrying values of the applicable mineral properties to determine if their
carrying values may exceed their fair value, which also requires the Company to make significant
judgments and estimates. The judgments and estimates mentioned above are subject to various risks
and uncertainties, which may ultimately have an effect on the expected recoverability of the carrying
values of the mineral properties.
The Company has determined that no indicators of impairment exist for its mineral properties as of
December 31, 2023.
c) Foreign currency translation
These consolidated financial statements are presented in Canadian dollars, which is the Company’s
functional and presentation currency. The functional currencies of its material subsidiaries, which have
operations in Chile and Argentina, are the Chilean peso and the Argentine peso, respectively.
For the Company’s Argentine subsidiaries, which are affected by hyperinflationary accounting as
described in Notes 3 and 4 below, and use the Argentine peso as their functional currency, the results
and financial position of these subsidiaries are translated into the presentation currency using the
exchange rate prevailing at the date of the statement of financial position.
6
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The results and financial position of all other subsidiaries that have a functional currency different from
the presentation currency are translated into the presentation currency as follows:
Assets and liabilities for each statement of financial position presented are translated using the
exchange rate prevailing at the date of that statement of financial position.
Income, expenses, and other comprehensive income for each statement of comprehensive income
are translated at average exchange rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the transactions).
All resulting exchange differences are recognized as a separate component of equity and in other
comprehensive income.
d) Mineral properties and exploration expenditure
The Company capitalizes acquisition costs for property rights, including payments for exploration rights
and estimated fair value of exploration properties acquired as part of an acquisition.
Mineral exploration costs and maintenance payments are expensed prior to the determination that a
property has economically recoverable ore reserves. When it has been established that a mineral
property is considered to be sufficiently advanced to the development stage, with economic viability and
technical feasibility demonstrated, all further expenditures for the current period and subsequent periods
are capitalized as incurred and subsequently amortized on a units of production based on proven and
probable reserves of the assets to which they relate.
e) Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-
generating units, or “CGU’s”). Value in use is determined as the present value of future cash inflows
expected to be derived from a CGU using a pre-tax discount rate that reflects the current time value of
money and the risks specific to that CGU.
Non-financial assets that have been previously impaired are reviewed for possible reversal of the
impairment at each reporting date.
f) Financial instruments
(i) Recognition
The Company measures and classifies its financial assets based on its business model for managing its
financial assets and the contractual cash flow characteristics of those financial assets. Financial assets
are classified into three measurement categories on initial recognition: those measured at fair value
through profit or loss, those measured at fair value through other comprehensive income (“OCI”) and
those measured at amortized cost.
7
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus
transaction costs, respectively, and subsequently carried at amortized cost less any impairment.
Investments in marketable securities, such as equity instruments of publicly listed entities, are required
to be measured at fair value through profit or loss, unless the Company makes an irrevocable election
to present subsequent changes in the fair value of such instruments through OCI. The Company has
not elected to measure any of its marketable securities through OCI.
(ii) Derecognition
The Company derecognizes financial assets when the contractual rights to cash flows from the financial
assets expire, or when it transfers the financial assets and substantially all the associated risk and
rewards of ownership to another entity. A financial liability is derecognized when the obligation under
the liability is discharged, canceled or expired. Gains and losses on derecognition of financial assets and
liabilities are generally recognized in the consolidated statement of comprehensive loss.
(iii) Impairment
The Company recognizes a loss allowance for expected credit losses on financial assets that are
measured at amortized costs based on a probability-weighted estimate of credit losses over the expected
life of the financial asset.
At each reporting date, the Company measures the loss allowance for the financial asset at an amount
equal to the lifetime expected credit losses if the credit risk on the financial asset has increased
significantly since initial recognition. If at the reporting date, the credit risk on the financial asset has
not increased significantly since initial recognition, the Company measures the loss allowance for the
financial asset at an amount equal to twelve month expected credit losses. Impairment losses on
financial assets carried at amortized cost are reversed in subsequent periods if the expected credit losses
are reversed after the impairment was recognized.
g) Cash
Cash includes cash on hand, and deposits held with financial institutions with a fixed deposit term of
three months or less, net of bank overdrafts.
h) Short-term Investments
Short-term investments include monetary instruments which cannot be redeemed or otherwise
liquidated within three months of their purchase date.
i) Equipment
Equipment is carried at cost less accumulated depreciation and impairment losses. The cost of an asset
consists of its purchase price, any directly attributable costs of bringing the asset to the working
condition and location of its intended use and an initial estimate of the costs of dismantling and removing
the item and restoring the site on which it is located.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably.
8
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
Depreciation of each asset is calculated using the straight line method to allocate its cost less its residual
value over its estimated useful life. The depreciation rates and methods for the Company’s equipment
are as follows:
Vehicles/Mobile Equipment
Exploration Equipment
Straight line over 5 years
Straight line over 9 years
The assets’ residual values, depreciation methods, and useful lives are reviewed, and adjusted if
appropriate, at each statement of financial position date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
When an asset is disposed of, the difference between the net sale proceeds and its carrying amount is
recognized as a gain or loss within net loss on the consolidated statement of comprehensive loss.
j) Current and deferred income tax
The Company follows the liability method of accounting for income taxes. Under the liability method,
deferred income tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases, unused tax losses and other income tax deductions. Deferred income tax assets
are recognized for deductible temporary differences, unused tax losses and other income tax deductions
to the extent that it is probable the Company will have taxable income against which those deductible
temporary differences, unused tax losses and other income tax deductions can be utilized.
Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates
expected to apply when the related assets are realized or the liabilities are settled. The measurement
of deferred income tax assets and liabilities reflects the tax consequences that would follow from the
manner in which the Company expects, at the reporting date, to recover and settle the carrying amounts
of its assets and liabilities, respectively. The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in the period in which the change is substantively enacted.
k) Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issuance of new
ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
l) Share-based compensation
The Company has a share-based compensation plan, whereby it is authorized to grant share options to
officers, employees, directors, and other eligible persons. The fair value of the options is measured at
the date the options are granted, using the Black-Scholes option-pricing model with assumptions for
risk-free interest rates, dividend yields, volatility of the expected market price of the common shares
and an expected life of the options. The fair value less estimated forfeitures is charged over the vesting
period of the related options as an expense on its financial statements.
9
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
m) Provisions
Provisions for restructuring costs and legal claims are recognized when: the Company has a present
legal or constructive obligation as a result of past events; it is probable that an outflow of resources
will be required to settle the obligation; and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligations using the pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the obligation. The increase in the provision due to the passage of time is
recognized as interest expense.
n) Segment reporting
As the Company primarily focuses its activity on the exploration and development of mineral properties,
its operating and reportable segments are the Los Helados Project, the Company’s exploration projects
in Argentina, other exploration projects, and the Company’s corporate administration function.
Operating segments are components of an entity that engage in business activities from which they
incur expenses and whose operating results are regularly reviewed by a chief operating decision maker
to make resource allocation decisions and to assess performance. The Chief Executive Officer, the chief
operating decision-maker for the Company, obtains and reviews operating results of each operating
segment on a monthly basis.
o) Hyperinflation
The Company applies IAS 29, Financial Reporting in Hyperinflationary Economies, which outlines the
use of the hyperinflationary accounting to consolidate and report its Argentine operating subsidiaries.
Argentine subsidiaries’ non-monetary assets and liabilities, shareholders’ equity and comprehensive
loss items from the transaction date when they were first recognized into the current purchasing power
which reflects a price index current at the end of the reporting period before being included in the
consolidated financial statements. To measure the impact of inflation on its financial position and
results, the Company has elected to use the Wholesale Price Index (Indice de Precios Mayoristas or
“IPIM”) for periods up to December 31, 2016, and the Retail Price Index (Indice de Precios al
Consumidor or “IPC”) thereafter. These price indices have been recommended by the Government
Board of the Argentine Federation of Professional Councils of Economic Sciences (“FACPCE”).
As the consolidated financial statements of the Company have been previously presented in Canadian
dollars, a stable currency, the comparative period amounts do not require restatement.
p) Adoption of new accounting policy
On January 1, 2023, the Company adopted IAS 1 and the IFRS Practice Statement 2, Making Materiality
Judgements. IAS 1 which was amended to provide guidance on the application of materiality judgments
with respect to an entity’s accounting policy disclosures. This amendment to IAS 1 replaced previous
requirements to disclose ‘significant’ accounting policies with a requirement to disclose ‘material’
accounting policies.
The adoption of this amendment to IAS 1 did not have an impact on the Company’s financial results
for the year ended December 31, 2023.
10
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
q) New accounting pronouncements
The IASB and/or the IFRS Interpretations Committee have issued new standards and amendments, or
interpretations to existing standards, which were not yet effective and not applied by the Company as
at December 31, 2023.
IAS 1, Presentation of Financial Statements
The IASB published Non-current Liabilities with Covenants (Amendments to IAS 1) to clarify how
covenants with which an entity must comply within 12 months after the reporting period affect the
classification of the related liability. Effectively, liabilities are to be classified as either current or non-
current, depending on the rights that exist at the end of the reporting period. Liabilities should be
classified as non-current if the entity has a substantive right to defer settlement for at least 12 months
at the end of the reporting period. These amendments are effective January 1, 2024, with early
adoption permitted. Retrospective application is required on adoption.
IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures
The IASB has also issued amendments to IAS 7 and IFRS 7 to include disclosure requirements of
qualitative and quantitative details regarding supplier/vendor finance arrangements that will assist
users of financial statements in evaluating any resulting effects to the reporting entity’s liabilities and
cash flows. The amendments are effective for annual periods beginning on or after January 1, 2024.
The Company does not expect adoption of these amendments to have a material impact on its
consolidated financial statements.
4. HYPERINFLATION
Argentina was designated a hyperinflationary economy as of July 1, 2018, for accounting purposes.
