OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
MANAGEMENT DISCUSSION AND ANALYSIS ("MD&A") FOR THE PERIOD ENDED JANUARY 31, 2025
Dated: March 25, 2025
Management's Responsibility for Financial Reporting:
The accompanying interim financial report for the nine months ended January 31, 2025, has been prepared by management using accounting policies consistent with International Financial Reporting Standards ("IFRS"). The following discussion is management's assessment and analysis of the results and financial condition of Orex Minerals Inc. (the Company) and should be read in conjunction with the unaudited condensed consolidated interim financial statements and the related notes. Other information contained in this document has also been prepared by management and is consistent with the data contained in the unaudited condensed consolidated interim financial statements.
The Company's certifying officers, based on their knowledge, having exercised reasonable diligence, are also responsible to ensure that the condensed consolidated interim financial statements and Management Discussion and Analysis (together the "filings") do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by these interim filings, and the interim financial report together with the other financial information included in these filings fairly present in all material respects the financial condition, financial performance and cash flows of the Company, as of the date of and for the periods presented in interim filings.
The Board of Directors approves the condensed consolidated interim financial statements together with the other financial information included in the interim filings and ensures that management has discharged its financial responsibilities. The Board's review is accomplished principally through the Audit Committee, which meets periodically to review all corporate filings prior to filing.
Certain statements in this report may constitute forward-looking statements that are subject to risks and uncertainties. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they were made.
In particular, forward looking comments regarding both the Company's plans and operations included in the "Description of Business" with respect to management's planned exploration and other activities, and in "Liquidity", "Commitments" and "Corporate Summary" regarding management's estimated ability to fund its projected costs of exploration work and general corporate costs of operations, and its ability to raise additional funding through placement of the Company's common shares, are plans and estimates of management only and actual results and outcomes could be materially different.
There are many external factors that can adversely affect general workforces, economies and financial markets globally. Examples include political conflict in other regions. It is not possible for the Company to predict the duration or magnitude of adverse results of such external factors and their effect on the Company's business or ability to raise funds.
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
Description of Business:
The Company is engaged primarily in the acquisition and exploration of "exploration and evaluation assets".
SANDRA PROJECT, MEXICO - (Previous name Sandra Escobar Project)
The Sandra Project is situated north of the town of Tepehuanes, Durango, in the heart of the "Mexican Silver Trend", midway between the mining districts of Tovar and Guanacevi and is 75 km west of Endeavour Silver Corp's La Pitarrilla. This prolific trend hosts some of the world's largest silver camps and deposits, including Fresnillo, Guanajuato, La Pitarrilla, La Preciosa, Real de Angeles, and Zacatecas. Excellent infrastructure exists in the Sandra area, including paved road access, electrical power, water and manpower from nearby communities.
The Sandra Project consists of 6,976 hectares of mineral concessions and covers multiple mineralized epithermal quartz veins, stockwork, disseminations and breccia structures. These veins form a high level silver-gold-base metals system, hosted in andesitic and rhyolitic rocks, centered on a large rhyolite dome complex in the north and silver systems in smaller rhyolite dome complexes to the southeast. Intense alteration zones and fluid flooding in permeable formations may also indicate the presence of bulk tonnage silver targets.
On September 15, 2015, the Company announced that it had entered into an option agreement with Canasil Resources Inc. (TSX-V: CLZ) ("Canasil"), with respect to Canasil's Sandra Project in Durango, Mexico. Pursuant to the terms of the Option Agreement, Orex had a right to earn up to a 65% ownership interest in the Project.
The Option Agreement provides that Orex may earn a 55% ownership interest (the "First Option") in the Project by making a payment of $500,000 to Canasil upon execution of the Option Agreement and completing US$ 2,000,000 in exploration and development expenditures (the "Expenditures") on the Project within three years of entering into the Option Agreement. In connection with the First Option, Orex must incur a minimum of US$ 675,000 in Expenditures in the first year of the Option Agreement and US$ 500,000 in Expenditures in the second year of the Option Agreement. Provided that Orex exercises the First Option, Orex may earn an additional 10% ownership interest (the "Second Option", and together with the First Option, the "Options") in the Project, for a total 65% ownership interest, by completing a further US$ 2,000,000 in Expenditures within two years of exercising the First Option and by making a payment to Canasil of $500,000 in cash and/or Orex shares, at the option of Orex. In connection with the Second Option, Orex must incur a minimum of US$ 675,000 in Expenditures during the first year of the Second Option.
