TROJAN GOLD INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS -
QUARTERLY HIGHLIGHTS
THREE AND NINE MONTHS ENDED September 30, 2024
Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
INTRODUCTION
The following management's discussion and analysis ("MD&A") of the financial condition and results of the operations of Trojan Gold Inc. (the "Company" or "Trojan") has been prepared to provide material updates to the business operations, liquidity and capital resources of the Company since its last management discussion and analysis, being the management discussion and analysis ("Annual MD&A") for the fiscal year ended December 31, 2023.
This MD&A has been prepared in compliance with the requirements of section 2.2.1 of Form 51-102F1, in accordance with National Instrument 51-102 - Continuous Disclosure Obligations. This discussion should be read in conjunction with the Annual MD&A, audited annual financial statements of the Company for the years ended December 31, 2023 and 2022 and the unaudited condensed interim financial statements of the Company for the three and nine months ended September 30, 2024, together with the notes thereto. Results are reported in Canadian dollars, unless otherwise noted. In the opinion of management, all adjustments (which consist only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected for any future period. Information contained herein is presented as at November 28, 2024, unless otherwise indicated.
The unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2024, have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee. The unaudited condensed consolidated interim financial statements have been
prepared in accordance with International Standard 34, Interim Financial Reporting.
For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Trojan's common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or
- it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward- looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. The following table outlines certain significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements.
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Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
Forward-looking statements | Assumptions | Risk factors | |||||||||||||||||
For fiscal 2024, the Company will | The Company has anticipated all | Unforeseen costs to the Company | |||||||||||||||||
be able to continue its business | material costs; the operating activities | will arise; any particular operating | |||||||||||||||||
activities. | of the Company for the twelve-month | costs increase or decrease from the | |||||||||||||||||
period ending | September | 30, 2025, | date of the estimation; changes in | ||||||||||||||||
and | the costs | associated | therewith, | economic conditions. | |||||||||||||||
will be consistent with Trojan's current | |||||||||||||||||||
expectations. | |||||||||||||||||||
The Company will be required to | The | operating | and | exploration | Changes in debt and equity | ||||||||||||||
raise additional capital in order to | activities of the Company for the | markets; timing and availability of | |||||||||||||||||
meet | its | ongoing | operating | twelve-month | period | ending | external | financing | on | acceptable | |||||||||
expenses and complete its planned | September 30, 2025, and the costs | terms; | increases | in | costs; | ||||||||||||||
exploration activities on all of its | associated therewith, will be consistent | environmental | compliance | and | |||||||||||||||
current projects for the twelve- | with | Trojan's | current | expectations; | changes in environmental and other | ||||||||||||||
month | period | ending September | debt | and | equity | markets, | exchange | local | legislation | and | regulation; | ||||||||
30, 2025. | and interest rates and other applicable | interest rate and exchange rate | |||||||||||||||||
economic conditions are favourable to | fluctuations; | changes | in | economic | |||||||||||||||
Trojan. | conditions. | ||||||||||||||||||
Management's | outlook | regarding | Financing will be available for the | Precious | metals | price | volatility; | ||||||||||||
future trends, including the future | Company's exploration and operating | changes in debt and equity markets; | |||||||||||||||||
price of precious metals and | activities; the price of precious metals | interest rate and exchange rate | |||||||||||||||||
availability of future financing. | will be favourable to the Company. | fluctuations; | changes | in | economic | ||||||||||||||
and political conditions. | |||||||||||||||||||
The Company's ability to carry out | The exploration activities of the | Changes in debt and equity | |||||||||||||||||
anticipated | exploration | on its | Company for the next twelve months | markets; timing and availability of | |||||||||||||||
property interests. | ending September 30, 2025, and the | external | financing | on | acceptable | ||||||||||||||
costs associated therewith, will be | terms; increases in costs; changes | ||||||||||||||||||
consistent with the Company's current | in the operations currently planned | ||||||||||||||||||
expectations; debt and equity markets, | for the next twelve months; | ||||||||||||||||||
exchange and interest rates and other | environmental | compliance | and | ||||||||||||||||
applicable | economic | conditions are | changes in environmental and other | ||||||||||||||||
