Item 1A. Risk Factors
Item
1A. Risk Factors.
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information
in this Annual Report, including our financial statements and the related notes thereto and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our securities. The occurrence
of any of the risks, the events or developments described below could harm our business, financial condition, operating results, and
growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
You should consider carefully the risks and uncertainties summarized and set forth in detail below and elsewhere in this Annual Report
before you decide to invest in our common stock.
Summary
of Risk Factors
Below
is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not
address all of the risks that we face. We encourage you to carefully review the full risk factors contained in this Report in their
entirety for additional information regarding the material factors that make an investment in our securities speculative or risky.
The primary categories by which we classify risks include those related to: (i) our business, (ii) regulatory and industry, (iii)
country and currency, (iv) our common stock, and (v) world events. Set forth below within each of these categories is a summary of the principal factors
that make an investment in our common stock speculative or risky.
Business
Risks
●
Our
future performance is difficult to evaluate because we have a limited operating history.
●
We have a history of losses
and expect to continue to incur losses in the future.
●
We are an exploration stage
company, and there is no guarantee that our properties will result in the commercial extraction of mineral deposits.
●
Because the probability
of an individual prospect ever having reserves is not known, our properties may not contain any reserves, and any funds spent on
exploration and evaluation may be lost.
●
We face risks related to
mining, exploration, plant assembly, and mine construction, if warranted, on our properties.
●
Labor disruptions and a rise in labor costs could impact on our business,
financial condition and results of operations.
●
Our long-term success will
depend ultimately on our ability to achieve and maintain profitability and to develop positive cash flow from our mining activities.
●
We depend on our ability
to successfully access the capital and financial markets. Any inability to access the capital or financial markets may limit our
ability to fund our ongoing operations, execute our business plan or pursue investments that we may rely on for future growth.
●
Our quarterly and annual
operating and financial results and our revenue are likely to fluctuate significantly in future periods.
●
Our ability to manage growth
will have an impact on our business, financial condition and results of operations.
●
We depend on information technology systems that are subject to cybersecurity
threats, disruption, damage or failure.
●
We
depend upon Mr. Marc Fogassa, our Chief Executive Officer and Chairman.
●
Our growth will require
new personnel, which we will be required to recruit, hire, train and retain.
●
Certain of our officers
may be in a position of conflict of interest.
●
We have historically relied on third-party consultants
and their inability to perform timely and in compliance with their contractual obligations can adversely impact our business operations.
●
We have a contractual dispute
with RTEK International DMCC, the outcome of which is unknown at this time, and our business and operations could be negatively impacted
by the termination of the Technical Services Agreement with RTEK International DMCC.
●
Adverse developments affecting
the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions
or transactional counterparties, could adversely affect our business, financial condition or results of operations.
●
We may be unable to hire and retain the third-party
contractors upon which we rely, including for drilling and construction of the lithium processing plant.
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Regulatory
and Industry Risks
●
The mining industry subjects
us to several risks.
●
Our operations are, and
our mineral projects will be subject to, significant government regulations, including environmental laws and regulations.
●
We are required to
obtain government permits in order to conduct development and mining operations, a process which is often costly and time-consuming.
●
Compliance with environmental
regulations and litigation based on environmental regulations could require significant expenditures.
●
Mining
operations face substantial health and safety regulations.
●
Mineral prices are subject
to unpredictable fluctuations.
●
The development of non-lithium battery technologies could adversely affect
us.
●
The growth potential of lithium markets is uncertain.
●
Demand and market prices
for lithium will greatly affect the value of our investment in our lithium resources and our future revenues and profitability generally
●
Changes in public policies and legislative initiatives could materially
affect our business and prospects
Country
and Currency Risks
●
Our ability to execute
our business plan depends primarily on the continuation of a favorable mining environment in Brazil and our ability to freely sell
our minerals.
●
The perception of Brazil
by the international community may affect us.
●
Exposure to foreign exchange
fluctuations and capital controls may adversely affect our costs, earnings and the value of some of our assets.
Common
Stock Risks
●
Our common stock price
has been and may continue to be volatile, and you could lose all or part of your investment.
●
We do not intend to pay
regular future dividends on our common stock and thus stockholders must look to appreciation of our common stock to realize a gain
on their investments.
●
We may seek to raise additional
funds, finance acquisitions, or develop strategic relationships by issuing equity securities. Any future issuances of equity will
dilute your ownership.
●
Our
Series A Preferred Stock (as defined below), which has been held by Mr. Fogassa since 2012 has the effect of concentrating voting
control over us in Mr. Fogassa, our Chief Executive Officer and Chairman. Due to Mr. Fogassa’s control of greater than 50% of
our voting securities, we are deemed a “controlled company” under the rules of Nasdaq.
●
Our Chief Executive Officer
and Chairman has substantial influence over us as a result of his voting control and his interests may not be aligned with the interests
of our other stockholders, which may discourage, delay or prevent a change in our control, which could deprive our stockholders of
an opportunity to receive a premium for their securities.
●
Sales of a substantial
number of shares of our common stock by our stockholders in the public market could cause our stock price to fall.
●
Costs as a result of operating
as a public company are significant, and our management is required to devote substantial time to compliance with our public company
responsibilities and corporate governance practices.
●
Our internal control over
financial reporting may not meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain
effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, could have a material
adverse effect on our business and share price.
World
Events Risks
●
Tariffs and other changes
in international trade policy could adversely affect our business, financial condition and the results of operations.
●
A resurgence of the COVID-19
pandemic, or the emergence of a new pandemic, may adversely affect our business.
●
An escalation of the current
war in Ukraine and the recent conflict in the Middle East, coupled with the international policy of the new U.S. presidential administration
or the emergence of conflict elsewhere may adversely affect our business.
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Business
Risks
Our
future performance is difficult to evaluate because we have a limited operating history.
Investors
should evaluate an investment in us considering the uncertainties encountered by mineral exploration companies. Although we were incorporated
in 2011, we began to implement our current business strategy in 2018, which is primarily focused on the exploration of strategic minerals.