Upon exercise of the Options, Orex and Canasil will enter into a joint venture with respect to the development of the Project based on their respective interests in the Project. If Orex exercises the Second Option, Orex's interest in the joint venture would be increased to 65%.
On October 15, 2015, the Company initiated a surface exploration program on the Sandra Project the results of which were announced in a news release dated November 9, 2015.
On December 9, 2015, the Company initiated a Phase - I diamond drilling program in the southeastern region of the Sandra mineral concessions. Drilling of the first three holes was completed before the year-end work stoppage on December 21, 2015. Drilling recommenced during the second week of January 2016. By the end of February 2016, 17 drill holes totalling 2,003 metres had been completed.
Results for the first hole SA-15-001, were announced in a news release dated January 25, 2016. This hole yielded an intercept of 61 metres (true thickness 43.1 metres) grading 359 g/t silver. Within this intercept was a subinterval of 3 metres (true thickness 2.12 Metres) grading 2,271 g/t silver. Highlighted drilling intercepts also included SA-16-006 yielding 37 metres (true thickness 33.5 metres) grading 328 g/t silver (news release 23 February 2016).
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
SANDRA PROJECT, MEXICO - (Previous name Sandra Escobar Project) (cont'd…):
Phase-II diamond drilling commenced in March 2016 consisting of 21 drill holes totalling 2,354.6 metres. Highlights included SA-16-019 yielding 60 metres (true thickness 49.15 metres) grading 205 g/t silver and SA-16-023 yielding 46 metres (true thickness 40.5 metres) grading 218 g/t silver (news release 9 May and 24 May 2016).
Phase-III diamond drilling program commenced in July 2016, consisting of 24 drill holes totalling 4,014.65 metres. Highlights included SA-16-041 yielding 67 metres (true thickness 58 metres) grading 192 g/t silver and SA-16-048 yielding 65 metres (true thickness 56 metres) grading 114 g/t silver (news releases 29 August and 12 September 2016).
Phase-IV diamond drilling program commenced in November 2016, consisting of 3 holes totalling 1,580.35 metres. These were reconnaissance holes north of the main zone of the Boleras Deposit area.
Total diamond drilling by the Company in the first four Phases to date on the Sandra Project equals 9,952.60 metres in 65 drill holes.
On October 31, 2016, Orex announced the results from the first resource estimate on the Boleras Silver Deposit of the Sandra Project. This study was conducted by Mining Plus Consultants Ltd, serving as "Independent Qualified Persons" as defined in National Instrument 43-101. At a "Base Case" of 45 g/t Ag cut-off, the Inferred Resource Estimate yielded 9.8 million tonnes grading 106 g/t Ag for a total of 33.3 million ounces of silver. The "Effective Date" is October 25, 2016 and the Technical Report has been filed onwww.sedarplus.com.(News releases October 31, 2016 and December 15, 2016)
On December 15, 2016, the Company announced the preliminary metallurgical results for the Boleras Main Zone of the Sandra Project. Early tests by hydrochloric acid, or sulphur dioxide pre-treatment before cyanidation demonstrated that a portion of the mineralization is refractory and more investigation was required. The silver recovery is grade dependent, with percentage recovery values between 6.1% and 93.0%. (News release December 15, 2016) On January 16, 2017, Orex announced the completion of the terms of the "First Option" payments and work expenditures for the Sandra Project and that it had earned a 55% ownership interest in the project. A joint-venture committee between Orex and Canasil was to be formed to manage ongoing exploration. Orex also notified Canasil that it would not be proceeding with the "Second Option". (News release January 16, 2017)
No exploration activities were conducted on the Sandra Project from the second quarter of 2017, and throughout 2018 and 2019 due to negotiations between the respective joint-venture parties. Mineral concessions were maintained in good standing with taxes paid as well as general overhead costs.
