2024 YEAR END REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
AND
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2024
(AUDITED)
1
NGEX MINERALS LTD.
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2024
(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, 2024 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 25, 2025. 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 common shares trade on the Toronto Stock Exchange under the symbol “NGEX”, and on the OTCQX
under the symbol “NGXXF”.
Lunahuasi
The Company owns a 100% interest in the Lunahuasi project, a high-grade copper-gold-silver deposit located in San
Juan Province, Argentina (“Lunahuasi” or the “Lunahuasi Project”), which is the most recent major deposit discovered
in the emerging Vicuña District, which also hosts the Caserones Mine, the Josemaria deposit, the Filo del Sol deposit,
and the Company’s Los Helados copper-gold deposit. Drilling at Lunahuasi has discovered a significant new zone of
high-grade mineralization, showcasing some of the highest copper, gold and silver grades drilled to date in the Vicuña
District and intersected globally in recent years. Follow-up drilling completed during the Phase 2 2023-2024 field
program, which ended in April 2024, has demonstrated the significant size potential of the initially discovered high-
grade copper-gold-silver veins and confirmed the presence of longer intercepts of high-grade stockwork mineralization.
Both styles of mineralization are interpreted to be part of a porphyry copper-gold system centered nearby and following
up on these initial findings will continue to be a focus for the Company moving forward.
The Lunahuasi Project, as currently defined, is located on the Nacimiento I concession. The Nacimiento I concession
is subject to a 1% net smelter return (“NSR”) royalty, which on December 31, 2024, was held by Filo Corp. (“Filo”), a
related party of the Company by way of directors, officers and shareholders in common. On January 15, 2025,
following the acquisition of Filo by Vicuña Corp., a joint venture formed by Lundin Mining Corporation (“Lundin Mining”)
and BHP Investments Canada Inc. (“BHP”), the 1% NSR royalty on the Nacimiento I concession is now held therein,
which is not a related party of the Company.
2
The Nacimiento I concession is also subject to an additional third-party NSR royalty of 0.5% covering the first 10 years
of production. The same third party is also entitled to a one-time payment of US$ 2.0 million upon commencement of
production at Nacimiento I.
Los Helados
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 Advanced Metals
Corporation, a Tokyo-based mining and smelting company that also has an indirect 30% ownership interest in the
Caserones Mine, located approximately 17km from Los Helados. The remaining 70% controlling interest in the
Caserones Mine is held by Lundin Mining. The Company and Lundin Mining are not related parties, however they are
respectively part of the Lundin Group of Companies, which are entities in which companies owned by trusts whose
settlor was the late Adolf H. Lundin hold varying degrees of equity interest. By virtue of its majority interest in the
Caserones Mine, and it being a joint venture partner with BHP in the future development of the Josemaria and Filo
del Sol projects, Lundin Mining currently has a significant interest in three of the major projects in the Vicuña District
within which the Company’s Los Helados and Lunahuasi Projects reside.
The total area of the Los Helados Property legal tenure is 31,428 hectares, all of which is subject to the JEA. While
the Los Helados concessions are not subject to royalties, back-in rights, or other obligations in favour of third parties,
pursuant to the terms of the JEA, a party’s interest is automatically converted to a 0.5% net smelter return (“NSR”)
royalty if it is diluted to below 5%. In addition to a specific tax on mining activities, the Chilean government also levies
royalties in the form of a mining tax on dividends paid by a Chilean mining company.
The Company’s most recent Mineral Resource Estimate for the Los Helados Project is summarized in the following
table, which has an effective date of October 31, 2023. 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”.
Los Helados Mineral Resources (0.33% CuEq Cutoff)
Tonnage
Resource Grade
Contained Metal
Class
(billion
tonnes)
Cu
(%)
Au
(g/t)
Ag
(g/t)
CuEq
(%)
Cu
(billion
lbs)
Au
(million
oz)
Ag
(million
oz)
Indicated
2.08
0.40
0.15
1.5
0.51
18.4
10.2
97.5
Inferred
1.08
0.34
0.10
1.5
0.42
8.2
3.6
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.
3
2024 OPERATING HIGHLIGHTS AND OUTLOOK
Lunahuasi Continues to Exceed Expectations with High-grades and Significant Potential for Scale
During the year ended December 31, 2024, the Company focused on advancing and accelerating exploration at the
Lunahuasi deposit, located in San Juan, Argentina. Discovered in early 2023, Lunahuasi has quickly grown to become
a cornerstone asset within the Vicuña District due to its remarkably high-grades, significant size potential, and strategic
location close to neighbouring advanced properties in this emerging giant metals region.
In the first half of 2024, the Company successfully completed its second ever drill program at Lunahuasi with 12,952m
of core drilling in 15 holes. The Phase 2 campaign continued to intersect long, bonanza-grade intervals in and around
the initial discovery hole, DPDH002, and confirmed the presence of mineralized high-grade structures throughout a
volume measuring at least 400m by 900m by 960m. Importantly, the Lunahuasi deposit remained open in all directions
with several of the holes that marked the outer boundaries of the drill pattern returning significant mineralization, such
as:
●
Northern boundary: DPDH002 which included 60.0m at 7.52% copper equivalent (“CuEq”) (5.65% Cu, 2.04
g/t Au, 44.0 g/t Ag);
●
Southern boundary: DPDH021 which included 58.1m at 6.04% CuEq (3.53% Cu, 2.76 g/t Au, 56.3 g/t Ag)
380m south of the intersection in DPDH002; and
●
Western boundary: DPDH022 which included 12.1m at 4.48% CuEq (3.82% Cu, 0.59 g/t Au, 25.2 g/t Ag)
near the bottom of the hole, 500m west of the intersection in DPDH002.
Building on the success of its Phase 2 program, the Company launched its ambitious Phase 3 drill program at Lunahuasi
in October 2024, which is planned to continue into May 2025. As of the date of this MD&A, the Phase 3 program has
already completed over 18,000m of drilling in 18 holes (DPDH024 to DPDH041), becoming the Company’s largest
campaign to date at Lunahuasi. The program also includes drill rigs with depth capacities beyond 2,000m which are
intended to test the western extent to the system.
Most notably, the Phase 3 program is testing the Lunahuasi deposit at three target scales:
●
Long-range exploration holes (+300m spacing) are big step-outs that are testing for significant extensions
of mineralization to the north, south, and west.
●
Mid-range step out holes (50-300m spacing) are exploring for extensions of the mineralized zone in all
directions and start to fill in large gaps in the drill pattern.
●
Short-range infill holes (30-50m spacing) are testing the short-range variability of mineralized structures
and high-grade zones and confirming the main structural orientations, ultimately contributing towards
developing a future mineral resource estimate for Lunahuasi.
As of the date of this MD&A, four sets of assay results from the Phase 3 program have been released by the Company.
Highlights from Phase 3 up to the date of this MD&A include:
●
Continuation of high- to bonanza-grade intersections across considerable widths, including within
short-range holes, which have confirmed local bonanza grades within the mineralized structures. Highlights
include:
o
DPDH024 which intersected 86.60m at 4.39% CuEq (1.76% Cu, 3.37 g/t Au, 20.6 g/t Ag), including
12.25m at 23.35% CuEq (9.36% Cu, 18.16 g/t Au, 84.7 g/t Ag);
o
DPDH028 which intersected 51.10m at 13.84% CuEq (5.98% Cu, 9.70 g/t Au, 90.4 g/t Ag);
4
o
DPDH032 which intersected 27.40m at 25.19% CuEq (7.80% Cu, 23.17 g/t Au, 55.9 g/t Ag) including
8.60m at 15.80% Cu, 69.82 g/t Au and 127.4 g/t Ag; and
o
DPDH035 which intersected 51.5m at 12.26% CuEq (including 10.42 g/t Au) including 21.50m at
23.81% CuEq (including 23.81 g/t Au);
●
Significant expansion of the Lunahuasi deposit with successful mid- and long-range step out
holes that have extended the mineralized volume to a minimum distance of 1km north-south, east-west, and
vertically. Of particular note, the largest step-outs completed at Lunahuasi and assayed to date include:
o
DPDH028, the best hole drilled to date at Lunahuasi, which was drilled deeper and to the west of all
previous holes;
o
DPDH029, which was drilled 470m south of DPDH028 and returned 157.7m at 2.18% CuEq (1.67%
Cu, 0.49 g/t Au, 16.7 g/t Ag); and
o
DPDH033, which extended the deposit 50m to the north with 16.25m at 6.79% CuEq (5.05% Cu, 1.87
g/t Au, 42.5 g/t Ag) plus 23.00m at 4.49% CuEq (2.34% Cu, 2.51 g/t Au, 35.6 g/t Ag);
●
Presence of elevated high-grade precious metals, particularly gold, with several intersections being
comparable or even exceeding renowned world-class, high-grade gold deposits. Notable examples include:
o
DPDH024 with 4.05m at 42.58g/t Au;
o
DPDH025 with 5.74m at 19.13 g/t Au;
o
DPDH028 with 8.20m at 39.11 g/t Au, within a broader interval of 51.10m at 9.70 g/t Au;
o
DPDH032 with 27.4m at 23.17 g/t Au; and
o
DPDH035 with 51.50m at 10.42 g/t Au, including 21.50m at 23.81 g/t Au.
