UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission File Number:
(Exact name of registrant as specified in its charter)
| Province of Ontario, |
||
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | None | None |
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
As of May 13, 2025, there were Common Shares issued and outstanding.
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) for Premium Resources Ltd. (the “Company” or “PREM”) contains forward-looking statements that relate to future events or our future financial performance. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. These risks and other factors include those listed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) as filed with the Securities and Exchange Commission on March 20, 2025, and elsewhere in this Report. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” of the 2024 Form 10-K. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. You should read this Report and the documents that we have filed as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless otherwise indicated, all references to “$”, “C$” and “dollars” in this Report refer to Canadian dollars, references to “US$” in this Report refer to United States dollars and references to “BWP” in this Report refer to Botswanan pula. On March 31, 2025, the daily exchange rate: (i) for one United States dollar expressed in Canadian dollars was US$1.00 = C$1.4376 (or C$1.00 = US$0.6956); (ii) for one Botswanan pula expressed in Canadian dollars was BWP 1.00 = C$0.1039 (or C$1.00 = BWP 9.6246); and (iii) for one Botswanan pula expressed in United States dollars was BWP 1.00 = US$0.0723 (or US$1.00 = BWP 13.8313). “This quarter” or “the quarter” means the first quarter (“Q1”) of 2025.
CAUTIONARY STATEMENTS TO INVESTORS ON RESERVES AND RESOURCES
This Report uses the terms “mineral resources”, “indicated mineral resources” and “inferred mineral resources” as such terms are defined under Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”). NI 43-101 is a rule developed by the Canadian Securities Administrators, which establishes standards for all public disclosure a Canadian issuer makes of scientific and technical information concerning mineral projects.
On October 31, 2018, the SEC adopted new mining disclosure rules (“S-K 1300”) that are more closely aligned with current industry and global regulatory practices and standards, including NI 43-101, with which we comply because we are also a “reporting issuer” under Canadian securities laws. While S-K 1300 is more closely aligned with NI 43-101 than the prior mining disclosure rules of the Securities and Exchange Commission, there are some differences. Accordingly, there is no assurance any mineral resources that the Company may report as “indicated mineral resources” and “inferred mineral resources” under NI 43-101 will be the same as the reserve or resource estimates prepared under S-K 1300. Investors should not assume that any part or all of indicated mineral resources or inferred mineral resources will ever be converted into a higher category of mineral resources or into mineral reserves. Mineralization described using these terms has a greater amount of uncertainty as to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to assume that any “indicated mineral resources” or “inferred mineral resources” on the Company’s projects are or will be economically or legally mineable. Further, “inferred resources” have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, investors are also cautioned not to assume that all or any part of the inferred resources exist. In accordance with Canadian rules, estimates of “inferred mineral resources” cannot form the basis of feasibility or other economic studies, except in limited circumstances where permitted under NI 43-101.
It should be noted that the Company filed technical reports prepared in accordance with S-K 1300 as Exhibits 96.1 and 96.2 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission on March 20, 2025.
| 3 |
Item 1. Financial Statements
(Formerly Premium Nickel Resources Ltd.)
Unaudited Condensed interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
In accordance with generally accepted accounting principles in the United States and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission and stated in Canadian dollars, unless otherwise indicated
INDEX
Unaudited Condensed Interim Consolidated Financial Statements
| ▪ | Unaudited Condensed Interim Consolidated Balance Sheets | |
| ▪ | Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss | |
| ▪ | Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ (Deficiency) Equity | |
| ▪ | Unaudited Condensed Interim Consolidated Statements of Cash Flows | |
| ▪ | Notes to the Unaudited Condensed Interim Consolidated Financial Statements |
| 4 |
Unaudited Condensed Interim Consolidated Balance Sheets
(Expressed in Canadian dollars)
| As at | ||||||||||
| Notes | March 31, 2025
$ | December 31, 2024
$ | ||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS | ||||||||||
| Cash and cash equivalents | 3 | |||||||||
| Prepaid expenses | ||||||||||
| Other receivables | 4 | |||||||||
| TOTAL CURRENT ASSETS | ||||||||||
| NON-CURRENT ASSETS | ||||||||||
| Exploration and evaluation assets | 5 | |||||||||
| Property, plant and equipment | 6 | |||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||||
| TOTAL ASSETS | ||||||||||
| LIABILITIES | ||||||||||
| CURRENT LIABILITIES | ||||||||||
| Trade payables and accrued liabilities – current | 7 | |||||||||
| Vehicle financing – current | ||||||||||
| DSU liability – current | 10(e) | |||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||
| NON-CURRENT LIABILITIES | ||||||||||
| Trade payables and accrued liabilities – non-current | 7 | |||||||||
| Provision for leave and severance | ||||||||||
| Vehicle financing – non-current | ||||||||||
| Term Loan | 8 | |||||||||
| NSR option liability | 9 | |||||||||
| DSU liability – non-current | 10(e) | |||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||||
| TOTAL LIABILITIES | ||||||||||
| SHAREHOLDERS’ (DEFICIENCY) EQUITY | ||||||||||
| Common Shares ( | 10 | |||||||||
| Preferred shares | 10 | |||||||||
| Additional paid-in capital | ||||||||||
| Deficit | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||||
| TOTAL SHAREHOLDERS’ (DEFICIENCY) EQUITY | ( | ) | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIENCY) EQUITY | ||||||||||
Nature of Operations and Going Concern (Note 1)
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Approved by the Board of Directors on May 13, 2025.
“signed” Morgan Lekstrom Director and Chief Executive Officer |
“signed” Jason LeBlanc Director |
| 5 |
Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
(Expressed in Canadian dollars)
| Three months ended March 31, | ||||||||||
| 2025 | 2024 | |||||||||
| Notes | $ | $ | ||||||||
| EXPENSES | ||||||||||
| General exploration expenses | 5 | |||||||||
| Depreciation and amortization | ||||||||||
| General and administrative expenses | 15 | |||||||||
| Investor relations and communications | ||||||||||
| DSUs granted | 10(e) | |||||||||
| Fair value movement of DSUs | 10(e) | ( | ) | ( | ) | |||||
| Net foreign exchange loss | ||||||||||
| LOSS FOR THE PERIOD BEFORE OTHER ITEMS | ||||||||||
| OTHER ITEMS | ||||||||||
| Interest (income) expense, net | ( | ) | ||||||||
| Interest expense and accretion on Term Loan | 8 | |||||||||
| Loss on Term Loan extinguishment | 8 | |||||||||
| NET LOSS FOR THE PERIOD | ||||||||||
| OTHER COMPREHENSIVE (INCOME) LOSS | ||||||||||
| Exchange differences on translation of foreign operations | ( | ) | ||||||||
| TOTAL COMPREHENSIVE LOSS FOR THE PERIOD | ||||||||||
| Basic and diluted loss per share | ||||||||||
| Weighted average number of Common Shares outstanding – basic and diluted | ||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 6 |
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ (Deficiency) Equity
(Expressed in Canadian dollars)
| Notes | Number of shares | Preferred shares $ | Additional paid-in capital $ | Deficit $ | Accumulated other comprehensive (loss) income $ | Total shareholders’ (deficiency) equity $ | ||||||||||||||||||||
| BALANCE, DECEMBER 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||
| Share capital issued through private placement | 10(a) | |||||||||||||||||||||||||
| Share issue costs – private placement | 10(a) | - | ( | ) | ( | ) | ||||||||||||||||||||
| Share capital issued through debt conversion | 8 | |||||||||||||||||||||||||
| Share issue costs – debt conversion | 8 | - | ( | ) | ( | ) | ||||||||||||||||||||
| Share-based compensation | 10(c)(d) | - | ||||||||||||||||||||||||
| Exchange differences on translation of foreign operations | - | |||||||||||||||||||||||||
| BALANCE, MARCH 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||
| BALANCE, DECEMBER 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||
| Exercise of options, net | ||||||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||||
| Exchange differences on translation of foreign operations | - | ( | ) | ( | ) | |||||||||||||||||||||
| BALANCE, MARCH 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 7 |
Unaudited Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
| Three months ended March 31, | ||||||||||
| Notes | 2025 $ | 2024 $ | ||||||||
| OPERATING ACTIVITIES | ||||||||||
| Net loss for the year | ( | ) | ( | ) | ||||||
| Items not affecting cash: | ||||||||||
| DSUs granted | 10(e) | |||||||||
| Fair value movement of DSUs | 10(e) | ( | ) | ( | ) | |||||
| Share-based compensation | 10(c)(d) | |||||||||
| Depreciation | 6 | |||||||||
| Provision for leave and severance | ||||||||||
| Accrued interest and accretion on loans | ||||||||||
| Accrued interest on lease liability | ||||||||||
| Loss on Term Loan extinguishment | 8 | |||||||||
| Changes in non-cash working capital | ||||||||||
| Prepaid expenses and other receivables | ||||||||||
| Trade payables and accrued expenses | ( | ) | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||||
| INVESTING ACTIVITIES | ||||||||||
| Acquisition of property, plant and equipment | 6 | ( | ) | ( | ) | |||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||
| FINANCING ACTIVITIES | ||||||||||
| Proceeds from issuance of units | 10(a) | |||||||||
| Share issue costs | 8 | ( | ) | |||||||
| Vehicle loan repayments, net of financing | ( | ) | ( | ) | ||||||
| Lease payments | ( | ) | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||||
| Change in cash and cash equivalents for the period | ( | ) | ||||||||
| Cash and cash equivalents at the beginning of the period | ||||||||||
| Cash and cash equivalents at the end of the period | ||||||||||
| Supplemental cash flow information | ||||||||||
| Income taxes paid | ||||||||||
| Interest paid | ||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 8 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Premium Resources Ltd. and its wholly-owned subsidiaries’ (collectively, the “Company” or “PREM” and formerly Premium Nickel Resources Ltd.) principal business activity is the exploration and evaluation of PREM’s flagship asset, the Selebi nickel-copper-cobalt sulphide mine in Botswana and, separately, the Company’s Selkirk nickel-copper-cobalt-platinum group elements sulphide mine, also in Botswana. The common shares of PREM (“Common Shares”) are listed and posted for trading on the TSX Venture Exchange (the “TSXV”) under the symbol “PREM”. Prior to November 20, 2024, the Company traded on the TSXV under its previous name and symbol, Premium Nickel Resources Ltd. and PNRL, respectively. In addition, the Common Shares are currently quoted on the OTC Pink Open Market under the symbol “PRMLF”.
The following corporate structure chart sets out details of the direct and indirect ownership of the principal subsidiaries of the Company:
Notes:
| (1) | Premium Nickel Group Proprietary Limited owns the Selkirk Assets (as defined below). | |
| (2) | Premium Nickel Resources Proprietary Limited owns the Selebi Assets (as defined below). |
The Company’s head and registered office is located at One First Canadian Place, 100 King Street West, Suite 3400, Toronto, Ontario, Canada M5X 1A4.
The principal assets of the Company are the Selebi and Selebi North nickel-copper-cobalt (“Ni-Cu-Co”) mines in Botswana and related infrastructure (together, the “Selebi Mines”), as well as the nickel, copper, cobalt, platinum-group elements (“Ni-Cu-Co-PGE”) Selkirk mine in Botswana, together with associated infrastructure and four surrounding prospecting licences (collectively, the “Selkirk Mine” and together with the Selebi Mines, the “Mines”).
| 9 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
Going Concern
The Company, being in the exploration stage, is subject to risks and challenges similar to companies in a comparable stage of exploration and development. These risks include the challenges of securing adequate capital for exploration and advancement of the Company’s material projects, operational risks inherent in the mining industry, and global economic and metal price volatility, and there is no assurance management will be successful in its endeavors.
These consolidated financial statements have
been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable
future and will be able to realize assets and discharge liabilities in the ordinary course of operations. The ability of the Company
to continue operations as a going concern is ultimately dependent upon achieving profitable operations and its ability to obtain adequate
financing. The Company incurred a net loss of $
It is not possible to predict whether future financing efforts will be successful or if the Company will attain a profitable level of operations. These material uncertainties cast substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities and the reported expenses and comprehensive loss that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material.
The properties in which the Company currently
has an interest are in pre-revenue stage. As such, the Company is dependent on external financing to fund its activities. In order to
carry out the planned activities and cover administrative costs, the Company will use its existing working capital and raise additional
amounts as needed. Further, the second instalment under the Selebi APA (defined in Note 5) of $
On March 18, 2025, the Company closed a significant refinancing (Note 8 and Note 10). While this transaction will provide sufficient capital for the Company to fund operations in the near term, the Company will need further funding to support advancement of the Selebi Mines and the Selkirk Mine toward the development stage.
Although the Company has been successful in its past fundraising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of Compliance
These unaudited condensed interim consolidated financial statements reflect the accounts of the Company and have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for financial information.
Historically, the Company has prepared its financial statements under IFRS® Accounting Standards, as issued by the International Accounting Standards Board, for reporting as permitted by security regulators in Canada, as well as in the United States under the status of a foreign private issuer and a non-accelerated filer as defined by the SEC. In Fiscal 2024, the Company determined that it no longer qualified as a non-accelerated filer under the SEC rules, as the SEC rules apply to foreign private issuers. As a result, the Company elected to report with the SEC on domestic forms and comply with domestic company rules, which permit the Company to continue to avail itself of accommodations available to non-accelerated filers that file on domestic issuer forms. Consequently, the Company transitioned to preparing its financial statements using US GAAP for its SEC filing requirements.