On December 19, 2017 the Company announced the signing of a "Letter of Intent" with Pan American Silver Corp. and Canasil Resources Inc. to combine their respective mineral concessions in the Sandra District into a single joint venture project to advance the exploration of the properties.
Through various stages, the planned joint venture would allow Pan American to acquire an undivided 51% of the resultant project following an aggregate expenditure of US$ 5 million. The Company would retain an undivided 26.95% of the resultant project and Canasil would retain an undivided 22.05% of the resultant project following an aggregate Orex/Canasil expenditure of US$ 1 million.
On October 24, 2018, Canasil announced the signing of a separate "Letter of Intent" to sell their interest in the Sandra Project to Pan American's Mexican subsidiary Plata Panamericana S.A. de C.V.. On June 28, 2019, Canasil Resources Inc. issued a news release announcing the signing of a definitive agreement providing for Pan American Silver to acquire Canasil's interest in the Sandra Project.
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
SANDRA PROJECT, MEXICO - (Previous name Sandra Escobar Project) (cont'd…):
On July 8, 2019, the Company announced the signing of a "Letter Agreement" with Pan American Silver Corp., through its subsidiary Plata Panamericana SA de CV, regarding a restructured Sandra project. This followed on the news that Pan American had acquired all of the interest of Canasil in the project.
On March 9, 2020 the Company entered into a Joint Venture Letter Agreement to form a joint venture with Pan American to further explore the Sandra Property. The joint venture was formed on March 1, 2021. The Company has a 40% interest and Pan American has a 60% interest in a new joint venture company, Empresa Minera Sandra-Escobar, S.A. De C.V. Pan American and the Company will make their proportionate share of contributions. The Company is the operator.
On October 19, 2020, the Company initiated a field based geological mapping and geochemical sampling program on the Sandra Property to consolidate the two groups of mineral concessions. (News release October 19, 2020)
Field based geological mapping and lithogeochemical sampling programs were conducted on the Sandra Property, with the assistance of Geotech Evaluation and Support ("GES") a Mexican consulting firm, with strict COVID-19 protocols in place. This program was completed in November 2021.
On June 22, 2022, Orex and Pan American initiated Phase-I of a new diamond drilling program on the Sandra Project, to consist of approximately 2,500 to 3,000 metres. The drilling contract was awarded to Globexplore, an experienced diamond drilling service company, utilizing low environmental impact, man-portable drill rigs.
The 2022 Phase-I drilling program has completed eight holes totalling 2,665.30 metres. Most of the holes are reconnaissance on mineralized targets away from the defined Boleras Silver Deposit in the Central and Eastern Corridors. The favourable host unit in the Boleras Deposit area, a rhyolite crystal lithic-tuff, has been extended a further 1.5 kilometres to the northwest (News release on October 5, 2022).
Total diamond drilling to date on the Sandra Project by Canasil, Orex and the Orex-Pan American Joint Venture equals 14,466.65 metres in 84 holes.
Ben Whiting, P.Geo, is the Qualified Person, as defined in National Instrument 43-101, and takes responsibility for the technical disclosure in this report with regards to the Sandra property.
CONETO, MEXICO:
On July 16, 2009, the Company signed a letter of intent to purchase 100% of the core mineral concessions within the Coneto silver-gold mining camp in Durango State, Mexico, in exchange for 2,200,000 common shares of the Company. The definitive purchase agreement, signed on September 1, 2009, was subject to the approval of the TSX Venture Exchange. After receiving TSX Venture Exchange approval, on April 15, 2010, the Company issued 2,200,000 shares to the vendors of the Coneto concessions, valued at $2,090,000. The Coneto Property is subject to a 2.5% NSR royalty payable to the vendors.
Located in the Mesa Central on the eastern flank of the Sierra Madre Occidental Mountains, Coneto is centrally positioned in the "Mexican Silver Trend". This silver trend, stretching from Guanajuato in the southeast, through the states of Zacatecas and Durango, hosts some of the world's largest silver deposits, including Real de Angeles, Zacatecas, Fresnillo, La Preciosa, and La Pitarilla mining camps.