Composited intervals from all Lunahuasi holes up to the date of this MD&A, including from the Company’s Phase 2 and
Phase 3 drill programs can be found in the Company’s most recent annual information form (“AIF”), as filed on SEDAR+
at www.sedarplus.ca.
In response to early success, the Phase 3 program was expanded from six to eight rigs in February 2025 and is now
targeting up to 25,000m of drilling. With the deposit remaining open in all directions, one of the main objectives for
the remainder of the current Phase 3 program will be to continue step out drilling to expand the known mineralized
zones and test for extensions of the known mineralization to the west, north and south of the current drill pattern.
As of the date of this MD&A, full assay results having been received and released for holes DPDH024 to DPDH026,
DPDH028, DPDH030 and DPDH031 and partial assays for an additional six holes (DPDH027, DPDH029 and DPDH032
through DPDH035). Remaining assay results from Phase 3 will be released as they are received, analyzed, and
confirmed by the Company.
2024 CORPORATE HIGHLIGHTS
Successful Completion of Oversubscribed Financing
On October 31, 2024, the Company successfully closed an oversubscribed non-brokered private placement, pursuant
to which the Company sold an aggregate of 16,082,453 common shares at a price of CAD$11.00 per common share,
generating gross proceeds of approximately CAD$176.9 million (the “Financing”). Share issuance costs related to the
Financing totaled $5.9 million, and included professional fees, regulatory fees, and 5% finders’ fees payable in cash
on approximately $46.5 million of the gross proceeds from the Financing.
5
As part of the Financing, Nemesia S.à.r.l. (“Nemesia”) purchased 2,272,727 common shares, pursuant to the terms
outlined above, for gross proceeds of $25.0 million. By virtue of Nemesia’s shareholding in the Company in excess of
20%, it is considered a related party of the Company. In addition, as part of the Financing, directors and members of
the executive management team of the Company purchased a total of 122,909 common shares pursuant to the terms
outlined above, for gross proceeds of $1.4 million.
The net proceeds of the Financing have been, and will be, predominantly used towards furthering exploration programs
at the Lunahuasi Project, continued exploration and maintenance of the Company’s Los Helados Project, as well as for
general corporate and working capital purposes.
The common shares issued under the Financing were subject to a hold period under applicable securities laws, which
expired on March 1, 2025.
RESULTS FROM OPERATIONS
Year Ended
Dec-24
Dec-23
Dec-22
Net loss ($000’s)
63,597
37,718
32,415
Loss per share, basic and diluted ($)
0.33
0.21
0.20
Total assets ($000’s)
208,563
81,293
32,312
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-24
Sep-24
Jun-24
Mar-24
Dec-23
Sep-23
Jun-23
Mar-23
Exploration costs ($000's)
27,195
6,218
7,818
22,519
9,795
4,469
10,898
15,122
Operating loss ($000’s)
30,634
12,253
9,795
24,378
11,714
8,675
12,116
16,483
Net loss ($000’s)
26,427
9,847
7,579
19,744
8,614
4,218
9,719
15,167
Net loss per share, basic and
diluted ($)
0.13
0.05
0.04
0.11
0.04
0.02
0.06
0.09
NGEx Minerals incurred a net loss of $63.6 million for the year ended December 31, 2024 (2023: $37.7 million),
including an operating loss of $77.1 million (2023: $49.0 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, 2024, accounted
for approximately 83% of the operating loss (2023: 82%). Due to the geographic location of the Company’s
mineral properties, the Company’s business activities generally fluctuate with the seasons, with 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, 2024, were $63.8 million (2023:
$40.3 million). The significant increase for the year ended December 31, 2024, is due primarily to the relatively
larger field and drill programs undertaken by the Company during the year compared to the campaigns conducted
during the comparative period. For the year ended December 31, 2024, the Company completed the bulk of its 4-
rig, Phase 2 program at Lunahuasi and also initiated its 6-rig, Phase 3 campaign in October 2024, as discussed in
the “2024 Operating Highlights and Outlook” section above. By comparison, for the year ended December 31,
2023, the Company had only conducted a small 2-rig maiden drill program at Lunahuasi to start the year, while
drilling was focused on the Los Helados Project with a 4-rig expansion and infill program. Following the discovery of
the Lunahuasi deposit during this first ever drill campaign, the Company made preparations for follow-up drilling,
which began as Phase 2 in October 2023.
In addition, the higher exploration and project investigation costs for the year ended December 31, 2024, is due to
the activity and related expenditures predominantly occurring in Argentina for the Lunahuasi project, whereas a
significant portion of the activity in the comparative period occurred at the Los Helados Project, located in Chile.
Specifically, operating in Argentina, relative to Chile, generally results in higher reported costs for financial reporting
purposes due the country’s high inflation, which increases Argentine peso-denominated costs, and restrictions placed
on the official exchange rates, which value the Argentine peso at artificially high levels. In addition, costs incurred by
the Company’s Argentine’s operating subsidiaries are subject to hyperinflation accounting adjustments, which increase
transactions recorded during the period into a measuring unit current as of the period end. During the year ended
December 31, 2024, exploration and project investigation costs included a hyperinflation adjustment of approximately
$3.3 million as a result of the Company’s exploration activity in Argentina (2023: $2.5 million).
For further details on the Company’s application of hyperinflation accounting, and the methods by which it manages
the deployment of capital into Argentina through the use of alternate funding mechanisms, refer to the Company’s
consolidated financial statements and related notes therein.
Excluding share-based compensation, administration costs for the year ended December 31, 2024 totaled $6.9
million (2023: $5.1 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,, 2024, were
higher than the 2023 comparative year primarily due to higher compensation costs, promotion and public relations
costs and general office expenses. The increase in compensation costs for the year ended December 31, 2024, is due
to severance payments made in the current periods, as well as a higher average personnel headcount and base
compensation levels, which reflect increases in resources and support in response to the Company’s growth since
2023. The increase in promotion and public relations costs during the year ended December 31, 2024, is the result of
an increase in scope in the Company’s investor relations initiatives to coincide with the recent increase in the
Company’s market capitalization and profile. Office and general costs have increased during the year ended December
31, 2024, due to additional fees paid in connection with the commencement of trading of the Company’s common
shares on the TSX and OTCQX in February and March 2024, respectively.
Interest income for the year ended December 31, 2024, totalled $3.6 million (2023: $1.9 million). The increase in
interest income earned for the year ended December 31, 2024, is due primarily to the significantly higher average
total balance of cash and short-term investments held by the Company during the year, which resulted from net
proceeds raised by the Financing as discussed in the “2024 Corporate Highlights” section above.
7
For the year ended December 31, 2024, the Company reported a foreign exchange gain of $2.2 million (2023: loss of
$0.1 million). The foreign exchange gain is due to the depreciation of the Canadian dollar against the US dollar,
particularly during the latter portion of 2024, which resulted in gains realized on revaluation of US dollars held by the
Company’s Canadian headquarters into its Canadian dollar functional currency at December 31, 2024.
The Company recognized a net monetary loss of $512,258 during the year ended December 31, 2024 (2023: gain of
$637,663), in relation to the application of hyperinflationary accounting for the Company’s Argentine subsidiaries. The
monetary loss 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 ended December 31, 2024. 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, 2024, the Company recognized a gain of $9.2 million (2023: $9.0 million) on the use of
marketable securities for this purpose, which represents the net benefit of having used this funding mechanism
over traditional methods. Although the gains are comparable in size, more funding was provided to its Argentine
subsidiaries during the year ended December 31, 2024, which reflects the significantly larger scope of work
undertaken at Lunahuasi during 2024 as described in the “2024 Operating Highlights and Outlook” section above.
However, during the year ended December 31, 2024, the spread between using this alternate funding mechanism
over traditional methods significantly contracted, which has largely offset the impact of the increased funding.
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.
In other comprehensive loss, the Company reported a foreign currency translation loss of $114,672 for the year
ended December 31, 2024 (2023: $929,853) on translation of subsidiary company accounts from their functional
currency to the Canadian dollar presentation currency. For the year ended December 31, 2024, the foreign currency
translation impact 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, 2024, the impacts of hyperinflation amounted a gain of $3.2
million (2023: loss of $ 1.3 million), 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 subsidiaries into
the Canadian dollar presentation currency for consolidation.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2024, the Company had cash of $153.4 million, short-term investments of $45.2 million and net
working capital of $188.9 million compared to cash of $59.5 million, short-term investments of $15.2 million and net
working capital of $69.7 million as at December 31, 2023. The Company’s total treasury, consisting of its cash and
short-term investments, and net working capital increased during the year ended December 31, 2024, due primarily
to net proceeds received from the Financing, as discussed above, and to $2.7 million in gross proceeds received
pursuant to the exercise of stock options (2023: $1.5 million). The increases have been partially offset by funds used
in operations, including mineral property and surface access rights payments, and for general corporate purposes.
RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances with related parties.
Other than those related party transactions identified elsewhere in this MD&A, during the year ended December 31,
2024, the Company also engaged with Filo, as discussed below.
8
Buy back of Lunahuasi Royalty
On May 13, 2024, the Company repurchased two thirds of a 3% NSR royalty (i.e. a 2% NSR royalty) on the Nacimiento
1 concession from Filo, a related party at the time by way of directors, officers and shareholders in common, pursuant
to a buy back option for cash consideration totaling US$ 1.5 million. The Company’s Lunahuasi deposit, as currently
defined, is located within the Nacimiento 1 concession. The consideration paid for the buy back had a Canadian dollar
equivalent of $2,048,456, which has been recorded as an addition to the mineral property balance for Lunahuasi.
The buy back has resulted in a residual 1% NSR royalty on the Nacimiento 1 concession, as described in the “Core
Business” section above.
Acquisition of mineral properties
In April 2024, the Company acquired a 100% interest in certain exploitation and exploration concessions located in
Chile (the “Maricunga Properties”) from Filo for total cash consideration having a Canadian dollar equivalent of $94,096.
The Maricunga Properties are adjacent to the Valle Ancho and Interceptor properties (collectively, “Valle Ancho” or the
“Valle Ancho Project”), in which the Company holds a 100% interest.
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, historically, the Company has engaged MOAR Consulting Inc. (“MOAR”),
an exploration consulting firm, of which a director of the Company is the president. These transactions were incurred
in the normal course of operations, and are summarized as follows:
Year ended
December 31,
2024
2023
Management Services to Filo
269,069
285,642
Management Services from Filo
(298,654)
(436,784)
Exploration Consultation from MOAR
-
(11,825)
Related party balances
The amounts due from (to) related parties, and the components of the consolidated statement of financial position in
which they are included, are as follows:
Related Party
December 31,
2024
December 31,
2023
Receivables and other assets
Filo
80,345
67,466
Accounts payable and accrued liabilities
Filo
(67,502)
(52,858)
9
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:
Year ended
December 31,
2024
2023
Salaries and other payments
1,155,790
912,411
Short-term employee benefits
36,576
26,825
Directors fees
148,841
97,000
Stock-based compensation
5,573,733
3,074,327
Short-term incentive bonuses
1,130,000
1,122,000
Severance
290,000
-
8,334,940
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, 2024, as filed on SEDAR+ at www.sedarplus.ca.
New Accounting Pronouncements
The International Accounting Standards Board (“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, 2024.
IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of Financial Instruments
In May 2024, the IASB issued targeted amendments to the classification and measurement of financial instruments
to respond to recent questions arising in practice, and to include new requirements not only for financial
institutions, but also for corporate entities. The amendments to IFRS 9 and IFRS 7 comprise of the following:
Clarify the recognition and derecognition dates for certain financial assets and liabilities, including a
new exception for financial liabilities settled through an electronic cash transfer system;
Provide additional guidance on assessing whether a financial asset meets the solely payments of
principal and interest (SPPI) criterion;
Introduce new disclosure requirements for instruments with contractual terms that can alter cash flows,
such as financial instruments linked to the achievement of environmental, social and governance (ESG)
targets;
Update the disclosure requirements for equity instruments designated at fair value through other
comprehensive income (FVOCI).
These amendments will apply prospectively for annual reporting periods beginning on or after January 1, 2026,
with early application permitted.
10
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements, aiming to enhance
the transparency and compatibility of financial reporting across entities. This standard will replace IAS 1 and
introduces potentially significant changes to the presentation of financial statements, particularly the statement
of profit or loss. IFRS 18 introduces a specified structure by requiring income and expenses to be presented into
three defined categories of operating, investing and financing, and by specifying certain defined totals and
subtotals. Where company-specific measures related to the income statement are provided (“management-defined
performance measures”), IFRS 18 requires disclosure of the explanations around those measures. IFRS 18 also
provides additional guidance on principles of aggregation and disaggregation which apply to the primary financial
statements and notes.
The standard is effective for reporting periods beginning on or after January 1, 2027. Retrospective application is
required, and early application is permitted.
The Company continues to assess the potential impacts of that the adoption of the new or amended financing
reporting standards may have 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, 2024, 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, 2024 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,
2024.
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FINANCIAL INSTRUMENTS
As at December 31, 2024, 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, 2024, 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 minimal as the Company deposits the majority of its cash with
large 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, such as Nemesia. 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, 2024 are as follows:
Total
Less than
1 year
1-5 years
More than
5 years
Accounts payable and
accrued liabilities
12,576,024
12,576,024
-
-
Due to exploration partner
4,707,571
-
-
4,707,571
Total
17,283,595
12,576,024
-
4,707,571
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$ 3.3 million as
of December 31, 2024, 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 $956,041 at December 31, 2024 (2023: $634,740). 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, 2024, 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 $53,800,000. 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 $5,380,000 in
financial position/comprehensive loss.
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OUTSTANDING SHARE DATA
As at March 25, 2025, the Company had 207,017,111 common shares outstanding and 11,007,999 share options
outstanding under its share-based incentive plan.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure controls and procedures (“DC&P”)
DC&P are designed to provide reasonable assurance that information required to be disclosed by the Company in its
annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed,
summarized and reported within the time periods specified in the securities legislation. They include controls and
procedures designed to ensure that information required to be disclosed by the Company in its annual filings, interim
filings or other reports filed or submitted under securities legislation is accumulated and communicated to the
Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the design and operation of the Company’s DC&P. As of December 31, 2024, the Chief Executive
Officer and Chief Financial Officer have each concluded that the Company’s DC&P, as defined in NI 52-109 –
Certification of Disclosure in Issuer’s Annual and Interim Filings, are effective to achieve the purpose for which they
have been designed.
Internal controls over financial reporting (“ICFR”)
The Company’s ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting
and preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. The
Company’s ICFR include policies and procedures that: pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and disposition of assets; provide reasonable assurance that
transactions are recorded as necessary to permit preparation of the financial statements in accordance with IFRS
Accounting Standards; receipts and expenditures are being made only in accordance with authorization of
management and directors of the Company; and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial
statements.
Any system, no matter how well conceived or operated, has inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement
preparation and presentation and will not prevent all, or detect all, misstatements and frauds. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented
or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.
The design of any control system also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.
Management uses the Internal Control – Integrated Framework (2013 Framework) issued by the Committee of
Sponsoring Organizations for the Treadway Commission (COSO) in order to assess the effectiveness of the
Company’s ICFR.
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The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the design and operation of the Company’s ICFR. As of December 31, 2024, the Chief Executive
Officer and Chief Financial Officer have each concluded that the Company’s ICFR, as defined in NI 52-109 –
Certification of Disclosure in Issuer’s Annual and Interim Filings, are effective to achieve the purpose for which
they have been designed.
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 personnel involved and the capital required to support exploration 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.
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The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration and
development of copper, gold, and silver projects and properties, including unusual and unexpected geologic
formations, seismic activity, rock slides, ground instabilities or failures, mechanical failures, precipitation, flooding
and other conditions involved in the drilling and removal of material, any of which could result in damage to, or
destruction of, facilities, damage to life or property, environmental damage and possible legal liability.
As appropriate, the Company may seek to mitigate its exploration risk by diversifying its portfolio, or through the
establishment of joint ventures and option agreements with third parties.
Mineral Resources 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.
15
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
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.
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.
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.
16
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
(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.
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.
ii.
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.
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.
17
ii.
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.
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
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 determine the
administration and enforcement of this 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.
Furthermore, the Chilean Congress is also considering legislation designed to protect the country’s glaciers. No
such changes have yet been approved and accordingly, no proposed legislation has been enacted as of the date
of this MD&A.
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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. The Lunahuasi deposit, as currently defined, is located on the Nacimiento I
concession, which is located adjacent to La Rioja. Therefore, anti-mining sentiment could potentially affect the
risk of successfully exploring and developing the Company’s assets in or around those provinces, including
Lunahuasi. In addition, 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 determine the administration and
enforcement of this law have not yet been written but this legislation could affect the Corporation’s ability to
develop parts of the Corporation’s properties in Argentina. Furthermore, 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 Corporation’s ability to develop its mineral properties
in Argentina, including the Lunahuasi Project, the costs associated therewith, or more generally, the Corporation’s
business, financial condition and results of operations.
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. No such changes have yet been
approved and accordingly, no proposed legislation has been enacted as of the date of this MD&A. However, any
changes ultimately enacted into new legislation by Chile which impact its environmental and socio-political
landscape could affect the Company’s ability to develop its properties in Chile, including the Los Helados Project,
the costs associated therewith, or more generally, the Company’s business, financial condition and results of
operations.
