Atlas Lithium Corp 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation. The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Annual Report. This discussion and analysis below include forward-looking statements that are subject to risks, uncertainties and other factors described in the “Risk Factors” section that could cause actual results could 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 “Forward Looking Statements” section of our Annual Report. Overview Atlas Lithium Corporation (“Atlas Lithium”, the “Company”, “we”, “us”, or “our” refer to Atlas Lithium Corporation and its consolidated subsidiaries) is a mineral exploration and development company with lithium projects and multiple lithium exploration properties. In addition, we own exploration properties in other battery minerals, including nickel, copper, rare earths, graphite, and titanium. Our current focus is the development from exploration to active mining of our hard-rock lithium project located in the state of Minas Gerais in Brazil at a well-known pegmatitic district in Brazil, which has been denominated by the government of Minas Gerais as “Lithium Valley.” We intend to mine and then process our lithium-containing ore to produce lithium concentrate (also known as spodumene concentrate), a key ingredient for the battery supply chain. We are building a modular plant targeted at producing 150,000 tons of lithium concentrate per annum (“tpa”) in what we describe as Phase I. We plan on adding additional modules to the plant with the intent of doubling its production capacity to 300,000 tpa in Phase II. However, there can be no assurance that we will have the necessary capital resources to develop such facility or, if developed, that we will reach the production capacity necessary to commercialize our products and with the quality needed to meet market demand. All our mineral projects and properties are located in Brazil, a well-established mining jurisdiction. Our mineral rights include approximately: ● 53,942 hectares (539 km 2 ) for lithium in 95 mineral rights (2 in pre-mining concession stage, 85 in exploration stage, and 8 in pre-exploration stage); ● 44,913 hectares (449 km 2 ) for nickel in 29 mineral rights (23 in exploration stage, and 6 in pre-exploration stage); ● 25,050 hectares (251 km 2 ) for copper in 13 mineral rights (12 in exploration stage, and 1 in pre-exploration stage); ● 12,144 hectares (121 km 2 ) for rare earths in 7 mineral rights, all in exploration stage; ● 6,927 hectares (69 km 2 ) for titanium in 5 mineral rights, all in exploration stage; ● 3,910 hectares (39 km 2 ) for graphite in 2 mineral rights, all in exploration stage; ● 1,030 hectares (10 km 2 ) for gold mineral rights, all in exploration stage. In addition, we also have a few additional mineral rights in the process of being acquired and not yet titled in our name. We believe that we hold the largest portfolio of exploration properties for lithium and other battery minerals in Brazil. 27 Table of Contents We are primarily focused on advancing and developing our hard-rock lithium project located in the state of Minas Gerais, Brazil. Our Minas Gerais Lithium Project (“MGLP”) is our largest project and consists of 85 mineral rights spread over approximately 468 km 2 and predominantly located within the Brazilian Eastern Pegmatitic Province which has been surveyed by the Brazilian Geological Survey and is known for the presence of hard rock formations known as pegmatites which contain lithium-bearing minerals such as spodumene and petalite. We believe that we can increase our value by continuing of our exploratory work and quantification of our lithium mineralization as well as by expanding our exploration campaign to new, high-potential areas within our portfolio of mineral rights. Our initial commercial goal is to be able to enter production of lithium concentrate, a product which is highly sought after in the battery supply chain for electric vehicles. We also have 100%-ownership of early-stage projects and properties in other minerals that are needed in the battery supply chain and high technology applications such as nickel, copper, rare earths, graphite, and titanium. We believe that the shift from fossil fuels to battery power may yield long-term opportunities for us not only in lithium but also in such other minerals. In addition to these projects, we own 58.71% of the shares of common stock of Apollo Resources, a private company primarily focused on the development of its initial iron mine. We also own approximately 27.42% of the shares of common stock of Jupiter Gold, a company focused on the exploration of two gold projects and a quartzite mine, and whose common stock are quoted on the OTCQB marketplace under the symbol “JUPGF.” The quartzite mine started preliminary operations in June 2023. The results of operations from both Apollo Resources and Jupiter Gold are consolidated in our financial statements under U.S. GAAP. 28 Table of Contents Operational Update Lithium Exploration Campaign Our ongoing drilling campaign is delineating the lithium resources of our 100%-owned Neves Project, a