We have generated limited revenues from operations and our cash flow needs have been financed through equity and debt issuances and not
through cash flows derived from our operations. As a result, we have little historical financial and operating information available
to help you evaluate and predict our future performance. In addition, advancing our projects will require significant capital and time,
and we are subject to all of the risks associated with developing and establishing new mining operations and business enterprises as
further described in these risk factors. There can be no assurance that our efforts will be successful or that we will ultimately be
able to attain profitability.
We
have a history of losses and expect to continue to incur losses in the future.
We
have incurred losses in each of the past three years, have negative cash flow from operating activities, have had limited revenues and
expect to continue to incur losses in the future.
We
have an accumulated deficit of approximately $144.4 million as of December 31, 2024. We expect to continue to incur losses unless and
until such time as our projects or properties acquired in the future enter into commercial production and generate sufficient revenues
to fund continuing operations and we are able to develop at least one economic deposit. If we are unable to generate cash flows from
our operations, we will not be able to earn profits and may be unable to continue operations. At this early stage of our operation, we
also expect to face the risks, uncertainties, expenses and difficulties encountered by companies at the mineral exploration stage. We
cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially
adverse effect on our financial condition.
There
is uncertainty regarding our ability to implement our business plan and to grow our operations with our existing financial resources
without additional financing. Our ability to implement our business plan is dependent on us generating cash from operations, the sale
of our common stock and/or obtaining debt financing. Historically, we have funded our operations through the issuance of debt and equity
securities. Management’s plan is to fund our capital requirements and ongoing operations through the generation of revenue from
our mining operations and projects, and until such time that we generate such revenue, to fund operations by selling our equity securities,
including our common stock, or common stock in Atlas Critical Minerals that we own, entering into royalty agreements for the
future sales of minerals or off-take agreements related to future sales of negotiated quantities of minerals, and obtaining debt financing.
For example, on March 28, 2024, we entered into a Securities Purchase Agreement with Mitsui & Co., Ltd. (“Mitsui”), pursuant
to which we agreed to sell to Mitsui 1,871,250 shares of our common stock for aggregate net proceeds of $29.6 million. In connection
with such agreement, our subsidiary Atlas Litio Brasil Ltda (“Atlas Brazil”) entered into an Offtake and Sales Agreement
pursuant to which Atlas Brazil agreed to sell and deliver to the Investor, and the Investor agreed to purchase and take delivery of,
(i) the spot quantity of fifteen thousand (15,000) dry metric tons of Atlas Brazil’s product, and, subject to the fulfillment of
certain conditions precedent, (ii) up to sixty thousand (60,000) dry metric tons of Atlas Brazil’s product for each year, up to
a total of three hundred thousand (300,000) dry metric tons.
There is no assurance that we will be successful in implementing
our business plan or that we will be able to generate sufficient cash from operations, sell securities or borrow funds on favorable terms
or at all. Our inability to generate significant revenue or obtain additional financing could have a material adverse effect on our ability
to fully implement our business plan and grow our business.
We
are an exploration stage company, and there is no guarantee that our properties will result in the commercial extraction of mineral deposits.
We
are engaged in the business of exploring and developing mineral properties with the intention of locating economic deposits of minerals.
An economic deposit is a mineral property which can be reasonably expected to generate profits upon extraction and commercialization
of its minerals after considering all costs involved. Our property interests are in the exploration stage. Accordingly, it is unlikely
that we will realize profits in the short term, and we also cannot assure you that we will realize profits in the medium to long term.
Any profitability in the future from our business will be dependent upon the development of at least one economic deposit and most likely
further exploration and development of other economic deposits, each of which is subject to numerous risks, including all of the risks
associated with developing and establishing new mining operations and business enterprises, such as:
●
completion of studies to
verify reserves and commercial viability, including the ability to find sufficient ore reserves to support a commercial mining operation;
●
the timing and cost, which
can be considerable, of further exploration, preparing studies, permitting and construction of infrastructure, mining and processing
facilities;
●
the availability and costs
of drill equipment, exploration personnel, skilled labor, and mining and processing equipment, if required;
●
the availability and cost
of appropriate smelting and/or refining arrangements, if required;
●
compliance with stringent
environmental and other governmental approval and permit requirements;
●
the availability of funds
to finance exploration, development, and construction activities, as warranted;
●
potential opposition from
non-governmental organizations, local groups or local inhabitants that may delay or prevent development activities;
●
potential increases in
exploration, construction, and operating costs due to changes in the cost of fuel, power, materials, and supplies; and
●
potential shortages of
mineral processing, construction, and other facilities related supplies.
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Further,
we cannot assure you that, even if an economic deposit of minerals is located, any of our property interests can be commercially mined.
The exploration and development of mineral deposits involves a high degree of financial risk over a significant period which may not
be mitigated or eliminated by careful evaluation, experience and/or knowledge of management. While the discovery of additional ore-bearing
deposits may result in rewards, few properties which are explored are ultimately developed into producing mines. Significant expenses
may be required to establish reserves by drilling and constructing mining and processing facilities at a particular site. It is impossible
to ensure that our current exploration programs will result in profitable commercial mining operations. The profitability of our operations
will be, in part, related to the cost and success of our exploration and development programs which may be affected by several factors, such as the factors set forth under the heading “ We face risks
related to mining, exploration and mine construction, if warranted, on our properties ” below.
Additional expenditures are required to establish reserves which are sufficient to commercially mine and to construct, complete and install
mining and processing facilities in those properties that are mined and developed.
In
addition, exploration-stage projects like ours have no operating history upon which to base estimates of future operating costs and capital
requirements. Exploration project items, such as any future estimates of reserves, metal recoveries or cash operating costs will to a
large extent be based upon the interpretation of geologic data, obtained from a limited number of drill holes and other sampling techniques,
as well as future studies. Actual operating costs and economic returns of all exploration projects may materially differ from the costs
and returns estimated, and accordingly our financial condition, results of operations, and cash flows may be negatively affected.
Because
the probability of an individual prospective mineral deposit ever having reserves is not known, and any funds
spent on exploration and evaluation may be lost if our properties may not contain any reserves.
We
are an exploration stage company, and we have no “reserves.” A mineral reserve is defined in Regulation S-K Item 1300 as
an estimate of tonnage and grade or quality of “indicated mineral resources” and “measured mineral
resources” (as those terms are defined in Regulation S-K 1300) that, in the opinion of a “qualified person” (as
defined in Regulation S-K Item 1300), can be the basis of an economically viable project. We cannot assure you about the existence
of economically extractable mineralization at this time, nor about the quantity or grade of any mineralization we may have found.