favourable to the Company. | local | legislation | and | regulation; | |||||||||||||||
interest rate and exchange rate | |||||||||||||||||||
fluctuations; | changes | in | economic | ||||||||||||||||
conditions; | receipt | of | applicable | ||||||||||||||||
permits. |
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Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
Forward-looking statements | Assumptions | Risk factors | |||||||||||
Trojan's properties may contain | Financing | will | be | available | for future | Gold | price | volatility; | uncertainties | ||||
economic deposits of gold. | exploration | and | development | of | involved in | interpreting geological | |||||||
Trojan's properties; the actual results | data and confirming title to acquired | ||||||||||||
of | Trojan's | exploration | and | properties; the possibility that future | |||||||||
development | activities | will | be | exploration results will not be | |||||||||
favourable; operating, exploration and | consistent | with | Trojan's | ||||||||||
development costs will not exceed | expectations; availability of financing | ||||||||||||
Trojan's expectations; | the | Company | for and actual results of Trojan's | ||||||||||
will be able to retain and attract skilled | exploration | and | development | ||||||||||
staff; all requisite regulatory and | activities; | increases | in | costs; | |||||||||
governmental | approvals | for | environmental | compliance | and | ||||||||
exploration | projects | and | other | changes in environmental and other | |||||||||
operations will be received on a timely | local | legislation | and | regulation; | |||||||||
basis upon terms acceptable to Trojan, | interest rate and exchange rate | ||||||||||||
and applicable political and economic | fluctuations; | changes | in economic | ||||||||||
conditions are favourable to Trojan; | and | political | conditions; | the | |||||||||
the price of gold and applicable | Company's ability to retain and | ||||||||||||
interest and exchange rates will be | attract skilled staff. | ||||||||||||
favourable to Trojan; no title disputes | |||||||||||||
exist with respect to the Company's | |||||||||||||
properties. |
Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Trojan's ability to predict or control. Please also make reference to those risk factors referenced in the "Risks and Uncertainties" section below. Readers are cautioned that the above chart does not contain an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A. The resource sector is currently experiencing a broad-based downturn as a result of the significant risk of a global recession brought about by record inflation and rapidly rising interest rates. In this environment investment in the junior resource sector is greatly impaired. The value of the gold and other metals are also volatile and could decline further. The Company is mindful of the current market environment and is managing accordingly. See "Risk Factors"
Although there can be no assurance that additional funding will be available to the Company, management believes that its projects are delivering positive results and should attract investment under normal market condition. Hence, management believes it is likely to obtain additional funding for its projects in due course.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward- looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward- looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.
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Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
DESCRIPTION OF BUSINESS
The Company was incorporated under the Business Corporations Act (Alberta) on October 24, 2012, under the name "Dominican Mineral Resources Inc." The Company was dissolved on April 2, 2015 for failure to file its annual returns but was revived on August 4, 2016. The Company amended its articles on February 27, 2017 to change the name of the Company to "Trojan Gold Inc.".
Since its incorporation on October 24, 2012, the Company has been in the business of acquiring mineral exploration properties in Ontario, Quebec and other jurisdictions. The Company is focused on acquiring and exploring early-stage base and precious metal projects using a prospect generator model. The Company's objective is to acquire gold and copper projects and the Company only considers properties for acquisition that demonstrate the viability of the project.
Trojan is trading on the Canadian Securities Exchange ("CSE") under the symbol 'TGII' and on the OTCQB Venture Market under the ticker symbol "TRJGF".
GOAL
Trojan's goal is to deliver superior returns to shareholders by concentrating on the acquisition, exploration and evaluation of properties that have the potential to contain base and precious metals. The Company plans to focus on certain properties, as set out below under "Mineral Exploration Properties".
OUTLOOK AND OVERALL PERFORMANCE
The Company has no revenues, so its ability to ensure continuing operations is dependent on it completing the acquisition of its mineral property interests, the discovery of economically recoverable reserves, confirmation of its interest in the underlying mineral claims, and its ability to obtain necessary financing to complete the exploration activities, development and future profitable production.
