Foremost Lithium Resource & Technology (FMST) F-1/ARegistration statement (foreign) (amended)

As filed with the U.S. Securities and Exchange Commission on August 16, 2023

Registration No. 333-272028

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

AMENDMENT NO. 6 TO

FORM F-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

FOREMOST LITHIUM RESOURCE & TECHNOLOGY LTD.

(Exact name of Registrant as specified in its charter)

Not Applicable 

(Translation of Registrant’s Name into English)

2500-700 West Georgia Street

Vancouver, British Columbia V7Y 1B3 Canada

info@foremostlithium.com
(604) 330-8067

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Cogency Global Inc.

122 East 42^nd Street, 18^th Floor
New York, N.Y. 10168

(800) 221-0102
(Names, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

Up to 909,090 Common Share Units, Each Consisting of a Common Share and a Common Share Purchase Warrant

Up to 909,090 Pre-Funded Warrant Units, Each Consisting of a Pre-Funded Warrant to Purchase One Common Share and a Common Share Purchase Warrant

Foremost Lithium Resource & Technology Ltd. 

This is a firm commitment public offering of common shares of Foremost Lithium Resource & Technology Ltd. We are offering 909,090 common shares, and warrants (the “Common Share Purchase Warrants”) to purchase 909,090 common shares pursuant to this prospectus. Each whole Common Share Purchase Warrant is exercisable to purchase one common share at an exercise price of US$        , representing 125% of the public offering price of one common share unit, will be exercisable upon issuance and will expire five years from the date of issuance. The common shares and Common Share Purchase Warrants will be issued and sold to purchasers in the ratio of one-to-one. This prospectus also relates to the offering of the common shares issuable upon exercise of Common Share Purchase Warrants.

We are also offering to certain purchasers whose purchase of common shares in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common shares immediately following the consummation of this offering, the opportunity to purchase, if any such purchaser so chooses, pre-funded warrants (the “Pre-Funded Warrants”), in lieu of common shares that would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common shares. Each pre-funded warrant will be exercisable for one common share. The exercise price of each Pre-Funded Warrants will be US$0.01 per common share. The Pre-Funded Warrants will be immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. This offering also relates to the common shares issuable upon exercise of any Pre-Funded Warrants sold in this offering.

The common shares and the accompanying Common Share Purchase Warrants will be sold in units (each, a “Common Share Unit”) and the pre-funded warrants and the accompanying Common Share Purchase Warrants will be sold in units (each, a “Pre-Funded Warrant Unit” and, together with the common share units, the “Units”), with each Common Share Unit consisting of one common share and one Common Share Purchase Warrant to purchase one common share and each Pre-Funded Warrant Unit consisting of one pre-funded warrant and one Common Share Purchase Warrant to purchase one common share. For each Pre-Funded Warrant Unit we sell, the number of Common Share Units we are offering will be decreased on a one-for-one basis. The common shares, Pre-Funded Warrants, and Common Share Purchase Warrants will be immediately separable on issuance.

The estimated offering price for the Common Share Units is expected to be between US$5.00 and US$6.00 per Common Share Unit and for purposes of this registration statement, we have assumed a public offering price of US$5.50 per Common Share Unit (which is the midpoint of the estimated range of the public offering price). The purchase price of each Pre-Funded Warrant Unit will be equal to the price at which each Common Share Unit is sold to the public in this offering, minus US$0.01, and the exercise price of each Pre-Funded Warrant will be US$0.01 per common share.

The share and per share information in this prospectus, including in our historical financial statements and the notes thereto, unless otherwise noted, reflects the share consolidation of our outstanding common shares at a 1-for-50 ratio, which became effective at market open on July 5, 2023 (“Share Consolidation”).

In connection with this offering, we have filed an application to list our common shares and Common Share Purchase Warrants under the symbol “FMST” and “FMSTW”, respectively, on the Nasdaq Capital Market (“Nasdaq”). No assurance can be given that our application will be approved. If our application is not approved, we will not consummate this offering.

