INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
Goldsource Mines Inc. (the "Company" or "Goldsource") is a Canadian resource company engaged in exploration activities. It is headquartered in Vancouver, BC, and its common shares trade on the TSX Venture Exchange ("TSX‐V") under the symbol "GXS" and on the OTCQX under the symbol "GXSFF". This Interim Management's Discussion and Analysis - Quarterly Highlights ("Interim MD&A") is an overview of all material information about the Company's operations, liquidity, and capital resources for the three and six months ended June 30, 2022. The Interim MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2022 and 2021 and the related notes contained therein which have been prepared under International Accounting Standard 34 - Interim Financial Reporting as issued by the International Accounting Standards Board. The following should also be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2021 and 2020 and the related notes contained therein. Additional information related to the Company is available for view on SEDAR at www.sedar.com and on the Company's website www.goldsourcemines.com .
The first, second, third, and fourth quarters of the Company's fiscal years are referred to as "Q1", "Q2", "Q3", and "Q4", respectively.
The effective date of this Interim MD&A is August 24, 2022. This Interim MD&A contains forward looking information. Reference to "7. Cautionary Statements and Disclaimers" is advised.
All amounts are in Canadian dollars unless noted.
The Company's key events and highlights during the first half ("H1") of 2022 and to date include the following:
The Company's focus is the Eagle Mountain Gold Project ("Eagle Mountain" or "Project") for which it has a 100% interest in the Eagle Mountain Prospecting License ("EMPL") and the Kilroy Mining Permit (collectively the "Property"), save and exempt all claims lawfully held and occupied. The Property consists of an area of approximately 5,050 hectares (12,480 acres) in central Guyana, South America. 4,784 hectares (11,860 acres) of the Eagle Mountain Property relate to the Eagle Mountain Prospecting License while 266 hectares (660 acres) relate to the Medium Scale Mining Permit held by Kilroy Mining Inc. ("Kilroy"), a Guyanese Company, on which Stronghold Guyana Inc. ("Stronghold"), a wholly‐owned subsidiary of Goldsource, has a long‐term lease with a 2% net smelter return royalty. Within the EMPL there are third‐party small‐scale claims ("Artisanal Claims") that predate the Company's Property. The Artisanal Claims that are licensed or recommended for license total approximately 123 hectares (305 acres). Additionally, one medium scale permit (referred to as Bishop Growler) is located in the central part of the EMPL northeast of the Eagle Mountain resource area. This was under an option and purchase agreement by Goldsource in 2018/19 that has since expired. Goldsource constantly reassesses the size of its land package as exploration work is completed.
On April 7, 2022, the Company announced an updated Mineral Resource Estimate ("2022 MRE"). The 2022 MRE reflected the Company's infill and expansion drilling completed in 2021 and is comprised of an estimated 31.1 million tonnes ("Mt") grading 1.18 grams per tonne ("gpt") gold for 1,183,000 oz of gold in Indicated Resources, and 18.4 Mt grading 0.98 gpt gold for 582,000 oz of gold in Inferred Resources. The 2022 MRE includes the Eagle Mountain and Salbora deposits in addition to the Toucan and Powis prospects. Eagle Mountain and Salbora, in particular, feature gold mineralization starting at surface in saprolite (soft rock, meaning the weathered, oxidized layer) and extending into the underlying fresh rock. The 2022 MRE was estimated at 0.30 gpt gold cut‐off grade for saprolite and 0.50 gpt gold cut‐off grade for fresh rock. It was defined by a total of 772 core holes for 75,430 metres drilled, which includes infill and exploration drilling up to December 31, 2021.
A description of the resource methodology for the 2022 MRE is detailed in the Company news release dated April 7, 2022, and in a report titled "Eagle Mountain Gold Project, Potaro - Siparuni Region Guyana, NI 43‐101 Technical Report", dated May 24, 2022 with an effective date of April 5, 2022 located on the Company's website and on SEDAR.
The 2022 MRE will be used as a basis for a Pre‐Feasibility Study ("PFS") focusing on establishing shallow, low strip open‐pittable mineral reserves. Opportunities for a phased development plan will be evaluated, specifically with initial and baseline production provided by soft‐ rock saprolite material followed by an expansion to incorporate the fresh rock mineralization. The PFS is expected to be delivered in H1, 2023.
INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
The 2022 program includes drilling and generative exploration activities as well as a significant increase in technical work to progress the pre‐feasibility study. The Company's 2022 exploration and engineering objectives include:
Generative exploration has seen a lesser focus in recent years as the Company's activities centred on expanding the mineral resources of the Eagle Mountain and Salbora deposits. Consequently, there remains a number of under‐explored areas, including several with historical artisanal workings on the western and eastern sides of the EMPL. The eastern side of the property has seen little historical exploration by Goldsource and prior operators. A Phase‐2 drill program in 2022 will be devised based on success with the Phase‐1 program and the results of generative exploration.