Foreign Operations Risk
The Company conducts exploration activities in foreign countries, including Argentina and Chile. Each of these
countries exposes the Company to risks that may not otherwise be experienced if all operations were located in
Canada. The risks vary from country to country and can include, but are not limited to, civil unrest or war, national
border disputes, terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates,
expropriation or nationalization without adequate compensation, changes to royalty and tax regimes, changes to
trade policies and tariffs, high or volatile 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.
19
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.
History of economic crisis and governmental intervention in Argentine economy
Argentina has historically defaulted on foreign debt repayments and on the repayment on a number of official
loans to multinational organizations, most recently during an economic crisis from 2001 to 2003 and again in 2014
and 2020.
In addition, the Argentine government has historically exercised substantial control over, or intervention in, its
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 or changing economic conditions, through
expropriation, nationalization, intervention, forced renegotiation or modification of existing contracts, new taxation
policies, establishment of price controls, or changes in laws, regulations and policies affecting foreign trade and
investment. If taken, 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 the Valle Ancho Project and the Lunahuasi Project, 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.
Since taking office, President Javier 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, including the 2024
approval of the “Régimen de Incentivo para Grandes Inversiones (RIGI)” (Incentive Regime for Large
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Investments). This regime is expected to provide significant incentives for investments across industries, including
the mining sector, including benefits related to value added tax (VAT) and income tax, as well as exemptions from
import and export duties. RIGI targets projects with minimum investment amounts ranging between US$200
million and US$900 million. Additionally, it grants fiscal stability and free availability of foreign currency. The
Company has not yet applied for status under RIGI for the Lunahuasi Project. There is no certainty that an
application to include the Lunahuasi Project under RIGI will be accepted by the Argentine government.
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 introduced by President Milei and enacted, including RIGI, 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 determine 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.
Operational Risks in Argentina
Inadequate transportation and logistics infrastructure may present an operational challenge for some mining
companies in Argentina. The country's road networks are often insufficient or poorly maintained, and its rail
systems remain relatively underdeveloped, which may impact the Corporation’s future operations should it require
rail transport between its project sites and export ports. Water and sanitation infrastructure may also pose a
challenge, particularly in arid mining regions where access to essential water resources is limited. Workforce and
labour relations are another potential area of concern, due to complex labor dynamics, particularly involving
powerful unions, which increase the risk of strikes and unrest. There can be no assurance that the future
development or operation of the Corporation’s projects in Argentina will not be affected by the then state of
infrastructure or labour relations in Argentina.
Economic and Political Uncertainty in Chile
Political Stability and Economic Activity in Chile and other Emerging Markets
The Company’s business depends in part on Chilean markets for labor and certain materials, services and
equipment, and on factors relating to Chilean political stability generally. The Chilean economy has been
historically influenced, to varying degrees, by economic conditions in other countries, especially the United States
and China, its largest trading partners. Changes in Chilean economic growth in the future or developments
affecting the Chilean economy, including consequences from a monetary policy normalization in the United States
or a deceleration of economic growth in China or other developed nations to which Chile exports its goods, may
have an impact on the Company’s business. In addition, changes in economic or other policies by the Chilean
government, which has exercised, and continues to exercise, substantial influence over many aspects of the private
sector, or other political or economic developments in Chile, may have an impact on the Company’s business. The
continuing trade disputes between the United States and, among other nations, China, Canada and Mexico, as
well as the evolution of the Chinese economy, may have an adverse effect on international trade and a slowdown
is likely to negatively impact the price of copper. Persistent declines in the price of copper would have an adverse
effect on the Chilean economy, which is the world’s largest copper producing nation as of the date of this MD&A.
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While, as of the date of this MD&A, no constitutional process or amendments to the Chilean constitution are in
discussion, the Company cannot anticipate whether there will be any additional 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.
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.
Moreover, starting January 1, 2025, under Law No. 21,420 and Law No. 21,649, mining concession holders in
Chile must pay annual fees of approximately US$4.50 per hectare for exploration concessions and US$29.90 per
hectare for exploitation concessions during the first five years, however, concession holders may opt to maintain
a payment of US$7.50 per hectare if they qualify as a productive mining operation, currently defined as a
concession holder which is actively undertaking mining works or involved in projects with environmental approvals.
To qualify, the concession holder must provide sufficient evidence of such mining works to the National Geology
and Mining Service (SNGM). Annual fees are due in March, and failure to pay can result in loss of the concession
through auction or the termination of the mining concession through a declaration of open land. On the other
hand, exploitation fees for mining concessions not being worked will be increased progressively to up to US$897.3
per hectare by the 31st year from the date the law came into effect.
The recent changes to mining taxes, mining concession fees and royalties in Chile 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 VAT, 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.
Future compliance with a changing and complex regulation scheme may require changes in the Company’s
business practices.
The Company’s exploration activities are also subject to other Chilean laws and regulations, which may change
from time to time. Matters subject to regulation include, but are not limited to, concession fees, transportation,
taxation and labor standards. While the Company does not believe that compliance with such laws and regulations
will have a material adverse effect on its business, financial condition, or results of operations, there can be no
assurance that more stringent enforcement of, or changes in, existing laws and regulations, or the adoption of
additional laws and regulations, would not have an adverse effect on the Company’s business, financial condition,
or results of operations.
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, and loss of life, and/or facility and workforce evacuation. Even though robust health and
22
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 Mineral Exploration and 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.
Potential for Provincial Border Disputes
The Company’s Lunahuasi deposit, as currently defined, is located within the Nacimiento I concession, located in
San Juan Province, Argentina, which is adjacent to La Rioja Province, Argentina. In the past, there have been
border disputes between the two provinces, or more generally, uncertainty of the exact border location.
Accordingly, as a result of the proximity of the Lunahuasi deposit, as currently defined, to the interprovincial
border, there is a risk that a future dispute may result in a portion of the Lunahuasi deposit falling outside of San
Juan Province and into La Rioja Province.
While the Company also holds the adjacent concession in La Rioja Province, if a portion of the Lunahuasi deposit
is determined to fall within La Rioja Province, such portion will be subject to the laws and regulations of that
province, which may differ significantly from those of San Juan Province. Such outcomes could adversely affect
the Company’s business, financial condition and results of operations.
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, changes in trade
policies, 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.
Indigenous Peoples
The Company operates in some areas, that are presently or were previously inhabited or used by Indigenous
Peoples. Various international and national laws, codes, resolutions, conventions, guidelines, and other material
relate to the rights of Indigenous Peoples. Many of these materials impose obligations on government to respect
the rights of Indigenous People. Some mandate that government consult with Indigenous People regarding
government actions, which may affect Indigenous People, including actions to approve or grant mining rights or
permits. ILO Convention 169, which has been ratified by Argentina and Chile, is an example of such an
international convention. The obligations of government and private parties under the various international and
national materials pertaining to Indigenous People continue to evolve and be defined. Examples of recent
developments in this area include the United Nations Declaration of the Rights of Indigenous People and the
International Finance Company’s revised Performance Standard 7, which requires governments to obtain the free,
23
prior, and informed consent of Indigenous Peoples who may be affected by government action, such as the
granting of mining concessions or approval of mine permits. The Company’s current and future operations are
subject to a risk that one or more groups of Indigenous People may oppose continued operation, further
development, or new development of the Company’s projects or operations. Such opposition may be directed
through legal or administrative proceedings or expressed in manifestations such as protests, roadblocks or other
forms of public expression against the Company’s activities. Opposition by Indigenous People to the Company’s
operations may require modification of, or preclude operation or development of, the Company’s projects or may
require the Company to enter into agreements with Indigenous People with respect to the Company’s projects.
Non-Governmental Organization Intervention
In recent years, certain communities of both Indigenous peoples and others, as well as non-governmental
organizations, have been vocal and negative with respect to mining activities. The Company’s relationship with
the communities in which it operates is critical to ensure the future success of its existing operations and the
construction and development of its projects. Community groups or non-governmental organizations may create
or inflame public unrest and anti-mining sentiment among the inhabitants in areas of mineral development. These
communities and organizations have taken such actions as protests, road closures, work stoppages and initiating
lawsuits for damages. Such organizations can be involved, with financial assistance from various groups, in
mobilizing sufficient local anti-mining sentiment to prevent the issuance of required permits for the development
of mineral projects of other companies. While the Company is committed to operating in a socially responsible
manner, there is no guarantee that the Company’s efforts in this respect will mitigate this potential risk. Any
actions by communities and non-governmental organizations may have a material adverse effect on the Company’s
activities, financial position, cash flow and results of operations.
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.
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
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
24
the profitability, future cash flows, earnings, results of operations and financial condition of the Los Helados Project
or the Company as a whole.
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. In addition, the exchange rate between the US and Canadian dollars has
experienced recent volatility following trade disputes, including the imposition of tariffs and retaliatory measures
(or the threats thereof), between the two nations. 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.
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 for Lunahuasi drill intersections is calculated based on US$ 3.00/lb Cu, US$ 1,500/oz Au and US$
18/oz Ag, with 80% metallurgical recoveries assumed for all metals. The formula is: CuEq % = Cu % + (0.7292 * Au
g/t) + (0.0088 * Ag g/t).