The accompanying unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2024. The interim period results do not necessary indicate the results that may be expected for any other interim period or for the full fiscal year.
| 10 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
(b) Basis of preparation
These unaudited condensed interim consolidated financial statements have been prepared under the historical cost convention, modified by the revaluation of any financial assets and financial liabilities where applicable. The preparation of these unaudited condensed interim consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company as of March 31, 2025, and through the date of this report filing.
Operating segments are reported in a manner consistent with the internal reporting provided to executive management. The Company determined that it has one reportable operating segment being that of the acquisition, exploration and evaluation of mineral properties in three geographic segments, which are Canada, Barbados and Botswana (Note 13).
The Company’s presentation currency is Canadian dollars. Reference herein of $ or CAD is to Canadian dollars, US$ or USD is to United States dollars, and BWP is to Botswana pula.
The significant accounting policies used in the preparation of these unaudited condensed interim consolidated financial statements are consistent with those used in the preparation of the audited annual consolidated financial statements for the year ended December 31, 2024. Except as described in Note 2(e) and (f), there were no changes in significant accounting policies during the three months ended March 31, 2025.
(c) Reclassification
Certain comparative figures on
the unaudited condensed interim consolidated balance sheets, unaudited condensed interim consolidated statements of operations and
comprehensive loss, unaudited condensed interim consolidated statements of cash flows, and the notes to the unaudited condensed
interim consolidated financial statements have been reclassified to conform to the current year presentation. These
reclassifications have no effect on net loss or shareholders’ equity as previously reported. An adjustment has been made to
reduce share-based compensation by $
| 11 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
(d) Basis of consolidation
These unaudited condensed interim consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries as summarized in the table below. All intercompany transactions, balances, income and expenses are eliminated upon consolidation.
| Name of Entity | Place of Incorporation | Percentage Ownership | Functional Currency | |||
| Premium Resources Ltd. | CAD | |||||
| NAN Exploration Inc. | CAD | |||||
| PNR Amalco Ltd. | CAD | |||||
| Premium Resources International Ltd. | USD | |||||
| Premium Resources Selkirk (Barbados) Limited | USD | |||||
| Premium Resources Selebi (Barbados) Limited | USD | |||||
| Premium Nickel Group Proprietary Limited | BWP | |||||
| Premium Nickel Resources Proprietary Limited | BWP | |||||
(e) Debt Extinguishment
Upon the extinguishment of debt, the difference between the amount paid on extinguishment, including miscellaneous costs of reacquisition, and the net carrying amount of the debt being extinguished, being the amount due at maturity, adjusted for unamortized premiums, discounts, and costs of issuance, is recognized as a gain or loss when the debt is extinguished. The fair value of the assets transferred or the fair value of an equity interest granted is used in accounting for the settlement of the debt unless the fair value of the debt being settled is more clearly evident.
Recently Adopted Accounting Pronouncements
| (f) | ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures |
In December 2023, the Financial Accounting Standards Board (“FASB”) issued a final standard on improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The Company adopted the new standard effective January 1, 2025, and will include certain additional disclosures in the notes to its consolidated financial statements for the year ending December 31, 2025.
Recently Issued Accounting Pronouncements and Disclosures Not Yet Adopted
| (g) | ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures |
In November 2024, FASB issued an Accounting Standards Update (“ASU”) which will require entities to provide disaggregated disclosure of specified categories of expenses that are included on the face of the income statement, including: purchases of inventory, employee compensation, depreciation, amortization and depletion. This ASU becomes effective January 1, 2027. The Company is assessing the impact of this ASU, and upon adoption, may be required to include certain additional disclosures in the notes to its consolidated financial statements.
| 12 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
3. CASH AND CASH EQUIVALENTS
A summary of the Company’s cash and cash equivalents is detailed in the table below:
March 31, 2025 $ | December 31, 2024 $ | |||||||
| Cash | ||||||||
| Short-term deposits | ||||||||
The cash balance at March 31, 2025, includes the proceeds from the non-brokered private placement (Note 10) that closed on March 18, 2025.
4. OTHER RECEIVABLES
A summary of the Company’s other receivables is detailed in the table below:
March 31, 2025 $ | December 31, 2024 $ | |||||||
| HST paid on purchases | ||||||||
| VAT paid on purchases | ||||||||
5. EXPLORATION AND EVALUATION ASSETS
The exploration and evaluation assets of the Company consist of the acquisition costs of mining assets located in Botswana:
| Botswana | ||||||||||||
Selebi $ | Selkirk $ | Total $ | ||||||||||
| Balance, December 31, 2023 | ||||||||||||
| Foreign currency translation | ||||||||||||
| Balance, December 31, 2024 | ||||||||||||
| Foreign currency translation | ||||||||||||
| Balance, March 31, 2025 | ||||||||||||
The following is a description of the Company’s exploration and evaluation assets and the related spending commitments:
Botswana Assets - Selebi and Selkirk
In September 2021, the Company executed the Selebi Asset Purchase Agreement (“Selebi APA”) with the BCL Limited (“BCL”) liquidator to acquire the Selebi Mines formerly operated by BCL. In January 2022, the Company closed the transaction and ownership of the Selebi Mines transferred to the Company.
| 13 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
Pursuant to the Selebi APA, the aggregate purchase
price payable to the seller for the Selebi Mines shall be the sum of $
| ● | $ |
| ● | $ |
| ● | $ |
The total acquisition cost of the Selebi Mines
included the first instalment of $
In addition to the Selebi APA, the purchase of
the Selebi Mines is also subject to a royalty agreement as well as a contingent consideration agreement with the liquidator.
The Company also negotiated a separate asset purchase agreement (the “Selkirk APA”) with the liquidator of Tati Nickel Mining Company (“TNMC”) in January 2022 to acquire the Selkirk deposit and related infrastructure formerly operated by TNMC. The transaction closed in August 2022.
The Selkirk APA does not provide for a purchase
price or initial payment for the purchase of the assets. The acquisition cost of the Selkirk Mine of $
In addition to the Selkirk APA, the purchase
of the Selkirk Mine is also subject to a royalty agreement as well as a contingent consideration agreement with the liquidator.
In August 2023, the Company entered into a binding
commitment letter with the liquidator of BCL, which is subject to customary closing conditions, to acquire a
| 14 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
The upfront cost to the Company to acquire these
additional mineral properties is $
Both the Selebi Mines and Selkirk Mine are subject
to a royalty payable to the Botswana Government of
General Exploration Expenses
Details of the general exploration expenses by nature are presented as follows:
| Three months ended March 31, 2025 | ||||||||||||||||
Selebi $ | Selkirk $ | Other $ | Total $ | |||||||||||||
| Drilling | ||||||||||||||||
| Site operations, administration, and overhead | ||||||||||||||||
| Infrastructure and equipment maintenance | ||||||||||||||||
| Geology | ||||||||||||||||
| Mine development | ||||||||||||||||
| Electricity | ||||||||||||||||
| Engineering and technical studies | ||||||||||||||||
| Geophysics | ||||||||||||||||
| Freight, tools, supplies, and other consumables | ||||||||||||||||
| Health and safety | ||||||||||||||||
| Environmental, social and governance | ||||||||||||||||
| Share-based compensation | ||||||||||||||||
| Total | ||||||||||||||||
| Three months ended March 31, 2024 | ||||||||||||||||
Selebi $ | Selkirk $ | Other $ | Total $ | |||||||||||||
| Drilling | ||||||||||||||||
| Site operations, administration, and overhead | ||||||||||||||||
| Infrastructure and equipment maintenance | ||||||||||||||||
| Geology | ||||||||||||||||
| Mine development | ||||||||||||||||
| Electricity | ||||||||||||||||
| Engineering and technical studies | ||||||||||||||||
| Geophysics | ||||||||||||||||
| Freight, tools, supplies, and other consumables | ||||||||||||||||
| Health and safety | ||||||||||||||||
| Environmental, social and governance | ||||||||||||||||
| Share-based compensation | ||||||||||||||||
| Total | ||||||||||||||||
| 15 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
6. PROPERTY, PLANT AND EQUIPMENT
The tables below set out costs and accumulated depreciation and amortization as at March 31, 2025 and December 31, 2024:
| Cost | Land and Buildings(1) $ | Equipment(1) $ | Furniture and Fixtures $ | Vehicles $ | Computer and Software $ | Total $ | ||||||||||||||||||
| Balance – December 31, 2023 | ||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Foreign currency translation | ( | ) | ||||||||||||||||||||||
| Balance – December 31, 2024 | ||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Foreign currency translation | ||||||||||||||||||||||||
| Balance – March 31, 2025 | ||||||||||||||||||||||||
| Accumulated Depreciation | Land and Buildings(1) | Equipment(1) | Furniture and Fixtures | Vehicles | Computer and Software | Total | ||||||||||||||||||
| Balance – December 31, 2023 | ||||||||||||||||||||||||
| Depreciation during the year | ||||||||||||||||||||||||
| Foreign currency translation | ||||||||||||||||||||||||
| Balance – December 31, 2024 | ||||||||||||||||||||||||
| Depreciation during the period | ||||||||||||||||||||||||
| Foreign currency translation | ||||||||||||||||||||||||
| Balance – March 31, 2025 | ||||||||||||||||||||||||
| Carrying Value | Land and Buildings(1) | Equipment(1) | Furniture and Fixtures | Vehicles | Computer and Software | Total | ||||||||||||||||||
| Balance – December 31, 2024 | ||||||||||||||||||||||||
| Balance – March 31, 2025 | ||||||||||||||||||||||||
Note:
| (1) |
| 16 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
7. TRADE PAYABLES AND ACCRUED LIABILITIES
A summary of trade payables and accrued liabilities is detailed in the table below:
March 31, 2025 $ | December 31, 2024 $ | |||||||
| Amounts due to related parties (Note 11) | ||||||||
| Trade payables | ||||||||
| Accrued liabilities | ||||||||
| Share issuance costs payable | ||||||||
| Total | ||||||||
| Less: current portion | ||||||||
| Non-current portion | ||||||||
Included in trade payables at March 31, 2025
is $
Share issuance costs payable relates to various legal, listing and financing fees incurred as part of the March 2025 Financing (defined in Note 8).
8. TERM LOAN
The Company had a three-year term loan (the “Term
Loan”) with Cymbria Corporation (“Cymbria”), the lender and an affiliate of the Company’s largest
shareholder, EdgePoint Investment Group Inc. (“EdgePoint”), in the amount of $
On March 18, 2025, the Company closed a financing transaction (the “March 2025 Financing”) which included a non-brokered private placement (Note 10) and the conversion of the Term Loan to equity (the “Debt Conversion”).
The Company issued to Cymbria an aggregate of
units (each, a “Settlement Unit”) at a deemed issue price of $ per Settlement Unit in full satisfaction
of the $
Each Settlement Warrant entitles the holder to
acquire one additional Common Share of the Company at a price of $ per Common Share until March 18, 2028. If, at any time prior to
the expiry date, the volume-weighted average trading price of the Common Shares is at least $ per Common Share for a period of
The fair value of the Common Shares issued as
part of the Settlement Units was estimated at $ and was determined by applying an implied discount for lack of marketability
to the market observed price on the date of issuance. The fair value of the Settlement Warrants was estimated at $
| 17 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
The Monte Carlo model used to value the Settlement Warrants was based on the following assumptions:
| Settlement Warrants | ||||
| Expected dividend yield | % | |||
| Share price | $ | |||
| Expected share price volatility | % | |||
| Risk free interest rate | % | |||
| Expected life of warrant | ||||
The volatility was determined by calculating the historical volatility of the Company’s share price over a 3-year period using daily closing prices. The formula used to compute historical volatility is the standard deviation of the logarithmic returns. The same implied discount for lack of marketability for purposes of the Common Shares valuation was also applied to the share price for the Settlement Warrants valuation.
In connection with the March 2025 Financing,
the Company issued: (i) Common Shares to TriView
Capital Ltd. (“TriView”) for its services as finder; (ii) Common Shares to Fiore Management and Advisory
Corp. (“Fiore”) and Common Shares to Bowering Projects Ltd. (“Bowering”) for certain
advisory services; and (iii) Common Shares to a financial advisor for financial advisory services. The fair value of
these shares was determined to be $. In addition to the Common Shares, the Company incurred various legal, listing and financing
fees payable in cash totalling $
All securities issued as part of the Debt Conversion are subject to a hold period expiring July 19, 2025, with the exception of the Common Shares issued to Fiore and Bowering which have a hold period expiring March 19, 2026.
The following is a continuity of the Term Loan:
| $ | ||||
| Term Loan balance, December 31, 2023 | ||||
| Accrued interest | ||||
| Accretion of warrant value and transaction costs | ||||
| Interest paid | ( | ) | ||
| Term Loan balance, December 31, 2024 | ||||
| Accrued interest | ||||
| Accretion of warrant value and transaction costs | ||||
| Interest paid | ( | ) | ||
| Debt Conversion | ( | ) | ||
| Term Loan balance, March 31, 2025 | ||||
9. NSR OPTION
In 2023, Cymbria paid an aggregate of $
As the NSR options are exercisable entirely at the discretion of Cymbria and the underlying projects are in the exploration stage, the fair value of the call and put on the options as at December 31, 2024 and December 31, 2023 is $. The Option payment received in cash was recorded as a non-current liability.
| 18 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
PREM’s indirect wholly-owned subsidiary
Premium Nickel Resources Proprietary Limited (“PNRP”) acquired the Selebi Mines in January 2022 out of liquidation.