The Company recognized a loss of $1,318,175 for the year ended December 31, 2023 (2022:
$84,302) in relation to the impact of hyperinflation within other comprehensive income. The
hyperinflationary gains and losses are generally the impact of two opposing factors:
Gains are driven by the hyperinflationary impacts on capital injected into the Argentine
subsidiaries during the period (“Gain on Capital Injected”).
Losses are largely the result of depreciation of the Argentine peso relative to the Canadian dollar
during the period, and its impact upon translation of the Argentine subsidiaries’ accounts into
the Canadian dollar reporting currency (“Loss on Translation”).
For the year ended December 31, 2023, although capital was injected into the Company’s Argentine
subsidiaries, the Loss on Translation was the dominant factor due to continued depreciation of the
Argentine peso relative to the Canadian dollar, which resulted in net hyperinflationary loss for the
year.
11
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
As a result of changes in the IPC and changes to the Company’s net monetary position, the Company
recognized a net monetary gain of $637,663 for the year ended December 31, 2023 (2022:
$54,798), to adjust transactions recorded during the year into a measuring unit current as of
December 31, 2023.
The level of the IPC at December 31, 2023, was 3,533.19 (December 31, 2022: 1,134.59), which
represents an increase of approximately 211% over the IPC at December 31, 2022, and an
approximate 79% increase over the average level of the IPC during the year ended December 31,
2023.
5. RECEIVABLES AND OTHER ASSETS
Current
Taxes receivable
Other receivables and advances
Other prepaid expenses and deposits
Non-current
Deferred surface access rights
Receivable from Exploration Partner
December 31,
2023
December 31,
2022
45,872
885,670
1,209,419
2,140,961
108,932
2,857,214
1,334,413
4,300,559
413,267
413,267
840,337
840,337
As at December 31, 2023, current other receivables and advances includes $137,077 (2022:
$2,730,489) receivable from the Company’s exploration partner at the Los Helados properties (Note
7).
Deferred Surface Access Rights
Reduced Surface Access Rights Agreements
Historically, the Company has had a contractual agreement with the owners of the surface rights
covering the Los Helados properties, which gave the Company access over these surface rights for
exploration, development, and mining through to closure of any mining operation, in exchange for
certain payments which are linked to project activities and certain development milestones (the
“Original Surface Access Agreement”). The Original Surface Access Agreement provided for
minimum annual payments of US$0.5 million which covered basic access to the property and
minimal surface disturbance such as road maintenance.
12
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
On January 26, 2021, the Original Surface Access Agreement was mutually terminated by the
Company and the holders of the surface rights and replaced with a reduced surface access
agreement with an effective period of three years (the “Reduced Surface Access Agreement”). The
Reduced Surface Access Agreement resulted in decreased payments receivable by the holders of
the surface rights in return for a reduction in permitted activities by the Company at the Los Helados
properties over its term. As a result, the payments by the Company to the holders of the surface
rights were reduced to a total of US$400,000 over the term of the Reduced Surface Access
Agreement, with US$200,000 paid upon execution in January 2021 and the remainder paid in
January 2022.
As the payments related to the Reduced Surface Access Agreement provide the Company the benefit
of access for the period ending January 26, 2024, the contractual amount was initially deferred and
has been amortized over the life of the agreement.
On November 22, 2022, the Company and the owners of the Los Helados surface rights negotiated
an amendment to the Reduced Surface Access Agreement, whereby the term of the agreement was
extended to January 26, 2026, in exchange for a US$250,000 payment upon execution, and
additional payments of US$250,000 on both November 22, 2023, and 2024 (the “Extension
Agreement”). Accordingly, as at December 31, 2023, the first two payments have been made, and
the third and final payment of US$250,000 due in November 2024 has been recognized within
current trade payables and accrued liabilities. As at December 31, 2023, the contractual liability had
a Canadian dollar equivalent of approximately $330,650.
Similar to above, all contractual amounts with respect to the Extension Agreement were initially
deferred and will be amortized over the term of the agreement ending January 26, 2026. In addition,
upon execution of the Extension Agreement, the term over which the remaining undeferred amounts
with respect to the Reduced Surface Access Agreement will be amortized was prospectively
extended to January 26, 2026.
The pro rata portion of deferred amounts relating to the 12 months ending December 31, 2024,
have been classified as a current asset.
Temporarily Restored Surface Access Rights
On November 30, 2021, the Company and the owners of the surface rights at Los Helados executed
a temporary restoration of the Company’s surface access rights as outlined in the Original Surface
Access Agreement (the “2021-2022 Restored Rights Agreement”). Pursuant to the 2021-2022
Restored Rights Agreement, the Company paid US$300,000 to the holders of the Los Helados
surface rights in exchange for reinstated surface access from date of execution until December 31,
2022. The amounts paid with respect to the 2021-2022 Restored Rights Agreement were initially
deferred and were amortized through the Consolidated Statement of Comprehensive Loss for the
year ended December 31, 2022.