In April 2024, it entered into an option assignment agreement pursuant to which the Company has become party to an option agreement with arms-length third parties optionors, which provides Trojan with an option to acquire a 50% interest in the Paulpic-Wascanna gold property. This property, which lies within the Beardmore-Geraldton-Tashota greenstone belt, comprises four mining leases and twenty-five mining claims, and covers two significant gold deposits and several under-explored gold occurrences. This interest was originally assigned to Tashota on November 3, 2021, and pursuant to the April 11, 2024 option assignment agreement, Tashota assigned 50% of its interest in the property to Trojan. As consideration for the assignment, Trojan issued 5,000,000 common shares to the optionors at a price of $0.05 per common share on May 10, 2024.
In May 2024, the Company announced a private placement financing consisting of the sale of up to 8,000,000 units (the "Units") and 5,000,000 flow-through units (the "FT Units") in the capital of the company at a price of $0.05 per Unit and $0.10 per FT Unit for aggregate gross proceeds of minimum of $350,000 and a maximum of $900,000 (the "Offering").
Each Unit will consist of one common share (a "Common Share") and one-half of one common share purchase warrant (each whole common share purchase warrant, a "Unit Warrant"). Each Unit Warrant will entitle the holder thereof to purchase one Common Share in the capital of the Company for a price of $0.08 for a period of 24 months from the date of the closing, subject to acceleration of the expiry date upon the occurrence of certain events.
Each FT Unit will consist of one Common Share that will qualify as a "flow-through share" for the purposes of the Income Tax Act (Canada) and one-half of one common share purchase warrant (each whole common share purchase warrant, a "FT Warrant"). Each FT Warrant will the holder thereof to purchase one Common Share in the capital of the Company for a price of $0.12 for a period of 24 months from the dater of the closing.
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Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
As at September 30, 2024, the Company had a working capital deficiency of $305,515 (December 31, 2023 - working capital deficiency of $274,925). The Company had cash and cash equivalents of $94,762 (December 31, 2023 - $345). Working capital decreased during the nine months ended September, 2024 due to cash used in operating activities.
The Company believes it will be able to fund its discretionary exploration and operating activities for the twelve months ending September 30, 2025 through the Offering mentioned above. Further financings will be required for exploration and evaluation expenditures of the Hemlo South, Paulpic/Adair-Wascanna and Watershed properties. Materially all of the Company's exploration activities and a portion of the general and administrative costs are discretionary. Therefore, there is considerable flexibility in terms of the pace and timing of exploration and how expenditures have been, or may be, adjusted, limited or deferred subject to current capital resources and potential to raise further funds. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern.
TRENDS AND ECONOMIC CONDITIONS
The Company is a mineral exploration company, focused on the acquisition, exploration and development of mineral properties.
The Company's future performance and financial success is largely tied to the success of its exploration and development activities. The development of assets may take years to complete and the resulting income, if any, is difficult to determine with any certainty. The Company lacks mineral reserves and to date has not produced any revenues. The sales value of any minerals discovered by the Company is largely dependent upon factors beyond its control, such as the market value of the commodities produced.
Current global economic conditions and financial markets are volatile and are likely to be so for the foreseeable future. This affects the mining industry, and, as it relates to the Company, affects the availability of equity financing for the purposes of mineral exploration and development. As a result, the Company may have difficulties raising equity financing for the purposes of mineral exploration, development and property acquisitions, particularly without excessively diluting the interests of its current shareholders. With continued market volatility expected, the Company's current strategy is to continue exploring its properties and to seek out other prospective project opportunities. The Company believes this focused strategy will enable it to meet the near-term challenges presented by the capital markets while maintaining momentum on key initiatives. The Company regularly monitors economic conditions and estimates their impact on the Company's operations and incorporates these estimates in short-term operating and longer-term strategic decisions. The Company continues to be in operations as of the current date.
MINERAL EXPLORATION PROPERTIES
Trojan is a mineral exploration company focused on the acquisition, exploration, and development of precious metal resource properties in Canada and the Dominican Republic. The belief in maximizing shareholder value based on strategic property acquisitions through experienced management and in-depth research.
The Company has options on various gold/copper claims situated in the Dominican Republic, awaiting government approval for development of the claims. However, at this time the Company has no intention of pursuing these claims and has not allocated any of its current resources toward any exploration or other work relating to these claims.
