Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in
conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.
In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions
that could cause actual results to differ materially from its management’s expectations. Factors that could cause such differences
are discussed in “Forward-Looking Statements”, “Risk Factor Summary” and “Risk Factors” in this Annual
Report on Form 10-K. The Company assumes no obligation to update any of these forward-looking statements, unless required to do so by
applicable law.
The discussion that follows includes a comparison
of the Company’s results of operations and liquidity and capital resources for the fiscal years ended December 31, 2025 and 2024.
The Company has elected to omit discussion of the earliest of the three years covered by the consolidated financial statements presented.
For a discussion and analysis of fiscal year ended December 31, 2023 and of changes from the fiscal year ended December 31, 2024 to the
fiscal year ended December 31, 2023, refer to “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in the Company’s prospectus filed with the SEC on February 11, 2026.
Overview
We are a uranium exploration and development company
focused on uranium discoveries. We are a junior miner engaged in uranium exploration. Our portfolio is comprised of two uranium exploration
projects in Argentina and one exploration project in Colombia.
We maintain significant land holdings in Colombia
and Argentina, which offer substantial exploration potential. Our Properties are located within mining-friendly jurisdictions and are
supported by established infrastructure.
From inception in December 2022 through the
present date, we have focused on acquiring properties and conducting exploration work on them, with the goal of building a larger aggregate
uranium and REE resource. We intend to regularly consider acquisitions of other uranium and critical metal assets across Latin America.
To execute our business strategy, we will require substantial additional financial resources, including amounts necessary to fund our
planned exploration program at our Properties. See the information under the heading “ Risk Factors — Risks Related
to Our Financial Conditions — Significant additional capital is required to fund our business plan. ” and “ Risk
Factors — Risks Related to Our Business — Our operations are capital intensive, and we will require significant
additional financing to acquire additional uranium resource properties and projects and to pursue exploration, development, and mining
operations on our existing uranium projects ” in this Annual Report on Form 10-K for more information.
55
We have not yet generated any income. Our expenses
for the year ended December 31, 2025 totaled $2,330,563, including approximately $503,849 in professional fees (including legal fees,
auditor fees, and accounting fees); $1,543,486 in general and administrative expenses; $277,744 in exploration and evaluation expenditures;
and, $5,484 in depreciation. Our expenses for the year ended December 31, 2024 totaled $7,341,652, including approximately $787,994
in professional fees (including legal fees, auditor fees, and accounting fees); $1,432,236 in general and administrative expenses; $1,497,523
in exploration and evaluation expenditures; $3,620,449 in mineral properties impairment; and, $3,450 in depreciation.
To date, our ongoing operations have been financed
by the sale of equity securities by way of private placements. We believe that we will be able to secure additional financings in the
future, but there can be no assurance that such financing will be available to us in sufficient amounts, on attractive terms, on a timely
basis, or at all. See the information under the heading “ Risk Factors — Risks Related to Our Financial Conditions
— Significant additional capital is required to fund our business plan. ” and “ Risk Factors — Risks
Related to Our Business — Our operations are capital intensive, and we will require significant additional financing to
acquire additional uranium resource properties and projects and to pursue exploration, development, and mining operations on our existing
uranium projects ” in this Annual Report on Form 10-K for more information. During the balance of 2026, we anticipate that we
will continue our exploration and development of mineral interests, secure and maintain title to properties with the goal upon achieving
future profitable production. There is no assurance that we will succeed in this endeavor, achieve revenues in the future, achieve revenues
that exceed the cost of our expense in the future, or generate a profit, taking into account our expenses.