The Coneto mining camp has a history going back over 400 years. More than 40 epithermal silver-gold quartz veins have been documented in a window of exposed Tertiary Lower Volcanic andesites. Past underground production was achieved on three of the
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
veins down to the water table. Prior to Orex, very little diamond drilling had been carried out within the property in spite of its long history of episodic production.
The Coneto mining camp historically consisted of approximately 3,300 hectares of claims. During 2010, the Company announced its successful applications to locate new mineral concessions called Lomas 3 and Lomas 4, which surround the historical claims. With the addition of these new mineral concessions, the total area of the Coneto Property increased to 16,346 hectares.
The initial work program on this property consisted of detailed structural geology mapping and geochemical sampling in the areas around Calaveras, Colemanito, Promontorio, Loma Verde, Durazno and Impulsora. This program was designed to guide a diamond drilling program. As of December 2009, regional geology mapping at 1:10,000 scale covered 35 sq km and detailed structural geology mapping at 1:500 scale covered 15 sq km. Forty-nine line-kilometres of geochemical sampling, both for soil and rock channel/chip/grab, total 1,794 samples. The Loma Verde, Promontorio and Impulsora sectors yielded multiple anomalous values for gold and silver.
The Phase-I drilling campaign of approximately 5,000 metres of HQ and NQ diameter core commenced in May 2010 and was performed by Major Drilling de Mexico, S.A. de C.V. utilizing a surface UDR-200 rig. A total of 21 holes were completed in the Loma Verde, Durazno, Promontorio, Impulsora, Estrella-Calaveras and Sauce-Palma areas. Over 2,000 drill core samples were submitted for analyses to SGS Mineral Services in Durango, Mexico. The assay results of the drilling campaign were announced by news releases on July 6, 2010, August 9, 2010 and November 1, 2010. Nine holes yielded high values for gold and silver, especially in the Loma Verde and Impulsora areas.
During fiscal 2011, the Company signed a non-binding letter of intent with Fresnillo PLC ("Fresnillo") to jointly explore the contiguous mineral concessions held by the Company and Fresnillo in the Coneto mining district. A definitive Association Agreement was signed on February 2, 2012. The principal terms of the Association Agreement are:
(a) Fresnillo will spend a minimum of US$2,000,000 on exploration during the first year after the necessary exploration permits are obtained (Fresnillo fulfilled this commitment during fiscal 2013). A minimum of 70% of this exploration must be conducted on the Company's concessions. (Note 6)
(b) Fresnillo will have the option to spend an additional US$2,000,000 per year on exploration for each of the following two years. A minimum of 70% of this exploration must also be conducted on the Company's concessions.
(c) Upon Fresnillo spending an aggregate of US$6,000,000 on exploration activities, the Company and Fresnillo will each contribute their respective Coneto mining concessions to a new company ("NewCo") that initially would be owned 55% by Fresnillo and 45% by the Company.
(d) Fresnillo will have the right to increase its ownership of NewCo to 70% by either completing a prefeasibility study or spending up to an additional US$21,000,000 in the process of preparing a prefeasibility study.
If Fresnillo chooses to not exercise the right to increase its ownership of NewCo to 70%, the costs incurred to complete a prefeasibility study will be shared by Fresnillo and the Company in proportion to their ownership of NewCo; 55% by Fresnillo and 45% by the Company.
(e) Any additional funding required by NewCo will be provided by the Company and Fresnillo in proportion to their respective ownership interests in NewCo at that time.
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
(f) Fresnillo has a right of first refusal to acquire the Company's ownership interest in NewCo if the Company receives an offer for its interest in NewCo that it proposes to accept.
(g) During the life of the Association Agreement, in the event that the Company, or any of its subsidiaries, enters into a transaction to acquire an interest in any additional mineral properties in Mexico and then later decides to sell or option out that interest to a third party, Fresnillo will have a right of first refusal to participate in such transaction on the same terms and conditions as offered to the third party.