13
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
On November 22, 2022, the Company and the owners of the Los Helados surface access rights
further restored the Company’s surface access rights on a temporary basis with an additional
agreement (the “2023 Restored Rights Agreement”). The 2023 Restored Rights Agreement allowed
the Company to carry on drilling and exploration activities at Los Helados during the year ended
December 31, 2023, in exchange for a payment of US$450,000. As the incremental payment related
to the temporary reinstatement of surface access rights provides the Company the benefit of access
up to December 31, 2023, the pro rata portion relating to the twelve months ending December 31,
2023 was initially deferred and have been amortized through the Consolidated Statement of
Comprehensive Loss for the year ended December 31, 2023.
6. EQUIPMENT
Cost
Mobile
Equipment
Exploration
Equipment
As at January 1, 2022
Adjustment for the impacts of inflation
As at December 31, 2022
Additions
Adjustment for the impacts of inflation
As at December 31, 2023
Accumulated depreciation
As at January 1, 2022
Amortization
Adjustment for the impacts of inflation
As at December 31, 2022
Amortization
Adjustment for the impacts of inflation
As at December 31, 2023
42,280
8,751
51,031
-
(17,053)
33,978
(18,312)
(12,275)
(1,721)
(32,308)
(13,169)
17,170
(28,307)
Total
42,280
8,751
51,031
-
-
-
189,419
-
189,419
189,419
(17,053)
223,397
-
-
-
-
(4,062)
-
(4,062)
(18,312)
(12,275)
(1,721)
(32,308)
(17,231)
17,170
(32,369)
Net book value
As at December 31, 2022
As at December 31, 2023
Mobile
Equipment
18,723
5,671
Exploration
Equipment
-
185,357
Total
18,723
191,028
14
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
7. MINERAL PROPERTIES
January 1, 2022
Additions
Effect of foreign currency translation
December 31, 2022
Additions
Effect of foreign currency translation
December 31, 2023
Los Helados Project
Los Helados
Project
$ 3,537,087
126,220
239,390
$ 3,902,697
133,923
(221,496)
$ 3,815,124
The Company’s holds interests in the Los Helados properties and the La Rioja properties (together, the
“Los Helados Project”), which are comprised of adjacent mineral titles in Region III, Chile, and the San
Juan Province in Argentina. At December 31, 2023, the Company held an approximate 69% interest in
the underlying Los Helados properties and a 60% interest in the La Rioja properties.
The Company is the majority partner and operator of the Los Helados Project, which is subject to a
Joint Exploration Agreement (“JEA”) with its exploration partner, Nippon Caserones Resources LLC
(“NCR”, previously Nippon Caserones Resources Co. Ltd). NCR is a subsidiary of JX Nippon Mining and
Metals Corporation, a Tokyo-based mining and smelting company that also has an indirect 49%
ownership interest in the Caserones Mine, located approximately 17 kilometres from the Los Helados
Project. The 51% controlling interest in the Caserones Mine is held by Lundin Mining Corporation.
The Company had sole funded 100% of the expenditures related to the Los Helados properties as the
result of elections by the exploration partner pursuant to the JEA not to fund its share of expenditures
for the period from September 1, 2015, to August 31, 2022. The sole funding of expenditures at the
Los Helados properties during this period resulted in dilution of NCR’s interest, and corresponding
increases to the Company’s interest, resulting in the amounts noted above.
The foregoing notwithstanding, NCR elected to exercise its right to fund its pro rata share of qualifying
expenditures related to the Los Helados properties since September 1, 2022. Amounts contributed or
contributable by NCR with respect to its funding commitment for the Los Helados properties are
recorded as reductions to exploration and project investigation costs and total $6,372,571 for the year
ended December 31, 2023 (2022: $2,624,306).
Lunahuasi Project
The Company holds a 100% interest in the Lunahuasi Project, an exploration target located in San
Juan Province, Argentina. Lunahuasi lies along the same major north-northeast structural trend that
controls the Filo del Sol deposit located approximately 6 km to the south and the Los Helados deposit
located approximately 9 km to the north.
15
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
Valle Ancho Properties
In November 2022, the Company secured a 100% interest in the Valle Ancho and Interceptor properties
(collectively, the “Valle Ancho Properties”), located in Catamarca, Argentina, by making its formal
submissions to the Province of Catamarca to evidence its completion of the US$8.0 million minimum
expenditure requirement.
8. CREDIT FACILITIES
On September 28, 2022, the Company obtained an unsecured US$3.0 million credit facility (the
“2022 Facility”) from Zebra Holdings and Investments S.à.r.l (“Zebra”) and Lorito Holdings S.à.r.l.
(“Lorito”) to provide financial flexibility to fund ongoing exploration and for general corporate
purposes. At the time, Zebra and Lorito were related parties of the Company by virtue of their
combined shareholding in the Company in excess of 20%.
As consideration for the 2022 Facility, Zebra and Lorito received 12,500 common shares upon
execution thereof (the “2022 Commitment Shares”) and were entitled to receive an additional 200
common shares each month, for every US$50,000 in principal outstanding, prorated accordingly for
the number of days outstanding.
During the year ended December 31, 2023, the Company made no draws against the 2022 Facility,
which matured on September 28, 2023. No interest was payable in cash during its term.
