PROSPECT RIDGE RESOURCES CORP. Management's Discussion and Analysis | For the nine months period ended May 31, 2022 |
("the Company")
FORM 51-102F1
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS PERIOD ENDED MAY 31, 2022
Introduction
This Management's Discussion and Analysis ("MD&A") of Prospect Ridge Resources Corp is the responsibility of management and covers the period ended May 31, 2022. The MD&A takes into account information available up to and including July 20, 2022 and should be read together with the Corporation's interim financial statements for the period ended May 31, 2022 and the audited financial statements for the year ended August 31, 2021. The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS").
Throughout this document the terms we, us, our, and the Company refer to Prospect Ridge Resources Corp. All financial information in this document is derived from the financial statements of the Company, which have been prepared in accordance with IFRS, except share and per share amounts, or unless otherwise indicated.
Additional information related to the Company is available for view on SEDAR at www.sedar.com.
This document contains forward-looking statements. Please refer to "Note Regarding Forward-Looking Statements." Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control, that may cause our actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Please refer to "Risk Factors" below.
Description of Business
Prospect Ridge Resources Corp. was incorporated under the laws of the Province of British Columbia. The Company is principally engaged in the acquisition and exploration of resource properties in Canada. The head office, records office, and principal address of the Company is 10TH Floor-595 Howe Street, Vancouver, British Columbia, V6C 2T5.
Prospect Ridge Resources Corp. | Page 1 of 9 |
Management's Discussion and Analysis | For the nine months period ended May 31, 2022 |
The Company is in the process of investing in potential new acquisitions and exploring and evaluating its resource properties and has not yet determined whether the properties contain ore reserves that are economically recoverable. The Company's primary focus is the Holy Grail property in Terrace, BC.
Performance Summary and Subsequent Events
During the nine months period ended May 31, 2022 and subsequent, the Company:
- Paid $200,000 and issued 2,000,000 common shares valued at $2,460,000 as required under the Holy Grail Agreement. In connection with agreement, the Company issued 285,715 finder shares valued at $131,429 to Triple K Ventures Ltd., a company related to the CEO.
- Completed a private placement by issuing 17,142,856 units at a price of $0.35 per unit for total proceeds of $6 million. Each unit consists of one common share and one-half of one share purchase warrant entitling the holder to purchase one additional common share at a price of $0.70 per common share for 18 months from the date of issuance, subject to a forced exercise clause in the event that the trading price of the common shares equals or exceeds $1.15 for 10 consecutive days. In connection with the offering, the Company paid an aggregate of $88,903 in finders' fees, issued 250,510 finder's warrants entitling the holder to purchase one common share at $0.70 per common share for a period of 18 months from the date of issuance and incurred an additional $29,927 in other closing costs.
- Issued 113,200 common shares at a price of $0.10 per common share for proceeds of $11,320 on the exercise of broker warrants.
- Issued a total of 500,000 stock options to certain of its directors, officers, employees and consultants. All of the stock options will be exercisable for a period of 5 years at an exercise price of $1.40. All stock options were voluntarily surrender by directors, officers, employees and consultants.
-
Completed a private placement by issuing 1,263,000 units at a price of $1.00 per unit for total proceeds of $1,263,000. Each unit consists of one common share and one-half of one share purchase warrant entitling the holder to purchase one additional common share at a price of $1.50 per common share for 18 months from the date of issuances, subject to a forced exercise clause in the event that the trading price of the shares equals or exceeds $2.25 for 10 consecutive days. In connection with the offering, the
Company paid an aggregate of $75,110 in finders' fees, issued 75,110 finder's warrants entitling the holder to purchase one common share at $1.50 per common share for a period of 18 months from the date of issuance. - Paid $10,000 and issued 500,000 common shares valued at $675,000 as required under the Knauss Creek Agreement. In connection with agreement, the Company issued 50,000 finder shares valued at $67,500 to Loan Wolf Exploration Ltd.
- The Company announced the appointment of Mr. Toby Lim to the Board of Directors. Biographical details are provided in the news release of February 24, 2022. Concurrently, Mr. Liam Corcoran resigned from the Board of Directors.
- The Company announced the appointment of Mr. Allen Alper and Mr. Brad Scharfe to the Board of Directors. Biographical details are provided in the news release of April 27, 2022.
- Issued a total of 1,075,000 stock options to certain of its directors, officers, employees and consultants. All of the stock options will be exercisable for a period of 5 years at an exercise price of $0.50.