cluster of four lithium mineral rights within MGLP. Our current geological team is comprised of 16 geologists, all of whom are full-time employees. To support the work of our geologists we have 13 full-time field and support technicians and machinery operators, as well as 3 trainee technicians and over 19 field assistants. Our geological team and our exploration campaign is supervised by James Abson, a Qualified Person for lithium as such term is defined in Subpart 1300 of Regulation S-K promulgated by the SEC (“Regulation S-K 1300”). Mr. Abson was appointed as our Chief Geology Officer in October 2023 and has over 29 years of diverse experience in mining and mineral exploration. Under Mr. Abson’s leadership, our technical team adopted a systematic approach to exploration of additional potential target areas within the Neves Project. These efforts involve geological mapping, sampling of historical artisanal mining sites and exposed pegmatites to analyze potassium-rubidium ratios, as well as soil sampling using both XRF and ICP testing for both LCT pathfinders and Li. Geophysical surveys, including magnetics, are used when warranted to pinpoint additional pegmatite deposits and related structures. Deep trenching of anomalous areas is used to identify and confirm lithium-cesium-tantalum (LCT) pegmatites and estimate width, strike, dip and mineralization prior to drilling. Finally, scout drilling is aimed at testing the highest priority pegmatite targets that appear widest and most mineralized. Within Neves Project area, four confirmed pegmatite bodies with spodumene mineralization were identified (designated as Anitta 1 through 4) with six other target areas remaining open to further exploration. Expanding beyond the Neves Project area, our regional exploration is now centered on the other mineral rights for lithium within the broader Minas Gerais Lithium Project (“MGLP”), a large footprint of 468 km 2 of lithium mineral claims, many of which are located in Brazil’s Lithium Valley, a well-known hard-rock lithium district. A specialized exploration geology team has been assembled to initiate reconnaissance work across this wider land package. Initial efforts involve LiDAR and geological mapping with a specific focus on historical artisanal mining sites, sampling of known and previously identified pegmatites, as well as first-pass soil sampling lines and geophysics to identify anomalies. This phased approach has systematically advanced regional prospecting across our mineral rights in MGLP with a number of targets generated for further exploration by our exploration team. We have engaged SGS Canada Inc. (“SGS”), and, in particular, their geologist Marc-Antoine Laporte, a Qualified Person for lithium under Regulation S-K 1300, to produce a mineral resource estimate report (the “Maiden Resource Report”) for our Neves Project in accordance with Regulation S-K 1300. Mr. Laporte is the author of mineral resource reports for two other companies which have hard-rock lithium projects in Lithium Valley, the general area where our Neves Project is located, and has worked on lithium properties in Lithium Valley since 2017. Mr. Laporte visited our Neves Project between May 4 and May 6, 2023. On March 19, 2024, our Board appointed Brian Talbot to serve as director on the Board, effective as of April 1, 2024. In addition to joining the Board, Mr. Talbot was also appointed by the Board as our Chief Operating Officer (“COO”), effective as of April 1, 2024. In his capacity as COO, Mr. Talbot will be responsible for both the Company’s development of its lithium mine and processing plant as well as all of its lithium exploration geology program. Mr. Talbot is a qualified person for lithium as such a term is defined in Item 1300 of Regulation S-K. Mr. Talbot has an extensive track record as a technical and operational leader throughout his career with over 30 years of experience in mining operations. In particular, he has extensive experience in DMS (dense media separation) plant development and operation. Most recently, Mr. Talbot was employed by RTEK International DMCC (“RTEK”), a consulting firm that advises lithium developers and producers. From July 2022 to September 2023, Mr. Talbot was the Chief Operating Officer at Sigma Lithium Corporation (“Sigma Lithium”), a Canadian lithium producer with operations in Brazil. At Sigma Lithium, he oversaw the development of that company’s flagship Grota do Cirilo project from construction through commissioning and operations. From 2017 to 2022, Mr. Talbot held positions as General Manager and Head of Australian Operations at Galaxy Resources, now part of Arcadium Lithium PLC, one of the world’s largest fully integrated lithium companies. While at Galaxy Resources, Mr. Talbot was instrumental in increasing the production at Mt. Cattlin (a hard-rock lithium mine in Ravensthorpe, Western Australia) which resulted in record production. From 2015 to 2017, Mr. Talbot was at Bikita Minerals in Zimbabwe, which owns and operates the longest running hard-rock lithium mine in the world. Mr. Talbot holds a bachelor’s degree in chemical engineering with Honors from the University of Witwatersrand, South Africa. Please refer to Part III, Item 10, for further information on Mr. Talbot. 