During the year ended December 31, 2023, the Company issued no common shares to Zebra and
Lorito in connection with the 2022 Facility (2022: 15,352). As a result of amortization of the 2022
Commitment Shares, the Company recognized $19,688 (2022: $16,741) in financing costs through
the consolidated statement of comprehensive loss for the year ended December 31, 2023.
All common shares issued in conjunction with the facilities were subject to a four-month hold period
under applicable securities laws.
9. DUE TO EXPLORATION PARTNER
The Company has an obligation to fund a partner’s share of exploration expenditures related to the La
Rioja properties (the “Obligation”). In accordance with the terms of the JEA between the Company and
the partner, NCR, the Company has elected to settle the Obligation through funding NCR’s share of
exploration expenditures, which remained US$3.4 million as at December 31, 2023, and has no defined
timeline for settlement.
The Company considered the estimated timeframe required to expend the remaining US$3.4 million on
behalf of NCR at the La Rioja properties and has presented the remaining obligation as a non-current
liability, discounted to its present value at an annual effective rate of 8% (2022: 8%).
16
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
As at December 31, 2023, the Company reviewed the nature and timing of future expenditures at the
La Rioja properties and increased its expected annual funding of NCR’s share of future exploration
expenditures from US$38,340 to US$39,600 based on its best estimate of exploration activities to be
conducted on the project. The effect of this change in future estimated expenditures at the La Rioja
properties is an increase in the amount due to exploration partner by $11,475, with a corresponding
amount recognized within other losses on the consolidated statement of comprehensive loss for the
year ended December 31, 2023 (2022: $212,531).
10. SHARE CAPITAL
The Company has authorized an unlimited number of voting common shares without par value.
On August 11, 2023, the Company closed a non-brokered private placement, pursuant to which the
Company sold an aggregate of 13,178,460 common shares at a price of $6.50 per common share,
generating aggregate gross proceeds of $85.7 million (the “Financing”). Share issuance costs related
to the Financing totaled $2.4 million, and included professional fees, regulatory fees, and 5% finders’
fees payable in cash on approximately $20.6 million of the gross proceeds from the Financing.
As part of the Financing, Nemesia S.à.r.l. (“Nemesia”), which acts jointly and reports its shareholdings
together with Zebra and Lorito, purchased 4,307,692 common shares pursuant to the terms outlined
above, for gross proceeds of $28.0 million. By virtue of Nemesia, Zebra and Lorito’s combined
shareholding in the Company in excess of 20%, Nemesia is also considered a related party of the
Company. In addition, as part of the Financing, directors of the Company purchased a total of 465,000
common shares pursuant to the terms outlined above, for gross proceeds of $3.0 million.
The common shares issued under the Financing were subject to a hold period under applicable
securities laws, which expired on December 12, 2023.
11. SHARE OPTIONS
a) Share option plan
The Company has a share option plan adopted by the Board of Directors on May 7, 2019, and amended
May 19, 2022, which reserves an aggregate of 10% of the issued and outstanding shares of the
Company for issuance upon the exercise of options granted. The granting, vesting and terms of the
share options are at the discretion of the Board of Directors.
17
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
b) Share options outstanding
Movements in the number of share options outstanding and their related weighted average exercise
prices are as follows:
Balance at January 1, 2022
Options granted
Exercised
Expired or forfeited
Balance at December 31, 2022
Options granted
Exercised
Balance at December 31, 2023
Number of
shares issuable
pursuant to
share options
9,160,834
4,640,000
(816,834)
(270,000)
12,714,000
1,500,000
(1,780,001)
12,433,999
Weighted
average
exercise price
per share
$ 0.56
1.98
0.61
1.59
$ 1.06
6.21
0.86
$ 1.71
On August 28, 2023, the Company granted a total of 1,425,000 share options to officers, employees,
directors and other eligible persons at an exercise price of $6.20 per share. In addition, on September
5, 2023, the Company granted a total of 75,000 share options to an officer at an exercise price of $6.36
per share.
The Company uses the Black-Scholes option pricing model to estimate the fair value for all options
granted and the resulting stock-based compensation. The weighted average assumptions used in this
pricing model, and the resulting fair values per option, for the 1,500,000 share options granted during
the year ended December 31, 2023, are as follows:
(i)
(ii)
(iii)
(iv)
(v)
Risk-free interest rate:
Expected life:
Expected volatility:
Expected dividends:
Fair value per option:
3.96%
4 years
79.11%
nil
$3.75
The weighted average share price on the exercise date for the share options exercised during year
ended December 31, 2023, was $6.21.