Results of Operations
Years ended December 31, 2025 and 2024
The following financial data is derived from,
and should be read in conjunction with the Annual Financial Statements. A summary of the Company’s operating results for the years
ended December 31, 2025 and 2024 are as follows:
Year ended
December 31,
2025
Year ended
December 31,
2024
REVENUE
$ —
$ —
OPERATING EXPENSES:
General and administrative expenses
1,543,486
1,432,236
Legal and professional fees
503,849
787,994
Mineral properties impairment
—
3,620,449
Depreciation
5,484
3,450
Exploration and evaluation expenditures
277,744
1,497,523
TOTAL OPERATING EXPENSES
2,330,563
7,341,652
OTHER INCOME AND EXPENSES
Interest and other (income) expense
941
(370,215 )
Foreign exchange (gain) loss
(16,983 )
(149,547 )
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE
2,314,521
6,821,889
Deferred tax recovery
—
(1,059,914 )
NET LOSS AND COMPREHENSIVE LOSS
$ 2,314,521
$ 5,761,975
The following is an analysis of the Company’s
operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. Significant items contributing
to the loss incurred during such period were as follows:
● General and administrative expenses totaling $1,543,486,
compared to $1,432,236 for the year ended December 31, 2024, mainly consisting of: $670,488 of share-based payments and $674,763
of cash compensation to consultants, directors and officers (2024 – $1,165,447); $10,617 in travel costs (2024 – $125,790);
and other miscellaneous general and administrative expenses amounting to $187,618 (2024 – $140,999). The increase in
these expenses are due to the accrual of $225,000 of management bonuses for December 31, 2025, which were offset by a decrease in travel
costs as the Company curtailed expenditures to focus on completing the IPO.
56
● Legal and professional fees for the year ended December 31,
2025 were $503,849 compared to $787,994 for the year ended December 31, 2024, mainly consisting of: $150,880 of audit and accounting
fees (2024 – $192,085), which fees were incurred to obtain audits and interim reviews for all entities (2024 - $192,085);
$75,598 of bookkeeping and financial consulting fees (2024 – $101,176), which relate to fees paid for the Company’s
bookkeeper as well as fees paid to external financial consultants for preparing for and managing the audit and accounting functions;
$277,371 of legal fees (2024 – $481,736), which primarily relate to fees paid for securities counsel as part of pursuing
the filing of a registration statement with the SEC, as well as ordinary corporate counsel fees. The decrease in legal and professional
costs are primarily due to a lesser need of professional services due to the involvement of the CFO for all of 2025, which required a
lesser reliance on outside accounting service providers, additionally, fewer audit costs were incurred as 2024 required the audits of
the acquired companies. Finally, lesser legal fees due to the Company having completed the largest part of the IPO related legal work
during 2024.
● During the period after acquisition of the respective mineral
properties and December 31, 2024, the uranium spot price experienced a consistent decline month over month. As a result of that
decline, the Company conducted an impairment test effective December 31, 2024. The Company retained an external valuations expert
who evaluated the fair value of the mineral properties using both a cost approach and a market approach, which yielded values less than
the original carrying value. Accordingly, the related mineral properties were deemed to be impaired and the impairment losses, as disclosed
above, were recognized, the majority of the impairment is the result of the recognition of a $2,459,914 deferred tax liability on the
Colombian acquisition and a corresponding increase in the impairment amount. The recognition of the impairment then in turn creates a
recovery of deferred taxes, which resulted in $1,059,914 in deferred tax recovery. During the year ended December 31, 2025, and as at
December 31, 2025, the uranium spot price had recovered, management performed a qualitative impairment assessment and concluded that
a quantitative impairment analysis of the mineral properties was not required, accordingly, there is no impairment of mineral properties
during the year ended December 31, 2025.
● The depreciation expenses for the year ended December 31,
2025, were $5,484 (2024 – $3,450).