Pursuant to the acquisition agreement, the liquidator retained a
PREM’s indirect wholly-owned subsidiary
Premium Nickel Group Proprietary Limited (“PNGP”) acquired the Selkirk Mine in August 2022 out of liquidation. Pursuant
to the acquisition agreement, the liquidator retained a
Each of PNRP and PNGP has agreed to grant Cymbria,
in exchange for the Option Payment, an option to participate in any such repurchase of the applicable portion of its NSR from the relevant
liquidator. Cymbria will, following the exercise of its option to participate in any such repurchase, acquire a
Under the NSR option purchase agreements, Cymbria
could acquire a
The authorized capital of the Company comprises an number of Common Shares without par value and Preferred Shares, issuable in series, of which are authorized to be designated as Series 1 Convertible Preferred Shares.
| a) | Common Shares Issued and Outstanding |
Three months ended March 31, 2025
On March 18, 2025, the Company closed the March
2025 Financing which included a non-brokered private placement and the conversion of its $
The non-brokered private placement (the “Private
Placement”) consisted of issuing
In connection with the March 2025 Financing,
the Company issued: (i) Common Shares to TriView for its services as finder; (ii) Common Shares to Fiore and
Common Shares to Bowering for certain advisory services; and (iii) Common Shares to a financial advisor for financial advisory
services. The fair value of these shares was determined to be $. In addition to the Common Shares, the Company incurred various
legal, listing and financing fees payable in cash totalling $
| 19 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
All securities issued under the Private Placement are subject to a hold period expiring July 19, 2025, with the exception of the Common Shares issued to Fiore and Bowering which have a hold period expiring March 19, 2026.
The fair value of the Common Shares issued under
the Private Placement was estimated at $
The fair value of the Private Placement Warrants was calculated using the following assumptions:
| Private Placement Warrants | ||||
| Expected dividend yield | % | |||
| Share price | $ | |||
| Expected share price volatility | % | |||
| Risk free interest rate | % | |||
| Expected life of warrant | ||||
The volatility was determined by calculating the historical volatility of the Company’s share price over a 3-year period using daily closing prices. The formula used to compute historical volatility is the standard deviation of the logarithmic returns. The same implied discount for lack of marketability for purposes of the Common Shares valuation was also applied to the share price for the Settlement Warrants valuation.
As at March 31, 2025, the Company had Common Shares issued and outstanding (December 31, 2024 – ).
Year ended December 31, 2024
During the year ended December 31, 2024, Common Shares were issued for the net exercise of options. In addition, Common Shares were issued as a result of the following financing transactions:
On June 14, 2024, the Company closed the first tranche of a non-brokered private placement offering (the “June 2024 Financing”), pursuant to which the Company issued an aggregate units of the Company (the “June 2024 Units”) at a price of $ per Unit for aggregate gross proceeds of $. Each June 2024 Unit was comprised of one Common Share and one Common Share purchase warrant of the Company (each, a “June 2024 Warrant”).
On June 21, 2024, the Company closed the second tranche of the June 2024 Financing and issued an additional June 2024 Units at $ per Unit for gross proceeds of $.
Each June 2024 Warrant entitles the holder thereof
to acquire one Common Share for a period expiring 60 months following the date of issuance (the “Expiry Date”) at
a price of $
In connection with the June 2024 Financing, the
Company issued
| 20 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
The fair value of the June 2024 Warrants, calculated
using the Monte Carlo model, was estimated at $
| June 14, 2024 | June 21, 2024 | |||||||
| Expected dividend yield | % | % | ||||||
| Share price | $ | $ | ||||||
| Expected share price volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Expected life of warrant | ||||||||
The volatility was determined by calculating the historical volatility of stock prices of the Company over a 5-year period using daily closing prices. The formula used to compute historical volatility is the standard deviation of the logarithmic returns.
| b) | Warrants |
The following summarizes Common Share purchase warrant activity:
| Three months ended | Year ended | |||||||||||||||
| March 31, 2025 | December 31, 2024 | |||||||||||||||
Number | Weighted Average $ | Number | Weighted Average $ | |||||||||||||
| Outstanding, beginning of the year | ||||||||||||||||
| Issued | ||||||||||||||||
| Exercised | ||||||||||||||||
| Expired | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Outstanding, end of the period | ||||||||||||||||
At March 31, 2025, the Company had outstanding Common Share purchase warrants exercisable to acquire Common Shares as follows:
Warrants Outstanding | Warrants Exercisable | Expiry Date | Exercise Price $ | Intrinsic $ | ||||||||||||
| June 28, 2026 | ||||||||||||||||
| June 14, 2029 | ||||||||||||||||
| June 21, 2029 | ||||||||||||||||
| March 18, 2028 | ||||||||||||||||
| March 18, 2028 | ||||||||||||||||
| c) | Stock Options |
The Company has a stock option plan (the “Option Plan”) providing the authority to grant options to directors, officers, employees and consultants enabling them to acquire up to Common Shares of the Company. Under the Option Plan, the exercise price of each option shall not be less than the discounted market price on the grant date and as approved by the Board of Directors of the Company. The options can be granted for a maximum term of .
| 21 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
The following summarizes the option activity under the Option Plan:
| Three months ended | Year ended | |||||||||||||||
| March 31, 2025 | December 31, 2024 | |||||||||||||||
Number | Weighted Average $ | Number | Weighted Average $ | |||||||||||||
| Outstanding, beginning of the year | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ( | ) | ||||||||||||
| Expired/cancelled | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Outstanding, end of the period | ||||||||||||||||
The total intrinsic value of options exercised for the year ended December 31, 2024, was $.
During the three months ended March 31, 2025, the Company granted an aggregate of stock options to employees, directors, officers and consultants with a term of . The options have an exercise price of $ per Common Share and vest as to one-half on the date of grant and the balance on the first anniversary of the date of grant.
During the year ended December 31, 2024, the Company granted an aggregate of stock options to employees, directors, officers and consultants with a term of . The options have a weighted average exercise price of $ per Common Share, with vesting annually in equal thirds beginning on the date of grant, and vesting immediately on the date of grant.
For the three months ended March 31, 2025, a total of $ (three months ended March 31, 2024 – $) was recorded as share-based compensation expense and credited to additional paid-in capital related to the Option Plan.
The fair value of stock options granted was calculated using the Black-Scholes Option Pricing Model. The volatility is determined using the historical daily volatility over the expected life of the options. The expected life of the options considers the contractual term of the options, as well as an estimate of the time to exercise. The Black-Scholes Option Pricing Model used the following assumptions:
| Three months ended | Year ended | |||||||
| March 31, 2025 | December 31, 2024 | |||||||
| Expected dividend yield | % | % | ||||||
| Expected forfeiture rate | % | % | ||||||
| Expected share price volatility range | - | % | - | % | ||||
| Weighted average expected share price volatility | % | % | ||||||
| Risk free interest rate | % | - | % | |||||
| Expected life of options | - years | - years | ||||||
| 22 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
Options Outstanding | Options Exercisable | Expiry Date | Exercise Price $ | Intrinsic $ | ||||||||||||
| August 19, 2025 | ||||||||||||||||
| January 26, 2026 | ||||||||||||||||
| February 25, 2026 | ||||||||||||||||
| September 29, 2026 | ||||||||||||||||
| October 25, 2026 | ||||||||||||||||
| January 20, 2027 | ||||||||||||||||
| August 8, 2028 | ||||||||||||||||
| August 14, 2029 | ||||||||||||||||
| December 4, 2029 | ||||||||||||||||
| March 18, 2030 | ||||||||||||||||
| d) | RSU Plan |
The Company has a restricted share unit plan (the “RSU Plan”) that enables the Company to grant RSUs to eligible participants upon approval by the Board of Directors. The maximum number of Common Shares that are issuable under the RSU Plan is Common Shares. Upon settlement, the holder is entitled to receive one Common Share. The Company may elect, in its sole discretion, to settle the value of the RSUs in cash.
The number and terms of RSUs awarded will be determined by the Board of Directors from time to time and be based on the volume weighted average price on the TSXV for the last five trading days immediately preceding the grant date. The RSU grants are fixed and are not subject to vesting conditions other than service. The Company uses the fair value method of accounting for the recording of RSU grants, and the fair value of the RSUs was determined based on the closing price of the Company’s Common Shares on the grant date.
During the three months ended March 31, 2025, the Company granted an aggregate of RSUs to employees, directors, officers and consultants with each RSU vesting in full on the first anniversary of the date of grant.
During the year ended December 31, 2024, the Company granted an aggregate of RSUs to employees, directors, officers and consultants with one-third of the RSU grant vesting on each of the first, second and third anniversaries of the date of grant.
| Three months ended | Year ended | |||||||||||||||
| March 31, 2025 | December 31, 2024 | |||||||||||||||
Number | Weighted Average $ | Number | Weighted Average $ | |||||||||||||
| Outstanding, beginning of the year | ||||||||||||||||
| Granted | ||||||||||||||||
| Outstanding, end of the period | ||||||||||||||||
For the three months ended March 31, 2025, a total of $ (three months ended March 31, 2024 – $) was recorded as share-based compensation expense and credited to additional paid-in capital related to the RSU Plan.
| 23 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
| e) | DSU Plan |
The Company has a deferred share unit plan (the “DSU Plan”) that enables the Company to grant DSUs to eligible non-management directors upon approval by the Board of Directors. The DSUs credited to the account of a director may only be redeemed following the date upon which the holder ceases to be a director. Depending upon the country of residence of a director, the DSUs may be redeemed at any time prior to December 15th in the calendar year following the year in which the holder ceases to be a director and may be redeemed in as many as four installments. Upon redemption, the holder is entitled to a cash payment equal to the number of units redeemed multiplied by the five-day volume weighted average price of the Common Shares on that date. The Company may elect, in its sole discretion, to settle the value of the DSUs redeemed in Common Shares on a one-for-one basis, provided shareholder approval has been obtained on or prior to the relevant redemption date.
| Number of Awards | Price(1) $ | Fair Value $ | ||||||||||
| DSUs outstanding at December 31, 2023 | ||||||||||||
| Granted | ||||||||||||
| Fair value adjustment | ( | ) | ||||||||||
| DSUs outstanding at December 31, 2024 | ||||||||||||
| Granted | ||||||||||||
| Fair value adjustment | ( | ) | ||||||||||
| DSUs outstanding at March 31, 2025 | ||||||||||||
| Less: current portion | ||||||||||||
| Non-current portion | ||||||||||||
Note:
| (1) |
During the three months ended March 31, 2025, the Company did not grant DSUs, and recorded a fair value adjustment gain of $ on the outstanding DSUs. During the three months ended March 31, 2024, the DSU compensation, net of fair value adjustments, was $.
The DSUs are classified as a derivative financial liability measured at fair value, with changes in fair value recorded in profit or loss. The fair value of the DSUs was determined based on the closing price of the Company’s Common Shares on the respective balance sheet date. As at March 31, 2025, the Company reassessed the fair value of the DSUs at $ and recorded the amount as a DSU liability (December 31, 2024 - $).
11. RELATED PARTY TRANSACTIONS
The following amounts due to related parties are included in trade payables and accrued liabilities (Note 7).
March 31, 2025 $ | December 31, 2024 $ | |||||||
| Directors and officers of the Company | ||||||||
| 24 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
Included in the amounts due to related parties
at December 31, 2024, is $
These amounts are unsecured, non-interest bearing and have 30-day fixed terms of repayment with the exception of the retirement payment, as noted above.
| (a) | Related party transactions |
During 2024, EdgePoint and its affiliates, related
parties of the Company, subscribed for
In connection with the June 2024 Financing, certain
insiders of the Company subscribed for an aggregate of
On March 18, 2025, the Company closed the March
2025 Financing which included the conversion of its Term Loan held by EdgePoint and its affiliates to equity (Note 8). The Company issued
to EdgePoint and its affiliates an aggregate of Settlement Units. As of March 31, 2025, EdgePoint and its affiliates beneficially
owned an aggregate of Common Shares and warrants, representing approximately of the outstanding Common Shares
(approximately
In connection with the Private Placement (Note
10), certain insiders of the Company subscribed for an aggregate of
For the three months ended March 31, 2025, the
Company paid interest of $
| (b) | Key management personnel are defined as members of the Board of Directors and certain senior officers. |
Key management compensation was related to the following:
| Three months ended March 31, | ||||||||
2025 $ | 2024 $ | |||||||
| Salaries and management fees | ||||||||
| Site operations and administration | ||||||||
| DSUs granted, net of fair value movements | ( | ) | ||||||
| Share-based compensation | ||||||||
| 25 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 820 - Fair Value Measurement establishes a three-tier fair value hierarchy. The fair value hierarchy’s three tiers are based on the extent to which inputs used in measuring fair value are observable in the market, and are as follows:
| Level 1: | Quoted prices (unadjusted) in active markets for identical assets or liabilities; | |
| Level 2: | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and | |
| Level 3: | One or more significant inputs used in a valuation technique are unobservable in determining fair values of the asset or liability. |
Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available. The classification of an asset or liability in the hierarchy is based upon the lowest level of input that is significant to the measurement of fair value.