Our common shares are currently quoted under the symbol “FRRSF” on the OTCQB and under the symbol “FAT” on the Canadian Securities Exchange (“CSE”). On August 15, 2023, the last reported sale price for our common shares on the OTCQB was US$5.75 per share. At present, there is a very limited market for our common shares. The trading price of our common shares has been, and may continue to be, subject to wide price fluctuations in response to various factors, many of which are beyond our control, including those described in “Risk Factors.”

We are an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act of 2012, and as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”

Investing in our common shares involves a high degree of risk. See “Risk Factors” beginning on page 15 of this prospectus for a discussion of information that should be considered in connection with an investment in our common shares. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We have granted a 45-day option to the representative of the underwriters to purchase up to additional Common Share Units or Pre-Funded Warrant Units representing fifteen percent (15%) of the Units sold in the offering, solely to cover over-allotments, if any.

The underwriters expect to deliver the securities to purchasers on or about             , 2023.

ThinkEquity

The date of this prospectus is                            , 2023

FOREMOST LITHIUM’S SNOW LAKE PROJECTS                               

TABLE OF CONTENTS

Page

ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. Neither we, nor the underwriters have authorized anyone to provide you with different information. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus, or any free writing prospectus, as the case may be, or any sale of common shares.

For investors outside the United States: Neither we, nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common shares and the distribution of this prospectus outside the United States.

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information.

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. Certain market data and other statistical information contained in this prospectus are based on information from independent industry organizations, publications, surveys and forecasts. Some market data and statistical information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of the independent sources listed above, our internal research and our knowledge of the Canadian mining industry. While we believe such information is reliable, we have not independently verified any third-party information and our internal data has not been verified by any independent source.

Our reporting currency and our functional currency is the Canadian dollar. This prospectus contains conversions of Canadian dollars into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from Canadian dollars into U.S. dollars in this prospectus were made at a rate of C$1.3525 per US$1.00, the noon buying rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board in effect as of March 31, 2023. All amounts in this prospectus are expressed in Canadian dollars, except where otherwise indicated. References to “$” or “C$” is to Canadian dollars and references to “US$” are to U.S. dollars. References to quarters are to calendar quarters unless otherwise specified. 

SCIENTIFIC AND TECHNICAL INFORMATION

Cautionary Note Regarding Presentation of Mineral Reserve and Mineral Resource Estimates

Estimates of mineral resources and other disclosures in this prospectus regarding our mineral properties have been prepared in compliance with subpart 1300 of SEC Regulation S-K, or S-K 1300, or the SEC Mining Modernization Rules.

Certain of our disclosures outside this prospectus do not comply with the SEC Mining Modernization Rules, and instead are prepared in accordance with Canadian regulatory requirements, including Canada’s National Instrument 43-101, or NI 43-101. Prospective investors should be aware that there are differences between the SEC Mining Modernization Rules and NI 43-101, and therefore our disclosures outside this prospectus, which are not part of this prospectus, may differ from our disclosures in this prospectus. Our disclosures outside this prospectus are not part of this prospectus and should not be relied upon by prospective investors in connection with this offering.

In addition, certain Canadian foreign private issuers who file registration statements and reports with the SEC using the Canada-U.S. multi-jurisdictional disclosure system are exempt from the requirement to comply with the SEC Mining Modernization Rules. Should we become eligible for the multi-jurisdictional disclosure system, we may discontinue complying with the SEC Mining Modernization Rules and may begin complying only with NI 43-101, in which case our disclosures regarding our mineral properties may differ from disclosures made by similarly situated companies that are subject to the SEC Mining Modernization Rules.

We are an exploration-stage company and all of our mineral properties are exploration-stage properties. We have not declared mineral reserves on any of our properties. We have declared mineral resources on one of our properties, the Zoro Property.