● Exploration and evaluation expenditures for the year ended
December 31, 2024, were $277,744 (2024 – $1,497,523), consisting of:
Exploration and Evaluation Expenses
Berlin
(Colombia)
Laguna Salada
(Argentina)
Huemul
(Argentina)
Year Ended
December 31,
2025
Personnel
$ 135,188
$ 155
$ 155
$ 135,498
Geological
10,095
—
—
10,095
Land management
41,937
63,363
22,618
127,918
Other
225
2,004
2,004
4,233
$ 187,445
$ 65,522
$ 24,777
$ 277,744
Exploration and Evaluation Expenses
Berlin
(Colombia)
Laguna Salada
(Argentina)
Huemul
(Argentina)
Year Ended
December 31,
2024
Personnel
$ 512,576
$ 17,582
$ 17,582
$ 547,740
Geological
712,837
—
—
712,837
Land management
91,920
47,981
44,350
184,251
Other
29,181
11,757
11,757
52,695
$ 1,346,514
$ 77,320
$ 73,689
$ 1,497,523
The Berlin Project SPA was entered into on December 8,
2023 and the Berlin Project Closing Date was April 8, 2024. During the intervening period, the Company incurred $415,185 of costs
related to exploration and evaluation of the Berlin Project in anticipation of the acquisition closing. Given the nature of these exploration
and evaluation expenses, we have expensed them as incurred and not as costs of the acquisition itself.
● Personnel costs consist of the payments made to the consultants,
who are managing the Company’s operations in Colombia.
● Geological costs consist of the payments made to contractors
who prepare the work plan for tour Properties, including surface geological exploration, subsoil exploration, geological assessment and
modelling and financial and market analysis.
57
● Land management costs consist of the payments made to the
Agencia Nacional De Mineria (“ANM”), regarding the interest related to the liability for the mining concessions, which are
included in accounts payable.
● Other costs consist of general operating costs, such as small
equipment rentals and drone operations.
● Costs related to 284 Ontario were incurred from the date
of acquisition until December 31, 2024 and relate primarily to our on-site personnel in Argentina; land management costs including
legal and administrative costs of maintaining regulatory compliance and on-site operations; and other expenses consist of local travel
costs and other expenses.
For clarity, the Company has not conducted any
physical exploration work on the Berlin Project or any other properties. The amounts shown above, including the $415,185 incurred during
the intervening period, relate to exploration and evaluation activities such as planning, geological assessments, and regulatory compliance
in anticipation of the acquisition closing, rather than field-based exploration.
Interest expense for the year ended December 31,
2025 was $941 (2024 – interest income $370,215). The 2024 interest income corresponds to the increased amount of cash
at hand as a result of the private placements throughout 2024 as well as a reversal of certain accrued liabilities that were assumed on
the acquisition of the Colombian entities and were subsequently reversed when the Company was not required to make payment. During the
year ended December 31, 2025, the Company had utilized the majority of the cash reserves in pursuing the IPO and as a result interest
income was insignificant and offset by bank charges incurred throughout the year.
Foreign exchange gains for the year ended December 31,
2025 were $16,984 (2024 – $149,547). The decline is due to a reduction in expenditures and payments made to Colombia,
compared with payments that were necessary in 2024, which primarily consisted of the liability to the ANM for surface fee payments and
the accrued interest thereon, in connection with the concessions comprising the Berlin Project.
Liquidity and Capital Resources
A summary and discussion of our cash inflows and
outflows are as follows:
Operating Activities
For the years ended December 31, 2025 and
2024, the Company used $944,440 and $3,443,499, respectively, in operations during the year. The primary driver of the decrease is the
overall decrease in net loss of $2,314,521 for the year ended December 31, 2025 (2024 - $5,761,975), and there were no amounts for release
of accounts payable obligation or mineral properties impairment during the year ended December 31, 2025 (2024 – ($327,458) and 3,620,449, respectively). Offset by a reduction in the amount of share-based compensation of $670,488 for the year ended December 31, 2025 (2024
- $1,030,480) and an increase due to the recognition of prepaid expenses in expense and an increase in accounts payable due to management
ceasing to take full payment of salary, accrued but unpaid bonuses and an overall cash management policy that extended terms with creditors
until after the IPO was completed.
Investing Activities
During the year ended December 31, 2025, the Company
used $nil in investing activities. During the year ended December 31, 2024, the Company used $254,190 in investing activities, consisting
primarily of $206,522 of cash consideration paid in respect of the Argentina and Colombia acquisitions.