The carrying value of cash and cash equivalents, trade payables and accrued liabilities approximate their fair value due to their short-term nature and therefore have been excluded from the table below. A summary of the carrying value and fair value of other financial instruments were as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||
| Classification | Carrying Value $ | Fair Value $ | Carrying Value $ | Fair Value $ | ||||||||||||||
| DSU liability | Level 1 | |||||||||||||||||
| Vehicle financing | Level 2 | |||||||||||||||||
| Term loan | Level 3 | |||||||||||||||||
| NSR option liability | Level 2 | |||||||||||||||||
DSU liability – the fair value of the DSUs is measured using the closing price of the Company’s Common Shares at the end of each reporting period.
Vehicle financing – The fair values approximate carrying values as the interest rates are comparable to current market rates.
Term loan – the term loan was carried at amortized cost. The fair value measurement of the term loan was based on an income approach.
NSR option liability – The fair value of the NSR options is determined using a valuation model that incorporates such factors as discounted cash flow projections, metal price volatility, and risk-free interest rate. As the NSR options are exercisable entirely at the discretion of Cymbria and the underlying projects are in the exploration stage, the fair value of the call and put on the options as at March 31, 2025 and December 31, 2024 is $.
13. SEGMENTED INFORMATION
The Company has identified its Chief Executive Officer as its Chief Operating Decision Maker (“CODM”). The CODM evaluates the Company’s performance and segmented results based on Loss for the Period Before Other Items. The significant segment expenses reviewed by the CODM are consistent with the expense line items presented in Loss for the Period Before Other Items in the Company’s unaudited condensed interim consolidated statements of operations and comprehensive loss. The CODM uses Loss for the Period Before Other Items to assess segment performance against the Company’s planned results, and to allocate capital investment.
| 26 |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2025 and 2024
(Expressed in Canadian dollars)
The Company operates in
March 31, 2025 $ | December 31, 2024 $ | |||||||
| Current assets | ||||||||
| Canada | ||||||||
| Barbados | ||||||||
| Botswana | ||||||||
| Total | ||||||||
| Exploration and evaluation assets | ||||||||
| Botswana | ||||||||
| Property, plant and equipment | ||||||||
| Botswana | ||||||||
14. CONTINGENT LIABILITIES
There are no environmental liabilities associated with the Mines as at the acquisition dates as all liabilities incurred prior to the acquisitions are the responsibility of the sellers, BCL and TNMC. The Company has an obligation for the rehabilitation costs arising subsequent to the acquisitions. As of March 31, 2025, there were no material rehabilitation costs for which the Company expects to incur, and management is not aware of or anticipating any contingent liabilities that could impact the financial position or performance of the Company related to its exploration and evaluation assets.
15. GENERAL AND ADMINISTRATIVE EXPENSES
Details of the general and administrative expenses are presented in the following table:
| Three months ended March 31, | ||||||||
2025 $ | 2024 $ | |||||||
| Advisory and consultancy | ||||||||
| Filing fees | ||||||||
| General office expenses | ||||||||
| Insurance | ||||||||
| Professional fees | ||||||||
| Salaries and management fees | ||||||||
| Share-based compensation | ||||||||
| Total | ||||||||
Share-based compensation expense for the three months ended March 31, 2025, includes $ related to the stock options granted on March 18, 2025 (Note 10), which vested as to one-half on the date of grant and the balance vesting on the first anniversary of the date of grant.
| 27 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis (this “MD&A”) of our financial condition and results of operation should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company and accompanying notes thereto for the quarters ended March 31, 2025 and 2024 (the “Quarterly Financial Statements”) appearing elsewhere in this Report. This discussion and analysis below includes forward-looking statements that are subject to risks, uncertainties and other factors described in the “Risk Factors” section set forth in the 2024 Form 10-K that could cause actual results to differ materially from those anticipated in these forward-looking statements as a result of various factors. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. We caution you to read the “Cautionary Note Regarding Forward-Looking Statements” section of this Report.
This MD&A is intended to assist the reader to assess material changes in the financial condition of the Company during the quarter ended March 31, 2025, and the results of operations of the Company for the three-month periods ended March 31, 2025 and March 31, 2024. The Quarterly Financial Statements and the financial information contained in this MD&A were prepared in accordance with US GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission.
In this MD&A, unless the context otherwise requires, references to the Company or PREM refer to Premium Resources Ltd. and its consolidated subsidiaries. All monetary amounts in the discussion are expressed in Canadian dollars unless otherwise indicated.
This MD&A contains forward-looking information within the meaning of applicable securities laws. All forward-looking information, including information not specifically identified herein, is made subject to cautionary language in this MD&A. Readers are cautioned to refer to the disclosure in this Report under the heading “Cautionary Note Regarding Forward-Looking Statements” when reading any forward-looking information.
Company Overview
PREM is a mineral exploration and evaluation company focused on the discovery and advancement of high-quality nickel-copper-cobalt-platinum group elements (“Ni-Cu-Co-PGE”) resources. The principal assets of the Company are the Selebi Main and Selebi North nickel-copper-cobalt (“Ni-Cu-Co”) mines in Botswana and related infrastructure (together, the “Selebi Mines”), as well as the Ni-Cu-Co-PGE Selkirk mine in Botswana, together with associated infrastructure and four surrounding prospecting licenses (collectively, the “Selkirk Mine” and together with the Selebi Mines, the “Mines”). PREM is committed to governance through transparency, accountability, and open communication within PREM’s team and stakeholders.
The Company’s principal business activity is the exploration and evaluation of the Mines.
The Selebi and Selkirk mines are permitted with 10-year mining licences, granted in 2022, and renewable upon the submission of approved mine plans and other customary conditions, and benefit from significant local infrastructure. The Company’s flagship Selebi Mines include two operational shafts, the Selebi Main and Selebi North shafts, and related infrastructure such as rail, power and roads.
PREM is headquartered in Toronto, Ontario, Canada and is publicly traded on the TSX Venture Exchange (the “TSXV”) under the symbol “PREM”. Prior to November 20, 2024, the Company traded on the TSXV under its previous name and symbol, Premium Nickel Resources Ltd. and PNRL, respectively. In addition, the Company’s common shares (the “Common Shares”) are currently quoted on the OTC Pink Open Market under the symbol “PRMLF”.
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Summary of Activities
On January 31, 2025, the Company filed the Selkirk Mineral Resource Estimate (“MRE”) in conformance with the SEC’s Modernized Property Disclosure Requirements for Mining Registrants as described in Subpart 229.1300 of Regulation S-K, Disclosure by Registrants Engaged in Mining Operations (S-K 1300) and Item 601(b)(96) Technical Report Summary, entitled “S-K 1300 Technical Report Summary, Selkirk Nickel Project, North East District, Republic of Botswana” (the “Selkirk TRS”) and dated January 8, 2025 (with an effective date of November 1, 2024) for its Selkirk Mine. The Selkirk MRE provides a solid foundation for advancing the Selkirk deposit to an economic study.
On March 18, 2025, PREM closed a significant recapitalization (the “March 2025 Financing”) of the Company which included a $46.0 million non-brokered equity private placement (the “Private Placement”) and the equity conversion of its $20.9 million three-year term loan (the “Debt Conversion”) with Cymbria Corporation (“Cymbria”). The March 2025 Financing has resulted in the successful deleveraging of the Company’s balance sheet and has provided the Company with the funds necessary to advance its new strategic direction.
The Company’s strategic direction is aimed at rapidly demonstrating the size potential of the Selebi North and Selebi Main deposits. The Company is aggressively executing a carefully designed exploration drilling program at the Selebi Mines while concurrently finalizing metallurgical work to identify the optimal mineral processing method to consider in a future economic study. In addition, the Company is advancing the Selkirk Mine through low-cost initiatives and evaluating strategic opportunities to enhance its value.
The exploration and development strategy includes the Selebi Main surface drilling program to target a potential third horizon, Hinge drilling between the Selebi North and Selebi Main deposits, Selebi North underground (“SNUG”) resource expansion drilling, underground development in Selebi North to facilitate drilling programs, and a surface drilling program at the Selkirk Mine.
The new strategy also includes advancing project economics through further metallurgical sampling and testing, the evaluation of XRT (“X-ray Transmission”) ore sorting, and the evaluation of IDEON Technologies Inc. for purposes of 3D density mapping. For more information relating to the Company’s new strategic direction, please see “Exploration and Evaluation Activities and Mineral Properties” below.
The Company has also strengthened its management team through the appointment of Morgan Lekstrom as the Company’s new Chief Executive Officer. The Company’s new strategic direction is also further supported by the addition of Frank Giustra and the Fiore Group as strategic advisors to the Company.
During the quarter, the Company announced the remaining results from its infill drill program at SNUG. The Selebi Main surface drilling progressed with the Company having extended historic drillholes by approximately 307 metres in 2 drill holes to-date. The SNUG Resource Expansion Drilling program also commenced, with approximately 2,222 metres in 3 holes drilled to-date. During the quarter, the Company intersected mineralization below the Selebi Mines MRE, confirming the down-plunge continuation of massive sulphides. These assay results will continue to be released as they are received and confirmed by the Company.
For more information relating to the contemplated activities and milestones on the Mines, please see “Exploration and Evaluation Activities and Mineral Properties” below.
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Highlights and Key Developments:
| ● | On January 27, 2025, the Company reported significant assay results for two holes that were drilled outside of the Selebi MRE at Selebi North. | |
| ● | On January 31, 2025, the Company filed the Selkirk TRS. For details of the Selkirk MRE, see “Selkirk Mine, Botswana”. | |
| ● | On March 18, 2025, the Company closed a $46.0 million Private Placement and Debt Conversion. On March 20, 2025, Morgan Lekstrom was appointed as the Company’s new Chief Executive Officer. For a summary of the transactions, see “Liquidity & Capital Resources — Financings”. | |
| ● | On March 25, 2025, the Company announced the appointment of Chris Leavy to the board of directors (the “Board of Directors” or the “Board”). The Company also announced the retirement of William O’Reilly as a director of the Company. | |
| ● | On April 10, 2025, the Company announced a new strategic direction for the Mines. For more information relating to the planned activities over the next six months, see “Exploration and Evaluation Activities and Mineral Properties” below. | |
| ● | On April 17, 2025, the Company announced additional high-grade assay results from resource reclassification drilling at SNUG. | |
| ● | On April 24, 2025, the Company announced the appointment of André van Niekerk to the Board. The Company also announced the retirement of Don Newberry as a director of the Company. | |
| ● | On May 1, 2025, the Company announced that it had successfully intersected mineralization at SNUG below the Selebi Mines MRE confirming the down-plunge continuation of massive sulphides. For details, see “Exploration and Evaluation Activities and Mineral Properties” below. | |
| ● | On May 6, 2025, the Company announced that it had applied to list its common shares on the Nasdaq Capital Market. |
Corporate Social Responsibility
The Company is committed to conducting its business in a socially responsible and sustainable manner, with a focus on environmental stewardship, health and safety, community engagement and ethical conduct. The Company has established policies and procedures in its Code of Business Conduct and Ethics to ensure compliance with applicable laws and regulations, as well as industry standards for responsible mining. PREM recognizes the importance of stakeholder engagement and works closely with local communities, indigenous groups and other stakeholders to ensure their concerns and perspectives are heard and addressed.
Exploration and Evaluation Activities
The following table outlines the key milestones, estimated timing and costs related to each of the Mines, based on the Company’s reasonable expectations, intended courses of action and current assumptions and judgement, with information based as of March 31, 2025.
| Key Milestones for Project | Expected Timing of Completion | Anticipated Costs | ||
| Exploration and Development | ||||
| Selebi Mines and Selkirk drill programs | Ongoing, costs to September 30, 2025 | $5.9 million to $6.6 million | ||
| Selebi Mines underground development | Ongoing, costs to September 30, 2025 | $1.8 million to $2.2 million | ||
| Capital expenditures(1) | Ongoing, costs to September 30, 2025 | $2.8 million to $3.1 million | ||
| Studies | ||||
| Advancing project economics(2) | Ongoing, costs to September 30, 2025 | $5.7 million to $6.4 million | ||
| Operating costs | Ongoing, costs to September 30, 2025 | $6.2 million to $6.6 million |
Notes:
| (1) | Includes drilling equipment, mobile equipment, and electrical and communications equipment in support of drill programs and underground development. | |
| (2) | Includes advancing project economics through further metallurgical sampling and testing, the evaluation of XRT (“X-ray Transmission”) ore sorting, and the evaluation of IDEON Technologies Inc. for purposes of 3D density mapping. |
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Readers are cautioned that the above represents the opinions, assumptions and estimates of management considered reasonable at the date the statements are made and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those described above. See “Cautionary Note Regarding Forward Looking Statements”.
Mineral Properties
The information that follows relating to the Selebi Mines is derived from, and in some instances is an extract from, the Selebi Technical Report Summary entitled “S-K 1300 Technical Report Summary Selebi Mines, Central District, Republic of Botswana” with an effective date of June 30, 2024 and a signature date of December 17, 2024 prepared by SLR Consulting (Canada) Ltd. (the “Selebi TRS”), prepared in compliance with the SEC’s Modernization of Property Disclosures for Mining Registrants set forth in subpart 1300 of Regulation S-K.
The information that follows relating to the Selkirk Mine is derived from, and in some instances is an extract from, the Selkirk Technical Report Summary entitled “S-K 1300 Technical Report Summary, Selkirk Nickel Project, North East District, Republic of Botswana” with an effective date of November 1, 2024 and a signature date of January 8, 2025 prepared by SLR Consulting (Canada) Ltd. (the “Selkrik TRS”), prepared in compliance with the SEC’s Modernization of Property Disclosures for Mining Registrants set forth in subpart 1300 of Regulation S-K.