Because the probability of an individual prospect ever having reserves is uncertain, any funds spent on evaluation and exploration
may be lost and our properties may not contain any reserves. Even if we confirm reserves on our properties, any quantity or grade of reserves we indicate must be considered as
estimates only until such reserves are mined. We do not know with certainty that economically recoverable minerals exist on our
properties. In addition, the quantity of any reserves may vary depending on commodity prices. Any material change in the quantity or
grade of reserves may affect the economic viability of our properties. Further, our lack of established reserves means that we are
uncertain about our ability to generate revenue from our operations.
Even
if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that they can be developed
into producing mines and that we can extract those minerals. Both mineral exploration and development involve a high degree of risk,
and few mineral properties that are explored are ultimately developed into producing mines.
Exploration
activities require significant amounts of capital that may not be recovered and may exceed our budget.
Mineral
exploration activities are subject to many risks, including the risk that no commercially productive or extractable resources will be
encountered. There can be no assurance that our activities will ultimately lead to an economically feasible project or that we will recover
all or any portion of our investment. Mineral exploration often involves unprofitable efforts, including drilling operations that ultimately
do not further exploration efforts. Despite our efforts to budget such costs, the cost of minerals exploration is often uncertain, and
cost overruns are common. Substantial expenditures are required to establish reserves through drilling, to develop processes to extract
the ore and, in the case of new properties, to develop the extraction and processing facilities and infrastructure at any site chosen
for extraction. Although benefits may be derived from the discovery of a major deposit, we cannot provide any assurance that any such
deposit will be commercially viable or that we will be able to obtain the funds required for development on a timely basis. Drilling
and exploration operations may be curtailed, delayed or cancelled as a result of numerous factors, many of which are beyond our control,
including title problems, weather conditions, protests, compliance with governmental requirements, including permitting issues, and shortages
or delays in the delivery of equipment and services. While we believe
we have sufficient resources to fund our operations for the next twelve months, an increase in our drilling campaigns to keep pace with
positive findings of potential economic deposits may require us to raise additional capital which, if not available on reasonable terms,
may cause us to curtail our operations and impair our ability to become profitable.
We
face risks related to mining, exploration, plant assembly and mine construction, if warranted, on our properties.
Our
level of profitability, if any, in future years will depend to a great degree on whether
our exploration-stage properties can be brought into production. We cannot provide any assurances that the current and future exploration
programs and/or studies on our existing properties will establish reserves. Whether it will be economically feasible to extract a mineral
depends on a number of factors, including, but not limited to: the particular attributes of the deposit, such as size, grade and proximity
to infrastructure; drilling costs; mineral prices; mining, processing and transportation costs; the willingness of lenders and investors
to provide project financing; labor costs and possible labor strikes; and governmental regulations, including, without limitation, regulations
relating to prices, taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental protection,
employment, worker safety, transportation, and reclamation and closure obligations. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in us receiving an inadequate return on invested capital. Assembly of our lithium processing plant, or any other facility, will require us to retain employees or contractors with the necessary technical expertise, which
may not be readily available when we need it or on terms favorable to us. We may incur delays or cost overruns in assembling our lithium
processing plant and achieving the readiness of such processing facility to commence production. Once assembled, operation of the lithium
processing plant will require significant ongoing operating costs, and our financial position and results of operations may be materially
impacted if we are unable to fund such expenses.
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Labor
disruptions and a rise in labor costs could impact our business, financial condition and results of operations.
Approximately
60% of our workforce is unionized. We may experience labor shortages and work stoppages due to localized or industry strikes. A
prolonged work stoppage or strike by unionized employees could increase costs and affect our ability to conduct our research,
development or production activities. In addition, upon the expiration of existing collective bargaining agreements, we may not
reach new agreements, or such agreements may not be on terms satisfactory to us.
If
we are unable to negotiate acceptable collective bargaining agreements, we may become subject to union-initiated work stoppages, including
strikes. In addition, additional groups of employees may seek union representation in the future.
An
increase in labor costs could adversely affect our results of operations. Most of the factors affecting labor costs are beyond our control
and we may not be able to offset increased labor costs. A shortage of qualified employees, inflationary pressure on wages, increases
in minimum wages or union-agreed wages in any of the jurisdictions in which we operate could increase labor costs and have a material
and adverse effect on our business, financial condition and results of operations.
Our
long-term success will depend ultimately on our ability to achieve and maintain profitability and to develop positive cash flow from
our mining activities.
Our
long-term success, including the recoverability of the carrying values of our assets, and our ability to continue with exploration, development
and commissioning and mining activities on our existing projects or to acquire additional projects, depends ultimately on our ability
to achieve and maintain profitability and to develop positive cash flow from our operations by establishing ore bodies that contain commercially
recoverable minerals and to develop these into profitable mining activities. We cannot assure you that any ore body that we extract mineralized
materials from will result in achieving and maintaining profitability and developing positive cash flow.
We
depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets
may limit our ability to fund our ongoing operations, execute our business plan or pursue investments that we may rely on for future
growth and could result in the failure of our business.
We
need, and for the foreseeable future will continue to need, additional equity or debt financing beyond our existing cash to maintain
and expand our operations. Until commercial production is achieved from one of our larger projects, we will continue to incur
operating and investing net cash outflows associated with, among other items, maintaining and possibly acquiring additional
exploration properties and undertaking exploration activities. As a result, we rely on access
to capital markets as a source of funding for our capital and operating requirements. We cannot assure you that such additional
funding will be available to us on satisfactory terms, or at all.
In
order to finance our current operations and future capital needs, we will require additional funds through the issuance of additional
equity and/or debt securities or other financings. Depending on the type and the terms of any financing we pursue, stockholders’
rights and the value of their investment in our shares could be reduced. Any additional equity financing will dilute shareholdings, and
new or additional debt financing, if available, may involve restrictions on financing and operating activities. For example, during the
year ended December 31, 2024, we issued an aggregate of 2,062,973 shares of our common stock in capital raising transactions, including (i) 191,723 shares sold pursuant to an At the Market Offering
Agreement, and (ii) 1,871,250 shares sold pursuant to a Securities Purchase Agreement with Mitsui & Co., Ltd. In addition,
if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders
until the debt is paid. Interest on such debt securities would increase costs and negatively impact operating results.