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
25
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.
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 this MD&A, if any, 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: the use of net
proceeds of the Financing; the future or ultimate owner(s) of strategic mineral assets within the Vicuña District where
the Company’s Los Helados and Lunahuasi projects are located; exploration and development plans and expenditures,
including the size, scope, nature, timing and foci of the Company’s future exploration programs, particularly at
Lunahuasi; whether current interpretation of the exploration and/or drill results to date at Lunahuasi will be confirmed
by future work, including statements regarding prospectivity of exploration properties or specific targets, the accuracy
of a geological model or geological interpretation, the ability of future drilling to convert exploration potential to a
Mineral Resource Estimate, the scale, grade, or significance of the centre 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.
26
Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that
the current price of and demand for commodities will be sustained or will improve, the supply of commodities will
remain stable, that the general business and economic conditions will not change in a material adverse manner, that
financing will be available if and when needed on reasonable terms and that the Company will not experience any
material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed
as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual
results to differ materially from those contained in forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove
to be accurate, as the Company’s actual results and future events could differ materially from those anticipated in
such statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and
elsewhere. 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.
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.
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, 2024 and 2023, and its financial performance and its cash flows for the years then ended in
accordance with IFRS Accounting 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, 2024 and 2023;
the consolidated statements of comprehensive loss for the years then ended;
the consolidated statements of cash flows for the years then ended;
the consolidated statements of changes in equity for the years then ended; and
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
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, 2024. 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
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
$6.3 million as at December 31, 2024 which related
to the Los Helados, Lunahuasi and Maricunga
projects. 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, 2024.
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 assessment of impairment
indicators, which required management judgment.
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
vouched 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.
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.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Company as a basis for forming an opinion on
the consolidated financial statements. We are responsible for the direction, supervision and review of
the audit work performed for purposes 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 25, 2025
NGEx Minerals Ltd.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
Note
December 31,
2024
December 31,
2023
ASSETS
Current assets:
Cash
$ 153,367,759
$ 59,502,617
Receivables and other assets
5
2,967,210
2,140,961
Short-term investments
45,184,932
15,229,918
201,519,901
76,873,496
Non-current assets:
Receivables and other assets
5
398,743
413,267
Equipment
6
374,110
191,028
Mineral properties
7
6,270,661
3,815,124
7,043,514
4,419,419
TOTAL ASSETS
208,563,415
81,292,915
LIABILITIES
Current liabilities:
Trade payables and accrued liabilities
12,576,024
7,189,838
Non-current liabilities:
Due to exploration partner
8
956,041
634,740
TOTAL LIABILITIES
13,532,065
7,824,578
SHAREHOLDERS’ EQUITY
Share capital
9
358,050,687
183,002,098
Contributed surplus
15,423,472
8,379,116
Deficit
(176,973,415)
(113,376,603)
Accumulated other comprehensive loss
(1,469,394)
(4,536,274)
TOTAL SHAREHOLDERS’ EQUITY
195,031,350
73,468,337
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY
$ 208,563,415
81,292,915
Commitment (Note 16)
The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board:
/s/Alessandro Bitelli
/s/Wojtek A. Wodzicki
Director
Director
NGEx Minerals Ltd.
Consolidated Statements of Comprehensive Loss
(Expressed in Canadian Dollars)
2
Year ended
December 31,
Note
2024
2023
Expenses
Exploration and project investigation
11
$ 63,750,316
$ 40,283,371
General and administration:
Management fees
381,041
188,080
Office and general
1,149,334
820,444
Professional fees
559,636
489,228
Promotion and public relations
744,132
372,540
Salaries and benefits
4,000,437
3,089,407
Share-based compensation
10c
6,388,242
3,592,030
Travel
87,457
152,698
Operating loss
77,060,595
48,987,798
Other expenses (income)
Financing costs
54,426
71,382
Foreign exchange loss (gain)
(2,161,052)
102,376
Gain on use of marketable securities, net
15
(9,200,702)
(9,030,537)
Interest income
(3,621,206)
(1,899,940)
Net monetary loss (gain)
4
512,258
(637,663)
Other expenses
83,137
-
Other losses
8
319,552
11,475
Other non-income taxes
549,804
113,301
Net loss
63,596,812
37,718,192
Other comprehensive loss
Items that may be reclassified
subsequently to net loss:
Foreign currency translation
adjustment
114,672
929,853
Impact of hyperinflation
4
(3,181,552)
1,318,175
Comprehensive loss
$ 60,529,932
$ 39,966,220
Basic and diluted loss per common share
$ 0.33
$ 0.21
Weighted average common shares
outstanding
191,887,263
178,007,539
The accompanying notes are an integral part of these consolidated financial statements.
NGEx Minerals Ltd.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
3
Year ended
December 31,
Note
2024
2023
Cash flows from (for) operating activities
Net loss for the year
$ (63,596,812)
$ (37,718,192)
Adjustments to reconcile net loss to net operating
cash flows:
Depreciation
58,192
17,231
Finance costs
54,426
71,382
Foreign exchange loss
95,347
18,426
Interest income from short-term investment
(573,142)
(229,918)
Net monetary loss
3,123,517
944,365
Other losses
8
319,552
11,475
Share-based compensation
10c
8,348,706
4,671,200
Net changes in working capital and other items:
Receivables and other
(578,717)
2,105,888
Trade payables and accrued liabilities
6,580,337
3,020,289
(46,168,594)
(27,087,854)
Cash flows from (for) financing activities
Payments made on behalf of exploration partner
(111,239)
(43,793)
Proceeds from equity financings
9
176,906,983
85,659,990
Proceeds from option exercises
2,735,497
1,527,892
Share issuance costs
9
(5,898,241)
(2,439,071)
173,633,000
84,705,018
Cash flows from (for) investing activities
Acquisition of equipment
6
(215,468)
(189,419)
Acquisition of non-current prepaid expenses
(416,195)
-
Mineral properties and related expenditures
7
(2,279,719)
(133,923)
Purchase of short-term investment
(45,000,000)
(15,000,000)
Redemption of short-term investment
15,618,128
-
(32,293,254)
(15,323,342)
Effect of exchange rate change on cash
(1,306,010)
(6,040,446)
Increase in cash during the year
93,865,142
36,253,376
Cash, beginning of the year
$ 59,502,617
$ 23,249,241
Cash, end of the year
$ 153,367,759
$ 59,502,617
The accompanying notes are an integral part of these consolidated financial statements.
NGEx Minerals Ltd.
Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars)
4
Note
Number of
Shares
Share Capital
Contributed
Surplus
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Balance, January 1, 2023
172,123,530
$ 97,613,481
$ 4,347,722
$ (75,658,411)
$ (2,288,246)
$ 24,014,546
Share-based compensation
-
-
4,671,200
-
-
4,671,200
Shares issued pursuant to equity
financings
13,178,460
85,659,990
-
-
-
85,659,990
Share issuance costs
-
(2,439,071)
-
-
-
(2,439,071)
Shares issued pursuant to stock option
exercises
1,780,001
2,167,698
(639,806)
-
-
1,527,892
Net loss and other comprehensive loss
-
-
-
(37,718,192)
(2,248,028)
(39,966,220)
Balance, December 31, 2023
187,081,991
$ 183,002,098
$ 8,379,116
$ (113,376,603)
$ (4,536,274)
$ 73,468,337
Balance, January 1, 2024
187,081,991
$ 183,002,098
$ 8,379,116
$ (113,376,603)
$ (4,536,274)
$ 73,468,337
Share-based compensation
10c
-
-
8,348,706
-
-
8,348,706
Shares issued pursuant to equity
financings
9
16,082,453
176,906,983
-
-
-
176,906,983
Share issuance costs
9
-
(5,898,241)
-
-
-
(5,898,241)
Shares issued pursuant to stock option
exercises
10b
3,836,001
4,039,847
(1,304,350)
-
-
2,735,497
Net loss and other comprehensive loss
-
-
-
(63,596,812)
3,066,880
(60,529,932)
Balance, December 31, 2024
207,000,445
$ 358,050,687 $ 15,423,472
$ (176,973,415)
$ (1,469,394)
$ 195,031,350
The accompanying notes are an integral part of these consolidated financial statements.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
5
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 2800, Four
Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1L2, Canada. The Company’s
common shares trade on the Toronto Stock Exchange under the symbol “NGEX”, and on the OTCQX
under the symbol “NGXXF”.
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. The Company
has consistently applied the same accounting policies as disclosed in the audited consolidated financial
statements for the year ended December 31, 2023. Certain prior year comparatives have been
reclassified to align with current year presentation. Specifically, other non-income taxes, which were
previously included within other expenses, are now separately presented on the consolidated
statements of comprehensive loss.
These consolidated financial statements were authorized for issuance by the Board of Directors of the
Company on March 25, 2025.