In conjunction with entering into the Association Agreement with Fresnillo, on February 8, 2012, the Company issued 2,500,000 units to Fresnillo at $0.80 per unit for gross proceeds of $2,000,000 under a non-brokered private placement. Each unit consisted of one common share and one half of one transferable share purchase warrant. Each whole share purchase warrant entitles the holder thereof to purchase one additional common share for 24 months from the date of closing at a price of $1.00 per common share.
A Phase-II diamond drilling program of 31 holes, totalling 11,998 metres, commenced in late August 2012 and a second drill was added in October 2012. The contracted drilling company, Kluane Drilling Ltd., utilized modularized mobile drilling equipment that minimizes the need to construct roads on the property. The total cost for the Phase II drilling program, including pre-drilling geological and geophysical mapping, was $3.3 million, an amount which was entirely funded by Fresnillo per the terms of the Association Agreement.
The results from the 31 diamond drill holes in the Loma Verde, Central Zone, Impulsora, Promontorio and La Bufa areas of the Phase-II program, yielded high grade intercepts of gold and silver in the Loma Verde and La Bufa areas, with results announced in news releases dated November 7, 2012, January 7, and March 25, 2013.
Also in fiscal 2013, a detailed surface trench channel sampling program was initiated on various mineralized structures at Coneto. Results for the Loma Verde, Santo Nino and Impulsora were announced in news releases dated July 10, 2013, August 20, 2013, and October 7, 2013.
On July 2, 2014, a Phase - III diamond drilling program commenced for 30 holes, totalling 11,744 metres. Kluane Drilling Ltd. was awarded the drilling contract and three drilling rigs were utilized.
The results from the Phase - III 30 diamond drill holes in the Promontorio, Impulsora, Loma Verde, La Bufa, and Central areas yielded high-grade intercepts in the Loma Verde and Promontorio areas. Results were announced in news releases dated October 7, November 18 and December 8, 2014.
In August 2014, Fresnillo confirmed that they had met the exploration expenditures of the First Investment Option Stage of $US 4,000,000 and were proceeding directly to the Second Investment Option Stage on the Coneto Project.
In March 2015, plans for a Phase-IV diamond drilling program were prepared, totaling approximately 4,656 metres in 11 holes. This program commenced in 2nd quarter 2015 and was completed in the 3rd quarter 2015. Results were announced in a news release drafted August 10, 2015.
In a news release on September 24th, 2015, the Company announced that the Coneto project earn-in expenditures of US$ 6 million had been reached by Fresnillo. Orex and Fresnillo would then proceed on the basis of a 45% : 55% respective ownership.
On July 1, 2016, the Company and Fresnillo, pursuant to the definitive agreement contributed their respective Coneto mining concessions to a new company, Exploracions y Desarrollos Mineros Coneto S.A.P.I. de C.V. ("EDMC"). The ownership is 55% Fresnillo, 45% by the Company.
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
In November 2016, a Phase-V diamond drilling program commenced and was completed in February 2017. A total of 11 holes were drilled in 5 target areas for 5,215 metres. These included La Bufa-Santo Nino, Loma Verde Durazno, Promontorio and Descubridora. (News release March 24, 2017)
No exploration activities were conducted on the Coneto Project during the calendar years 2018, 2019 and 2020, due to a review of Fresnillo's exploration portfolio and strategic planning, plus the start of the COVID-19 pandemic. Mineral concessions were maintained in good standing during that period.
Exploration programs were reinitiated for 2021. These have included contracting the services of SGS de Mexico S.A. de C.V. laboratories in Durango, Mexico, for preliminary metallurgical testing, plus SRK Consulting (Canada) Inc. ("SRK") for an independent NI43-101 Resource Estimation study.
Excellent results for gold yielded recoveries exceeding 93% for five of the zones, with the seven zones tested averaging over 90% recovery. The bulk of the gold was recovered in the first 48 hours. Silver recoveries varied from 69.0% to 92.3%, with the average silver recovery of 79.6%. Silver recovery percentage was still increasing at the 96 hour mark of the leach tests (news release 4 August 2021).