29 Table of Contents Recent geological soil sampling anomalies discovered at our Anitta 1 location have determined that such ore body is larger than initially predicted. A decision was made to extend drilling of the Anitta 1 pegmatite to the east, with several drill holes already yielding further significant and shallow additional spodumene intersects with lithium mineralization confirmed by ultraviolet light testing while the geochemical test results are still pending. We expect that these results will add further volume to the Anitta 1 deposit size, and, most importantly, the lithium-bearing material appears to be relatively close to the surface to permit eventual open pit mining. Under Brian Talbot’s leadership as incoming Chief Operating Officer, the exploration plans for our lithium tenements will be focused to support our early revenue strategy. Figure 1: Core sample from recent drilling at Anitta 1. 30 Table of Contents Figure 2: Anitta 1 sample illuminated by ultraviolet light and showing spodumene mineralization. As of December 31, 2023, we had drilled an aggregate of 72,899 meters. 31 Table of Contents Early-Revenue Strategy On December 4, 2023, we announced implementing an early-revenue strategy. With the well-delineated initial Anitta pegmatites, positive metallurgical test work and well-advanced mining and environmental permits Atlas Lithium’s technical team opted to expedite the production timeline for its 100%-owned Neves Project. This early-revenue strategy targets initial “Phase I” production of spodumene concentrate by the fourth quarter of 2024, ramping up to “Phase II” production in mid-2025. The early-revenue Phase I plant is expected to have a maximum capacity of 150,000 tons per annum of spodumene concentrate. We intend to deploy compacted modular dense media separation (DMS) technology together with contracting the crushing and mining operations. The total capital expenditures, including the initial production and ramp-up is estimated at $49.5 million, which includes the modular DMS plants, tailings management module for dry stacked tailings; engineering, procurement, construction management costs; earthworks and civils; site access upgrade, mining preparation and pre-strip, commissioning and ramp-up. The fabrication of the DMS modules, tailing management module, and associated materials handling equipment is advancing. On February 26, 2024, we announced that the fabrication of the DMS modules, tailing management module, and associated materials handling equipment is progressing on schedule, with delivery to Brazil expected in Q2 2024 and first commissioning and production of high-quality, environmentally sustainable lithium concentrate anticipated in Q4 2024. The manufacturing orders were placed by us in December 2023. By condensing components into modules with significantly reduced footprint and weight versus recent DMS plants, Atlas Lithium plans to streamline installation and commissioning. For example, whereas fully assembled traditional DMS facilities commonly weigh 250-300 tons, the Company’s modular plant is predicted to weigh only approximately 41 tonnes. Modular DMS construction and preassembly are well advanced on the primary 100 tons per hour (tph) module and the secondary 50 tph module. We plan to carry out a full pre-assembly and testing of these two modules before they are shipped to Brazil. We engaged CDM Group as engineering contractor and construction coordinator and ADP Marine & Modular for plant manufacturing, with both of these firms located in South Africa. The manufacturing facility located in South Africa has recently been visited by our technical team and photographs of parts completed and in progress of our modular DMS lithium processing plant under construction can be seen in Figures 3-5 below. Figures 6-8 depict 3-D model views of our planned modular DMS lithium processing plant. Figure 3: Our modular DMS lithium processing plant under construction. 32 Table of Contents Figure 4: View of part of our DMS lithium processing plant under construction. Figure 5: View of part of our modular DMS lithium processing plant under construction. 33 Table of Contents Figure 6: View of 3-D model of our planned DMS lithium processing plant. Figure 7: Additional view of 3-D model of our planned DMS lithium processing plant. Figure 8: Additional view of 3-D Model of our planned DMS lithium processing plant. 