3. SUMMARY OF MATERIAL ACCOUNTING POLICIES
a) Consolidation
The consolidated financial statements of the Company include the following subsidiaries:
Subsidiaries
Jurisdiction
Nature of operations
Suramina Resources Inc.
Canada
Holding company
NGEx Argentina Holdings Inc.
Canada
Holding company
NGEx RioEx Holdings Inc.
Canada
Holding company
Frontera Holdings (Bermuda) I Ltd.
Bermuda
Holding company
Frontera Holdings (Bermuda) II Ltd.
Bermuda
Holding company
Frontera Holdings (Bermuda) III Ltd.
Bermuda
Holding company
Urupampa S.A.
Uruguay
Holding company
RioEx Uruguay S.A.
Uruguay
Holding company
Minera Frontera del Oro SPA.
Chile
Exploration company
Desarrollo de Prospectos Mineros Peruanos S.A.C.
Peru
Exploration company
Pampa Exploracion S.A.
Argentina
Exploration company
Pampa Catamarca S.A.
Argentina
Exploration company
RioEx S.A.
Argentina
Exploration company
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
6
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, 2024, 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, 2024.
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.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
7
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.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
8
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.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
9
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
Straight line over 5 years
Exploration Equipment
Straight line over 5 to 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.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
10
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 standards
On January 1, 2024, the Company adopted amendments to IAS 1, Non-current Liabilities with
Covenants, which clarify how covenants with which an entity must comply within 12 months after the
reporting period affect the classification of the related liability. Effectively, the amendments to IAS 1
require liabilities to be classified as either current or non-current, depending on the rights that exist at
the end of the reporting period. Liabilities are 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.
The adoption of amendment to IAS 1 did not have a material impact on the Company’s financial results
for the year ended December 31, 2024.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
11
In addition, the Company adopted amendments to IAS 7, Statement of Cash Flows Disclosures, which
include disclosure requirements pertaining to qualitative and quantitative details regarding supplier
finance arrangements that would assist users of financial statements in evaluating any resulting effects
to the reporting entity’s liabilities and cash flows.
As the Company is not subject to supplier finance arrangements, the adoption of the amendments to
IAS 7 had no impact on the Company’s audited consolidated financial statements for the year ended
December 31, 2024.
q) New accounting pronouncements
The International Accounting Standards Board (“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, 2024.
IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of Financial Instruments
In May 2024, the IASB issued targeted amendments to the classification and measurement of financial
instruments to respond to recent questions arising in practice, and to include new requirements not
only for financial institutions, but also for corporate entities. The amendments to IFRS 9 and IFRS 7
comprise of the following:
Clarify the recognition and derecognition dates for certain financial assets and liabilities,
including a new exception for financial liabilities settled through an electronic cash transfer
system;
Provide additional guidance on assessing whether a financial asset meets the solely payments
of principal and interest (SPPI) criterion;
Introduce new disclosure requirements for instruments with contractual terms that can alter
cash flows, such as financial instruments linked to the achievement of environmental, social
and governance (ESG) targets;
Update the disclosure requirements for equity instruments designated at fair value through
other comprehensive income (FVOCI).
These amendments will apply prospectively for annual reporting periods beginning on or after January
1, 2026, with early application permitted.
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements, aiming to
enhance the transparency and compatibility of financial reporting across entities. This standard will
replace IAS 1 and introduces potentially significant changes to the presentation of financial statements,
particularly the statement of profit or loss. IFRS 18 introduces a specified structure by requiring income
and expenses to be presented into three defined categories of operating, investing and financing, and
by specifying certain defined totals and subtotals. Where company-specific measures related to the
income statement are provided (“management-defined performance measures”), IFRS 18 requires
disclosure of the explanations around those measures. IFRS 18 also provides additional guidance on
principles of aggregation and disaggregation which apply to the primary financial statements and notes.
The standard is effective for reporting periods beginning on or after January 1, 2027. Retrospective
application is required, and early application is permitted.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
12
The Company continues to assess the potential impacts of that the adoption of the new or amended
financing reporting standards may have 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 gain of $3,181,552 for the year ended December 31, 2024 (2023: loss
of $1,318,175) 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, 2024, Gains on Capital Injected were the dominant factor due to
capital injected into the Company’s Argentine subsidiaries in support of operations, which resulted
in net hyperinflationary gains for the year.
As a result of changes in the IPC and changes to the Company’s net monetary position, the Company
recognized a net monetary loss of $512,258 for the year ended December 31, 2024 (2023: gain of
$637,663), to adjust transactions recorded during the year into a measuring unit current as of
December 31, 2024.
The level of the IPC at December 31, 2024, was 7,694.01 (December 31, 2023: 3,533.19), which
represents an increase of approximately 118% over the IPC at December 31, 2023, and an
approximate 22% increase over the average level of the IPC during the year ended December 31,
2024.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
13
5. RECEIVABLES AND OTHER ASSETS
December 31,
2024
December 31,
2023
Current
Taxes receivable
210,039
45,872
Other receivables
1,474,465
885,670
Prepaid expenses, advances
and deposits
1,282,706
1,209,419
2,967,210
2,140,961
Non-current
Deferred surface access rights
30,570
413,267
Prepaid expenses
368,173
-
398,743
413,267
Receivable from Exploration Partner
As at December 31, 2024, current other receivables and advances includes $341,160 (2023: $137,077)
receivable from the Company’s exploration partner at the Los Helados properties (Note 7).
Deferred Surface Access Rights
Reduced Surface Access Rights Agreements
The Company does not own the surface rights covering the Los Helados properties (the “Los Helados
Surface Rights”). Historically, the Company has had various contractual agreements with the owners
of the Los Helados Surface Rights, which have allowed it to access, explore and develop the property
in exchange for cash payments.
Since 2021, the Company’s access at Los Helados has been based on a limited access agreement,
whereby, in exchange for certain upfront and committed cash payments, the Company is permitted
to access the property for limited purposes, such as site visits, environmental data collection and
monitoring, and property maintenance. This agreement was amended on November 22, 2022, and
its term was extended to January 26, 2026 (collectively, the “Limited Access Extension Agreement”).
Consideration for the Limited Access Extension Agreement consisted of three contractual payments
of US$250,000, the last of which was completed by the Company in November 2024.
As the contractual amounts paid or payable by the Company pursuant to the Limited Access
Extension Agreement provide the Company the benefit of access for the period ending January 26,
2026, the total contract value was initially deferred and has been amortized over the life of the
agreement ending January 26, 2026. The pro rata portion of deferred amounts relating to the 12
months ending December 31, 2025, have been classified as a current asset.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
14
The foregoing notwithstanding, during the term of the Limited Access Extension, the Company and
the holders of the Los Helados Surface Rights may, from time to time, negotiate the reinstatement
of additional surface access rights, which would allow for the Company to conduct drilling or other
field work at Los Helados, in exchange for incremental compensation. Most recently, the holders of
the Los Helados Surface Rights restored the Company’s access at Los Helados allowing for the
undertaking of drilling and exploration activities during the year ended December 31, 2023, in
exchange for an incremental cash payment of US$450,000. As at December 31, 2024, no such
arrangement remains in effect.
Non-current Prepaid Expenses
The Company receives shared office and ancillary corporate support services from an office and
administrative support services provider (the “Office Provider”). The final net amount paid by the
Company to the Office Provider to effectively secure access to its services until February 28, 2039
totaled $416,195.
As the amounts paid by the Company provide the Company the benefit of access for an extended
period, the amount paid has been initially deferred and will be amortized over the life of the
agreement. The pro rata portion of deferred amounts relating to the 12 months ending December
31, 2025, have been classified as a current asset and the portion beyond 12 months is shown as
non-current.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
15
6. EQUIPMENT
Cost
Mobile
Equipment
Exploration
Equipment
Total
As at January 1, 2023
51,031
-
51,031
Additions
-
189,419
189,419
Adjustment for the impacts of hyperinflation
(17,053)
-
(17,053)
As at December 31, 2023
33,978
189,419
223,397
Additions
-
215,468
215,468
Effect of foreign currency translation
-
(7,268)
(7,268)
Adjustment for the impacts of hyperinflation
28,991
27,477
56,468
As at December 31, 2024
62,969
425,096
488,065
Accumulated depreciation
As at January 1, 2023
(32,308)
-
(32,308)
Amortization
(13,169)
(4,062)
(17,231)
Adjustment for the impacts of hyperinflation
17,170
-
17,170
As at December 31, 2023
(28,307)
(4,062)
(32,369)
Amortization
(11,036)
(47,156)
(58,192)
Effect of foreign currency translation
-
(185)
(185)
Adjustment for the impacts of hyperinflation
(23,626)
417
(23,209)
As at December 31, 2024
(62,969)
(50,986)
(113,955)
Net book value
As at December 31, 2023
5,671
185,357
191,028
As at December 31, 2024
-
374,110
374,110
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
16
7. MINERAL PROPERTIES
Los Helados
Project
Lunahuasi
Project
Maricunga
Properties
Total
January 1, 2023
$ 3,902,697
-
-
$ 3,902,697
Additions
133,923
-
-
133,923
Effect of foreign currency translation
(221,496)
-
-
(221,496)
December 31, 2023
$ 3,815,124
-
-
$ 3,815,124
Additions
135,081
2,048,456
96,182
2,279,719
Effect of foreign currency translation
(145,795)
-
(1,948)
(147,743)
Adjustment for the impacts
of hyperinflation
-
323,561
-
323,561
December 31, 2024
$ 3,804,410
$ 2,372,017
$94,234
$ 6,270,661
Los Helados Project
The Company 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. As at December 31, 2024, 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”). NCR is a subsidiary of JX Metals Corporation, a Tokyo-based mining and smelting company
that also has an indirect 30% ownership interest in the Caserones Mine, located approximately 17
kilometres from the Los Helados Project.