On October 27, 2021, Orex announced the results from the first resource estimate on six mineralized lodes from the Coneto Gold-Silver Project. This study was conducted by SRK Consulting (Canada) Inc., serving as "Independent Qualified Persons" as defined in National Instrument 43-101.
At a base case cut-off mineral value of $US 74.30 per tonne, the "Inferred Mineral Resource Estimate" yielded 5,325,000 tonnes, grading 1.67 g/t gold and 112 g/t silver for a gold-equivalent of 3.15 g/t. Total gold 286,000 ounces and silver 19,111,000 ounces have a gold-equivalent of 538,000 ounces. The "Effective Date" of the Mineral Resource Estimate is August 30, 2021. A Technical Report has been filed onwww.sedarplus.com (News releases on October 27 and November 16, 2021).
A series of recommendations have been made by the consulting group SRK, totalling $US 6.2 million, to advance exploration and delineation of deposits on the Coneto Project. The 2023 program is currently under review.
Ben Whiting, P.Geo., is the Qualified Person, as defined in National Instrument 43-101, and takes responsibility for the technical disclosure in this report with regards to the Coneto Property.
BARSELE, SWEDEN:
On October 27, 2010, the Company signed a letter of intent with Barsele Guld A.B. ("Barsele Guld"), a wholly-owned subsidiary of Northland Resources S.A. ("Northland") to purchase all of the issued and outsanding shares of two Swedish companies, Gunnarn Mining A.B. ("Gunnarn Mining") and its wholly-owned subsidiary, Gunnarn Exploration A.B. ("Gunnarn Exploration"). The primary assets of Gunnarn Mining are mining claims for the Barsele Central, Avan, Skiråsen and Norra resource areas located in northern Sweden, collectively known as the Barsele Property.
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
The Company and Barsele Guld completed the final agreement on April 29, 2011 and as the initial consideration, the Company paid $1,958,230 (US$2,000,000) and issued 1,153,997 common shares valued at $1,015,517 to the vendor. The Company also issued 250,000 common shares valued at $220,000 as a finder's fee. In addition, the Company agreed to make the following deferred consideration payments to Barsele Guld, in cash and issuances of common shares of the Company, with a total value on the acquisition date, after applying a 7.5% discount rate, of $4,428,940 (US$5,500,000, undiscounted):
(a) On the first anniversary of completing the final agreement, US$1,000,000 in cash plus the lesser of 1,000,000 common shares or the number of common shares valued at US$500,000 (on April 29, 2012, the Company paid $996,200 (US$1,000,000) and issued 852,764 common shares valued at $492,400 to Barsele Guld);
(b) On the second anniversary of completing the final agreement, US$2,000,000 in cash.
(c) On the third anniversary of completing the final agreement, the lesser of 2,000,000 common shares or the number of common shares valued at US$1,000,000. If the value of the common shares issued is less than US$1,000,000, the balance shall be paid in cash;
(d) On the fourth anniversary of completing the final agreement, the lesser of 2,000,000 common shares or the number of common shares valued at US$1,000,000. If the value of the common shares issued is less than US$1,000,000, the balance shall be paid in cash.
In addition, the Company agreed to make direct exploration expenditures as follows:
(a) Before the first anniversary of completing the final agreement, US$1,000,000 of exploration expenditures (the Company fulfilled this requirement during fiscal 2012).
(b) Before the second anniversary of completing the final agreement, an additional US$2,000,000 of exploration expenditures (the Company fulfilled this requirement during fiscal 2013).
Barsele Guld retained a 2 percent net smelter royalty on the Barsele Property, which the Company could purchase at any time for US$2,000,000 per percentage point, or a total of US$4,000,000. On October 15, 2014, the Company purchased the remaining 2% net smelter royalty for cash in the amount of US$500,000 (CDN $549,800).