- The Company announced the appointment of Mr. Allen Alper and Mr. Brad Scharfe to the Board of Directors. Biographical details are provided in the news release of April 27, 2022.
- The Company announced the appointment of Mr. Yan Ducharme as the new company President, Nicholas Luksha as the new Executive Vice President. Biographical details are provided in the news release of June 6, 2022.
Prospect Ridge Resources Corp. | Page 2 of 9 |
Management's Discussion and Analysis | For the nine months period ended May 31, 2022 |
COVID-19 Update
In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally. The Company continues to work to adapt to changing circumstances, travel restrictions and impacts on movement of goods and services. These conditions may impact the Company's ability to execute on its business plans.
Exploration Results
2021 Highlights
2021 field crews have collected over 500 rock samples, over 850 soils and cut over 40 meters of channel samples through a systematic property-wide exploration program efficiently rank and generate drilling vectors.
Key results from rock sampling available in Table 1, with highlights including:
- Sample #A0600805 from the Shock & Awe target containing 49.20 g/t gold, 311.0 g/t silver, 0.09% copper, 2.32% lead, and 1.92% zinc
- Sample #A0600810 from the Shock & Awe target containing 21.20 g/t gold, 17.8 g/t silver, 0.04% copper, 0.85% lead, and 0.23% zinc
- Sample #A0600829 from the 4shore target containing 21.30 g/t gold, 38.3 g/t silver, and 1.62% copper
- Over 50% of assay results are still pending and are expected to be received periodically over the coming months.
The 2021 program has identified multiple new targets and mapped 7 extensive mineralized zones that cross the Property including samples with visible gold (VG) at four sites. Exploration is on-going with field crews active on the Property and continuing 2nd and 3rd pass follow-up programs.
Resource Property Interests - Exploration and evaluation expenditures
Activities of the Company for the period ended May 31, 2022 focused on the continuing exploration work on its properties as indicated in the Exploration Program and Results described above.
Exploration and evaluation expenditures for the nine-month period ended May 31, 2022 is detailed below:
Knauss | ||||||
Holy Grail | Creek | Total | ||||
Claims | $ | 25,691 | $ | 2,000 | $ | 27,691 |
Geophysics | 11,473 | - | 11,473 | |||
Geology | 95,108 | 31,506 | 126,614 | |||
Prospection/Geochemistry | 371,806 | 144,315 | 516,121 | |||
Drilling | 14,291 | 12,750 | 27,041 | |||
Stripping | 1,785 | - | 1,785 | |||
Technical studies | 5,418 | 12,000 | 17,418 | |||
$ | 525,572 | $ | 202,571 | $ | 728,143 |
Results of Operations for the three months ended May 31, 2022
During the three-month period ended May 31, 2022, the Company incurred a net loss of $1,049,465 as compared to $57,405 for the period ended May 31, 2021. Significant items making up the loss include:
- Investor relation expense of $242,366 (2021 - $Nil) as the Company increased its investor relations following the completion of the Company's IPO and listing on the CSE on May 27, 2021.
Prospect Ridge Resources Corp. | Page 3 of 9 |
Management's Discussion and Analysis | For the nine months period ended May 31, 2022 |
- Consulting and Management fees of $90,500 (2021 - $12,000) as the Company incurred third-party consulting fees in addition to fees paid or accrued to the Company's Management. Activity ramped up significantly following the completion of the Company's IPO and listing on the CSE on May 27,
2021. - Professional fees of $28,991 (2021 - $29,738) related to audit, accounting fees and legal fees.
- Transfer agent and filing fees of $17,607 (2021 - $10,200) related to transfer agent, regulatory, and filing fees.
- Exploration and evaluation expenditures of $245,378 (2021 - $Nil) as the Company continues to ramp-up exploration work following initial success on its projects.
- Share-basedpayments of $367,860 (2021 - $Nil) relating to the fair value of stock options granted in the period.
- Depreciation expense of $20,217 (2021 - $4,448) as the Company recorded office lease right-of-use assets and purchased additional equipment during the period.
Summary of Quarterly Results
The following table summarizes the last quarter of the Company.