Financing activities
For the years ended December 31, 2025, offsetting
the above uses of cash, were $923,000, which consisted of $350,000 of proceeds from the issuance of units, $150,000 from the issuance
of a convertible debenture and $423,000 from the exercise of warrants (2024 - $3,406,653 consisting principally of proceeds from the issuance
of Common Shares and units and subscriptions received in advance).
Cash Resources and Going Concern
We have no revenue generating operations from
which we can internally generate funds. To date, our ongoing operations have been financed by the sale of our equity securities by way
of private placements. We believe that we will be able to secure additional financings in the future, but there can be no assurance that
such financing will be available to us in sufficient amounts, on attractive terms, on a timely basis, or at all. This situation is unlikely
to change until such time as we can develop a bankable feasibility study on one of our Properties. When acquiring an interest in mineral
properties through purchase or option, we will sometimes issue Common Shares to the vendor or optionee of the property as partial or full
consideration for the property interest in order to conserve our cash.
58
As of December 31, 2025, we had a working capital
deficit of $772,896, and an accumulated deficit of $10,507,351. At December 31, 2024, the Company had working capital deficit of
$57,216 and an accumulated deficit of $5,853,605. Subsequent to the year ended December 31, 2025, the Company completed its IPO, which
resulted in the receipt of net proceeds of $22.7 million. The continuing operations of the Company are dependent upon obtaining necessary
financing to meet our commitments as they come due, to finance future exploration and development of mineral interests and to secure and
maintain title to properties and upon future profitable production.
We anticipate that the proceeds of the IPO will
fund our capital requirements for the following 24 months from the IPO. The reason that we expect that the IPO will fund our capital
requirements for the next 24 months is based on the Company’s budget with regards to its anticipated exploration programs,
workforce expansion plans and general corporate activities such as legal counsel, accounting, investor relations and other typical expenditures.
The categories of expenditures expected by the Company are exploration expenditures and property maintenance fees, general administrative
expenses and working capital and general corporate purposes. We expect that we will operate at a loss for the foreseeable future and believe
the current cash and cash equivalents will be sufficient for us to maintain our currently held Properties, and fund our currently anticipated
general and administrative costs. In any event, we will be required to raise additional funds through future financings in order to continue
our business. Should such financing not be available in that time-frame or in reasonable and acceptable terms to us, we will be required
to reduce our operating activities.
Despite our success to date in raising capital
to fund our operations, there remains uncertainty that we will be able to secure any additional financing in the current or future equity
markets. See the information under the heading “ Risk Factors ” in this Annual Report on Form 10-K for more information.
Failure to obtain additional financing could have a material adverse effect on our financial condition and results of operation and could
cast uncertainty on our ability to continue as a going concern.
Mineral Property Obligations
We hold our property rights through the following
mining leases and option agreements.
Berlin Project
On April 8, 2024, we acquired a 100% indirect
interest in the Berlin Project pursuant to the Berlin Project SPA. Pursuant to the Berlin Project SPA, we acquired all of the issued
and outstanding shares of Gaia Energy from Green Shift on the Berlin Project Closing Date in consideration of (a) an initial cash
payment to Green Shift of C$20,000, (b) the issuance to Green Shift of 1,211,687 Common Shares, and (c) the grant of the Berlin
Project Royalty to Green Shift pursuant to the Berlin Project Royalty Agreement.
Pursuant to the Berlin Project SPA, as additional
consideration for the purchase of all of the issued and outstanding shares of Gaia Energy, we will no later than 30 days after the
commencement of commercial production at the Berlin Project, pay Green Shift a third cash payment of C$5 million. We have previously;
(a) paid to Green Shift a second cash payment of C$1 million;
and
(b) issued to Green Shift such number of Common Share that
would result in Green Shift owning an aggregate 25% of the issued shares of the issued and outstanding Common Shares (after giving effect
to both the issuance to Green Shift and the completion of the Liquidity Event) at the price per share equal to the Offering Price.