There is, however, no guarantee that we will be able to secure any additional
funding or be able to secure funding which will provide us with sufficient funds to meet our objectives, which may adversely affect our
business and financial position. The
global decline in economic conditions, geopolitical instability, and other macroeconomic factors, including inflation, interest rate
and foreign currency rate fluctuations, and volatility in capital markets could negatively impact our business, financial condition,
and results of operations, including our ability to raise capital. If we are unable to obtain additional financing, as needed, at competitive
rates, our ability to fund our current operations and implement our business plan and strategy will be affected, and we would be required
to reduce the scope of our operations and scale back our exploration, development and mining programs. If such an inability to obtain financing persists, such measures could include
eliminating operations or even seeking reorganization, in which case the holders of our securities could lose a substantial part or all
of their investment.
Our
quarterly and annual revenue, operating results and financial results are likely to fluctuate significantly in
future periods.
Our
quarterly and annual revenue, operating results and financial results are difficult to predict and may fluctuate significantly from
period to period based on activities related to our exploration projects. For example, for the year ended December 31, 2023, costs
associated with our exploration activities were significantly higher than in prior years, which contributed to a substantial
increase to our net loss for the year as compared to the prior year. Our revenues, if any, net loss and results of operations may
also fluctuate as a result of a variety of factors that are outside our control including, but not limited to, lack of sufficient
working capital, equipment malfunction and breakdowns, inability to timely find spare machines or parts to fix the broken equipment,
regulatory or licensing delays, deteriorations in our labor relations, changes in the prices of commodities
or in the cost of our key inputs, currency fluctuations and severe weather phenomena.
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Our
ability to manage growth will have an impact on our business, financial condition and results of operations.
Future
growth may place strains on our financial, technical, operational and administrative resources and cause us to rely more on project partners
and independent contractors, potentially adversely affecting our financial position and results of operations. Our ability to grow will
depend on several factors, including:
●
our
ability to successfully complete our exploration activities and develop existing projects;
●
our
ability to identify new projects;
●
our
ability to continue to retain and attract skilled personnel;
●
our
ability to maintain or enter into relationships with project partners and independent contractors;
●
the
results of our exploration programs;
●
the
market prices for our minerals;
●
our
access to capital;
●
our
ability to enter into agreements for the sale of our minerals;
●
our ability to obtain and
maintain requisite licenses and permits;
●
global demand for lithium;
●
the global trade environment
and the existence of trade barriers such as tariffs or sanctions;
●
volatility resulting from
international conflicts or geopolitical tensions;
●
natural or man-made disasters
and severe climate or weather events;
●
government policies with
respect to climate change and natural resource conservation; and
●
fluctuations in inflation
and currency exchange rates.
We
may not be successful in upgrading our technical, operational and administrative resources or increasing our internal resources sufficiently
to provide certain of the services currently provided by third parties, and we may not be able to maintain or enter into new relationships
with project partners and independent contractors on financially attractive terms, if at all. Our inability to achieve or manage growth
may materially and adversely affect our business, results of operations and financial condition.
We
depend on information technology systems that are subject to cybersecurity threats, disruption, damage or failure.
We
depend on information technology and operational technology systems in the operation of our business. Our systems, and those of our
third-party vendors, may be targeted by increasingly sophisticated threat actors. These threats include continually evolving
cybersecurity risks from a variety of sources such as malware, extortion, employee error or malfeasance, security breaches,
cyber-attacks, natural disasters and defects in design. Cybersecurity risk is increasingly difficult to measure and cannot be easily
mitigated due to the rapidly evolving nature of the threats and threat actors. Additionally, unauthorized parties may attempt to
gain access to our systems for company information through fraud or other means of deception. Our systems and procedures for
preparing and protecting against such attempts and mitigating such risks may prove to be insufficient. Any material compromise or
breach of our IT systems could have an adverse impact on our business and operations, including damage to our reputation and
competitiveness, remediation costs, litigation or regulatory actions. In addition, new technology that could result in greater
operational efficiency, such as artificial intelligence, may further expose our operations and computer systems to the risk of
cybersecurity incidents.
We
depend upon Marc Fogassa, our Chief Executive Officer and Chairman.
Our
existing operations and continued future development are largely dependent upon the personal efforts and continued performance of
Mr. Marc Fogassa, our Chief Executive Officer and Chairman and principal stockholder. The loss of the services of Mr. Fogassa would
have a material adverse effect on our business and prospects. We maintain key-man life insurance on the life of Mr. Fogassa. If we
were to lose Mr. Fogassa, we may not be able to find appropriate replacements on a timely basis and our financial condition and
results of operations could be materially adversely affected. Although Mr. Fogassa spends the vast majority of his time with us and
is highly active on a daily basis in our management, he does not devote his full time and attention to Atlas Lithium. Mr. Fogassa
also currently serves as Chief Executive Officer and Chairman of Atlas Critical Minerals.
Our
growth will require new personnel, which we will be required to recruit, hire, train and retain.
Our
ability to recruit and assimilate new personnel will be critical to our performance. We compete with other mining companies in the recruitment
and retention of qualified managerial and technical employees. As we grow, we will be required to recruit additional personnel and to
train, motivate and manage employees. If we are unable to successfully compete for qualified employees, our exploration and development
programs may be slowed down or suspended.
Certain
officers and directors may be in a position of conflict of interest.
Mr.
Marc Fogassa, our Chief Executive Officer and Chairman, also serves as chief executive officer and chairman of Atlas Critical
Minerals. Rodrigo Menck, one of our directors, serves as the chief financial officer of Atlas Critical Minerals. We have partial
equity ownership in Atlas Critical Minerals. There exists the possibility that one or more of these individuals, or others, may in
the future be in a position of conflict of interest, where their interests may not be aligned with the interests of our other
stockholders, and they may from time to time be incentivized to take certain actions that benefit the interests of Atlas Critical
Minerals and that our other stockholders do not view as being in their interest as investors in us.
We have historically relied on third-party consultants
and their inability to perform timely and in compliance with their contractual obligations can adversely impact our business operations.