18
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The following table details the share options outstanding and exercisable as at December 31, 2023:
Outstanding options
Weighted
average
remaining
contractual
life
(Years)
0.74
1.92
2.26
3.03
3.69
3.92
4.66
4.68
2.58
Weighted
average
exercise
price
$0.475
$0.54
$0.68
$1.65
$2.08
$3.16
$6.20
$6.36
$1.71
Options
outstanding
2,515,000
2,205,000
2,153,999
1,403,333
2,446,667
210,000
1,425,000
75,000
12,433,999
Exercise
price
$0.475
$0.54
$0.68
$1.65
$2.08
$3.16
$6.20
$6.36
Exercisable options
Weighted
average
remaining
contractual
life
(Years)
0.74
1.92
2.07
3.03
3.69
3.92
4.66
-
2.17
Weighted
average
exercise
price
$0.475
$0.54
$0.68
$1.65
$2.08
$3.16
$6.20
-
$1.23
Options
exercisable
2,515,000
2,205,000
1,479,003
456,667
1,619,997
140,000
475,001
-
8,890,668
c) Share-based compensation
Exploration and project investigation
General and administration
Year ended
December 31,
2022
574,117
2,353,238
2,927,355
2023
1,079,170
3,592,030
4,671,200
12. EXPLORATION AND PROJECT INVESTIGATION
The Company expensed the following exploration and project investigation costs for the years ended
December 31, 2023 and 2022:
19
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
Year ended
December 31,
2023
Los Helados
Project
Lunahuasi
Valle
Ancho
Other
Total
Land holding and access costs
Drilling, fuel, camp costs and field
supplies
Roadwork, travel and transport
Engineering and conceptual studies
Consultants, geochemistry and geophysics
Environmental and community relations
VAT and other taxes
Office, field and administrative salaries,
overhead and other administrative costs
Share-based compensation
COVID related health and safety
Total
1,101,845
10,335
18,318
7,267
1,137,765
7,384,904
15,394,758
1,406,354
347,755
1,093,837
83,006
1,631,736
2,493,339
-
866,631
97,181
2,934,239
-
301
-
5,654
-
31,435
-
22,779,662
13
-
-
-
11,142
3,900,007
347,755
1,966,122
180,187
4,608,552
1,640,149
2,478,085
137,891
27,595
4,283,720
404,862
-
15,094,448
667,719
431
24,942,718
5,321
-
198,920
1,268
-
1,079,170
431
47,285 40,283,371
2022
Land holding and access costs
Drilling, fuel, camp costs and field
supplies
Roadwork, travel and transport
Engineering and conceptual studies
Consultants, geochemistry and geophysics
Environmental and community relations
VAT and other taxes
Office, field and administrative salaries,
overhead and other administrative costs
Share-based compensation
COVID related health and safety
Total
416,851
22
22,503
27,684
467,060
11,225,277
1,893
1,423,143
-
12,650,313
4,961,496
303,666
1,099,791
142,996
3,171,718
1,279,451
17,374
-
-
25,202
52,909
778,753
-
228,012
88,971
859,429
37
-
-
-
18,751
5,757,660
303,666
1,327,803
257,169
4,102,807
347,285
1,708,337
28,725
3,363,798
460,431
975
23,062,652
8,794
-
103,381
118,477
453,479 5,331,006
1,511
-
574,117
119,452
76,708 28,923,845
20
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
13. RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances
with related parties. Other than those related party transactions identified elsewhere in these
condensed interim consolidated financial statements, the Company may, from time to time, engage
with Filo Corp. (“Filo”), a related party by way of directors, officers and shareholders in common, and
MOAR Consulting Inc. (“MOAR”), an exploration consulting firm, of which a director of the Company
is the president.
a) Related party services
The Company has a cost sharing arrangement with Filo. Under the terms of this arrangement, the
Company may, from time to time, provide management, technical, administrative and/or financial
services (collectively, “Management Services”) to Filo, and vice versa. In addition, the Company
engages MOAR to provide exploration consultation. These transactions were incurred in the normal
course of operations, and are summarized as follows:
Management Services to Filo
Management Services from Filo
Exploration Consultation from MOAR
b) Related party balances
Year ended
December 31,
2022
2023
285,642
(436,784)
(11,825)
364,343
(902,414)
(12,750)
The amounts due from (to) related parties, and the components of the consolidated statements of
financial position in which they are included, are as follows:
Receivables and other assets
Accounts payable and accrued liabilities
Filo
Filo
67,466
(52,858)
112,163
(186,449)
Related Party
December 31,
2023
December 31,
2022
21
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
c) Key management compensation
The Company’s key management personnel have the authority and responsibility for overseeing,
planning, directing and controlling its activities and consist of the Board of Directors and members of
the executive management team. Total compensation expense for key management personnel, and
the composition thereof, is as follows:
Salaries and other payments
Short-term employee benefits
Directors fees
Stock-based compensation
Short-term incentive bonuses
14. INCOME TAXES
Year ended
December 31,
2022
572,667
17,514
92,458
1,983,771
690,000
3,356,410
2023
912,411
26,825
97,000
3,074,327
1,122,000
5,232,563
Income tax expense differs from the amount that would result from applying the Canadian federal and
provincial income tax rates to the loss for the year. These differences result from the following items:
Loss before taxes
Combined Canadian federal and provincial statutory
income tax rates
Income tax recovery based on the above rate
Changes to income tax balances and other items that have