34 Table of Contents Drilling Campaign Highlights (drill holes sorted by location) Shown below are the results from our ongoing Neves Project drilling campaign, which include certain results obtained after December 31, 2023. Drill Hole Intercepts Location DHAB-39B 1.00% Li2O over 9.1m from 107.4m to 116.6m 1.48% Li2O over 9.0m from 119.2m to 128.2m Anitta 1 DHAB-44 1.30% Li2O over 17.9m from 141.8m to 159.7m 1.88% Li2O over 9.0m from 150.0m to 159.0m Anitta 1 DHAB-15 1.40% Li2O over 15.0m from 60.5m to 65.5m 1.83% Li2O over 5.0m from 66.5m to 71.5m Anitta 1 DHAB-11B 1.57% Li2O over 13.1m from 74.0m to 87.1m 2.25% Li2O over 4.0m from 76.7m to 80.8m 2.00% Li2O over 3.1m from 84.0m to 87.1m Anitta 1 DHAB-183 1.00% Li2O over 11.0m from 247.0m to 258.0m 1.32% Li2O over 2.1m from 261.7m to 263.8m Anitta 2 DHAB-77 1.08% Li2O over 3.2m from 65.8m to 69.0m 1.46% Li2O over 14.0m from 70.0m to 84.0m 2.04% Li2O over 5.0m from 70.0m to 75.0m Anitta 2 DHAB-145EX 1.09% Li2O over 73.85m from 210.0m to 283.8m 1.34%Li2O over 21.0m from 211.0m to 232.0m 2.18%Li20 over 17.0m from 237.0m to 254.0m Anitta 2 DHAB-190 1.10% Li2O over 17.4m from 136.0 to 153.4m 1.75% Li2O over 3.8m from 139.2 to 143.0m Anitta 2 35 Table of Contents DHAB-162 1.13% Li2O over 77.1m from 179.0m to 256.1m 2.71% Li2O over 14.0m from 219.1 to 233.1m Anitta 2 DHAB-70 1.16% Li2O over 14.9m from 43.8m to 58.6m 1.20% Li2O over 2.4m from 78.3m to 80.7m Anitta 2 DHAB-104 1.18% Li2O over 11.2m from 95.4m to 106.6m 2.26% Li2O over 2.7m from 97.9m to 100.6m 1.71% Li2O over 3.2m from 103.4m to 106.6m 1.51% Li2O over 84.0m from 113.8 to 197.8m 2.19% Li2O over 5.1m from 127.0m to 132.1m 1.95% Li2O over 13.7m from 137.3m to 151.0m 2.10% Li2O over 14.6m from 155.0m to 169.6m 2.31% Li2O over 9.1m from 176.2m to 185.3m Anitta 2 DHAB-85 1.18% Li2O over 47.0m from 7.0m to 54.0m 2.12% Li2O over 7.0m from 13.0m to 20.0m 2.23% Li2O over 10.0m from 24.0m to 34.0m 1.39% Li2O over 4.0m from 40.0m to 44.0m Anitta 2 DHAB-159 1.27% Li2O over 19.7m from 114.4m to 134.0m Anitta 2 DHAB-68 1.36% Li2O over 25.4m from 54.2m to 79.6m 2.02% Li2O over 6.5m from 54.2m to 60.2m 4.40% Li2O over 0.6m from 60.2m to 60.7m 1.89% Li2O over 5.0m from 71.5m to 76.5m 1.89% Li2O over 5.0m from 71.5m to 76.5m Anitta 2 DHAB-47 2.80% Li2O over 9.9m from 54.2m to 64.1m Anitta 2 36 Table of Contents DHAB-356 0.96% Li2O over 12.55 m from 29.15m to 47.70m 1.96% Li2O over 3.40 m from 126.60m to 130.00m Anitta 3 DHAB-160 0.98% Li2O over 6.0 m from 205.4m to 211.4m 2.23% Li2O over 17.8 m from 216.1m to 233.9m 2.71% Li2O over 14.0 m from 219.1m to 233.1m Anitta 3 DHAB-354 1.06% Li2O over 11.60 m from 152.60m to 164.20m Anitta 3 DHAB-185 1.22% Li2O over 56.4m from 7.0m to 63.4m 2.10% Li2O over 6.2m from 8.1m to 140.3m 3.16% Li2O over 4.3m from 16.7m to 21.0m Anitta 3 DHAB-214 1.25% Li2O over 10.6m from 144.25m to 154.85m 1.70% Li2O over 26.55m from 158.25m to 184.8m 2.12% Li2O over 20.0m from 159.25m to 179.25m Anitta 3 DHAB-211 1.31% Li2O over 14.89m from 158.92m to 173.81m 1.49% Li2O over 4.6m from 228.7m to 233.3m Anitta 3 DHAB-347 1.32% Li2O over 42.88 m from 133.12m to176.00m 1.20% Li2O over 9.65 m from 223.35m to 233.00m Anitta 3 DHAB-220 1.34% Li2O over 9.72m from 201.886m to 211.6m Anitta 3 DHAB-206 1.40% Li2O over 6.2m from 179.2 to 283.42 Anitta 3 DHAB-200 1.43% Li2O over 27.8m from 64.5m to 92.4m 1.49% Li2O over 15.0m from 192.5m to 207.5m Anitta 3 DHAB-345 1.44% Li2O over 47.00 m from 59.00m to 106.00m Anitta 3 37 Table of Contents DHAB-369 1.47% Li2O over 16.00 m from 114.00m to 130.00m Anitta 3 DHAB-339 1.52% Li2O over 20.90 m from 82.00m to102.90m 1.70% Li2O over 9.00 m from 162.00m to 171.00m Anitta 3 DHAB-208 1.64% Li2O over 18.0m from 67.56m to 85.56m 1.61% Li2O over 5.71m from 190.39m to 196.1m Anitta 3 DHAB-362 1.41% Li2O over 6.30 m from 101.85m to 108.35m Anitta 4 DHAB-353 1.41% Li2O over 7.63 m from 79.37m to 87.00m Anitta 4 Our drilling and sampling follow strict best practices established under industry-standard quality assurance and quality control protocols. All lithium samples are analyzed at SGS-Geosol, an established analytical laboratory used by mining companies in Brazil. Normally geochemical results are obtained from SGS-Geosol three weeks after submission of the samples for analysis. Metallurgical Report On April 24, 2023, we announced the receipt of the metallurgical report (the “Metallurgical Report”) from SGS-Geosol for studies performed over several months on a representative ore sample from our Neves Project. The Metallurgical Report showed that a very high grade of 7.22% was achieved for heavy liquid separation. Commercial-grade lithium concentrate was obtained from our representative sample using standard dense media separation, a gravity-based approach which does not use any harmful chemicals or flotation. The Metallurgical Report also showed final lithium concentrate grading of 6.04% Li 2 O with only 0.53% Fe 2 O 3 , and a lithium recovery of 70%. Our desired target was the production of concentrate grading 6.0% Li 2 O with less than 1.0% Fe 2 O 3 , and these targets were exceeded. The Metallurgical Report will become a chapter in the Maiden Resource Report described above. The Metallurgical Report also allows SGS-Geosol to begin work towards a Preliminary Economic Assessment of the Neves Project which is a technical study expected to be issued after the Maiden Resource Report. 