We have historically relied on third-party technical
consultants for various aspects of our Neves Project development. While we have strengthened our internal capabilities through the appointment
of a Project Management Officer and Vice President of Engineering, who brings experience from multibillion-dollar mining projects in Brazil,
we continue to depend on certain consultants for specific technical requirements. Also, there is significant competition for the services of these consultants in Brazil. Given this dependency, the
consultants’ potential delivery of inadequate technical materials, or non-compliance with their contractual obligations, inclusive
of exclusivity provisions, exposes us to significant operational and financial risks.
We have a contractual dispute with RTEK International DMCC, the outcome
of which is unknown at this time, and our business and operations could be negatively
impacted by the termination of the Technical Services Agreement with RTEK International DMCC.
We
have a contractual dispute with RTEK International DMCC with respect to the Second A&R RTEK Agreement (as defined in this Annual Report) and are
currently assessing all avenues available to us related to the resolution of this dispute. and if arbitration ensues, we may incur arbitration-related
costs, which may negatively impact our financial position and results of operations. To the extent the Second A&R RTEK Agreement terminates
other than as currently provided under the terms of the agreement, while we believe that we can effectively utilize our current team
to fulfill the services required to be delivered under the Second A&R RTEK Agreement, we may need to recruit additional talent and expertise to address some
of the aspects of the services covered under the Second A&R RTEK Agreement. Current high levels of demand for talent in our industry present challenges in attracting and retaining
qualified technical personnel with the necessary specialized knowledge.
Adverse
developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance
by financial institutions or transactional counterparties, could adversely affect our business, financial condition or results of operations.
Events
involving limited liquidity, defaults, non-performance or other adverse
developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or
the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past
and may in the future lead to market-wide liquidity problems. We regularly maintain cash balances at third-party financial institutions
in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. The FDIC took control and was appointed
receiver of Silicon Valley Bank and New York Signature Bank on March 10, 2023, and March 12, 2023, respectively, and JPMorgan Chase Bank
assumed all deposits and substantially all assets of First Republic Bank on May 1, 2023. We did not have any direct exposure
to Silicon Valley Bank, New York Signature Bank or First Republic Bank. However, if other banks and financial institutions enter receivership
or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability
to access our existing cash, cash equivalents and investments, or access funding sources and other credit arrangements in amounts adequate
to finance or capitalize our current and projected future business operations may be threatened and could have a material adverse effect
on our business and financial condition.
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In
addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing
terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit
and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available
funding or access to our cash and liquidity resources could, among other risks, adversely impact on our ability to meet our operating expenses,
financial obligations or fulfill our other obligations, result in breaches of our contractual obligations or result in violations of
federal or state wage and hour laws. Any of these impacts, or any other impact resulting from the factors described above or other related
or similar factors not described above, could have material adverse impacts on our liquidity and our business, financial condition or
results of operations.
We
may be unable to hire and retain the third-party contractors upon which we rely, including for drilling and construction of the lithium
processing plant.
We
have and will have agreements with consultants to provide services for us, including with respect to drilling and construction services.
Each of these contractors performs functions that require the services of persons in high demand in the industry and these persons may
or may not always be available when needed based on their status as contractors or at affordable prices. The implementation of our business
plan and our exploration activities may be impaired if we are not able to retain or afford our significant contractors or if they do
not perform in accordance with their agreements and the failure to conduct our exploration and construction activities could result in
delays in our ability to execute on our business plan will could have an adverse effect on the value of our common stock.
Regulatory
and Industry Risks
The
mining industry subjects us to several risks.
In
our operations, we are subject to the significant risks normally encountered in the mining industry, such as:
●
the discovery of unusual
or unexpected geological formations;
●
accidental fires, floods,
earthquakes or other natural disasters;
●
unplanned power outages
and water shortages;
●
controlling water and other
similar mining hazards;
●
industrial and mining accidents;
●
operating labor disruptions
and labor disputes;
●
the ability to obtain suitable
or adequate machinery, equipment, or labor;
●
our liability for pollution
or other hazards; and
●
other known and unknown
risks involved in the conduct of exploration and operation of mines.
These
hazardous activities pose significant management challenges and could result in loss of life, a mine shutdown, damage to or destruction
of our properties and surrounding properties, production facilities or equipment, production delays or business interruption.
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Our
operations and mineral projects are subject to significant government regulations, including extensive environmental laws and regulations.
Mining
activities in Brazil are subject to extensive federal, state, and local laws and regulations governing environmental protection, natural
resources, prospecting, development, production, post-closure reclamation costs, taxes, labor standards and occupational health and safety
laws and regulations, including mine safety, toxic substances and other matters. The costs we will incur to comply with such laws and
regulations are expected to substantially increase once we progress from exploration activities to mining and production operations as
is our intention. We also will be subject to periodic inspections by governmental authorities, which could result in fines, penalties
or other actions by such authorities, any of which could have a material adverse effect on our future operations. In addition, changes
in such laws and regulations, or more restrictive interpretations of current laws and regulations by governmental authorities, could
result in unanticipated capital expenditures, expenses, or restrictions on, or suspensions of our operations and delays in the development
of our properties.
Our
exploration, development, mining and processing operations are subject to extensive laws and regulations governing land use and the protection
of the environment, which generally apply to air and water quality, protection of endangered, protected or other specified species, hazardous
waste management and reclamation. We have made, and expect to make in the future, significant expenditures to comply with such laws and
regulations. Compliance with these laws and regulations imposes substantial costs and burdens, and can cause delays in obtaining, or
failure to obtain, government permits and approvals which may adversely impact our closure processes and operations.
Increased
global attention or regulation of consumption of water by industrial activities, as well as water quality discharge, and on restricting
the use of cyanide and other hazardous substances in processing activities could similarly have an adverse impact on
our results of operations and financial position due to increased compliance and input costs.
We
are required to obtain governmental permits in order to conduct development and mining operations, a process which is often costly and
time-consuming.