Qualified Person Statement

Some scientific and technical information contained herein with respect to the Zoro Property is derived from the Initial Assessment titled “Technical Report on the Zoro Lithium Project, Snow Lake, Manitoba”, prepared for us by Mark A.F. Fedikow and Scott Zelligan with an effective date of March 31, 2023, a copy of which is an exhibit to this prospectus. We refer to this report herein as our S-K 1300 Report. The scientific and technical information related to the Zoro Property contained in the S-K 1300 Report and reproduced in this prospectus has been approved by Mark A.F. Fedikow and Scott Zeligan. All scientific and technical information regarding our mineral properties that is included in this prospectus, but not derived from our S-K 1300 Report, has been reviewed and approved by Mark A.F. Fedikow. Dr. Fedikow, P. Eng., P. Geo, is a “Qualified Person” within the meaning of S-K 1300. Dr. Fedikow holds Honors B.Sc. and M.Sc. degrees in geology, geophysics, and geochemistry from the University of Windsor (Canada) and a Ph.D. in exploration geochemistry from the School of Applied Geology, University of New South Wales in Sydney (Australia).

Dr. Fedikow currently serves as our Vice President of Exploration, and is, accordingly, one of our affiliates. He serves in that position as a consultant; he is not an employee of any company. He is not affiliated with any other entity that has any ownership, royalty or other interest in any of our properties. Mr. Zelligan, P. Geo, is also a Qualified Person within the meaning of S-K 1300. Mr. Zelligan has 15 years of experience in exploration, production, and resource estimation in both Canada and abroad. Mr. Zelligan is a professional geoscientist registered in the Province of Ontario. Mr. Zelligan is not an employee or affiliate of us. He is a self-employed, independent resource geologist. He is not affiliated with any other entity that has an ownership, royalty or other interest in the Zoro Property.

GLOSSARY OF MINING TERMS

The following is a glossary of certain mining terms that may be used in this prospectus.

RISK FACTORS

An investment in our common shares involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this prospectus, before purchasing our common shares. We have listed below (not necessarily in order of importance or probability of occurrence) what we believe to be the most significant risk factors applicable to us, but they do not constitute all of the risks that may be applicable to us. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section titled “Cautionary Statement Regarding Forward-Looking Statements.”

Risks Related to Our Business and Industry

We have a limited operating history and have not yet generated any revenues.

Our limited operating history makes evaluating our business and prospects difficult and may increase the risk of your investment. We were formed in 2005 and we have not yet begun commercial mining of lithium. To date, we have no revenues. We are in the exploration stage of our development with the potential to establish commercial operations still unknown and we do not expect to start generating revenues until the 2025, at the earliest. We intend to proceed with the development of the Lithium Lane Properties through economic and technical studies such as PEAs and PFSs and, provided the results are positive, through to a Feasibility Study and mine development. We intend to derive substantial revenues from becoming a strategic supplier of SC6 to producers of battery-grade LiOH that supply the growing electric vehicle and battery storage markets. Our planned exploration and development of mineral resources, primarily lithium, will require significant investment prior to commercial introduction and may never be successfully developed or commercially successful.

Our consolidated financial statements have been prepared on a going concern basis and our financial status creates a doubt about whether we will continue as a going concern.

Our consolidated financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. Our future operations are dependent upon the identification and successful completion of equity or debt financing and the achievement of profitable operations at an indeterminate time in the future. There can be no assurances that we will be successful in completing an equity or debt financing or in achieving or maintaining profitability. The consolidated financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should we be unable to continue as a going concern.

If we do not obtain additional financing, our business may be at risk, or the execution of our business plan may be delayed.

We have limited assets upon which to commence our business operations and to rely otherwise. As of March 31, 2023, we had cash of $574,587 (US$424,833). As of July 6, 2023, we had cash and cash equivalents of approximately $175,000 (US$129,390), based on unaudited information then available to management. During the years ended March 31, 2023 and 2022, we had a net income (loss) of $956,578 (US$707,266) and $(4,150,922), and we will need to seek additional funds in the future through debt financings or strategic alliances with third parties, either alone or in combination with equity financings to complete our lithium exploration initiatives. Additional funding will be needed to implement our business plan that includes various expenses such as continuing our mining exploration program, legal, operational set-up, general and administrative, marketing, employee salaries and other related start-up expenses. Obtaining additional funding will be subject to various factors, including general market conditions, investor acceptance of our business plan and ongoing results from our exploration efforts. These financings could result in substantial dilution to the holders of our common shares or require contractual or other restrictions on our operations or on alternatives that may be available to us. If we raise additional funds by issuing debt securities, these debt securities could impose significant restrictions on our operations. Any such required financing may not be available in amounts or on terms acceptable to us, and the failure to procure such required financing could have a material and adverse effect on our business, financial condition, and results of operations, or threaten our ability to continue as a going concern. 