Based on the 2022 MRE1 announced on April 7, 2022, the Company's mineral resources at the Eagle Mountain Project are as follows:
1 The 2022 MRE was prepared by CSA Global Consultants Canada Ltd. in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Definition. Mineral Resources are not Mineral Reserves as they do not have demonstrated economic viability. Refer to the 2022 MRE news release, dated April 7, 2022.
INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
Eagle Mountain Project Activities - 2022
During the six months ended June 30, 2022, the Company incurred $2.5 million of exploration and evaluation expenses for the Eagle Mountain Gold Project (please refer to section 3 below - Results of Operations and Financial Condition). As at June 30, 2022, the Company's cumulative exploration and evaluation expenditures, including acquisition costs, on the Eagle Mountain Gold Project totaled $39.7 million, of which $33.0 million is related to exploration activities.
In 2022, the Company commenced its generative exploration program, which focused on underexplored areas outside of both the 2022 MRE outline and the Salbora‐Powis trend with the aim of locating additional mineralized areas and corridors within the EMPL. During Q2, 2022, the Company completed 10,950 metres of auger lines sampled at 25‐metre intervals, following up on stream sediment anomalies detected in Q1, 2022. In addition to auger sampling, 177 metres of trenching was completed in Q2, 2022. Analytical results received to date in 2022 for auger and trenching work, which represent the majority of samples taken, have not led to the identification of new near‐surface gold anomalies outside of the 2022 MRE outline or known prospect areas. Assay results are pending for the remainder of the auger lines on the east and west sides of the EMPL.
On March 11, 2022, the Company announced drill results for the Soca Prospect area of the Eagle Mountain Prospecting License. Reported results represented 20 core holes totaling 3,126 metres drilled in late 2021. Drilling intersected mineralization along an estimated 250 metres of strike and down to 170 metres depth, with high‐grade gold intervals as well as broader zones of lower grade mineralization. Drill hole EMX21‐010 intersected 6.0 meters grading 18.31 gpt gold at 130 metres vertical depth. This included a higher‐grade sub‐interval of
Since January 1, 2022, the Company has completed approximately 6,366 metres of core drilling. During H1, 2022, the Company completed 5,648 metres of core drilling, with exploration and tight‐spaced variography drilling accounting for 4,146 metres and 1,502 metres, respectively.
INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
The 2022 MRE, reported on April 7, 2022, comprises:
The MRE includes the Eagle Mountain and Salbora deposits as well as the earlier‐stage Toucan and Powis prospects. Gold mineralization starts at surface in saprolite with the base of the saprolite marked by a narrow transition zone and extending into the underlying fresh rock. Overall, the saprolite and transition contain 35% of the gold in Indicated Resource and 24% in Inferred Resource.
The Indicated Resource, representing 67% of the gold in the 2022 MRE, is laterally extensive and generally shallow. At the Eagle Mountain deposit the Indicated Resource extends from surface to a maximum depth of 150 metres and has an average depth of 35 metres. 75% of the Indicated Resource is within 50 metres of surface. At the Salbora deposit the Indicated Resource extends from surface to a maximum depth of 156 metres and has an average depth of 49 metres, and 58% of the Indicated Resource is within 50 metres of the surface.
Pursuant to the Mining Act, the term of prospecting licenses is three years with two rights of renewal of one year each, for a total of five years. After five years, the license may be further renewed through submission of a new license application. The Company was granted all previous renewals and new license applications. The three‐year term for the EMPL is due to expire on October 18, 2022. In Q2, 2022, the Company submitted an application for the renewal of the existing license. On August 19, 2022, the Guyana Geology and Mines Commission approved the first one‐year renewal of the EMPL, which will expire on October 18, 2023.
Ann Mining Claim Option‐Purchase Agreement
On August 8, 2022, the Company and the optionor amended the terms of the option agreement to acquire 100% interest in the Ann Mining Claim, at the Minnehaha Creek area. Pursuant to the amended terms, the Company and the optionor agreed to extend the option period for two additional years, expiring on October 20, 2024, for a total additional consideration of US$40,000. All other terms of the agreement remain unchanged, including the right to terminate the agreement at any time without any further liabilities. The remaining payments are scheduled as follows:
During the six months ended June 30, 2022, corporate highlights include the following:
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GoldSource Mines Inc. published this content on 24 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 August 2022 21:57:01 UTC.