not been recognized
Impacts of changes and differences in foreign tax and
currency rates
Non-deductible expenses and permanent differences
Total income tax recovery
Year ended
December 31,
2022
2023
37,718,192
32,415,262
27.00%
10,183,912
27.00%
8,752,121
(7,263,052)
(9,310,039)
(3,416,671)
495,811
-
642,557
(84,639)
-
22
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The Company’s unrecognized deductible temporary differences and unused tax losses for which no
deferred tax asset has been recognized consist of the following:
Non-capital losses carried forward
Mineral properties and related expenditures
Other
Year ended
December 31,
2022
2,978,119
25,671,833
253,303
2023
3,884,369
30,209,552
911,852
35,005,773 28,903,255
As at December 31, 2023, the non-capital loss carry-forwards and their respective expiration dates are
as follows:
Year
2024
2025
2026
2027
2028 and onwards
Canada
-
-
-
-
13,204,899
13,204,899
Argentina
2,295
2,411
53,916
204,202
543,006
805,830
Other
37,690
32,688
23,855
29,615
19,881
143,729
Total
39,985
35,099
77,771
233,817
13,767,786
14,154,458
15. SEGMENTED INFORMATION
The Company is principally engaged in the acquisition, exploration and development of mineral
properties in South America. The information regarding mineral properties and exploration and project
investigation costs presented in Notes 7 and 12, respectively, represent the manner in which
management reviews its business performance. Materially all of the Company’s mineral properties and
exploration and project investigation costs relate to South America, particularly Chile and Argentina. The
net gains on the use of marketable securities are allocated to the underlying projects for which the
funding was provided. Materially all of the Company’s administrative costs are incurred by the Canadian
parent, where materially all of the Company’s cash is held in the normal course of business until it is
required to be deployed to the Company’s South American subsidiaries in support of ongoing and
planned work programs.
23
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
The following are summaries of the Company’s current and non-current assets, current liabilities, and net losses by segment:
Current assets
Non-current receivables and other assets
Equipment
As at
December 31, Mineral properties
2023
Total assets
Current liabilities
Due to exploration
partner
Total liabilities
Current assets
Non-current receivables and other assets
Equipment
As at
December 31, Mineral properties
2022
Total assets
Current liabilities
Non-current accrued liabilities
Due to exploration
partner
Total liabilities
Los
Helados
Project
1,089,494
413,267
185,358
3,815,124
5,503,243
Lunahuasi &
Valle Ancho
1,077,345
-
5,670
-
1,083,015
Corporate
74,706,657
-
-
-
74,706,657
Total
76,873,496
413,267
191,028
3,815,124
81,292,915
768,887
5,670,081
750,870
7,189,838
-
5,670,081
634,740
1,385,610
634,740
7,824,578
Lunahuasi &
Valle Ancho
536,267
-
18,723
-
554,990
432,919
-
-
432,919
Corporate
18,712,293
-
-
-
18,712,293
Total
27,549,800
840,337
18,723
3,902,697
32,311,557
850,809
-
7,327,951
338,600
630,460
1,481,269
630,460
8,297,011
-
768,887
Los
Helados
Project
8,301,240
840,337
-
3,902,697
13,044,274
6,044,223
338,600
-
6,382,823
24
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
Year ended
December 31,
2023
2022
Exploration and
project
investigation
Gain on use of
marketable
securities
General and
administration
and other items
Net loss
Exploration and
project
investigation
Gain on use of
marketable
securities
General and
administration
and other items
Net loss
Los Helados
Project
Lunahuasi &
Valle Ancho
Corporate
Other
Total
15,094,448
25,141,638
(61,957)
(8,968,580)
-
-
47,285
40,283,371
-
(9,030,537)
117,986
15,150,477
(510,600)
15,662,458
6,857,972
6,857,972
-
47,285
6,465,358
37,718,192
Los Helados
Project
Lunahuasi &
Valle Ancho
Corporate
Other
Total
23,062,652
5,784,485
(57,155)
(1,918,201)
-
-
76,708
28,923,845
-
(1,975,356)
84,312
23,089,809
24,842
3,891,126
5,357,619
5,357,619
-
76,708
5,466,773
32,415,262
25
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
16. USE OF MARKETABLE SECURITIES
From time to time, the Company may acquire and transfer marketable securities to facilitate
intragroup funding transfers between the Canadian parent and its Argentine operating subsidiaries.
The Company does not acquire marketable securities or engage in these transactions for speculative
purposes. In this regard, under this strategy, the Company generally uses marketable securities of
large and well-established companies, with high trading volumes and low volatility. Nonetheless, as
the process to acquire, transfer and ultimately sell the marketable securities occurs over several
days, some fluctuations are unavoidable.
As the marketable securities are acquired with the intention of a near term sale, they are considered
financial instruments that are held for trading. Accordingly, all changes in the fair value of the
instruments, between acquisition and disposition, are recognized through profit or loss.
As a result of having utilized this mechanism for intragroup funding for the year ended December
31, 2023, the Company realized a net gain of $9,030,537 (2022: $1,975,356). The net gain for the
year ended December 31, 2023 was comprised of a favorable foreign currency impact of
$10,100,473 (2022: $2,269,711) and a trading loss of $1,069,936 (2022: $294,355), including the
impact of fees and commissions.
17. CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to safeguard its ability to continue as a going
concern in order to pursue the development of its mineral properties and to maintain a flexible
capital structure which optimizes the costs of capital at an acceptable risk. In the definition and
management of capital, the Company considers the items included in shareholders’ equity to be
capital.
The Company manages the capital structure and makes adjustments, as necessary, in light of
changes in economic conditions and the risk characteristics of its assets. In order to maintain or
adjust the capital structure, the Company may attempt to issue new shares or debt instruments,
acquire or dispose of assets, or to bring in joint venture partners.
To facilitate the management of its capital requirements, the Company may prepare expenditure
plans and budgets that are updated as necessary depending on various factors, including, but not
limited to, successful capital deployment and general industry conditions.
26
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
18. FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS
The Company has estimated the fair values of its financial instruments based on appropriate
valuation methodologies. These values are not materially different from their carrying value.
The Company classifies the fair value of its financial instruments according to the following hierarchy
based on the amount of observable inputs used to value the instrument:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the
assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
As at December 31, 2023, the Company’s financial instruments consist of cash, receivables and
other assets, short-term investments, trade payables and accrued liabilities, and the amounts due
to its exploration partner. Other than for the amounts due to its exploration partner, the carrying
values of the Company’s financial instruments are considered to be reasonable approximations of
fair value due to their short-term nature. For amounts due to its exploration partner, the Company
revalues the liability from time to time based on revisions to the timing and amounts of expected
future settlement, which the Company believes is a reasonable approximation of fair value. Between
revaluations, the liability is accreted.
As at December 31, 2023, the Company’s financial instruments are exposed to the following financial
risks, including credit, liquidity and currency risks:
(i)
(ii)
Credit risks associated with cash is minimal as the Company deposits the majority of its cash
with a large Canadian financial institution that has been accorded a strong investment grade
rating by a primary rating agency.
Liquidity risks associated with the inability to meet obligations as they become due is minimized
through the management of its capital structure as explained on Note 17 and by maintaining
good relationships with significant shareholders and creditors, such as Nemesia, Zebra and
Lorito. The Company also closely monitors and reviews its costs to date and actual cash flows
on a monthly basis.
The maturities of the Company’s financial liabilities as at December 31, 2023, are as follows:
Total
Less than
1 year
1-5
years
More than
5 years
Accounts payable and
accrued liabilities
Due to exploration partner
Total
7,189,838
4,432,169
7,189,838
-
11,622,007
7,189,838
-
-
-
-
4,432,169
4,432,169
27
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise stated)
In accordance with the terms of a JEA between the Company and the partner, NCR, the
Company has elected to settle the Obligation through funding NCR’s share of exploration
expenditures, which remained US$3.4 million as at December 31, 2023, and has no defined
timeline for settlement. The Obligation has been discounted and recorded at its present
value at an annual effective rate of 8%. The figure provided in the preceding table
represents the Canadian dollar equivalent of the liability on an undiscounted basis.
(iii)
Foreign currency risk can arise when the Company or its subsidiaries transact or have net
financial assets or liabilities which are denominated in currencies other than their respective
functional currencies.
At December 31, 2023, the Company’s largest foreign currency risk exposure existed at the
level of its Canadian headquarters, where the Company held a net financial asset position
denominated in US dollars having a Canadian dollar equivalent of approximately $8,600,000.
A 10% change in the foreign exchange rate between the US dollar, and the Canadian dollar,
NGEx Minerals’ functional currency, would give rise to increases/decreases of approximately
$860,000 in financial position/comprehensive loss.
28
NGEx Minerals Corporate Directory
Corporate Head Office(1)
2000 – 885 West Georgia Street
Vancouver, B.C. V6C 3E8 Canada
Phone: +1 604 689 7842
Fax: +1 604 689 4250
Auditors
Pricewaterhouse Coopers LLP
Vancouver, B.C. Canada
Officers
Wojtek Wodzicki
President and CEO
Jeff Yip
Chief Financial Officer
Bob Carmichael
Vice President, Exploration
Registered and Records Office
2200 – 885 West Georgia Street
Vancouver, B.C. V6C 3E8 Canada
Registrar and Transfer Agent
Computershare Trust Company of Canada
Vancouver, B.C. Canada
Phone: +1 604 661 9400
Directors
William Rand (Chair)
Wojtek Wodzicki
Adam I. Lundin
Alessandro Bitelli
Cheri Pedersen
Neil O’Brien
Axel Lundin
Brent Bonney
Vice President, Corporate Development &
Investor Relations
Judy McCall
Corporate Secretary
Solicitors
Cassels Brock & Blackwell LLP
Vancouver, B.C. Canada
Company Information
Brent Bonney
Investor Relations
Email: info@ngexminerals.com
Phone: +1 604 689 7842
Share Listing
TSX: NGEX
OTCQX: NGXXF
CUSIP: 65343P103
(1) Effective April 15, 2024, the corporate head office will be changed to Suite 2800, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, BC, V7X 1L2, Canada