38 Table of Contents Business Development Update Mitsui & Co., Ltd. On January 18, 2023, we announced that we had signed a non-binding, non-exclusive Memorandum of Understanding (“MOU”) with Mitsui & Co., Ltd. (“Mitsui”) with respect to Mitsui’s potential interest in acquiring the right to purchase our future lithium concentrate production. In November 2023, we entered into the Chengxin and Yahua agreements, described below, at which time we ceased discussions with Mitsui regarding a potential offtake arrangement as contemplated by the MOU. We have continued discussions with Mitsui regarding other possible strategic opportunities and/or partnerships. Lithium Royalty Corp. Royalty Agreement On May 2, 2023, our 99.9% owned subsidiary, Atlas Litio Brasil Ltda. (“Atlas Brasil”), entered into a written agreement pursuant to which it sold a royalty interest equaling 3% of the future gross revenue from the sale of products from certain 19 mineral rights and properties owned by Atlas Brasil and located in Brazil, to Lithium Royalty Corp., a Canadian company listed on the Toronto Stock Exchange (“LRC”), for $20,000,000 in cash. The royalty will be calculated, and royalty payment will be made, on a quarterly basis commencing from the first receipt of the sales proceeds with respect to the products. Atlas Brasil also granted LRC an option to purchase additional royalty interests with respect to certain additional Brazilian mineral rights and properties on the same terms and conditions, at a total purchase price of $5,000,000. 39 Table of Contents Chengxin and Yahua Agreements On November 29, 2023, we entered into Offtake and Sales Agreements (the “Offtake Agreements”) with each of Sichuan Yahua Industrial Group Co., Ltd. and Sheng Wei Zhi Yuan International Limited, a subsidiary of Shenzhen Chengxin Lithium Group Co., Ltd., pursuant to which we agreed, for a period of five years, to sell to each of the buyers 60,000 dry metric tons of lithium concentrate per year, subject to our ability to increase or decrease such quantity by up to ten percent (10%) each year. The price for the lithium concentrate is determined according to a formula as set forth in the Offtake Agreements. Each of the buyers agreed to invest $5 million into shares of our common stock at $29.77, and when we receive final permits, to invest an additional $20 million as offtake pre-payment for future deliveries of the lithium concentrate after we obtain customary licenses. Each pre-payment amount will be used to offset the buyer’s future payment obligations under the Offtake Agreements. Results of Operations Fiscal Year Ended December 31, 2023, Compared to Fiscal Year Ended December 31, 2022 Revenue for the year ended December 31, 2023, totaled $0, compared to revenue of $6,765 during the year ended December 31, 2022, representing a decrease of 100%. Revenue in 2022 was comprised solely of sales of industrial sand that we mined in one of our mineral rights. Industrial sand is a residual business line, as we are primarily focused on our lithium exploration program. In December 2022, we ceased operations of our industrial sand business line. Cost of goods sold for the year ended December 31, 2023, totaled $0, as compared to cost of goods sold of $63,548 during the year ended December 31, 2022, representing a decrease of 100%. Cost of goods sold is primarily comprised of labor, fuel, repairs and maintenance on our mining equipment. The cost of goods sold in 2022 related to industrial sand production. Gross loss for the year ended December 31, 2023, totaled $0, compared to gross loss of $56,783 during the year ended December 31, 2022, representing decrease of 100%. Operating expenses for the year ended December 31, 2023, totaled $42,588,044, compared to operating expenses of $5,446,984 during the year ended December 31, 2022, representing an increase of 682%. The increase was mostly due to increases in general and administrative expenses, stock-based compensation expense and exploration expenses, as described below. General and administrative expenses increased by 278%, from $2,722,197 for the year ended December 31, 2022, to $10,303,340 for the year ended December 31, 2023, mainly due to: ● approximately $1,030,000 in non-recurring transaction costs associated with our public offering in January 2023 in connection with the listing of our common stock on the Nasdaq Capital Market., ● higher compensation costs due to the increase in employee headcount approximately of $1,940,000, ● increased legal fees of approximately of $1,160,000, ● consulting expenses approximately $1,950,000. Stock-based compensation expense for the year ended December 31, 2023, was $15,609,698, compared to $2,269,566 in the prior year, an increase of 588%. The increase was primarily due to the increase in the market price of our common stock and an increase in stock-based compensation awarded to new members of our management team. Exploration expenses for the year ended December 31, 2023, were $16,553,830, compared to $0 for the year ended December 31, 2022. The increase was primarily due to increased exploration activities related to the execution of the drilling program on our 100% owned Minas Gerais Lithium Project. 