We
are required to obtain and renew governmental permits for our exploration activities and, prior to developing or mining any mineralization
that we discover, we will be required to obtain new governmental permits. Obtaining and renewing governmental permits is a complex, costly
and time-consuming process. The timeliness and success of permitting efforts are contingent upon many variables not within our control,
including the interpretation of permit approval requirements administered by the applicable permitting authority. We may not be able
to obtain or renew permits that are necessary for our planned operations or the cost and time required to obtain or renew such permits
may exceed our expectations. Any unexpected delays or costs associated with the permitting process could delay the exploration, development
or operation of our properties, which in turn could materially adversely affect our future revenues and profitability. In addition, key
permits and approvals may be revoked or suspended or may be changed in a manner that adversely affects our activities.
Private
parties, such as environmental activists, frequently attempt to intervene in the permitting process and to persuade regulators to deny
necessary permits or seek to overturn permits that have been issued. Obtaining the necessary government permits involves numerous jurisdictions,
public hearings and possibly costly undertakings. These third-party actions can materially increase the costs and cause delays in the
permitting process and could cause us to not proceed with the development or operation of a property. In addition, our ability to successfully
obtain key permits and approvals to explore for, develop, operate and expand operations will likely depend on our ability to undertake
such activities in a manner consistent with the creation of social and economic benefits in the surrounding communities, which may or
may not be required by law. Our ability to obtain permits and approvals and to successfully operate in particular communities may be
adversely affected by real or perceived detrimental events associated with our activities.
Compliance
with environmental regulations and litigation based on environmental regulations could require significant expenditures.
Environmental
regulations mandate, among other things, the maintenance of air and water quality standards, and the rules on land development and reclamation.
They also set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste. Environmental
legislation is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for mining companies and their
officers, directors and employees. In connection with our current exploration activities or with our prior mining operations, we may
incur environmental costs that could have a material adverse effect on our financial condition and results of operations. Any failure
to remedy an environmental problem could require us to suspend operations or enter into interim compliance measures pending completion
of the required remedy.
Moreover,
government authorities and private parties may bring lawsuits based upon damage to property and injury to persons resulting from the
environmental, health and safety impacts of prior and current operations, including operations conducted by other mining companies many
years ago at sites located on properties that we currently own or formerly owned. These lawsuits could lead to the imposition of substantial
fines, remediation costs, penalties and other civil and criminal sanctions. We cannot assure you that any such law, regulation, enforcement
or private claim would not have a material adverse effect on our financial condition, results of operations or cash flows.
Mining
operations face substantial health and safety regulations.
Mining
operations are subject to extensive and complex laws and regulations governing worker health and safety and failure to comply with applicable
legal requirements can result in substantial penalties. Future changes in applicable laws, regulations, permits and approvals or changes
in their enforcement or regulatory interpretation could substantially increase costs to achieve compliance, leading to the revocation of
existing or future exploration or mining rights or otherwise have an adverse impact on our results of operations and financial position.
In
addition to potential government restrictions and regulatory fines, penalties or sanctions, our ability to operate (including the effect
of any impact on our workforce) and thus, our results of operations and our financial position (including because of potential related
fines and sanctions), could be adversely affected by accidents, injuries, fatalities or events detrimental (or perceived to be detrimental)
to the health and safety of our employees, the environment or the communities in which we operate.
Mineral
prices are subject to unpredictable fluctuations.
Portions
of our revenues may come from the extraction and sale of minerals. Our level of profitability, if any, in future years will depend to a great
degree on the prices of minerals set by the global markets. The price of minerals may fluctuate widely and is affected by numerous
factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations,
interest rates, global or regional consumptive patterns, speculative activities, increased production due to new extraction developments
and improved extraction and production methods and technological changes in the markets for the end products. For instance, the price
of spodumene concentrate has varied from a high of approximately $8,000 per ton during the fourth quarter of 2022 to a low of approximately
$740 during the fourth quarter of 2024, as reported by industry publications. The effect of these factors on the price of minerals, and
therefore the economic viability of any of our exploration properties, cannot accurately be predicted.
The
development of non-lithium battery technologies could adversely affect us.
The
development and adoption of new battery technologies that rely on inputs other than lithium compounds could significantly impact our
prospects and future revenues. Current and next generation high energy density batteries for use in electric vehicles rely on lithium
compounds as a critical input. Alternative materials and technologies are being researched with the goal of making batteries lighter,
more efficient, faster charging and less expensive, and some of these could be less reliant on lithium compounds. We cannot predict which
new technologies may ultimately prove to be commercially viable and on what time horizon. Commercialized battery technologies that use
no, or significantly less, lithium could materially and adversely impact on our prospects and future revenues.
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The
growth potential of lithium markets is uncertain.
Our
lithium business will be significantly dependent on the development and adoption of new applications for lithium batteries and the growth
in demand for plug-in hybrid electric vehicles and battery electric vehicles. As such, our business results will inherently depend on
the decarbonization of the global economy. To the extent that such development, adoption, decarbonization and growth do not occur in the
volume and/or manner that we contemplate, including for reasons described under the heading “The development of non-lithium battery
technologies could adversely affect us,” above, the long-term growth in the markets for lithium products may be adversely affected,
which would have a material adverse effect on our business, financial condition and operating results.
Demand
and market prices for lithium will greatly affect the value of our investment in our lithium resources and our future revenues and profitability
generally.
Our
ability to successfully develop our lithium resources and generate a return on investment will be affected by changes in the demand
for and market price of lithium-based end products. The market price of these products can fluctuate and is affected by numerous
factors beyond our control, primarily world supply and demand. Such external economic factors are influenced by changes in
international investment patterns, global economic activity and growth, the unknown geopolitical consequences of the wars between
Ukraine and Russia and between Israel and Hamas and macro-economic circumstances. For example, in 2023, lithium prices significantly
decreased by approximately 75% to 85% from their high in January 2023 to the end of the year. Lithium prices experienced a further
decline in 2024. For instance, battery-grade lithium carbonate prices dropped from around CNY ¥100,000 per ton at the beginning of 2024
to approximately CNY ¥75,000 per ton by the end of the year, representing a decrease of about 25%. Throughout 2024, lithium
prices were characterized by volatility and a general downward trajectory, influenced by factors such as oversupply in the market,
with new lithium production capacity coming online while the growth rate of demand from the electric vehicle and energy storage
sectors did not keep pace with the supply expansion. In addition, the price of lithium products is impacted by their purity and
performance. We may not be able to effectively mitigate against such fluctuations. High volatility or declines in lithium prices
could have a material and adverse effect on our ability to generate revenues and our future profitability generally.