The Barsele Property is located 40 km southeast of the town of Storuman in Västerbottens Län, a regional district of northern Sweden approximately 600 km due north of Stockholm. Exploration in the project area has been ongoing for more than 30 years. From 1985 to 2010, a total of 398 diamond drill holes (43,609 metres) have been drilled and in 2006, Northland completed a National Instrument 43-101 technical report which contained resource estimates of both indicated and inferred resources and was filed on SEDAR+ by Northland on April 13, 2006.
The Central-Avan-Skiråsen (CAS) Zone at Barsele contains most of the documented gold in the 2006 resource report with a grade similar to other gold deposits in the area. In the CAS Zone, gold mineralization is predominantly within a granodiorite that has been deformed, sheared and intruded by late stage quartz veins and ranges in width from 200 to 500 metres, with a strike-extent in excess of eight kilometres. The Central and Skiråsen Zones have a combined strike length of 1,350 metres and a width of 250 metres. The Avan Zone has a strike length of 1,400 metres and a width varying from 200 to 500 metres. Base metal content of this deposit is typically low.
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
The Norra Zone, a small massive sulphide deposit, contains the balance of the gold reported in the 2006 resource report although the overall grade for this deposit is higher than at the CAS Zone. In the Norra Zone, sulphide mineralization is exposed in two open trenches in the centre of the drilled zone. Based on drilling, the footprint of the main mineralized body at Norra is 300 metres in strike-length and 50 metres in width.
On February 28, 2011, the Company reported that an independently verified mineral resource estimate had been completed on the Barsele Property. A new estimate was also prepared at this time for the Norra volcanogenic massive sulphide deposit. On April 27, 2011, the Company filed a National Instrument 43-101 compliant technical report on SEDAR+.
In May 2011, the Company initiated a 2,500 line-kilometre airborne geophysical survey of the Barsele Property, performed by SkyTEM Surveys ApS ("SkyTEM") of Denmark. SkyTEM used a helicopter-borne Time-Domain Electromagnetic (TDEM) System which had a transmitter moment of 500,000 NIA to maximize the depth of penetration. The airborne survey yielded high resolution maps of the apparent resistivity/conductivity, total magnetic field, and vertical magnetic derivatives. Following interpretation of the airborne results, in July 2011, the Company reported that there were a significant number of new anomalous targets outside of the known mineralized zones.
In August 2011, the Company engaged Finland-based Suomen MalmiOy ("SMOY") and LeBel Geophysics to conduct ground follow-up surveys. The majority of the new anomalous targets lie outside of the known mineralized zones. Initially 12 gold targets and 25 VMS targets were outlined as warranting follow-up by way of geological examination, and ground magnetic and induced polarization (IP) and electromagnetic (EM) surveying. SMOY carried out IP surveying, toward detection of the disseminated-style of mineralization associated with the Central, Avan and Skiråsen Zones at Barsele, wherein, gold mineralization is associated with non-magnetic dioritic intrusive rocks, indicated by magnetic lows. A total of 30 line kilometres was completed in four areas.
In addition, 9 VMS targets were surveyed by LeBel Geophysics, utilizing a very low frequency (VLF) EM method, which has proved efficient and successful in characterizing the airborne EM VMS targets. A total of 30 line-kilometres was completed. Preliminary analysis of the VLF-EM surveying suggests an extension of the Norra base/precious metal deposit and shows other VMS targets with favourable geophysical signatures with respect to VMS-style mineralization. Examination of government archives revealed a historic high-grade float boulder discovered within the property grading 33 g/t gold and 7% zinc, which is believed to be associated with one of the anomalies located up-ice within the claims.
After completing the initial phase of ground geophysics, in November 2011, the Company commenced diamond drilling to test both the strike extensions and depth potential of the deposits outlined to date. ProtekNorr AB of Skeleton, Sweden, was retained to conduct a 6,200 metre diamond drill program. In this first phase of drilling, 16 holes were completed; 12 in the Central Zone and 4 in the Avan Zone. The assay results from the Central Zone expanded the boundaries of the known mineralization, both laterally and vertically. (Drilling results were announced in news releases dated 14 March, 26 April, 29 May, 19 July and 10 August 2012)
On November 7, 2012, the Company reported that an independent updated resource estimate had been completed on the Barsele Property by the consulting firm, Mining Plus. The study concluded that drilling to date on the Central-Avan-Skiråsen Zones, at a 0.6g/t cut-off, outlined an Indicated Resource of 14.1 million tonnes grading 1.21 g/t gold or 547,000 contained ounces of gold. In addition, the study estimated additional Inferred Resources of 20.2 million tonnes grading 0.97 g/t gold or 627,000 contained ounces of gold. The resource estimate was performed to a depth of 300 metres, although gold mineralization is known to occur below this depth.