We may not be able to acquire additional funds on acceptable terms, or at all. If we are unable to raise adequate funds, we may have to delay, reduce the scope of or eliminate some or all our planned exploration programs. If we do not have, or are not able to obtain, sufficient funds, we may be required to delay further exploration, development, or commercialization of our expected mineral resources, if and when verified. We also may have to reduce the resources devoted to our mining efforts or cease operations. Any of these factors could harm our operating results.

Our business is subject to operational risks that are generally outside of our control and could adversely affect our business.

Mineral mining sites, like the sites where our Lithium Lane Properties are located, by their nature are subject to many operational risks and factors that are generally outside of our control and could adversely affect our business, operating results, and cash flows. These operational risks and factors include the following:

Any one or more of these factors or other risks could cause us not to realize the anticipated benefits from our properties and could have a material adverse effect on our financial condition.

All of our business activities are now in the exploration stage and there can be no assurance that our exploration efforts will result in the commercial development of a lithium mine.

All our operations are at the exploration stage and there is no guarantee that any such activity will result in commercial production of lithium mineral deposits. Very limited drilling has been conducted on our Lithium Lane Properties to date, which makes the extrapolation of an S-K 1300 compliant indicated or inferred resource to an S-K 1300 probable or proven reserve and to commercial viability impossible without further drilling. We intend to engage in that additional exploratory drilling with proceeds from this offering, but we can provide no assurance of future success from our planned additional drilling program. The exploration for lithium deposits involves significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish proven mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration programs planned by us, or any future development programs will result in a profitable commercial mining operation. There is no assurance that our mineral exploration activities will result in any discoveries of commercial quantities of lithium. There is also no assurance that, even if commercial quantities of ore are discovered, a mineral property will be brought into commercial production. Whether a mineral deposit will be commercially viable depends on several factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted. Our long-term profitability will be in part directly related to the cost and success of our exploration programs and any subsequent development programs.

Our mineral resources may be significantly lower than expected.

We are in the exploration stage and our planned principal operations have not commenced. While we have declared an inferred mineral resource on our Zoro Property, inferred mineral resources have a great degree of uncertainty and cannot form the basis of a mineral reserve. There can be no assurance that our inferred mineral resources will ever be upgraded to a higher category of mineral resources. There is currently no commercial production on the Lithium Lane Properties, and we have not yet completed a PFS or Feasibility Study on any of our properties. You should not rely on the S-K 1300 Report as an indication that we will have successful commercial operations in the future. Even if we prove reserves on the Lithium Lane Properties, we cannot guarantee that we will be able to develop and market them, or that such production will be profitable.

Any inferred resource figures presented in this prospectus are estimates from the written reports of technical personnel and mining consultants who were contracted to assess the mining prospects. Resource estimates are a function of geological and engineering analyses that require us to forecast production costs, recoveries, and metals prices. The accuracy of such estimates depends on the quality of available data and of engineering and geological interpretation, judgment, and experience. Estimated inferred lithium resources may not be upgraded to measured or indicated or to probable or proved reserves, and any reserves may not be realized in actual production and our operating results may be negatively affected by inaccurate estimates. Additionally, resource estimates do not determine the economics of a mining project and even if an economic assessment is produced, we cannot guarantee that it will reflect positive economics for our mining resources or that we will be able to execute our plans to create an economically viable mining operation.

Our mineral resources described in our most recent S-K 1300 compliant inferred mineral resource report are only estimates and no assurance can be given that the anticipated tonnages and grades will be achieved, or that the indicated level of recovery will be realized.