Changes
in public policies and legislative initiatives could materially affect our business and prospects.
There
has been substantial debate in the United States and abroad in the context of environmental and energy policies affecting climate change,
the outcome of which could have a positive or negative influence on our prospects for growing our business. The new U.S. presidential
administration favors traditional energy technologies and our future prospects could be adversely affected if renewable technologies
are either (i) disfavored in any new laws or regulations pursued by the new U.S. presidential administration, or (ii) not included among those technologies
identified in any final laws or regulations as favoring renewable technologies, or not included in state plans to reduce carbon emissions,
and therefore not entitled to the benefits of such laws, regulations, or plans. For example, on January 20, 2025, President Trump issued Executive Order 14151, Unleashing American
Energy , which encouraged energy exploration and production on federal lands and waters, directed the federal government to eliminate
rules and incentives favoring electric vehicles, and paused the disbursement of grants and loans under the Inflation Reduction Act and
the Infrastructure Investment and Jobs Act.
Country
and Currency Risks
Our
ability to execute our business plan depends primarily on the continuation of a favorable mining environment in Brazil and our ability
to freely sell our minerals.
Mining
operations in Brazil are heavily regulated. Any significant change in mining legislation or other changes in Brazil’s current mining
environment may slow down or alter our business prospects. Further, countries in which we may wish to sell our mined minerals may impose
special taxes, tariffs, or otherwise place limits and controls on consumption of our mined minerals, including tariffs or trade restrictions imposed by the new U.S. presidential
administration.
The
perception of Brazil by the international community may affect us.
Brazil’s
political environment and its environmental policies, in particular the preservation of the Amazon rain forest, are continuously scrutinized
by the global media. If Brazil’s political environment, regulations or policies are, or are perceived to be, inadequate, unfavorable or hostile by foreign customers or investors, we may lose the interest of investor
groups or potential buyers of our minerals, which will have a negative impact on us.
Exposure
to foreign exchange fluctuations and capital controls may adversely affect our costs, earnings and the value of some of our assets.
Our
reporting currency is the U.S. dollar; however, we conduct our business in Brazil utilizing the Brazilian real. A large portion of our
operating expenses are incurred in Brazilian real. An appreciation of the Brazilian real against the U.S. dollar would increase our costs
in U.S. dollar terms. Our consolidated financials are directly impacted by movements in the Brazilian real to U.S. dollar exchange rate.
While
not expected, Brazil may choose to adopt measures to restrict the entry of U.S. dollars or the repatriation of capital across borders.
These measures would have a number of negative effects on us, reducing the immediately available capital that we could otherwise deploy
for investment opportunities or the payment of expenses, and the ability to repatriate any profits.
Common
Stock Risks
Our
stock price may be volatile, and you could lose all or part of your investment.
The
trading price of our common stock may fluctuate substantially and will depend on several factors, including those described in this “Risk
Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations
could cause you to lose all or part of your investment in our securities. Factors that could cause fluctuations in the trading price
of our common stock include:
●
results from our exploration
and/or project development efforts;
●
changes to our industry,
including demand and regulations;
●
actions by our competitors
or other industry participants;
●
failure to achieve commercial
extraction of mineral deposits from any of our properties;
●
absence of any reserves
contained within our properties, and loss of any funds spent on exploration and evaluation;
●
our ability to compete
successfully against current and future competitors;
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●
competitive pricing pressures;
●
our ability to obtain working
capital financing as required;
●
additions or departures
of key personnel;
●
sales of our common stock;
●
our ability to execute
our business plan;
●
operating results that
fall below expectations;
●
any major change in our
management;
●
changes in accounting standards,
procedures, guidelines, interpretations or principals; and
●
economic,
geo-political and other external factors, particularly relating to global trade barriers or tariffs and developments within the
country of Brazil.
In
addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of those companies. Broad market and industry factors, including actions by and the results of operations
of our competitors, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously
affect the market price of our common stock, regardless of our actual operating performance.
Securities
class action litigations have often been instituted in the past against companies who have experienced volatility of the market prices of their securities during and following periods of volatility
in the overall market. Litigation of this type, if instituted
against us, could result in substantial costs and a diversion of our management’s attention and resources. Any adverse
determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require us to
make significant payments.
We
do not intend to pay regular future dividends on our common stock and thus stockholders must look for appreciation of our common stock
to realize a gain on their investments.
We
have never paid a dividend, and we do not have any plans to pay dividends in the foreseeable future. Our future dividend policy is within
the discretion of our Board of Directors and will depend upon various factors, including future earnings, if any, our capital requirements
and general financial condition, and other factors. Accordingly, stockholders must look solely to appreciation of our common stock to
realize a gain on their investment. This appreciation may not occur or may occur only over a longer timeframe, and is contingent upon, among other factors, our ability to raise additional
capital, continue developing and then commercializing our mineral projects.
We
will seek to raise additional funds, finance acquisitions, or develop strategic relationships by issuing securities that would dilute
your ownership.
Until
we have achieved profitability, we intend to finance our operations through the issuance of equity and/or debt securities or other financings.
Issuing equity securities will reduce the percentage ownership of our existing stockholders. Furthermore, any newly issued securities
could have rights, preferences, and privileges senior to those of our existing common stock. Moreover, any issuances by us of equity
securities may be at or below the prevailing market price of our stock and in any event will have a dilutive impact on the ownership
interest of existing common stockholders, which could cause the market price of our common stock to decline. We may also raise additional
funds through the incurrence of debt or the issuance or sale of other securities or instruments senior to our common stock. The holders
of any debt securities or instruments that we may issue could have rights superior to the rights of our common stockholders.
Our
Series A Preferred Stock has the effect of concentrating voting control over us in Marc Fogassa, our Chief Executive Officer and Chairman,
and as a result, he has substantial influence over our company and his interests may not be aligned with the interests of our other stockholders,
which may discourage, delay or prevent a change in control of our company, which could deprive our stockholders of an opportunity to
receive a premium for their securities.