A new estimate was not prepared for the Norra volcanogenic massive sulphide deposit. In February 2011, a resource estimate at a 0.6g/t Au cut-off outlined an Indicated Resource of 110,000 tonnes grading 3.13 g/t gold, 30.27 g/t silver, 0.53% copper and 0.72% zinc. The study also estimated additional Inferred Resources of 310,000 tonnes grading 1.62 g/t gold, 12.69 g/t silver, 0.26% copper and 0.42% zinc.
OREX MINERALS INC.
INTERIM REPORT TO SHAREHOLDERS
For the Three and Nine Months Ended January 31, 2025 (Expressed in Canadian Dollars)
At least three other target areas of known gold and/or base metal mineralization have been reported from the various generations of regional exploration outside the CAS Zone and Norra Zone. Further exploration is also warranted in these zones.
In fiscal 2013, the Company reached an alternative payment arrangement with Barsele Guld with regards to its outstanding deferred consideration obligations. The amended payment terms were as follows:
(a) Upon receipt of TSX Venture Exchange approval, US$250,000 in cash and 4,000,000 common shares.
(b) On or before December 31, 2013, US$1,750,000 in cash.
Finally, on October 21, 2013, the terms were altered in that the deferred consideration valued at $3,974,406 was settled. The value of $3,974,406 was an increase of $150,374 from April 30, 2013 due to interest expense of $64,833 and foreign exchange of $85,541. The balance was settled with the issuance of 7,500,000 shares of the Company valued at $1,912,500, and cash of $257,615 (USD 250,000). As a result the Company recorded a gain on settlement of deferred consideration in the amount of $1,804,291.
Closure of this amended agreement, giving the Company 100% ownership of the Barsele Project, was announced in a news release dated October 21, 2013.
Total drilling to date prior to transfer on the Barsele Project equals 49,809 metres in 414 drill holes.
As at April 30, 2015, the Company transferred acquisition costs of $8,161,407 to Assets Held for Sale.
On June 11, 2015, the Company closed the joint venture transaction with Agnico Eagle Mines Limited ("Agnico Eagle") with respect to the development of the Company's Barsele Project located in Sweden (the "Project"). Pursuant to the Transaction, Agnico Eagle acquired a 55% interest in the corporate entity which owns the Project in consideration of an initial payment to Orex of US $6 million, with an additional US $2 million payable by Agnico Eagle in cash or shares at Agnico Eagle's election to Orex on each of the first and second anniversaries of the closing. As part of the Transaction, Agnico Eagle has committed to spend US $7 million on Project expenditures over three years and will earn an additional 15% interest in the corporate entity which owns the Project if it completes a pre-feasibility study. Pursuant to the Transaction, Orex was also granted a 2% net smelter royalty on production from the Project which may be repurchased by Agnico at any time for US $5 million. Agnico will have a majority of board seats and will be the operator of the Project for customary compensation.
On August 6, 2015, the Company announced the intention to spin-out the Barsele Project to a wholly owned subsidiary, Barsele Minerals Corp, by plan of arrangement. This spin-out was completed, with a vote in favour by 99.87% of the votes cast by ordinary shareholders and 100% of the votes cast by warrant holders, as announced on September 23, 2015.
Orex has received the first and second anniversary cash allocations from Agnico Eagle as they became due. The Company also retains the aforementioned 2% net smelter royalty on the Barsele Project.
Ben Whiting, P.Geo., is the Qualified Person, as defined in National Instrument 43-101, and takes responsibility for the technical disclosure in this report with regards to the Barsele Property.
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