Argentina Projects
On July 19, 2024, we acquired a 100% indirect
interest in the Argentina Projects pursuant to the Argentina Projects SPA. Pursuant to the Argentina Projects SPA, we acquired all
of the issued and outstanding shares of 284 Ontario from Consolidated Uranium on the Argentina Projects Closing Date in consideration
of (a) the issuance to Consolidated Uranium of 2,000,000 Common Shares, (b) the grant of the Huemul II Royalty to Consolidated
Uranium pursuant to the Huemul II Royalty Agreement; and (c) the grant of the Laguna Project Royalty to Consolidated
Uranium pursuant to the Laguna Project Royalty Agreement. Pursuant to the terms of the Laguna Project Royalty Agreement, we have the option
to repurchase one-half (1.0%) of the Laguna Project Royalty for a period of seven years from the Argentina Projects Closing
Date for $2,500,000. Pursuant to the terms of the Huemul II Royalty Agreement, Consolidated Uranium retained the Huemul Option that extends
the royalty to cover both the Huemul I and Huemul II Properties, in exchange for a payment of $1.0 million to the Company, provided
the payment is made prior to the execution of the Huemul I Buy Back Right Assignment Agreement. On March 10, 2025, the Huemul I Buy
Back Right Assignment Agreement was executed, and the Existing Huemul I Buy Back Right was assigned to Consolidated Uranium, resulting
in the immediate termination of the Huemul Option.
59
Prior to the execution of the Argentina Projects
SPA, 284 Ontario had entered into two net smelter return royalty agreements: Existing Huemul Royalty Agreement I and Existing Huemul Royalty
Agreement II, both dated July 31, 2023. Pursuant to the Existing Huemul Royalty Agreement I, 284 Ontario granted Minera Agauca S.A.
a 2.0% net smelter return royalty on all future production from specific concessions of the Huemul Project, namely Cateo Huemul Norte,
Cateo Huemul Sur, Mina Huemul, MD Silvana, and MD Cerro Butalo. Under the terms of this agreement, 284 Ontario had the Existing Huemul
I Buy Back Right, which has been assigned to Consolidated Uranium on March 10, 2025. Pursuant to the Existing Huemul Royalty Agreement
II, 284 Ontario granted NewEra Metal Resources Ltd. and Mr. Guillermo Wild Ceruzzi a 1.0% net smelter return royalty on future production
from the MD Mirano Norte and MD Carmencita concessions within the Huemul Project. This agreement grants 284 Ontario the exclusive and
irrevocable one-time right to repurchase the entire 1.0% royalty for a payment of $400,000, which can be exercised at any time, subject
to a 15-day notice requirement.
Pursuant to the Argentina Projects SPA, as additional
consideration for the purchase of all of the issued and outstanding shares of 284 Ontario, we have issued to Consolidated Uranium 400,000
Common Shares. Further, we have also issued to Consolidated Uranium Common Shares in an amount to reflect a $12,000,000 valuation of the
Argentina Projects at the offering price of $4.00.
Pursuant to the Argentina Projects SPA, we have
acquired a 100% indirect interest in the Sierra Pintada Project, in addition to the Argentina Projects. The Sierra Pintada Project consists
of 15 claims that grant us rights solely to explore for specified minerals; no rights to mine any minerals have been conferred. To date,
no material exploration work has been conducted on the Sierra Pintada Project, and we have no current plans to initiate exploration or
development activities. Accordingly, the Sierra Pintada Project remains, and is expected to remain for the foreseeable future, in an initial
exploration stage, with no drilling or geological data to support potential mineral findings, nor any economic assessments to indicate
value. The Sierra Pintada Project is not anticipated to impact our business operations, cash flow, or asset valuation in the foreseeable
future. We do not claim any mineral resources or reserves on the Sierra Pintada Project at this time, and there is no certainty that mineralized
material will be discovered.