Trojan holds a 100% interest in the Watershed Property (11,000+ acres) 100km west of the city of Thunder Bay situated in the Shebandowan Greenstone Belt with access to existing infrastructure such as an airport, hydro electricity and a well developed road system. Trojan holds a 50% interest in the Hemlo South Property (3,318 acres) situated in the Hemlo Gold Camp, 35 kilometres east of Marathon, Ontario. The Shebandowan Greenstone Belt is part of the Wawa Abitibi Sub Province, the world's second largest historic gold producing terrane.
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Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
Trojan also holds 50% interest in the Paulpic-Wascanna gold property. This property, which lies within the Beardmore-Geraldton-Tashota greenstone belt, comprises four mining leases and twenty-five mining claims, and covers two significant gold deposits and several under-explored gold occurrences.
Watershed property
Trojan holds a 100% interest in 111 mining claims comprising the Watershed property. The property is located 100 kilometres west of the city of Thunder Bay situated in the Shebandowan Greenstone Belt.
The Watershed Property is adjacent to the Larose Property (12,000+ acres), which has been the subject of substantial work performed on the property previously by Freewest Resources (later acquired by Cliffs Resources Canada Inc.).
The major player in the area is Goldshore Resources (GSHR-V) situated approximately 7 kilometres south of the Watershed Property, Its Moss Lake property hosts 1.47m oz AU M&I and 2.51m oz AU inferred.
Initial exploration programs conducted by Freewest on Larose were successful in exposing a mineralized structural corridor containing gold over a 4 kilometre strike length (now estimated at 8-9 kilometres long). The corridor, known as the Larose Shear Zone (LSZ), consists of a series of discrete north-east tending shear zones from which multiple ounce gold grade samples have been obtained from sedimentary and porphyry rock units.
Recent samples taken during the 2016 fall program on Larose by Tashota Resources Inc. (TRI) resulted in relatively hi-grade samples between 1.67 - 5.02 ounces of gold, as well as drill results of .50 metres of 27.69 gms/ton and 2.84 gms/ton over 7.5 metres. Based on the extent of this gold bearing shear zone and its recent discovery, confirmed grades, and unexplored SW sector, the LSZ should be viewed as a legitimate gold exploration property with significant potential.
In July 2022, the Company commenced the preliminary prospecting in the historically prolific Shebandowan Greenstone Belt, including mapping and a rock/soil sampling program targeting four specific areas previously determined to be prospective.
During November 2023, a limited program of prospecting was conducted in search of lithium (spodumene/pegmatites), while 9 samples were collected for analysis.
Paulpic-Wascanna property
The Paulpic/Adair-Wascanna Project is a 3,245-hectare group of mining claims and mining leases in the Beardmore-Geraldton greenstone belt, 200 kilometres northeast of Thunder Bay, Ontario. The Paulpic/Adair gold deposit was discovered in 1916, and has been drilled at various times since then. Following a 14-hole diamond drilling program in 2011, an Inferred Mineral Resource Estimate was made: 68,900 ounces of contained gold grading 8.24 grams per tonne of gold (g/t Au). Future work may include exploratory drilling to test for potential new gold-bearing zones to the west of the Paulpic/Adair deposit.
The Wascanna gold deposit was developed by a 91-metre shaft with three levels, between 1917 and 1936, although there was no commercial production. Approximately 8,000 tonnes of "development rock" from the underground workings was stockpiled on the surface; preliminary sampling has indicated that the stockpile has an average gold content between 1.4 and 4.2 g/t Au. Future plans include a more robust systematic sampling program; the objective would be to assess whether there is potential for shipping the stockpile to a mill and recovering its contained gold. A 10-hole diamond drilling program in 2013 partially outlined a zone of gold mineralization between surface and the first (28-metre) level, with 9 of those holes intersecting zones with visible gold. Future work will include detailed sampling of surface exposures of the gold-bearing zone (currently hidden by the stockpile) and additional deeper drilling.
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Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
On January 22, 2021, Trojan entered into a joint venture agreement (the "Joint Venture Agreement") with Tashota Resources Inc. (TRI) (a related company) regarding the Hemlo South Property. The Joint Venture Agreement provides that each of the Company and TRI has a 50% working interest in the Hemlo South Property, which is subject to the NSR royalty in favour of Wahl.