May 31, | February 28, | November 30, | August 31, | |
2022 | 2022 | 2021 | 2021 | |
Total assets | 9,228,390 | 9,864,515 | 9,522,217 | 1,484,465 |
Working capital | 4,659,953 | 5,580,707 | 5,290,183 | 303,457 |
Deficit | (4,766,132) | (3,706,618) | (2,897,212) | (1,690,346) |
Net loss | (1,049,465) | (809,406) | (1,206,866) | (1,653,626) |
Net loss per share | (0.02) | (0.02) | (0.02) | (0.22) |
May 31, | February 28, | November 30, | August 31, | |
2021 | 2021 | 2020 | 2020 | |
Total assets | 1,186,613 | 700,074 | 756,190 | 742,317 |
Working capital | 954,394 | 621,466 | 664,873 | 677,903 |
Deficit | (201,556) | (144,151) | (86,351) | (36,720) |
Net loss | (57,405) | (57,800) | (49,631) | (36,607) |
Net loss per share | (0.00) | (0.00) | (0.00) | (36,607) |
Results of Operations for the nine months ended May 31, 2022
During the nine-month period ended May 31, 2022, the Company incurred a net loss of $3,075,786 as compared to $164,836 for the period ended May 31, 2021. Significant items making up the loss include:
- Investor relation expense of $956,076 (2021 - $34,625) as the Company increased its investor relations following the completion of the Company's IPO and listing on the CSE on May 27, 2021
-
Consulting and Management fees of $292,733 (2021 - $39,500) as the Company incurred third- party consulting fees in addition to fees paid or accrued to the Company's Management. Activity ramped up significantly following the completion of the Company's IPO and listing on the CSE on
May 27, 2021. - Professional fees of $71,703 (2021 - $59,643) related to audit, accounting fees and legal fees.
- Transfer agent and filing fees of $34,625 (2021 - $15,905) related to transfer agent, regulatory, and filing fees.
Prospect Ridge Resources Corp. | Page 4 of 9 |
Management's Discussion and Analysis | For the nine months period ended May 31, 2022 |
- Exploration and evaluation expenditures of $728,143 (2021 - $Nil) as the Companycontinues to ramp-up exploration work following initial success on its projects Please refer to the exploration and evaluation expenditure table above for a breakdown of the expenditures.
- Share-basedpayments of $889,125 (2021 - $Nil) relating to the fair value of stock options granted in the period.
- Depreciation expense of $41,807 (2021 - $11,863) as the Company recorded office lease right-of- use assets and purchased additional equipment during the period.
Liquidity
The Company's historical capital needs have been met by issuance of shares. As at May 31, 2022, the Company had a working capital of $4,659,953 (August 31, 2021 - $303,457). The Company proposes to meet any additional financing requirements through equity financing. The Company's cash position as at May 31, 2022 was $4,399,070 (August 31, 2021 - $764,359).
Operating activities: The Company does not generate cash from operating activities. Net cash used in the Company for operating activities, for the period ended May 31, 2022 was $2,887,981.
Investing activities: The Company spent a total of $504,217 on investing activities during the period ended May 31, 2022, comprised of mineral property acquisitions and equipment expenditures.
Financing activities: The Company generated a total of $7,027,409 in cash provided by financing activities, comprised of proceeds from private placements of $7,263,000 and proceeds from special warrant $11,320 less share issuance costs of $243,440 and outflows of $3,471 towards lease liabilities.
The Company does not have operations that generate cash-flow and it is unlikely that it will generate cash- flow from operations in the foreseeable future. Cash requirements will depend primarily on the extent of future exploration programs. Subsequent phases will depend, both on cost and duration, and on results from previous phases, and it is therefore extremely difficult to predict future cash requirements.
Related Party Transactions
Related parties and related party transactions impacting the financial statements are summarized below and include transactions with the following individuals or entities:
Key management personnel
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Company's Board of Directors, corporate officers, including the Company's Chief Executive Officer, Chief Financial Officer, Corporate Secretary, President.
The following entities are classified as related parties due to the following:
Management | Consulting | Share-based | ||||||
fees | fees | payments | Total | |||||
Chief Executive Officer | $ | 150,000 | $ | - | $ | 313,138 | $ | 463,138 |
Chief Financial Officer | 22,500 | - | - | 22,500 | ||||
Officer | - | - | 34,161 | 34,161 | ||||
Non-executive directors | - | 117,833 | 263,416 | 381,249 | ||||
$ | 172,500 | $ | 117,833 | $ | 610,715 | $ | 901,048 |
As at May 31, 2022, $7,725 (August 31, 2021 - $343,039) was included in accounts payables and accrued liabilities for fees owed to related parties.
Prospect Ridge Resources Corp. | Page 5 of 9 |
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Prospect Ridge Resources Corp. published this content on 20 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 July 2022 23:53:08 UTC.