The qualified persons of SLR Consulting (Canada) Ltd. meet the qualifications specified under the definition of “qualified person” under Item 1300 of Regulation S-K. Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the Selebi TRS and Selkirk TRS, which have been included as Exhibit 96.1 and 96.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, respectively. In the event that we determine that any modifying factors, estimates and other scientific and technical information in the reports materially change, we may update or file a new technical report in the future. The Selebi Mines and Selkirk Mine are exploration stage properties.
Selebi Mines, Botswana
The Selebi Mines are located in Botswana approximately 150 km southeast of the city of Francistown, and 410 km northeast of the national capital Gaborone. The Selebi Mines are readily accessed via paved and gravel roads from the town of Selebi-Phikwe, located just north of the mining licence. With a population of approximately 52,000, the town is accessed via a well-maintained paved road that branches due east from the major A1 highway at the town of Serule, 57 km from the Selebi Mines.
The Selebi Mines infrastructure includes two previously operating mines, Selebi Main (#2 Shaft) and Selebi North (#4 Shaft), and associated surface infrastructure.
The Selebi Mines consists of a single mining licence covering an area of 11,504 hectares. The mining licence is centred approximately at 22°03’00”S and 27°47’00”E.
Mining licence 2022/1L was granted to PNRPL on January 31, 2022, over the Selebi Mines deposits discovered under mining licence 4/72. The original licence which had been granted to BCL Limited (“BCL”) on March 7, 1972, which covered both Selebi and Phikwe project areas, was amended several times and renewed once, and was set to expire on March 6, 2022. The current mining licence is limited to the Selebi and Selebi North deposits and their surrounding areas, expires May 26, 2032, and excludes the Phikwe mines and associated infrastructure.
Selebi Mines Mineral Resource Estimate, June 30, 2024
| Tonnage | Grade | Contained Metal | |||||||||||||||||||||
| Classification | Deposit | (Mt) | (% Cu) | (% Ni) | (000 t Cu) | (000 t Ni) | |||||||||||||||||
| Indicated | Selebi North | 3.00 | 0.90 | 0.98 | 27.1 | 29.5 | |||||||||||||||||
| Total Indicated | 3.00 | 0.90 | 0.98 | 27.1 | 29.5 | ||||||||||||||||||
| Inferred | Selebi Main | 18.89 | 1.69 | 0.88 | 319.2 | 165.5 | |||||||||||||||||
| Selebi North | 5.83 | 0.90 | 1.07 | 52.5 | 62.4 | ||||||||||||||||||
| Total Inferred | 24.72 | 1.50 | 0.92 | 371.7 | 227.9 | ||||||||||||||||||
The key assumptions, parameters, and methods used to estimate the mineral resources are contained in the Selebi TRS. Readers are cautioned not to assume that all or any part of Indicated Mineral Resources will ever be converted into Mineral Reserves as defined by S-K 1300. Readers are cautioned not to assume that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable, or that an Inferred Mineral Resource will ever be upgraded to a higher category.
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Selebi North
In 2023, an underground resource and exploration drilling program at Selebi North was initiated. The program was a combination of infill and exploration drilling to follow the extension of the mineralization down-dip and down-plunge. The Company reported the final assays from the 2023/2024 in-fill drill program on April 17, 2025. Supplementary infill drilling has been strategically moved into later work programs.
In March 2025, the Selebi North Underground Resource Expansion Drilling program commenced with one drill rig targeting Borehole Electromagnetic (“BHEM”) plates located down-dip, and down-plunge from the N3, N2, and South Limbs. During 2025 and up to the date of this report, the Company has drilled approximately 2,222 metres in 3 holes. During the quarter, drill hole SNUG-25-184 intersected mineralization 183 metres down-plunge from the Selebi Mines MRE. A BHEM survey in SNUG-25-184 identified strong off-hole responses, indicating both the South Limb and N2 zones remain open down-plunge.
Assays for a total of approximately 34,368 metres across 82 completed holes have not been accounted for in the Initial Selebi MRE. All core is sampled and sent to ALS Chemex in Johannesburg for analysis. All holes are surveyed with a gyro instrument and selected holes are surveyed with BHEM geophysical tools.
Selebi Main
The Company has implemented a surface drilling program at Selebi Main to investigate the potential of a third parallel mineralized horizon beneath the two known zones. The initial drill testing has been through the extension of historic drill holes, to target a large BHEM plate 150 to 200 metres beneath the Selebi Main resource. If successful, this program could lead to the discovery of a new mineralized horizon. These BHEM plates are situated outside the Selebi Mines MRE extents. During 2025 and up to the date of this report, the Company has extended historic drillholes by approximately 307 metres in 2 existing holes.
Selebi Hinge
A large drill capable of drilling to depths of 2,500 metres (NQ core) and kits for converting the two underground U5 drills into surface A5 drills are currently being mobilized from Canada. These are being mobilized for surfacing drilling of the Selebi Hinge, a drilling program targeting BHEM plates in the untested two-kilometre-long area between the Selebi North and Selebi Main deposits. These BHEM targets are situated down-dip and down-plunge of the Selebi Main resource and potentially represent additional mineralization between the two deposits.
Further information on assay results can be found in the Company’s news releases which are available on the Company’s website (https://premiumresources.com) (the Company’s website is not incorporated in this Report). Assay results are publicly released as they are received and confirmed by the Company.
Studies
The historical BCL operations consisted of an integrated mining, concentrating and smelting complex which operated for over 40 years over the Selebi Phikwe project area. The smelter processed Selebi and Phikwe concentrates and toll treated nickel concentrates received from the Nkomati Nickel Mine and the Phoenix Mine. The concentrator plant and smelter were placed on care and maintenance in 2016 and are located adjacent to the Selebi Mines at the historical Phikwe Mine.
PREM intends to use pre-concentration methods to separate the minerals from waste materials to produce a mill feed and flotation to produce a concentrate for commercial sale, or for further refining, and does not plan to restart the existing concentrator or smelter.
Metallurgical sampling and testing from Selebi flotation studies are ongoing. The Company has also begun evaluating XRT ore sorting, which could potentially have a significant impact on waste rock removal. This could in turn positively impact the head feed grade to the concentrate flowsheet, and has the potential to be applied at both the Selebi Mines and Selkirk Mine.
The Company has begun its evaluation of IDEON Technologies Inc., a Company that applies Muon Tomography to create 3D density maps of subsurface mineralization, with the goal of applying this technology at both the Selebi Mines and Selkirk Mine to identify potential areas of additional mineralization.
During the three months ended March 31, 2025, the Company incurred $5,944,153 (three months ended March 31, 2024 - $6,469,929) in exploration and evaluation expenditures on the Selebi Mines. The Company incurred $8,735,401 to acquire the Selebi Mines, and has incurred a further $75,240,729 in exploration and evaluation expenditures project-to-date as at March 31, 2025.
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Outlook
The Company has outlined a multi-faceted exploration strategy aimed at expanding the mineral resource potential at the Selebi Mines. One drill is active on surface at Selebi Main with three drills being mobilized to the Selebi Hinge, and one drill is active underground at Selebi North.
The Selebi North Underground Resource Expansion Drilling program is expected to continue throughout the remainder of the year for further testing of the BHEM plates.
The Company is planning to further investigate the potential of a third parallel mineralized horizon at Selebi Main, with approximately 765 metres in 3 hole extensions over a period of 6 weeks.
The Selebi Hinge drilling offers a strategic opportunity for potential substantial resource expansion. Drilling is planned to target large BHEM plates located off the Selebi Main mine horizon and toward the Selebi North deposit. The Company intends to pre-collar the holes to a depth of up to 1,200 metres and bring in a more powerful drill to extend these holes to final target depths. These holes are planned to target a series of previously untested BHEM plates located down-dip and down-plunge of the Selebi Main resource. Drilling is expected to consist of approximately 12,500 metres in 6 holes over an estimated period of 7 months.
In addition to the drilling, the Company is advancing metallurgical studies. Flowsheet designs are nearing completion, taking into consideration the ongoing XRT ore sorting evaluations.
Selkirk Mine, Botswana
The Selkirk Mine is located in the northeast of Botswana approximately 28 km southeast of the city of Francistown, and 450 km northeast of the national capital Gaborone.
The Selkirk Mine is accessed year-round via paved and gravel roads from Gaborone and Francistown. The Selkirk Mine infrastructure includes relict surface infrastructure supporting the historical underground mine, and the original decline. The Selkirk Mine is quite flat, and beyond the mine footprint is covered in grassland with dispersed and clustered trees typical of a tree savanna biome.
The Selkirk Mine consists of a single mining licence covering an area of 1,458 hectares (14.58 km2) and four prospecting licences covering a total of 12,670 hectares (126.7 km2). The mining licence, 2022/7L, is centred approximately at 21°19’13” S and 27°44’17” E and is held by PNGPL, a subsidiary of PREM. The mining licence was renewed for ten years commencing on May 27, 2022, ending on May 26, 2032. The four prospecting licences (PL050/2010, PL051/2010, PL210/2010, and PL071/2011) were renewed during the first quarter of 2025 and will expire March 31, 2027.
Exploration
On January 31, 2025, the Company filed the Selkirk MRE in conformance with the SEC’s Modernized Property Disclosure Requirements for Mining Registrants as described in Subpart 229.1300 of Regulation S-K, Disclosure by Registrants Engaged in Mining Operations (S-K 1300) and Item 601(b)(96) Technical Report Summary, entitled “S-K 1300 Technical Report Summary, Selkirk Nickel Project, North East District, Republic of Botswana” and dated January 8, 2025 (with an effective date of November 1, 2024) for its Selkirk Mine.
Selkirk Mine Mineral Resource Estimate, November 1, 2024:
| Classification | Tonnage | Grade | Contained Metal | ||||||||||||||||||||||||||||||||||
| (Mt) | (% Cu) | (% Ni) | (g/t Pd) | (g/t Pt) | (000 t Cu) | (000 t Ni) | (000 oz Pd) | (000 oz Pt) | |||||||||||||||||||||||||||||
| Inferred | 44.2 | 0.30 | 0.24 | 0.55 | 0.12 | 132 | 108 | 775 | 174 | ||||||||||||||||||||||||||||
The key assumptions, parameters, and methods used to estimate the mineral resources are contained in the Selkirk TRS. Readers are cautioned not to assume that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable, or that an Inferred Mineral Resource will ever be upgraded to a higher category.
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The Selkirk MRE provides a solid foundation for advancing the Selkirk deposit to an economic study. It was prepared using results from 232 surface and 10 underground historical drillholes drilled between 2003 and 2016, five 2016 drillholes sampled by PREM in 2021, and 17 historical drillholes resampled in 2024. Analytical results from PREM re-sampling showed higher platinum group element values compared to historic results. Further, the Selkirk MRE was prepared under the conceptual processing scenario of producing two separate concentrates. Additional work on alternate processing options may result in higher recoveries. Cobalt, a potentially valuable by-product, has not been included in the Selkirk MRE as cobalt analyses are not consistently available throughout the deposit. Planned metallurgical studies will determine payability of cobalt at the Selkirk Mine.
During the first quarter of 2025, the Company continued its re-sampling program of historic drill core, targeting both resource expansion and reclassification in an updated MRE.
A surface drilling program is planned to commence in the second quarter of 2025 which will support the collection of samples for metallurgical test work and an updated MRE through twinning of historic holes and in-filling of identified gaps.
Studies
The Company has been exploring alternate processing options, including producing a lower grade nickel concentrate suitable for hydrometallurgical processing. Phase 1 hydrometallurgical test-work using the Platsol process began in late 2023 and was completed in 2024. Recoveries of all the payable metals (Ni, Cu, Co, Au, Pt and Pd) to the solution phase were very high (generally >99%) in the initial batch autoclave testing. The downstream processes have been tested at bench scale and, although it is not possible to precisely quantify final metal recoveries to saleable products until continuous, integrated piloting is completed, overall recoveries of all payable metals is expected to be >95% based on commercial experience of base metal hydrometallurgical plants. This study demonstrated that alternate processing options are potentially viable at Selkirk.
The surface drilling program that is expected to commence in the second quarter of 2025 will utilize HQ sized holes. These will facilitate the collection of metallurgical samples for flowsheet development and XRT ore sorting.
During the three months ended March 31, 2025, the Company incurred $101,968 (three months ended March 31, 2024 - $196,497) in exploration and evaluation expenditures on the Selkirk Mine. The Company incurred $327,109 to acquire the Selkirk Mine, and has incurred a further $3,160,470 in exploration and evaluation expenditures project-to-date as at March 31, 2025.
Outlook – Selkirk
The ongoing re-sampling program is expected to support an updated MRE through systematic analyses of PGE to augment the patchwork of PGE analyses in the historic database.
The surface drilling program that is expected to commence in the second quarter of 2025 will also support an updated MRE through twinning of historic holes and in-filling of identified gaps.
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Canadian Nickel Projects - Sudbury, Ontario
Post Creek Property
The Post Creek property is located 35 kilometres east of Sudbury in Norman, Parkin, Alymer and Rathburn townships and consists of 64 unpatented mining claim cells, covering a total area of 847 hectares held by the Company. The Company acquired the property through an option agreement in April 2010, which was subsequently amended in March 2013. As at the date of this Report, the Company holds a 100% interest in the Post Creek property and is obligated to pay advances on a net smelter return of $10,000 per annum, which will be deducted from any payments to be made under the net smelter return.