40 Table of Contents Other expense (income) for the year ended December 31, 2023, totaled a net $45,876, compared to $155,812 during the year ended December 31, 2022, representing a decrease of other expense of 71%. The decrease is mainly due to non-cash fair value adjustments and interest received from cash deposits during 2023. As a result, we incurred a net loss attributable to our stockholders of $41,393,525, or $4.11 per share, for the year ended December 31, 2023, compared to a net loss attributable to our stockholders of $4,628,520, or $1.00 per share, during the year ended December 31, 2022. Liquidity and Capital Resources Overview We have historically incurred net operating losses and have not yet received material revenues from the sale of products or services. As a result, our primary sources of liquidity have been derived through proceeds from the (i) sales of our equity and the equity of one of our subsidiaries, and (ii) issuance of convertible debt. As of December 31, 2023, we had cash and cash equivalents of $29,549,927 and working capital of $24,044,931, compared to cash and cash equivalents $280,525 and a working capital deficit of $2,452,553 as of December 31, 2022. We believe our cash on hand will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months through March 2025. However, our future short- and long-term capital requirements will depend on several factors, including but not limited to, the rate of our growth, our ability to identify areas for mineral exploration and the economic potential of such areas, the exploration and other drilling campaigns needed to verify and expand our mineral resources, the types of processing facilities we would need to install to obtain commercial-ready products, and the ability to attract talent to manage our different areas of endeavor. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to scale back our existing operations and growth plans, which could have an adverse impact on our business and financial prospects and could raise substantial doubt about our ability to continue as a going concern. Net cash used in operating activities totaled $5,029,318 for the year ended December 31, 2023, compared to net cash used of $1,480,530 during the year ended December 31, 2022, representing an increase in cash used of $3,548,788, or 240%. The increase was primarily due to the net loss in the period offset by proceeds from the sale of future royalties. Net cash used in investing activities totaled $7,082,467 for the year ended December 31, 2023, compared to net cash used of $2,846,356 during the year ended December 31, 2022, representing an increase in cash used of $4,236,111, or 149%. The increase is mainly due to cash advances for the lithium processing plant construction during 2023. Net cash provided by financing activities totaled $41,214,684 for the year ended December 31, 2023, compared to $4,502,356 during the year ended December 31, 2022, representing an increase in cash provided of $36,712,328, or 815%. The increase is due to net proceeds from the sales of common stock of $31,214,660 and from the issuance of convertible debt in the amount of $10,000,024, as described below under Financing Activities. We currently have no off-balance sheet arrangements. Financing Activities ● On January 12, 2023, we completed our firm underwritten public offering of 776,250 shares of our common stock (which includes the shares subject to the over-allotment option, exercised by the underwriter in full), for aggregate gross proceeds of $4,657,500 (prior to deducting any underwriting discounts, commissions, and other offering expenses). ● On January 30, 2023, we raised an aggregate of $4 million in gross proceeds from the sale of 640,000 shares of its common stock in transaction exempt under Regulation S of the Securities Act. ● On July 18, 2023, we consummated a transaction with four investors, pursuant to which we agreed to issue and sell to the investors in a Regulation S private placement an aggregate of 526,317 restricted shares of our common stock. The purchase price for the shares was $19.00 per share, for total gross proceeds of $10,000,023. ● On November 7, 2023, we issued convertible promissory notes with an aggregate total principal amount of $20,000,000, accruing interest at a rate of 6.5% per annum, in a private placement in reliance upon the exemption from registration provided by Regulation D under the Securities Act . The notes are convertible into shares of our common stock at the option of the holders at any time up until the maturity date at a conversion price of $28.224 per share. The notes will mature on November 24, 2026. ● On November 29, 2023, we entered into two securities purchase agreements with certain accredited investors pursuant to which we agreed to sell and issue 167,954 shares of its common stock, to each of the investors in a registered direct offering at a purchase price of $29.77 per share. The total gross proceeds from the registered offering were $10,000,000. ● Additionally, during the 2023, we sold an aggregate of 192,817 shares of common stock to Triton Funds, LP for total gross proceeds of $1,675,797 pursuant to a Common Stock Purchase Agreement (the “CSPA”) entered into between us and Triton Funds, LP, dated February 26, 2021. 