The Company had sole funded 100% of the expenditures related to the Los Helados properties for the
period from September 1, 2015, to August 31, 2022, as a result of elections by the exploration partner
pursuant to the JEA not to fund its share of expenditures. 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, as 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 $761,688 for the year
ended December 31, 2024 (2023: $6,372,571).
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
17
While the Los Helados concessions are not subject to royalties, back-in rights, or other obligations in
favour of third parties, pursuant to the terms of the JEA, a party’s interest is automatically converted
to a 0.5% net smelter return (“NSR”) royalty if it is diluted to below 5%. In addition to a specific tax
on mining activities, the Chilean government also levies royalties in the form of a mining tax on
dividends paid by a Chilean mining company.
Lunahuasi Project
The Company holds a 100% interest in the Lunahuasi Project, a high-grade copper-gold-silver deposit
located on the Nacimiento I concession in San Juan Province, Argentina. Lunahuasi lies along the same
major north-northeast structural trend that controls the Filo del Sol deposit located approximately 6 km
to the south and the Los Helados deposit located approximately 9 km to the north.
The Nacimiento I concession was subject to a 3% NSR royalty, of which the Company repurchased two
thirds (i.e. a 2% NSR royalty) on May 13, 2024, from Filo Corp. (“Filo”), a related party at the time by
way of directors, officers and shareholders in common, pursuant to a buy back option for cash
consideration totaling US$ 1.5 million. The consideration paid for the buy back had a Canadian dollar
equivalent of $2,048,456, which has been recorded as an addition to the mineral property balance for
Lunahuasi. The remaining 1% NSR royalty was held by Filo until its acquisition by Vicuña Corp., a joint
venture formed by Lundin Mining Corporation and BHP Investments Canada Inc., on January 15, 2025
(the “Filo Acquisition”). Vicuña Corp. is not a related party of the Company.
The Nacimiento I concession is also subject to an additional third-party NSR royalty of 0.5% covering
the first 10 years of production. The same third party is also entitled to a one-time payment of US$2.0
million upon commencement of production at Nacimiento I.
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. Historically, no acquisition costs have been incurred with respect to the Valle
Ancho Properties.
Following an internal reorganization completed in July 2024, the Valle Ancho Properties are now held
by Pampa Catamarca S.A., a newly incorporated, wholly owned subsidiary of the Company.
Maricunga Properties
In April 2024, the Company acquired a 100% interest in certain exploitation and exploration
concessions located in Chile (the “Maricunga Properties”) from Filo for total cash consideration having
a Canadian dollar equivalent of $96,182. The Maricunga Properties are adjacent to the Valle Ancho
Properties.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
18
8. 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$3.3 million as at December 31, 2024, and has no defined
timeline for settlement.
The Company considered the estimated timeframe required to expend the remaining US$3.3 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% (2023: 8%).
As at December 31, 2024, 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$39,600 to US$55,200 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 $319,552, with a corresponding
amount recognized within other losses on the consolidated statement of comprehensive loss for the
year ended December 31, 2024 (2023: $11,475).
9. 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 “2023 Financing”). Share issuance costs
related to the 2023 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 2023
Financing. The common shares issued under the 2023 Financing were subject to a hold period under
applicable securities laws, which expired on December 12, 2023.
As part of the 2023 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. By virtue of its shareholding
in the Company in excess of 20%, either individually or on an aggregate basis with other entities with
which it acts jointly or reports its shareholdings jointly, Nemesia is considered a related party of the
Company. In addition, as part of the 2023 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.
On October 31, 2024, the Company closed a non-brokered private placement, pursuant to which the
Company sold an aggregate of 16,082,453 common shares at a price of $11.00 per common share,
generating aggregate gross proceeds of $176.9 million (the “2024 Financing”). Share issuance costs
related to the 2024 Financing totaled $5.9 million, and included professional fees, regulatory fees, and
5% finders’ fees payable in cash on approximately $46.5 million of the gross proceeds from the 2024
Financing. The common shares issued under the 2024 Financing were subject to a hold period under
applicable securities laws, which expired on Mach 1, 2025.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
19
As part of the 2024 Financing, Nemesia purchased 2,272,727 common shares, pursuant to the terms
outlined above, for gross proceeds of $25.0 million. In addition, as part of the 2024 Financing, directors
and members of the executive management team of the Company purchased a total of 122,909
common shares pursuant to the terms outlined above, for gross proceeds of $1.4 million.
10. 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
on May 19, 2022 and May 13, 2024, 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.
b) Share options outstanding
Movements in the number of share options outstanding and their related weighted average exercise
prices are as follows:
Number of
shares issuable
pursuant to
share options
Weighted
average
exercise price
per share
Balance at January 1, 2023
12,714,000
$ 1.06
Options granted
1,500,000
6.21
Exercised
(1,780,001)
0.86
Balance at December 31, 2023
12,433,999
$ 1.71
Options granted
2,125,000
$9.70
Exercised
(3,836,001)
0.71
Forfeited or cancelled
(158,333)
4.97
Balance at December 31, 2024
10,564,665
$ 3.63
On August 14, 2024, the Company granted a total of 1,925,000 share options to officers, employees,
directors and other eligible persons at an exercise price of $9.53 per share. In addition, on October 7,
2024, the Company granted a total of 200,000 share options to an officer at an exercise price of $11.34
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 2,125,000 share options granted during
the year ended December 31, 2024, are as follows:
(i)
Risk-free interest rate:
2.95%
(ii)
Expected life:
4 years
(iii)
Expected volatility:
72.25%
(iv)
Expected dividends:
nil
(v)
Fair value per option:
$5.38
The weighted average share price on the exercise date for the share options exercised during year
ended December 31, 2024, was $9.43.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
20
The following table details the share options outstanding and exercisable as at December 31, 2024:
Outstanding options
Exercisable options
Exercise
price
Options
Outstanding
Weighted
average
remaining
contractual
life
(Years)
Weighted
average
exercise
price
Options
exercisable
Weighted
average
remaining
contractual
life
(Years)
Weighted
average
exercise
price
$0.54
1,705,000
0.91
$0.54
1,705,000
0.91
$0.54
$0.68
1,741,666
1.67
$0.68
1,741,666
1.67
$0.68
$1.65
1,234,998
2.03
$1.65
761,666
2.03
$1.65
$2.08
2,263,334
2.68
$2.08
2,263,334
2.68
$2.08
$3.16
135,000
2.91
$3.16
135,000
2.91
$3.16
$6.20
1,359,667
3.66
$6.20
901,335
3.66
$6.20
$9.53
1,925,000
4.62
$9.53
641,672
4.62
$9.53
$11.34
200,000
4.77
$11.34
66,667
4.77
$11.34
10,564,665
2.67
$3.63
8,216,340
2.32
$2.55
c) Share-based compensation
Year ended
December 31,
2024
2023
Exploration and project investigation
1,960,464
1,079,170
General and administration
6,388,242
3,592,030
8,348,706
4,671,200
11. EXPLORATION AND PROJECT INVESTIGATION
The Company expensed the following exploration and project investigation costs for the years ended
December 31, 2024 and 2023:
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
21
Year ended
December 31,
Los Helados
Project
Lunahuasi
Valle
Ancho
Other
Total
2024
Land holding and access costs
563,098
30,549
4,679
82,882
681,208
Drilling, fuel, camp costs and field
supplies
96,989
31,397,806
2,805
-
31,497,600
Roadwork, travel and transport
87,212
8,615,779
76,170
1,443
8,780,604
Consultants, geochemistry and geophysics
378,430
1,848,378
3,760
-
2,230,568
Environmental and community relations
122,682
2,086,695
3,507
12,937
2,225,821
VAT and other taxes
46,455
9,709,402
29,042
7,623
9,792,522
Office, field and administrative salaries,
overhead and other administrative costs
1,109,547
5,335,837
110,769
25,376
6,581,529
Share-based compensation
77,595
1,872,123
7,316
3,430
1,960,464
Total
2,482,008
60,896,569
238,048
133,691
63,750,316
2023
Land holding and access costs
1,101,845
10,335
18,318
7,267
1,137,765
Drilling, fuel, camp costs and field
supplies
7,384,904
15,394,758
-
-
22,779,662
Roadwork, travel and transport
1,406,354
2,493,339
301
13
3,900,007
Engineering and conceptual studies
347,755
-
-
-
347,755
Consultants, geochemistry and geophysics
1,093,837
866,631
5,654
-
1,966,122
Environmental and community relations
83,006
97,181
-
-
180,187
VAT and other taxes
1,631,736
2,934,239
31,435
11,142
4,608,552
Office, field and administrative salaries,
overhead and other administrative costs
1,640,149
2,478,085
137,891
27,595
4,283,720
Share-based compensation
404,862
667,719
5,321
1,268
1,079,170
COVID related health and safety
-
431
-
-
431
Total
15,094,448
24,942,718
198,920
47,285
40,283,371
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
22
12. 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
consolidated financial statements, during the year ended December 31, 2024, the Company also
engaged with Filo with respect to the sharing of services.