The Joint Venture Agreement provides for the following: (i) management and budget control is to be by a joint management committee; (ii) each party will have an initial WI of 50% and a deemed initial contribution of $450,000;
- TRI and the Company will be joint operators, unless the interest of either party is diluted below 50%, in which case, the party with the larger WI will have the right to become the operator; (iv) budgets will be set annually, or more frequently if requested by either party; (v) technical reports will be prepared in a timely manner on all activities, submitted to Wahl and reported to the Ministry of Energy, Northern Development and Mines (MNDM) for assessment credit; (vi) if either party (a "Non-Contributing Party") is unable or unwilling to provide its pro rata share of an approved budget, the other party (the "Contributing Party") will have the right to provide the difference between the amount which the Non-Contributing Party has contributed to an approved budget, and its pro rata share of the approved budget; and (vii) the WI of a Non-Contributing Party shall be diluted according to the industry- standard formula.
During August, 2022, a limited program of geological mapping, prospecting and soil sampling was conducted to follow up on the favourable results of the 2020 investigation 70 person-days were spent on this program, while 58 rock samples and 535 samples were collected for soil gas hydrocarbon analysis (SGH).
Exploration and Evaluation Expenditures
Names | Period ended | Period ended | ||
September 30, 2024 | September 30, 2023 | |||
Watershed Propery | ||||
Licenses and permits | $ | 2,105 | $ | 873 |
Claim staking | 5,775 | nil | ||
Assays | nil | 10,608 | ||
Geological consultants | nil | 4,000 | ||
Geophysics | nil | nil | ||
Watershed Property Total | $ | 7,880 | $ | 15,481 |
Total | $ | 7,880 | $ | 15,481 |
TECHNICAL INFORMATION
Ike Osmani are the Company's designated Qualified Persons for this MD&A within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects and has reviewed and approved its scientific and technical content.
ENVIRONMENTAL CONTINGENCY
The Company's exploration activities are subject to various government laws and regulations relating to the protection of the environment. These environmental regulations are continually changing and generally becoming more restrictive. As of November 28, 2024, the Company does not believe that there are any significant environmental obligations requiring material capital outlays in the immediate future.
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Trojan Gold Inc.
Management's Discussion and Analysis - Quarterly Highlights
Three and Nine Months Ended September 30, 2024
Dated - November 28, 2024
TRENDS
The Company is a mineral exploration company, focused on the acquisition, exploration and development of mineral properties.
The Company's future performance and financial success is largely tied to the success of its exploration and development activities. The development of assets may take years to complete and the resulting income, if any, is difficult to determine with any certainty. The Company lacks mineral reserves and to date has not produced any revenues. The sales value of any minerals discovered by the Company is largely dependent upon factors beyond its control, such as the market value of the commodities produced.
Current global economic conditions and financial markets are volatile and are likely to be so for the foreseeable future, reflecting ongoing concerns about the global economy. This affects the mining industry, and, as it relates to the Company, affects the availability of equity financing for the purposes of mineral exploration and development. As a result, the Company may have difficulties raising equity financing for the purposes of mineral exploration, development and property acquisitions, particularly without excessively diluting the interests of its current shareholders. With continued market volatility expected, the Company's current strategy is to continue exploring its properties and to seek out other prospective project opportunities. The Company believes this focused strategy will enable it to meet the near-term challenges presented by the capital markets while maintaining momentum on key initiatives. The Company regularly monitors economic conditions and estimates their impact on the Company's operations and incorporates these estimates in short-term operating and longer-term strategic decisions. The Company continues to be in operations as of the current date.
OFF-BALANCE-SHEET ARRANGEMENTS
As of the date of this filing, the Company does not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.
PROPOSED TRANSACTIONS
The Company routinely evaluates various business development opportunities which could entail optioning properties, direct acquisitions, trades and/or divestitures. In this regard, the Company is currently in discussions with private company Tashota Resources inc. ("Tashota") with respect to the terms of a potential business combination, but no definitive agreement has been entered into as of the date of this MD&A. There can be no assurance that the transaction will be concluded in the future.
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