41 Table of Contents Currency Risk We operate primarily in Brazil, which exposes us to currency risks. Our business activities may generate intercompany receivables or payables that are in a currency other than the functional currency of the entity. Changes in exchange rates from the time the activity occurs to the time payments are made may result in it receiving either more or less in local currency than the local currency equivalent at the time of the original activity. Our consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting in the consolidated financial statements. Our foreign subsidiaries translate their financial results from the local currency into U.S. dollars in the following manner: (a) income statement accounts are translated at average exchange rates for the period; (b) balance sheet asset and liability accounts are translated at end of period exchange rates; and (c) equity accounts are translated at historical exchange rates. Translation in this manner affects the shareholders’ equity account referred to as the foreign currency translation adjustment account. This account exists only in the foreign subsidiaries’ U.S. dollar balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets in agreement. Critical Accounting Polices and Estimates The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of American (“U.S. GAAP”). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from those estimates. 42 Table of Contents Exploration Stage Company The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by exploration stage companies. An exploration stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statements of operations as other gain or loss, net. The processing plant and other machinery are depreciated over an estimated useful life of ten years; vehicles are depreciated over an estimated life of five years; and computer and other office equipment over an estimated useful life of five years. Mineral Properties Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs, including licenses and lease payments, are capitalized. Although we have taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee our rights. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. As of December 31, 2023, and 2022, we did not recognize any impairment losses related to mineral properties held. Impairment of Intangible Assets with Indefinite Useful Lives We account for intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other (“ASC 350”). ASC 350 requires that intangible assets with indefinite useful lives no longer be amortized, but instead be evaluated for impairment at least annually. On an annual basis, in the fourth quarter of the fiscal year, we review our intangible assets with indefinite useful lives for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances makes it more-likely-than-not that the fair value of an intangible asset is less than its carrying amount. If it is determined that it is more-likely-than-not that the fair value of an intangible asset is less than its carrying amount, the intangible asset is further tested for impairment by comparing the carrying amount to its estimated fair value using a discounted cash flow. Impairment, if any, is measured as the amount by which an indefinite-lived intangible asset’s carrying amount exceeds its fair value. Application of impairment tests requires significant management judgment, including the determination of fair value of each indefinite-lived intangible asset. Judgment applied when performing the qualitative analysis includes consideration of macroeconomic, industry and market conditions, overall financial performance of the entity, composition, or strategy changes affecting the recoverability of asset groups. Judgments applied when performing the quantitative analysis includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these judgments, estimates and assumptions could materially affect the determination of fair value for each indefinite-lived intangible asset. 43 Table of Contents Impairment of Long-Lived Assets For long-lived assets, such as property and equipment and intangible assets subject to amortization, we continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. Variable Interest Entities We determine at the inception of each arrangement whether an entity in which we hold an investment or in which we have other variable interests in is considered a variable interest entity. We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, we assess whether any changes in the interest or relationship with the entity affect the determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary in a VIE, we account for the investment under the equity method or cost method in accordance with the applicable GAAP. We have concluded that Apollo Resources, Jupiter Gold and their subsidiaries are VIEs in accordance with applicable accounting standards and guidance; and although the operations of Apollo Resources and Jupiter Gold are independent of ours, because our chief executive officer, Marc Fogassa, is also the controlling shareholder of both Apollo Resources and Jupiter Gold, we may be considered to have power to direct the activities that are most significant to Apollo Resources and Jupiter Gold. Therefore, we concluded that we are the primary beneficiary of both Apollo Resources and Jupiter Gold. Stock-Based Compensation We measure and records stock-based compensation expense in accordance with ASC Topic 718 for share-based payments related to stock options, restricted stock, and performance-based awards granted to certain directors, employees and consultants. ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. Under ASC 718, volatility is based on the historical volatility of our stock or the expected volatility of the stock of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. 44 Table of Contents The fair value of stock options and performance awards without a market condition is estimated at the date of grant using the Black-Scholes option-pricing model. The fair value of restricted stock awards and stock options with a market condition is estimated at the date of grant, using the Monte Carlo Simulation model. The fair value of restricted stock awards with a required lock-up period without a market condition is estimated at the date of grant, using the Hull-White Lattice (binomial) model. The Black-Scholes, Monte Carlo Simulation, and Hull-White Lattice valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate, illiquidity discount, and dividend yield. In valuing our stock options, significant judgment is required in determining the expected volatility of our common stock and the expected life that individuals will hold their stock options prior to exercising. Expected volatility for stock options is based on the historical and implied volatility of our common stock while the volatility for restricted stock awards with a market condition is based on the historical volatility of our own stock and the stock of companies within our defined peer group. Because changes in the subjective assumptions can materially affect the estimated value of our employee stock options, it is management’s opinion that the valuation models may not provide an accurate measure of the fair value of our stock options, restricted stock and performance-based awards. Although the fair value of stock options and restricted stock awards is determined in accordance with ASC Topic 718, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Foreign Currency Our foreign subsidiaries use a local currency as the functional currency. Resulting translation gains or losses are recognized as a component of accumulated other comprehensive income. Transaction gains or losses related to balances denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. Net foreign currency transaction losses included in our consolidated statements of operations were negligible for all periods presented. Recent Accounting Pronouncements Accounting Standards Updates Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden on accounting for contract modifications caused by reference rate reform. In January 2021, ASU 2021-01, Reference Rate Reform (Topic 848): Scope was issued which broadened the scope of ASU 2020-04 to include certain derivative instruments. In December 2022, ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, was issued which deferred the sunset date of ASU 2020-04. The guidance is effective for all entities as of March 12, 2020, through December 31, 2024. The guidance may be adopted over time as reference rate reform activities occur and should be applied on a prospective basis. There has been no significant effect that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. Accounting Standards Updates to Become Effective in Future Period In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which clarifies the business combination accounting for joint venture formations. The amendments in the ASU seek to reduce diversity in practice that has resulted from a lack of authoritative guidance regarding the accounting for the formation of joint ventures in separate financial statements. The amendments also seek to clarify the initial measurement of joint venture net assets, including businesses contributed to a joint venture. The guidance is applicable to all entities involved in the formation of a joint venture. The amendments are effective for all joint venture formations with a formation date on or after January 1, 2025. Early adoption and retrospective application of the amendments are permitted. We do not expect adoption of the new guidance to have a material impact on our consolidated financial statements and disclosures. 45 Table of Contents In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this update on our consolidated financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the impact of this update on our consolidated financial statements and disclosures. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The information to be reported under this Item is not required of smaller reporting companies. Item 8. Financial Statements and Supplementary Data. Our financial statements, including the notes thereto, together with the report from our independent registered public accounting firm are presented beginning at page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None .