a) Related party services
During the year ended December 31, 2024, the Company had 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, historically, the Company has engaged MOAR Consulting Inc. (“MOAR”), an
exploration consulting firm, of which a director of the Company is the president. These transactions
were incurred in the normal course of operations, and are summarized as follows:
Year ended
December 31,
2024
2023
Management Services to Filo
269,069
285,642
Management Services from Filo
(298,654)
(436,784)
Exploration Consultation from MOAR
-
(11,825)
b) Related party balances
The amounts due from (to) related parties, and the components of the consolidated statements of
financial position in which they are included, are as follows:
Related Party
December 31,
2024
December 31,
2023
Receivables and other assets
Filo
80,345
67,466
Accounts payable and accrued liabilities
Filo
(67,502)
(52,858)
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
23
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:
Year ended
December 31,
2024
2023
Salaries and other payments
1,155,790
912,411
Short-term employee benefits
36,576
26,825
Directors fees
148,841
97,000
Stock-based compensation
5,573,733
3,074,327
Short-term incentive bonuses
1,130,000
1,122,000
Severance
290,000
-
8,334,940
5,232,563
13. INCOME TAXES
Income tax expense differs from the amount that would result from applying the Canadian federal and
provincial income tax rates to the loss for the year. These differences result from the following items:
Year ended
December 31,
2024
2023
Loss before taxes
63,596,812
37,718,192
Combined Canadian federal and provincial statutory
income tax rates
27.00%
27.00%
Income tax recovery based on the above rate
17,171,139
10,183,912
Changes to income tax balances and other items that have
not been recognized
(12,038,755)
(7,263,052)
Impacts of changes and differences in foreign tax and
currency rates
(5,563,360)
(3,416,671)
Non-deductible expenses and permanent differences
430,976
495,811
Total income tax recovery
-
-
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
24
The Company’s unrecognized deductible temporary differences and unused tax losses for which no
deferred tax asset has been recognized consist of the following:
Year ended
December 31,
2024
2023
Non-capital losses carried forward
5,260,112
3,884,369
Mineral properties and related expenditures
44,376,455
30,209,552
Other
1,776,472
911,852
51,413,039
35,005,773
As at December 31, 2024, the non-capital loss carry-forwards and their respective expiration dates are
as follows:
Year
Canada
Argentina
Other
Total
2025
-
2,052
33,346
35,398
2026
-
45,885
24,330
70,215
2027
-
173,784
22,648
196,432
2028
-
462,119
52,535
514,654
2029 and onwards
16,823,027
1,243,610
33,831
18,100,468
16,823,027
1,927,450
166,690
18,917,167
14. 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 11, 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.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
25
The following are summaries of the Company’s current and non-current assets, current liabilities, and net losses by segment:
Los Helados
Project
Lunahuasi &
Valle Ancho
Corporate
Total
Current assets
1,109,560
4,917,954
195,492,387
201,519,901
Non-current receivables
and other assets
30,570
-
-
30,570
Prepaids
-
-
368,173
368,173
As at
Equipment
158,006
216,104
-
374,110
December 31,
Mineral properties
3,898,644
2,372,017
-
6,270,661
2024
Total assets
5,196,780
7,506,075
195,860,560
208,563,415
Current liabilities
684,501
10,914,401
977,122
12,576,024
Due to exploration
partner
-
-
956,041
956,041
Total liabilities
684,501
10,914,401
1,933,163
13,532,065
Los Helados
Project
Lunahuasi &
Valle Ancho
Corporate
Total
Current assets
1,089,494
1,077,345
74,706,657
76,873,496
Non-current receivables
and other assets
413,267
-
-
413,267
As at
Equipment
185,358
5,670
-
191,028
December 31,
Mineral properties
3,815,124
-
-
3,815,124
2023
Total assets
5,503,243
1,083,015
74,706,657
81,292,915
Current liabilities
768,887
5,670,081
750,870
7,189,838
Due to exploration
partner
-
-
634,740
634,740
Total liabilities
768,887
5,670,081
1,385,610
7,824,578
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
26
Year ended
December 31,
Los Helados
Project
Lunahuasi &
Valle Ancho
Corporate
Other
Total
2024
Exploration and
project
investigation
2,482,008
61,134,617
-
133,691
63,750,316
Gain on use of
marketable
securities
(22,798)
(9,177,904)
-
-
(9,200,702)
General and
administration
and other items
126,871
1,085,679
7,834,648
-
9,047,198
Net loss
2,586,081
53,042,392
7,834,648
133,691
63,596,812
Los Helados
Project
Lunahuasi &
Valle Ancho
Corporate
Other
Total
2023
Exploration and
project
investigation
15,094,448
25,141,638
-
47,285
40,283,371
Gain on use of
marketable
securities
(61,957)
(8,968,580)
-
-
(9,030,537)
General and
administration
and other items
117,986
(510,600)
6,857,972
-
6,465,358
Net loss
15,150,477
15,662,458
6,857,972
47,285
37,718,192
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
27
15. 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, 2024, the Company realized a net gain of $9,200,702 (2023: $9,030,537). The net gain for the
year ended December 31, 2024 was comprised of a favorable foreign currency impact of
$11,823,572 (2023: $10,100,473) and a trading loss of $2,622,870 (2023: $1,069,936), including
the impact of fees and commissions.
16. COMMITMENT
In June 2024, the Company entered into a long-term office premise and ancillary corporate support
services agreement with the Office Provider, retroactive to January 1, 2024. The agreement expires
on February 28, 2039, and provides a guarantee of monthly fees over its duration, which was set
at $41,000 as at December 31, 2024 and is subject to periodic revision. In addition to the monthly
fee, the final net amount paid by the Company to the Office Provider to effectively secure access to
its services until February 28, 2039 totaled $416,195 (Note 5).
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.
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
28
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, 2024, 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, 2024, 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 minimal as the Company deposits the majority of its cash
with large 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 is minimized
through the management of its capital structure as explained on Note 17 and by maintaining
good relationships with significant shareholders, such as Nemesia. 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, 2024, are as follows:
Total
Less than 1
year
1-5
years
More than
5 years
Accounts payable and
accrued liabilities
12,576,024
12,576,024
-
-
Due to exploration partner
4,707,571
-
-
4,707,571
Total
17,283,595
12,576,024
-
4,707,571
NGEx Minerals Ltd.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(Expressed in Canadian Dollars, unless otherwise stated)
29
In accordance with the terms of a JEA between the Company and its partner, NCR, the
Company has elected to settle the Obligation through funding NCR’s share of exploration
expenditures, which remained US$3.3 million as at December 31, 2024, 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, 2024, 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 $53,800,000.
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
$5,380,000 in financial position/comprehensive loss.
NGEx Minerals Corporate Directory
Corporate Head Office
Suite 2800, Four Bentall Centre
1055 Dunsmuir Street,
Vancouver, B.C. V7X 1L2 Canada
Phone: +1 604 689 7842
Fax: +1 604 689 4250
Registered and Records Office
Cassels Brock & Blackwell LLP
2200 – 885 West Georgia Street
Vancouver, B.C. V6C 3E8 Canada
Auditors
Pricewaterhouse Coopers LLP
Vancouver, B.C. Canada
Registrar and Transfer Agent
Computershare Trust Company of Canada
Vancouver, B.C. Canada
Phone: +1 604 661 9400
Officers
Wojtek Wodzicki
President and CEO
Jeff Yip
Chief Financial Officer
Bob Carmichael
Vice President, Exploration
Arndt Brettschneider
Vice President, Operations & Projects
Finlay Heppenstall
Vice President, IR & Corporate Development
Martin Rode
General Manager, South America Operations
Judy McCall
Corporate Secretary
Directors
William Rand (Chair)
Wojtek Wodzicki
Adam I. Lundin
Alessandro Bitelli
Cheri Pedersen
Neil O’Brien
Company Information
Investor Relations
Email: info@ngexminerals.com
Phone: +1 604 689 7842
Solicitors
Cassels Brock & Blackwell LLP
Vancouver, B.C. Canada
Share Listing
TSX: NGEX
OTCQX: NGXXF
CUSIP: 65343P103