The Post Creek property lies adjacent to the Whistle Offset Dyke Structure which hosts the past–producing Whistle Offset and Podolsky Cu-Ni-PGM mines. Post Creek lies along an interpreted northeast extension of the corridor containing the Whistle Offset Dyke and Footwall deposits and accounts for a significant portion of all ore mined in the Sudbury nickel district and, as such, represents favourable exploration targets. Key lithologies are Quartz Diorite and metabreccia related to offset dykes and Sudbury Breccia associated with Footwall rocks of the Sudbury Igneous Complex which both represent potential controls on mineralization.
No exploration work was completed in the first quarter of 2025 on the Post Creek Property. The claims have sufficient work credits to keep them in good standing until 2030. No material expenditures or activities are contemplated on the Post Creek property at this time.
Halcyon Property
The Halcyon property is located 35 kilometres northeast of Sudbury in the Parkin and Aylmer townships and consists of 62 unpatented mining cells for a total of 1,024 hectares. Halcyon is adjacent to the Post Creek property and is approximately two kilometres north of the producing Podolsky Mine of FNX Mining. The property was acquired through an option agreement and as at the date of this Report, the Company holds a 100% interest in the Halcyon property and is obligated to pay advances on a net smelter return of $8,000 per annum, which will be deducted from any payments to be made under the net smelter return.
No exploration work was completed in the first quarter of 2025 on the Post Creek Property. The claims are in good standing through 2030. No material expenditures or activities are contemplated on the Halcyon property at this time.
Maniitsoq Nickel-Copper-PGM Project, Southwest Greenland
In December 2024, the Company notified the Government of Greenland that it was relinquishing its licences effective immediately. The Company is expecting final approval from authorities pending the removal of remaining structures.
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Selected Financial Information and Financial Position
The following amounts are derived from the Company’s unaudited condensed interim consolidated financial statements prepared under US GAAP.
| In Canadian dollars, except number of shares outstanding |
Three months ended March 31, |
|||||||
| Income Statement | 2025 | 2024 | ||||||
| Net loss | 15,228,330 | 9,347,180 | ||||||
| Weighted average number of Common Shares outstanding – basic and diluted | 223,551,815 | 149,373,068 | ||||||
| Basic and diluted loss per share | 0.07 | 0.06 | ||||||
| As at | ||||||||
| Balance Sheet | March 31, 2025 | December 31, 2024 | ||||||
| Additional paid-in capital | 214,806,833 | 145,025,333 | ||||||
| Common Shares outstanding | 428,986,474 | 185,708,588 | ||||||
| Total assets | 63,781,465 | 24,953,469 | ||||||
| Current liabilities | 7,261,855 | 4,207,753 | ||||||
Net Loss
The net loss of $15,228,330 for the three months ended March 31, 2025 was higher by $5,881,150 compared to the prior year comparable period of $9,347,180, largely due to the loss on the Term Loan extinguishment of $5,982,434 and an increase in general and administrative expenses of $462,682 largely associated with stock options issued during the current period, partially offset by reduced general exploration expenses of $578,682 resulting from the pause of certain activities in the current period as part of cash conservation measures.
Total Assets
Total assets as at March 31, 2025 increased by $38,827,996 from the December 31, 2024 balance largely as a result of higher cash balances in the current period. During the quarter, the Company closed a Private Placement for aggregate gross proceeds of $46,000,000 (see “Liquidity & Capital Resources — Financings”).
Current Liabilities
Current liabilities as at March 31, 2025 increased by $3,054,102 from December 31, 2024 due to: (i) an increase in trade payables as the Company deferred certain payments as part of cash conservation measures; and (ii) an increase in share issuance costs payable related to the March 2025 Financing.
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Overall Performance and Results of Operations
As at the date of this Report, the Company has not earned revenue nor proved the economic viability of its projects. The Company’s expenses are not subject to seasonal fluctuations or general trends other than factors affecting costs such as inflation and input prices. The Company’s expenses and cash requirements will fluctuate from period to period depending on the level of activity at the projects, which may be influenced by the Company’s ability to raise capital to fund these activities. Comparisons of activity made between periods should be viewed with this in mind. The Company’s quarterly results may be affected by many factors such as timing of exploration activity, share-based compensation costs, capital raised, marketing activities and other factors that affect the Company’s exploration and evaluation activities.
The following table summarizes the Company’s operations for the three-month periods ended March 31, 2025 and March 31, 2024:
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| EXPENSES | ||||||||
| General exploration expenses | 6,135,777 | 6,714,459 | ||||||
| Depreciation and amortization | 635,828 | 364,228 | ||||||
| General and administrative expenses | 1,660,382 | 1,197,700 | ||||||
| Investor relations and communications | 209,398 | 74,704 | ||||||
| DSUs granted | - | 281,249 | ||||||
| Fair value movement of DSUs | (10,824 | ) | (226,602 | ) | ||||
| Net foreign exchange loss | 251,425 | 66,014 | ||||||
| LOSS FOR THE PERIOD BEFORE OTHER ITEMS | 8,881,986 | 8,471,752 | ||||||
| Interest (income) expense, net | (64,461 | ) | 115,318 | |||||
| Interest expense and accretion on Term Loan | 428,371 | 760,110 | ||||||
| Loss on Term Loan extinguishment | 5,982,434 | - | ||||||
| NET LOSS FOR THE PERIOD | 15,228,330 | 9,347,180 | ||||||
| ● | General exploration expenses decreased by $578,682 for the three months ended March 31, 2025 as the Company put drilling activities on hold mid-February 2025 through to the end of the quarter to conserve cash. | |
| ● | Depreciation increased $271,600 for the three months ended March 31, 2025 due to the acceleration of depreciation on certain software assets. | |
| ● | General and administrative expenses increased by $462,682 for the three months ended March 31, 2025. The Company granted 5,750,000 stock options during the current quarter which vested as to one-half on the date of grant and the balance vesting on the first anniversary of the date of grant. There were no stock options granted during the prior year comparable period. |
| ● | DSUs granted, net of fair value movement, or deferred share units, represents the Company’s long-term incentive program compensation granted to directors of the Company, net of period-end mark to market adjustments. The decrease of $65,471 for the three months ended March 31, 2025 is a result of DSUs not being granted during the current period as the Company evaluates its board of directors’ compensation plan. | |
| ● | Interest income and expense represents interest income earned on cash and cash equivalent deposits and interest expense on the Company’s vehicle financing and previous lease liabilities. Net interest income increased by $179,779 for the three months ended March 31, 2025. The final instalments on the drilling equipment and Syringa Lodge leases were paid subsequent to the first quarter of 2024, resulting in lower interest expense for the current period. | |
| ● | Interest expense and accretion on Term Loan comprises the accrued interest on the Company’s now extinguished Term Loan (see “Liquidity & Capital Resources – Financings” below), as well as the accretion of related transaction costs and fees. The decrease of $331,739 for the three months ended March 31, 2025 relates to the Term Loan being converted to equity during the first quarter of 2025. | |
| ● | Loss on Term Loan extinguishment represents the difference between the fair value of the Settlement Units (defined in “Liquidity & Capital Resources – Financings”) issued and the carrying amount of the Term Loan on the date it was converted to equity. |
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Cash Flows
The following table summarizes the Company’s cash flows:
| Three months ended March 31, | ||||||||
2025 $ | 2024 $ | |||||||
| Cash flows | ||||||||
| Operating activities | (6,294,964 | ) | (8,485,949 | ) | ||||
| Investing activities | (50,033 | ) | (1,051,902 | ) | ||||
| Financing activities | 45,568,232 | (354,475 | ) | |||||
| Increase (decrease) in cash and cash equivalents before effects of exchange rate changes | 39,223,235 | (9,892,326 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | 137,671 | 13,519 | ||||||
| Change in cash and cash equivalents for the period | 39,360,906 | (9,878,807 | ) | |||||
| Cash and cash equivalents at the beginning of the period | 6,105,933 | 19,245,628 | ||||||
| Cash and cash equivalents at the end of the period | 45,466,839 | 9,366,821 | ||||||
Operating Activities
Net cash used in operating activities for the three months ended March 31, 2025, decreased by $2,190,985 compared to the prior year comparable period resulting from: (i) a reduction in general exploration expenses as the Company put drilling activities on hold mid-February 2025 through to the end of the quarter to conserve cash; (ii) positive changes in non-cash working capital resulting from an increase in trade payables as the Company deferred certain payments as part of cash conservation measures; and (iii) lower interest payments on the Term Loan.
Investing Activities
Key investing activities relate to the acquisition of property, plant and equipment. Net cash used in investing activities for the three months ended March 31, 2025 decreased by $1,001,869 compared to the prior comparable period. The higher spending in the 2024 comparable period primarily relates to the acquisition of capital spares and critical spares for existing equipment on-site.
Financing Activities
Net cash provided by financing activities for the three months ended March 31, 2025 increased by $45,922,707 compared to the prior year comparable period. During the current period, the Company closed a Private Placement for gross proceeds of $46,000,000 (see “Liquidity & Capital Resources - Financings”). The Company did not execute any financing transactions during the prior year comparable period.
Liquidity & Capital Resources
The Company, being in the exploration and evaluation stage, is subject to risks and challenges similar to companies in a comparable stage of exploration and evaluation. These risks include the challenges of securing adequate capital for exploration and advancement of the Company’s material projects, operational risks inherent in the mining industry, and global economic and metal price volatility. There is no assurance management will be successful in its endeavors.
The properties in which the Company currently has an interest are in the pre-revenue stage. Operating cash outflows are highly dependent upon the exploration and evaluation programs taking place at that time. As such, the Company is dependent on external financing to fund its activities and the advancement of its projects. In order to carry out the planned project advancement and cover administrative costs, the Company will need to use its existing working capital and raise additional amounts as needed.
As at March 31, 2025, the Company had $45,466,839 in available cash (December 31, 2024 – $6,105,933), with no source of operating cash flows, and no significant credit lines in place. As at March 31, 2025, the Company had working capital (calculated as total current assets less total current liabilities) of $39,434,623 (December 31, 2024 – $3,410,490). The increase in working capital is a result of the cash proceeds received from the Private Placement.
Financings
2025
On March 18, 2025, the Company closed a financing transaction which included a non-brokered private placement and the conversion into equity of its $20,882,353 three-year Term Loan with Cymbria, the lender and an affiliate of the Company’s largest shareholder, EdgePoint Investment Group Inc. (“EdgePoint”), which bore interest at a rate of 10% per annum.
The Company issued to Cymbria an aggregate of 69,607,843 units (each, a “Settlement Unit”) at a deemed issue price of $0.30 per Settlement Unit in full satisfaction of the $20,882,353 principal amount outstanding under the Term Loan. Accrued interest under the Term Loan, up to the date of the Debt Conversion, in the amount of $268,896 was settled in cash. Each Settlement Unit consisted of one Common Share of the Company and one Common Share purchase warrant (each, a “Settlement Warrant”) of the Company.
Each Settlement Warrant entitles the holder to acquire one additional Common Share of the Company at a price of $0.40 per Common Share until March 18, 2028. If, at any time prior to the expiry date, the volume-weighted average trading price of the Common Shares is at least $2.00 per Common Share for a period of 20 trading days, the Company may, at its option, accelerate the expiry date with 30 days’ notice to the Settlement Warrant holders.
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The Private Placement consisted of issuing 153,333,334 units (each, a “Private Placement Unit”) of the Company at a price of $0.30 per unit for aggregate gross proceeds of $46,000,000. Each Private Placement Unit consisted of one Common Share of the Company and one-half of one Common Share purchase warrant (each whole warrant, a “Private Placement Warrant”) of the Company. Each Private Placement Warrant entitles the holder to acquire one additional Common Share at a price of $0.55 per share until March 18, 2028.
In connection with the March 2025 Financing, the Company issued: (i) 4,000,000 Common Shares to TriView Capital Ltd. (“TriView”) for its services as finder; (ii) 9,000,000 Common Shares to Fiore Management and Advisory Corp. (“Fiore”) and 3,750,000 Common Shares to Bowering Projects Ltd. (“Bowering”) for certain advisory services; and (iii) 3,586,709 Common Shares to a financial advisor for financial advisory services. In addition to the Common Shares, the Company incurred various legal, listing and financing fees payable in cash totalling $2,371,203. As of March 31, 2025, the Company has made cash payments relating to these fees of $397,250.
As at March 31, 2025, the Company has expended $553,704 of the Private Placement net proceeds. While the Company has arranged this additional financing, the proceeds are intended for the advancement of exploration and evaluation activities at the Mines and for general corporate and working capital purposes. Subject to any changes in the Company’s operational plan, this transaction will provide the Company with the funds required to advance its planned activities and cover administrative costs into the first quarter of 2026. Therefore, the Company will need to arrange additional financing to meet its commitments under the asset purchase agreements (see “Contractual Obligations and Contingencies”).
2024
In June of 2024, the Company closed two tranches of a non-brokered private placement offering of units of the Company, pursuant to which the Company issued a total of 35,256,409 units at a price of $0.78 per unit for gross proceeds of approximately $27.5 million (the “June 2024 Financing”). Each unit was comprised of one Common Share and one Common Share purchase warrant. As at March 31, 2025, the Company has expended all the June 2024 Financing.