In connection with the Argentina Projects SPA,
we entered into the IsoEnergy IRA. Pursuant to the IsoEnergy IRA, IsoEnergy is entitled to participate in future equity financings,
including the issuance of equity securities or securities convertible into or exercisable for equity securities in any public or private
offering, on terms consistent with those offered to other investors, subject to certain exceptions, including issuances of securities
(a) under the Company’s existing or future share-based incentive plans, (b) upon the exercise or conversion of previously
issued convertible or exchangeable securities, (c) in connection with acquisitions, business combinations, or other asset transactions,
and (d) through a rights offering made available to all shareholders.
IsoEnergy is also entitled to nominate one director
to our board of directors following our IPO. The nominee, who may be a director or officer of IsoEnergy, is not required to meet independence
criteria. We are required to take all necessary steps to ensure the appointment of IsoEnergy’s nominee to our board of directors.
The IsoEnergy IRA will terminate when IsoEnergy’s
ownership percentage in the Company falls below 5%. Upon termination, all rights and obligations under the agreement will cease.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Basis of Presentation
The accompanying financial statements have been
prepared in accordance with U.S. GAAP as issued by the Financial Account Standards Board.
Recently Adopted Accounting Pronouncements
In November 2023, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements
to Reportable Segment Disclosures (“ASU 2023-07”) to improve reportable segment disclosure requirements, primarily through
enhanced disclosures about significant segment expenses. The standard does not change the definition of a segment, the method for determining
segments, or the criteria for aggregating operating segments into reportable segments. ASU 2023-07 is effective for annual periods beginning
after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application
to all prior periods presented in the financial statements. The Company adopted this guidance during the fiscal year ended December 31,
2024, by providing the additional disclosures as required.
60
In August 2020, the FASB issued ASU No.2020-06
(“ASU 2020-06”): Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 reduces the number of accounting models for convertible debt instruments by
eliminating the cash conversion and beneficial conversion models. The diluted net income per share calculation for convertible instruments
requires the Company to use the if-converted method. For contracts in an entity’s own equity, the type of contracts primarily affected
by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure
to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing
the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required
to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for the Company on January 1, 2024, with early adoption permitted.
On January 1, 2024, the adoption of ASU 2020-06 was not disclosed as an adoption as there were no applicable instruments at the time of
the adoption and accordingly, AUS 2020-06 had no impact on the Company’s consolidated financial statements or disclosures; however,
it had an impact in the accounting for the convertible debenture issued during the current period, so the adoption disclosures have been
included herein.
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires additional disaggregation of the reconciliation between
the statutory and effective tax rate for an entity and of income taxes paid. The amendments improve the transparency of income tax disclosures
by requiring consistent categories and greater disaggregation of information by jurisdiction. ASU 2023-09 is effective for annual periods
beginning after December 15, 2024, and is applied either prospectively or retrospectively at the option of the Company. The Company adopted
this standard prospectively on January 1, 2025, which resulted in expanded income tax disclosures in these consolidated financial statements.
Critical Accounting Estimates
A summary of significant accounting policies of
the Company is presented in Note 3 of the Audited Financial Statements and in the audited condensed consolidated financial statements
for the period ended December 31, 2025. The financial statements and notes are representations of our management, which is responsible
for their integrity and objectivity. These accounting policies conform to accounting principles under U.S. GAAP and have been consistently
applied in the preparation of the financial statements. The below discussion highlights the accounting policies having the greatest impact
on the respective financial statements:
Functional currency and foreign currency translations
The functional currency of the Company and its
subsidiaries is the U.S. Dollar. On acquisition of the subsidiaries pursuant to the Berlin Project SPA, the functional currency of
the acquired companies was reassessed based on the relevant facts and circumstances related to the subsidiaries and in consideration of
its integration with the Company, the outcome of which was that the functional currency of the subsidiaries is the U.S. Dollar. The
unaudited condensed consolidated financial statements of the Company are presented in the U.S. Dollar.