We intend to continue exploration on our Lithium Lane Properties, and we may or may not acquire additional interests in other mineral properties. The search for mineral deposits as a business is extremely risky. We can provide investors with no assurance that exploration on our current properties, or any other property that we may acquire, will establish that any commercially exploitable quantities of mineral deposits exist. Additional potential problems may prevent us from discovering any mineral deposits. These potential problems include unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of viable lithium mineral deposits on our properties, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably, and investors may lose all their investment in our company.

We have no history of mineral production.

We are an exploration stage company and have no history of mining or refining mineral products from our properties. As such, any future revenues and profits are uncertain. There can be no assurance that our Lithium Lane Properties will be successfully placed into production, produce minerals in commercial quantities or otherwise generate operating earnings. Advancing projects from the exploration stage into development and commercial production requires significant capital and time and will be subject to further technical studies, permitting requirements and construction of mines, processing plants, roads and related works and infrastructure. We will continue to incur losses until mining-related operations successfully reach commercial production levels and generate sufficient revenue to fund continuing operations. There is no certainty that we will generate revenue from any source, operate profitably or provide a return on investment in the future.

Lithium mining and production is relatively new to the Province of Manitoba and the Snow Lake area.

If lithium resources on the Lithium Lane Properties are proven, we intend to work towards entering the production stage of our operations. This means that the processing of our spodumene will be conducted through a fully electrified process not using any fossil fuels to generate the electrical power needed to run our operations. Lithium mining and processing the pore to spodumene has occurred at the Tanco mine located northeast of Winnipeg. Locating the necessary experts and work force that are familiar with and trained in this mining process may be a challenge and our success may be hindered by the lack of historical familiarity with the processes and challenges faced in lithium mining and production.

Mineral exploration and development are subject to extraordinary operating risks. We currently do not insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources, which could have an adverse impact on us.

Exploration and mining operations generally involve a degree of risk. Our operations are subject to all of the hazards and risks normally encountered in the exploration, development and production of rare earth metals, including, without limitation, unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, personal injury or loss of life and damage to property and environmental damage, all of which may result in possible legal liability. Although we expect that adequate precautions to minimize risk will be taken, mining operations are subject to hazards such as fire, rock falls, geo-mechanical issues, equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability. The occurrence of any of these events could result in a prolonged interruption of our operations that would have a material adverse effect on our business, financial condition, results of operations and prospects.

The exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of a mineral deposit may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral resources and reserves, to develop metallurgical processes and to construct mining and processing facilities and infrastructure at a particular site. It is impossible to ensure that the exploration or development programs planned by us will result in a profitable commercial mining operation. Whether a mineral deposit will be commercially viable depends on several factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices that are highly cyclical, and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our company not receiving an adequate return on invested capital. There is no certainty that the expenditures made towards the search and evaluation of mineral deposits will result in the discovery of mineral resources or the development of commercial quantities of mineral reserves.

Our development projects have no operating history upon which to base estimates of future capital and operating costs. Mineral resource and reserve estimates and estimate of operating costs are, to a large extent, based upon the interpretation of geologic data obtained from drill holes and other sampling techniques, and feasibility studies, which derive estimates of capital and operating costs based upon anticipated tonnage and grades to be mined and processed, ground conditions, the configuration of the deposit, expected recovery rates of minerals from ore, estimated operating costs, and other factors. As a result, actual production, cash operating costs and economic returns could differ significantly from those estimated.

There are numerous risks associated with the development of the Lithium Lane Properties.

Our future success will largely depend upon our ability to successfully explore, develop, and manage the Lithium Lane Properties. Our success is dependent upon management’s ability to implement our strategy, to develop the project and to maintain ongoing lithium production from the mines that we expect to develop.

Development of the Lithium Lane Properties could be delayed, experience interruptions, incur increased costs or be unable to complete due to several factors, including but not limited to:

It is not uncommon for new mining developments to experience these factors during their exploration or development stages or during construction, commissioning, and production start-up, or indeed for such projects to fail as a result of one or more of these factors occurring to a material extent. There can be no assurance that we will complete the various stages of exploration and development necessary in order to achieve our strategy in the timeframe pre-determined by us or at all. Any of these factors may have a material adverse effect on our business, results of operations and activities, financial condition, and prospects.