Although the Company has been successful in its past fundraising activities, there is no assurance as to the success of future fundraising efforts or as to the sufficiency of funds raised in the future. Factors that could affect the availability of financing include the progress and results of ongoing exploration and evaluation activities at the Mines, the state of international debt and equity markets, and investor perceptions and expectations with respect to global commodity markets. If necessary, depending on the amount of funding raised, the Company may explore opportunities to defer the timing of certain discretionary expenditures and the Company’s planned initiatives and other work programs may be postponed, or otherwise revised.
Going Concern
The ability of the Company to continue operations as a going concern is ultimately dependent upon achieving profitable operations and its ability to obtain adequate financing. The Company incurred a net loss of $15,228,330 for the three months ended March 31, 2025 (three months ended March 31, 2024 - $9,347,180). To date, the Company has not generated profitable operations from its resource activities. It is not possible to predict whether future financing efforts will be successful or if the Company will attain a profitable level of operations. These material uncertainties cast substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited condensed interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities, and the reported expenses and comprehensive loss that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material. In assessing whether a going concern assumption is appropriate, management considers all available information about the future, which is at least, but not limited to, twelve months from the date of this report.
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Contractual Obligations and Contingencies
As of March 31, 2025, the Company had commitments for capital expenditures over the next 12 months of $1,062,094 and the following other contractual obligations and commitments:
Selebi Mines
As per the Selebi APA, the aggregate purchase price payable to the seller for the Selebi Mines is the sum of US$56,750,000 which amount shall be paid in three instalments:
| ● | US$1,750,000 payable on the closing date, and payment of care and maintenance funding contributions in respect of the Selebi Mines from March 22, 2021, to the closing date of US$5,178,747. These payments have been made. |
| ● | US$25,000,000 upon the earlier of: (i) approval by the Botswana Ministry of Mineral Resources, Green Technology and Energy Security (“MMRGTES”) of the Company’s Section 42 and Section 43 applications (for the further extension of the mining licence and conversion of the mining licence into an operating licence, respectively); and (ii) January 31, 2026, the expiry date of the study phase. |
| ● | The third instalment of US$30,000,000 is payable on the completion of mine construction and production start-up by the Company on or before January 31, 2030, but not later than four years after the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 applications. |
As per the terms and conditions of the Selebi APA, the Company has the option to cancel the second and third payments and return the Selebi Mines to the BCL Liquidator if the Company determines that the Selebi Mines are not economical. The Company also has an option to pay in advance the second and third payments if the Company determines that the Selebi Mines are economical. The Company’s accounting policy is to measure and record contingent consideration when the conditions associated with the contingency are met. As of March 31, 2025, none of the conditions of the second and third instalments have been met, hence these amounts are not accrued in the Financial Statements.
In addition to the Selebi APA, the purchase of the Selebi Mines is also subject to a royalty agreement as well as a contingent consideration agreement with the liquidator. The royalty agreement consists of a net smelter royalty (“NSR”) of 2% on the net value of sales of concentrate or other materials with respect to production from the Selebi mining licence, of which the Company has the right to buy-back 50%. The contingent consideration agreement consists of two components: (i) a sliding scale payment of US$0.50/tonne of ore up to US$1.40/tonne of ore with respect to the discovery of new mineable deposits greater than 25 million tonnes of ore from a base case of 15.9 million tonnes, with a minimum grade of 2.5% nickel equivalent, accrued at the time of a decision to mine; (ii) price participation of 15% on post-tax net earnings directly attributable to an increase of 25% or more in commodity prices, on a quarterly basis, for a period of seven years from the date of first shipment of concentrate or other materials.
Both the Selebi Mines and Selkirk Mine are subject to a royalty payable to the Botswana Government of 5% of all precious metals sales and 3% of all base metals sales.
Phikwe South and the Southeast Extension
In August 2023, the Company announced that it had entered into a binding commitment letter with the liquidator of BCL to acquire a 100% interest in two additional deposits, Phikwe South and the Southeast Extension, located adjacent to and immediately north of the Selebi North historical workings. The acquisition of the Phikwe South and the Southeast Extension deposits is subject to customary closing conditions and has not yet closed as of May 13, 2025.
The upfront cost to the Company to acquire these additional mineral properties is US$1,000,000. In addition, the Company has agreed to additional work commitments of US$5,000,000 in the aggregate over four years. As a result of the extension of the Selebi mining licence, the remaining asset purchase obligations of the Company outlined in the Selebi APA will each increase by 10%, US$5,500,000 in total, while the trigger events remain unchanged. The existing 2% NSR and contingent consideration agreement held by the liquidator with respect to production from the Selebi mining licence will also apply to production from these additional deposits, subject to the Company’s existing buy-back right for 50% of the NSR.
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Selkirk Mine
In regard to the Selkirk Mine, the purchase agreement does not provide for a purchase price or initial payment for the purchase of the assets. The Selkirk purchase agreement provides that if the Company elects to develop Selkirk first, the payment of the second Selebi instalment of US$25 million would be due upon the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 applications (for the further extension of the Selkirk mining licence and conversion of the Selkirk mining licence into an operating licence, respectively). For the third Selebi instalment of US$30 million, if Selkirk were commissioned earlier than Selebi, the payment would trigger on Selkirk’s commission date.
In addition to the Selkirk purchase agreement, the purchase of the Selkirk Mine is also subject to a royalty agreement as well as a contingent consideration agreement with the liquidator. The royalty agreement consists of an NSR of 1% on the net value of sales of concentrate or other materials with respect to production from the Selkirk mining licence, which the Company has the right to buy-back in full. The contingent consideration agreement is on similar terms as the Selebi Mines contingent consideration.
NSR Option
The Company received $2,750,000 (the “Option Payment”) from Cymbria for their right to participate in the Company’s right to repurchase one-half of the Selebi NSR and the entirety of the Selkirk NSR. Cymbria also has the right: (i) at any time following the date of any buyback exercise notice from PNRP and/or PNGP and prior to the first anniversary of sale of product, to terminate the option and receive from PNRP and/or PNGP a refund of the related option price paid by Cymbria; (ii) upon receipt from PNRP and/or PNGP of any termination, settlement or waiver of the buyback right or royalty agreement and prior to the first anniversary of sale of product, to exercise the option or terminate the option, and if terminated PNRP and/or PNGP shall refund the related option price paid by Cymbria; (iii) to exercise the option and compel PNRP and/or PNGP to exercise the buyback right at any time within the first nine months immediately following the first anniversary of sale of product and not less than 60 days prior to the date of exercise of the buyback right; and (iv) to require PNRP and/or PNGP to repurchase the option from Cymbria for an amount equal to the option price at any time commencing on the first anniversary of sale of product, provided PNRP and/or PNGP have not provided a buyback exercise notice or notice of any termination, settlement or waiver of the buyback right or royalty agreement to Cymbria.
Contingencies
There are no environmental liabilities associated with the Mines as at the acquisition dates as all liabilities incurred prior to the acquisitions are the responsibility of the sellers, BCL and Tati Nickel Mining Company (“TNMC”). The Company has an obligation for the rehabilitation costs arising subsequent to the acquisitions. As of March 31, 2025, there were no material rehabilitation costs for which the Company expects to incur, and management is not aware of or anticipating any contingent liabilities that could impact the financial position or performance of the Company related to its exploration and evaluation assets.
The Company’s exploration and evaluation assets are affected by the laws and environmental regulations that exist in the various jurisdictions in which the Company operates. It is not possible to estimate any future contingent liabilities and the impact on the Company’s operating results due to future changes in the Company’s development of its projects or future changes in such laws and environmental regulations.
Related Party Transactions
Key management personnel
Key management (defined as members of the Board of Directors and senior officers) compensation was related to the following:
| Three months ended March 31, | ||||||||
2025 $ | 2024 $ | |||||||
| Salaries and management fees | 196,104 | 256,491 | ||||||
| Site operations and administration | 426,914 | 583,037 | ||||||
| DSUs granted, net of fair value movements | (10,824 | ) | 54,647 | |||||
| Share-based compensation | 328,536 | 220,998 | ||||||
| 940,730 | 1,115,173 | |||||||
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Other related parties
On March 18, 2025, the Company closed the March 2025 Financing which included the conversion of its Term Loan held by EdgePoint and its affiliates, related parties of the Company, to equity. The Company issued to EdgePoint and its affiliates an aggregate of 69,607,843 Settlement Units. As of March 31, 2025, EdgePoint and its affiliates beneficially owned an aggregate of 93,441,067 Common Shares and 83,324,150 warrants, representing approximately 21.8% of the outstanding Common Shares (approximately 34.5% on a partially-diluted basis assuming the exercise of all warrants held by EdgePoint).
In connection with the Private Placement, certain insiders of the Company subscribed for an aggregate of 3,936,667 Private Placement Units for gross proceeds of $1,181,000.
During 2024, EdgePoint and its affiliates subscribed for 7,692,307 units as part of the June 2024 Financing. As of December 31, 2024, EdgePoint and its affiliates beneficially owned 23,833,224 Common Shares and 13,716,307 warrants, representing approximately 12.8% of the issued and outstanding Common Shares (approximately 18.8% on a partially-diluted basis assuming the exercise of all warrants held by EdgePoint).
In connection with the June 2024 Financing, certain insiders of the Company subscribed for an aggregate of 1,389,140 Units for gross proceeds of $1,083,529.
For the three months ended March 31, 2025, the Company paid interest of $268,896 (three months ended March 31, 2024 - $519,206) to Cymbria Corporation and recognized a loss on the Debt Conversion of $5,982,434 (three months ended March 31, 2024 – $nil).
Segmented Disclosure
The Company operates in one reportable operating segment, being that of the acquisition, exploration and evaluation of mineral properties, in three geographic segments, being Canada, Barbados, and Botswana. The Company’s geographic segments are as follows:
March 31, 2025 $ | December 31, 2024 $ | |||||||
| Current assets | ||||||||
| Canada | 41,731,641 | 4,066,121 | ||||||
| Barbados | 441,913 | 89,446 | ||||||
| Botswana | 4,522,924 | 3,462,676 | ||||||
| Total | 46,696,478 | 7,618,243 | ||||||
| Exploration and evaluation assets | ||||||||
| Botswana | 9,029,319 | 8,846,421 | ||||||
| Property, plant and equipment | ||||||||
| Botswana | 8,055,668 | 8,488,405 | ||||||
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The Company’s exploration and evaluation activities are assessed at the individual project level. The Selebi and Selkirk projects below make up the Botswana geographic segment.
| Three months ended March 31, 2025 | ||||||||||||||||
Selebi $ | Selkirk $ | Other $ | Total $ | |||||||||||||
| Drilling | 684,092 | - | - | 684,092 | ||||||||||||
| Site operations, administration, and overhead | 931,327 | 42,263 | 39,656 | 1,013,246 | ||||||||||||
| Infrastructure and equipment maintenance | 710,929 | - | - | 710,929 | ||||||||||||
| Geology | 567,974 | 26,535 | - | 594,509 | ||||||||||||
| Mine development | 668,619 | - | - | 668,619 | ||||||||||||
| Electricity | 863,913 | 4,356 | - | 868,269 | ||||||||||||
| Engineering and technical studies | 842,773 | 11,679 | - | 854,452 | ||||||||||||
| Geophysics | 226,810 | - | - | 226,810 | ||||||||||||
| Freight, tools, supplies, and other consumables | 130,195 | 10,964 | - | 141,159 | ||||||||||||
| Health and safety | 93,584 | - | - | 93,584 | ||||||||||||
| Environmental, social and governance | 74,408 | - | - | 74,408 | ||||||||||||
| Share-based compensation | 199,529 | 6,171 | - | 205,700 | ||||||||||||
| Total | 5,994,153 | 101,968 | 39,656 | 6,135,777 | ||||||||||||
Financial Instruments
ASC 820 - Fair Value Measurement establishes a three-tier fair value hierarchy. The fair value hierarchy’s three tiers are based on the extent to which inputs used in measuring fair value are observable in the market, and are as follows:
| Level 1: | Quoted prices (unadjusted) in active markets for identical assets or liabilities; | |
| Level 2: | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and | |
| Level 3: | One or more significant inputs used in a valuation technique are unobservable in determining fair values of the asset or liability. |
Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available. The classification of an asset or liability in the hierarchy is based upon the lowest level of input that is significant to the measurement of fair value.
The carrying value of cash and cash equivalents, trade payables and accrued liabilities approximate their fair value due to their short-term nature and therefore have been excluded from the table below. A summary of the carrying value and fair value of other financial instruments were as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||
| Classification | Carrying Value $ | Fair Value $ | Carrying Value $ | Fair Value $ | ||||||||||||||||
| DSU liability | Level 1 | 930,840 | 930,840 | 941,664 | 941,664 | |||||||||||||||
| Vehicle financing | Level 2 | 216,454 | 216,454 | 246,137 | 246,137 | |||||||||||||||
| Term Loan | Level 3 | - | - | 18,983,212 | 20,862,478 | |||||||||||||||
| NSR option liability | Level 2 | 2,750,000 | 2,750,000 | 2,750,000 | 2,750,000 | |||||||||||||||
DSU liability - the fair value of the DSUs is measured using the closing price of the Company’s Common Shares at the end of each reporting period.
Vehicle financing - The fair values approximate carrying values as the interest rates are comparable to current market rates.