Changes in the underlying facts and circumstances
in the future could result in a change in functional currency. Should the functional currency change to a foreign currency, other than
the U.S. Dollar, the change would be made prospectively and could result in material future changes to the unaudited condensed consolidated
financial statements of the Company, including the need to present other comprehensive income/loss.
Mineral properties
In accordance with U.S. GAAP, expenditures
relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures
are expensed as incurred until such time as we exit the exploration stage by establishing proven or probable reserves.
In capitalizing the acquisition of mineral rights,
it is first necessary to determine whether the transaction constitutes an asset acquisition or a business combination, including whether
to apply the screen test in determining whether substantially all of the fair value is concentrated in a single identifiable asset or
a group of similar identifiable assets. These estimates are subject to risks and uncertainties, primarily related to the recognition and
measurement of fair value of the related consideration. The estimates are based on management’s judgments and relevant market data.
Impairment of long-lived assets
The ultimate recoverability of the exploration
and evaluation assets with a carrying value of $ at December 31, 2025, is dependent upon the Company’s ability to obtain the necessary
financing to complete the exploration and development and commence profitable production at its Properties, or alternatively, upon the
Company’s ability to dispose of its interests therein on an advantageous basis. A review of the indicators of potential impairment
is at minimum carried out at each period end.
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Management reviews mineral properties for impairment
whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. Where an indicator
of impairment exists, a formal estimate of the recoverable amount of the assets is made. An impairment loss is recognized when the carrying
value of the assets is higher than the recoverable amount and when mineral license tenements are relinquished or have lapsed. In undertaking
this review, management of the Company is required to make significant estimates of, among other things, discount rates, commodity prices,
availability of financing, future operating and capital costs and all aspects of project advancement.
These estimates are subject to various risks and
uncertainties, which may ultimately have an effect on the expected recoverability of the carrying values of the assets.
Long-lived assets, consisting of property and
equipment and mineral rights are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an
asset or asset group may not be recoverable. Management applies judgment to assess whenever events or changes in circumstances indicate
the carrying amount of an asset or asset group may not be recoverable giving rise to the requirement to conduct an impairment test. Circumstances
which could trigger an impairment test include, but are not limited to: significant decreases in the market price of the asset; significant
adverse changes in the business climate or legal factors including significant decreases in uranium prices; significant increases in reclamation
costs and accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset;
current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the
use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end
of its estimated useful life. Recoverability of these assets is measured by comparing the carrying value to the future undiscounted cash
flows expected to be generated by the assets. When the carrying value of an asset exceeds the related undiscounted cash flows, an impairment
loss is recorded by writing down the carrying value of the related asset to its estimated fair value, which is determined using discounted
future cash flows or other measures of fair value.
Share-based compensation and share-based payments
The fair value of share-based payments are subject
to the limitations of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used
by management in the assumptions. Because the Black-Scholes option pricing model requires the inputs of highly subjective assumptions,
including the volatility of share prices, changes in subjective input assumptions can materially affect the estimate.
Contingent liabilities
Certain conditions may exist as of the date the
financial statements are issued, that may result in a loss to the Company but that will only be resolved when one or more future events
occur or fail to occur. Such losses are disclosed are contingent liabilities if it’s not both probable and reasonably estimable.
Our management assesses such contingent liabilities and estimated legal fees, if any. Such assessment inherently involves an exercise
of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that
may result in such proceedings. Our management evaluates the perceived merits of any legal proceedings or unasserted claims as well as
the perceived merits of the amount of relief sought or expected to be sought.
Management’s best estimates regarding the
restoration provisions are based on the current economic environment. Changes in estimates of contamination, restoration standards and
restoration activities result in changes to provisions from period to period. Actual restoration provisions will ultimately depend on
future market prices for future restoration obligations. Management has determined that the Company has no restoration obligations on
acquisition of the mineral properties and as at December 31, 2025.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Not applicable.
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