One
share of our Series A Convertible Preferred Stock (“Series A Preferred Stock”) is issued and outstanding, which has been
held since 2012 by Mr. Marc Fogassa, our Chief Executive Officer and Chairman. The Certificate of Designations, Preferences and
Rights of our Series A Convertible Preferred Stock provides that for so long as Series A Preferred Stock is issued and outstanding,
the holders of Series A Preferred Stock shall vote together as a single class with the holders of our common stock, with the holders
of Series A Preferred Stock being entitled to 51% of the total votes on all matters regardless of the actual number of shares of
Series A Preferred Stock then outstanding, and the holders of common stock and any other class or series of capital stock entitled
to vote with the common stock being entitled to their proportional share of the remaining 49% of the total votes based on their
respective voting power. As a result, Mr. Fogassa has the ability to decisively influence all matters requiring stockholder
approval, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of
directors and other significant corporate actions, and holders of our common stock have a limited ability to impact on our operations
and activities. This concentration of ownership may discourage, delay or prevent a change in our control, which could deprive our
stockholders of an opportunity to receive a premium for their shares as part of any contemplated sale of us and may reduce the price
of our common stock.
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We
are deemed a “controlled company” under the rules of Nasdaq and therefore qualify for exemptions from certain governance
requirements under the rules of the Nasdaq.
As
a result of his ownership since 2012 of the one issued and outstanding share of our Series A Preferred Stock, Mr. Fogassa, our Chief
Executive Officer and Chairman, holds more than 50% of our voting securities, and as such, we are a “controlled company”
under the rules of Nasdaq and may elect not to comply with certain corporate governance requirements, including the requirement (i)
to have a compensation committee composed entirely of independent directors with a written charter addressing the committee’s
purpose and responsibilities; (ii) that our nominations committee be composed entirely of independent directors with a written
charter addressing the committee’s purpose and responsibilities, or if no such committee exists, that our director nominees be
selected or recommended by independent directors constituting a majority of the board of director’s independent directors in a
vote in which only independent directors participate; and (iii) for an annual performance evaluation of the nominations and
compensation committees. We do not take advantage of any of these exemptions but may do so in the future. Our status as a controlled
company could make our common stock less attractive to some investors or otherwise harm our stock price.
Sales
of a substantial number of shares of our common stock by our stockholders in the public market could cause our stock price to fall.
Sales
of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could significantly
reduce the market price of our common stock and impair our ability to raise adequate capital through the sale of additional equity securities.
We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.
The costs of operating as a public company are significant, and our management is required to devote substantial time to compliance
with our public company responsibilities and corporate governance practices.
As
a public company, we incur significant legal, accounting and other expenses that private companies do not incur. The Sarbanes-Oxley Act,
the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Capital Market, and other applicable
securities rules and regulations impose various requirements on public companies. Our management and other personnel will devote a substantial
amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance
costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will
incur as a public company or the specific timing of such costs.
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Our
internal control over financial reporting may not meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to
achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, could
have a material adverse effect on our business and share price.
Our
management is required to report on the effectiveness of our internal control over financial reporting. The rules governing the standards
that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation,
testing and possible remediation. Our management previously determined that a material weakness existed in our internal control over financial reporting
as of December 31, 2023, and 2022.
Although management has determined that such weaknesses have been remediated
and that our internal control over financial reporting is effective as of December 31, 2024, we
cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting
in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report on
our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting
is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency
in our internal control over financial reporting once that firm begins our Section 404 reviews, investors may lose confidence in the
accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions
or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control
over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict
our future access to capital markets.
Risks
Related to World Events
Tariffs
and other changes in international trade policy could adversely affect our business, financial condition and results of operations.
Materials
and products imported into the EU, the United States and other countries are subject to import duties. In addition, we cannot predict
whether future Brazilian, U.S. or international laws, regulations or specific or broad trade remedy actions or international agreements
may impose additional duties or other restrictions on exports of minerals from Brazil. Any such changes in legislation and government
policy may have a material adverse effect on our business. For example, in recent periods, the U.S. government has announced and, in
particular following the U.S. presidential election in November 2024, may continue to announce, various import tariffs on goods imported
from certain trade partners, such as the EU and China, which have resulted, and may continue to result, in reciprocal tariffs on goods
exported from the United States to such trade partners. For example, recently the Trump Administration has signed executive orders imposing
tariffs on imports from Canada, Mexico, and China. An escalating global trade war, including between the United States and China, could
harm our business and growth prospects. Trade barriers and other governmental action related to tariffs or international trade agreements
around the world have the potential to decrease demand for our minerals and adversely impact the markets in which we operate.
A
resurgence of the COVID-19 pandemic, or the emergence of a new pandemic, may adversely affect our business.
A
resurgence of the COVID-19 pandemic, or the emergence of a new pandemic, may adversely affect our business. In the recent past, the spread
of COVID-19 caused public health officials in both Brazil and the U.S. to recommend precautions to mitigate the spread of the virus,
especially as to international travel. In addition, certain states and municipalities in both countries enacted quarantine and “shelter-in-place”
regulations and at times required non-essential businesses to close. There is no certainty that a resurgence of COVID-19, or a new pandemic,
will not occur with restrictions imposed again in response. It is unclear how such restrictions, if put in place again, would contribute
to a general slowdown in the global economy and would affect our business.
An
escalation of the war in Ukraine and conflicts in the Middle East, coupled with the international policy of the new
U.S. presidential administration or the emergence of conflict elsewhere may adversely affect our business.
Global
markets have experienced, and may continue to experience, volatility and disruption following the escalation of geopolitical tensions,
including the ongoing war in Ukraine, the new U.S. presidential administration’s internal policy agenda, recent conflicts in the
Middle East, rising tensions between China and Taiwan, the relationship between China and the United States, and other sources of geopolitical
uncertainty and instability. The length and impact of these ongoing military and economic conflicts is highly unpredictable. Such geopolitical
events, terrorist or other attacks, wars (or threatened wars) or international hostilities may lead to armed conflict or acts of terrorism
in other parts of the world, which in turn may contribute to further economic instability in the global financial markets and international
commerce. While much uncertainty remains regarding the global impacts of the war in Ukraine and conflict in the Middle East,
it is possible that such tensions could adversely affect our business, financial condition, results of operation and cash flows. Furthermore,
it is possible that third parties, such as our customers and suppliers, may be impacted by these conflicts, which could adversely affect
our operations. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us
or at all.