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Term Loan – the Term Loan is carried at amortized cost. The fair value measurement of the Term Loan was based on an income approach.
NSR option liability – The fair value of the NSR options is determined using a valuation model that incorporates such factors as discounted cash flow projections, metal price volatility, and risk-free interest rate. As the NSR options are exercisable entirely at the discretion of Cymbria and the underlying projects are in the exploration stage, the fair value of the call and put on the options as at March 31, 2025 and December 31, 2024 is $nil.
Interest Rate Risk
The Company’s exposure to interest rate risk arises from the interest rate impact on its cash and cash equivalents and debt facilities. Interest payable on the vehicle financing is based upon a variable base rate, being the lending institution’s prime lending rate, plus a fixed rate margin.
Foreign Currency Exchange Risk
The Company primarily operates in Canada, Barbados and Botswana and undertakes transactions denominated in foreign currencies such as the US dollar and Botswana pula, and consequently is exposed to exchange rate risks. The value of cash and other financial assets and liabilities denominated in foreign currencies can fluctuate with changes in currency exchange rates. Exchange risks are managed by matching levels of foreign currency balances with the related obligations and by maintaining operating cash accounts in non-Canadian dollar currencies.
The following table illustrates the estimated impact a 5% USD and BWP change against the CAD would have on net loss before tax as a result of translating the Company’s foreign denominated financial instruments:
| Currency | Change | Effect on Net Loss (Earnings) Before Tax $ | Change | Effect on Net Loss (Earnings) Before Tax $ | ||||||||||||
| USD | +5% | (125,808 | ) | -5% | 125,808 | |||||||||||
| BWP | +5% | 86,146 | -5% | (86,146 | ) | |||||||||||
Credit Risk
The Company’s credit risk is primarily associated with its cash and cash equivalents. The Company’s exposure to credit risk arises from the potential default of the counterparty to its cash and cash equivalents, and the maximum exposure is limited to the carrying value of these instruments. The Company limits exposure to credit risk on its cash and cash equivalents by holding these instruments at highly-rated financial institutions.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company manages the liquidity risk inherent in these financial obligations by regularly monitoring actual cash flows against its annual budget, which forecasts expected cash availability to meet future obligations. The Company will defer discretionary expenditures, as required, in order to manage and conserve cash required for current liabilities.
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The following table shows the Company’s undiscounted contractual obligations as at March 31, 2025:
Less than 1 year $ | 1 - 2 years $ | 2 - 5 years $ | Total $ | |||||||||||||
| Trade payables and accrued liabilities | 6,781,524 | 438,273 | - | 7,219,797 | ||||||||||||
| Vehicle financing | 137,059 | 66,143 | 13,252 | 216,454 | ||||||||||||
| 6,918,583 | 504,416 | 13,252 | 7,436,251 | |||||||||||||
The DSU liability of $930,840 is not presented in the above liquidity analysis as management considers it not practical to allocate the amounts into maturity groupings
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements as at March 31, 2025.
Share Capital Information
As of the date of this Report, the fully diluted share capital of the Company, including Common Shares issuable upon exercise of securities of the Company, is as follows:
| Securities | Common Shares | |||
| Common Shares | 428,986,474 | |||
| Preferred shares(1) | 13,131 | |||
| DSUs | 2,164,744 | |||
| Warrants | 188,579,919 | |||
| Stock options | 20,813,771 | |||
| RSUs | 4,175,000 | |||
| Fully diluted share capital | 644,733,039 | |||
Note:
| (1) | The 118,186 outstanding preferred shares are convertible into Common Shares at a 9:1 ratio. |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based on the evaluation of these disclosure controls and procedures, management concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
We have no knowledge of any material, active, pending or threatened legal, administrative or judicial proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.
Item 1A. Risk Factors
Risks and other factors include those listed under “Risk Factors” in the 2024 Form 10-K and elsewhere in this Report, as well as the risk identified below.
We caution readers that our business activities involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management. We described the most significant risks that could impact our results in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table outlines the number of Common Shares and securities that are convertible into Common Shares issued by the Company pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) as a transaction not involving a public offering and Rule 506 promulgated under the Securities Act, during the three months ended March 31, 2025.
Commons Shares
|
Date of Issuance |
Price
per Common |
Number of Common Shares | Proceeds |
Reason for Issuance | ||||
| March 18, 2025 | 0.30 | 153,333,334(1) | $46,000,000 | Non-brokered private placement | ||||
| March 18, 2025 | N/A | 69,607,843(2) | N/A | Debt conversion | ||||
| March 18, 2025 | N/A | 16,336,709(3) | N/A | Advisory services | ||||
| March 18, 2025 | N/A | 4,000,000(4) | N/A | Finder’s fee |
Notes:
| (1) | Issuance is for units of the Company at a price of $0.30 per unit, with each unit comprised of one Common Share and one-half of one Common Share purchase warrant with each whole warrant entitling the holder thereof to purchase one Common Share at a price of $0.55 for a period of three years. | |
| (2) | Issuance is for units of the Company in full satisfaction of the $20,882,353 Term Loan, with each unit comprised of one Common Share and one Common Share purchase warrant with each warrant entitling the holder thereof to purchase one Common Share at a price of $0.40 for a period of three years. | |
| (3) | These advisory services were provided in connection with the non-brokered private placement and debt conversion. | |
| (4) | Issued in connection with the non-brokered private placement. |
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Convertible Securities
| Date of Issuance | Security | Exercise Price per Security ($) | Number of Securities | ||||||||
| March 18, 2025 | Warrants(1) | 0.55 | 76,666,667 | ||||||||
| March 18, 2025 | Warrants(2) | 0.40 | 69,607,843 | ||||||||
| March 18, 2025 | Stock options | 0.50 | 5,750,000 | ||||||||
| March 18, 2025 | RSUs | N/A | 1,250,000 | ||||||||
| March 19, 2025 | RSUs | N/A | 675,000 | ||||||||
| March 20, 2025 | RSUs | N/A | 1,250,000 | ||||||||
Notes:
| (1) | These Common Share purchase warrants were issued as part of the sale of units described in Note 1 to the table above, under the heading “Unregistered Sales of Equity Securities and Use of Proceeds – Common Shares”. | |
| (2) | These Common Share purchase warrants were issued as part of the debt conversion described in Note 2 to the table above, under the heading “Unregistered Sales of Equity Securities and Use of Proceeds – Common Shares”. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements
During the three months ended March 31, 2025, none
of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act)
| Item 1.01 | Entry into a Material Definitive Agreement |
As disclosed elsewhere in this Report, on February 17, 2025, the Company and Cymbria, an affiliate of EdgePoint, entered into a debt settlement agreement (the “Debt Settlement Agreement”) pursuant to which the parties agreed to the Debt Conversion, whereby the Company agreed to issue to Cymbria an aggregate of 69,607,843 Settlement Units at a deemed issue price of $0.30 in full satisfaction of the $20,882,353 principal amount outstanding under the Term Loan previously advanced by Cymbria to the Company, with the accrued interest to be settled in cash. Each Settlement Unit consists of one Common Share and one Settlement Warrant. Each Settlement Warrant entitles the holder to acquire one additional Common Share at a price of $0.40 per Common Share for a period of 36 months following the date of issuance. The Debt Conversion closed on March 18, 2025. If, at any time prior to the expiry date, the volume-weighted average trading price of the Common Shares is at least $2.00 per Common Share for a period of 20 trading days, the Company may, at its option, accelerate the expiry date with 30 days’ notice to the Settlement Warrant holders.
The foregoing description of the Debt Settlement Agreement is qualified in its entirety by reference to the full text of the Debt Settlement Agreement, which is attached as Exhibit 10.1 to this Report and is incorporated by reference herein.
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The Investor Rights Agreement previously entered into between the Company and EdgePoint was amended upon the closing of the Debt Conversion (the “Investor Rights Agreement”) including to increase EdgePoint’s director nomination right from one director of the Company to two directors and to provide EdgePoint with certain information and registration rights, provided in each case that EdgePoint meets certain equity ownership thresholds and satisfies certain other conditions, and a “right to place” securities proposed to be sold by EdgePoint in favor of the Company in certain circumstances.
The foregoing description of the Investor Rights Agreement is qualified in its entirety by reference to the full text of the Investor Rights Agreement, which is attached as Exhibit 10.3 to this Report and is incorporated by reference herein.
All securities issued under the Debt Conversion are subject to a hold period of four months plus one day from the date of issuance in accordance with applicable Canadian securities laws and the policies of the Exchange.
On March 18, 2025, the Company closed the Private Placement. The Private Placement consisted of issuing 153,333,334 Private Placement Units of the Company at a price of $0.30 per Private Placement Unit for aggregate gross proceeds of $46,000,000. Each Private Placement Unit consists of one Common Share of the Company and one-half of one Private Placement Warrant of the Company. Each Private Placement Warrant entitles the holder to acquire one additional Common Share at a price of $0.55 per share until March 18, 2028.
In connection with the above transactions, the Company issued: (i) 4,000,000 Common Shares to TriView for its services as finder; (ii) 9,000,000 Common Shares to Fiore and 3,750,000 Common Shares to Bowering for certain advisory services; and (iii) 3,586,709 Common Shares to a financial advisor for financial advisory services.
| Item 3.02 | Unregistered Sales of Equity Securities |
The information set forth under Item 1.01 is incorporated herein by reference to the extent responsive to Item 3.02. The securities issued were not registered under the Securities Act, and were issued in reliance on the exemption from registration pursuant to Section 4(a)(2), Regulation S or Rule 506 thereunder.
The information set forth under Part II, Item 2 of this Report is also incorporated by reference herein.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On March 20, 2025 Morgan Lekstrom, age 40, was appointed as the Company’s Chief Executive Officer and a director. There are no arrangements or understandings between Mr. Lekstrom and any other person pursuant to which Mr. Lekstrom was selected as Chief Executive Officer.
Mr. Lekstrom has over 17 years of experience in the mining industry, with a diverse background in executive and project management, operations, and engineering. He has an established track record of delivering successes, including most recently, the successful building of NexGold Mining Corp, creating a near term development company with a clear path to building two new Canadian gold mines. This was accomplished through deleveraging and restructuring debt, setting a new strategic direction for the company through multiple back-to-back mergers/acquisitions of Blackwolf Copper and Gold Ltd. and Treasury Metals Inc., and then Signal Gold Inc. in 2024.
He has also held senior technical roles with experience at Freeport McMoran’s Grasberg site in Indonesia and Rio Tinto’s Oyu Tolgoi Project in Mongolia. He has direct African experience though his role with Golden Star Resources in supporting the redevelopment of an underground mine in Ghana, West Africa. Mr. Lekstrom has also served as engineering manager at Sabina Gold & Silver Corp., where he was responsible for the first phases of execution at the Back River Marine Laydown Project.
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Mr. Lekstrom currently serves as a director of NexGold Mining Corp.
Mr. Lekstrom’s employment agreement provides for an annual rate of base salary equal to $395,000.
If Mr. Lekstrom’s employment is terminated by Mr. Lekstrom himself for good reason or by the Company without cause, in each case as set out and defined in the employment agreement (other than on account of Mr. Lekstrom’s death or Permanent Disability) in either case within 18 months following a Change of Control of PREM, on such termination date, he shall be entitled to: (i) a lump sum payment in lieu of notice equal to 1.5 times the sum of Mr. Lekstrom’s base salary plus Mr. Lekstrom’s target performance bonus, as set out and defined in the employment agreement, in addition to any other payments owed to Mr. Lekstrom, as well as the continuation of medical, dental and pension benefits for a period of 18 months; and (ii) any securities convertible into or exchangeable for securities or shares of the Company or any affiliate or any other equity linked entitlements related to the Common Shares shall be accelerated so that such rights become immediately exercisable for a period of 180 days after such termination date. If Mr. Lekstrom’s employment is terminated other than within 18 months following a Change of Control of PREM, he shall be entitled to receive his base salary plus performance bonus on the basis of either: (i) 12 months if his employment is terminated on or before September 20, 2026 and 18 months if terminated after September 20, 2026.
The estimated payment under Mr. Lekstrom’s employment agreement resulting from a change of control is $1,185,000. The estimated payment under Mr. Lekstrom’s employment agreement resulting from a termination without cause is $790,000.
On March 25, 2025, Chris Leavy was appointed to the Board of Directors. On April 24, 2025, the Company appointed Andre van Niekerk to the Board of Directors of the Company. Mr. Leavy and Mr. van Niekerk will be compensated in accordance with the Company’s standard compensation policy, as may be amended from time to time, for its non-employee directors. There were no arrangements or understandings between either Mr. Leavy or Mr. van Niekerk and any other person pursuant to which either was selected as a director.
On March 20, 2025, Paul Martin, who had been serving as Interim Chief Executive Officer transitioned from such role to Chairman of the Board. On March 25, 2025, William O’Reilly retired as a director of the Company. On April 24, 2025, Don Newberry retired as a director of the Company.
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Item 6. Exhibits
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SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: May 13, 2025 |
PREMIUM RESOURCES LTD. (Registrant) | |
| By: | /s/ Morgan Lekstrom | |
| Name: | Morgan Lekstrom | |
| Title: |
Chief Executive Officer (principal executive officer) | |
| By: | /s/ Peter Rawlins | |
| Name: | Peter Rawlins | |
| Title: |
Chief Financial Officer (principal financial officer) | |
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