We do not insure against all of the risks we face in our operations.

In general, where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions and limitations. We currently maintain insurance against certain risks including securities and general commercial liability claims and certain physical assets used in our operations, subject to exclusions and limitations; however, we do not maintain insurance to cover all the potential risks and hazards associated with our operations. We may be subject to liability for environmental, pollution or other hazards associated with our exploration, pre-extraction, and extraction activities, which we may not be insured against, which may exceed the limits of our insurance coverage or which we may elect not to insure against because of high premiums or other reasons. Furthermore, we cannot provide assurance that any insurance coverage we currently have will continue to be available at reasonable premiums or that such insurance will adequately cover any resulting liability.

Changes in technology and future demand may result in an adverse effect on our results of operation.

Currently lithium is a key metal used in batteries, including those used in electric vehicles. However, the technology pertaining to batteries, electric vehicles and energy creation and storage is changing rapidly and there is no assurance lithium will continue to be used to the same degree as it is now, or that it will be used at all. Any decline in the use of lithium -ion batteries or technologies utilizing such batteries may result in a material and adverse effect on our future profitability, results of operation and financial condition.

Our business operations are exposed to a high degree of risk associated with the mining industry.

Our business operations are exposed to a high degree of risk inherent in the mining sector. Risks which may occur during the exploration and development of mineral resources include environmental hazards, industrial accidents, equipment failure, import/customs delays, shortage or delays in installing and commissioning plant and equipment, metallurgical and other processing problems, seismic activity, unusual or unexpected formations, formation pressures, rock bursts, wall failure, cave ins or slides, burst dam banks, flooding, fires, explosions, power outages, opposition with respect to mining activities from individuals, communities, governmental agencies and non-governmental organizations, interruption to or the increase in costs of services, cave-ins and interruption due to inclement or hazardous weather conditions.

Commencement of mining can also reveal mineralization or geologic formations, including higher than expected content of other minerals that can be difficult to separate from rare earth metals, which can result in unexpectedly low recovery rates.

Such occurrences could cause damage to, or destruction of properties, personal injury or death, environmental damage, pollution, delays, increased production costs, monetary losses, and potential legal liabilities. Moreover, these factors may result in a mineral deposit, which has been mined profitably in the past to become unprofitable. They are also applicable to sites not yet in production and to expanded operations. Successful mining operations will be reliant upon the availability of processing and refining facilities and secure transportation infrastructure at the rate of duty over which we may have limited or no control. Any liabilities that we incur for these risks and hazards could be significant and the costs of rectifying the hazard may exceed our asset value.

Infrastructure required to carry on our business may be affected by unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure.

Exploitation of the Lithium Lane Properties will depend to a significant degree on adequate infrastructure. While developing our expected operations, assuming our exploration efforts will be successful, we may need to construct and support the construction of infrastructure, which includes permanent gas pipelines, water supplies, power, transport and logistics services which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure or any failure or unavailability in such infrastructure could materially adversely affect our operations, financial condition, and results of operations.

We may receive negative conclusions from further economic assessments.

The net proceeds from this offering will be used to, among other things, fund further exploration on the Lithium Lane Properties and for the continuation of the exploration work to establish the economic potential of the Lithium Lane Properties. Until such time as any further economic assessment is concluded, uncertainty will exist as to the economic viability of the Lithium Lane Properties. If any further economic assessments have negative conclusions, investors may lose some or all their investment.

We may not be able to obtain or renew licenses or permits that are necessary to our operations.

In the ordinary course of business, we will be required to obtain and renew governmental licenses or permits for exploration, development, construction, and commencement of mining at the Lithium Lane Properties. Obtaining or renewing the necessary governmental licenses or permits is a complex and time-consuming process involving public hearings and costly undertakings on the part of our company. The duration and success of our efforts to obtain and renew licenses or permits are contingent upon many variables not within our control, including the interpretation of applicable requirements implemented by the licensing and/or permitting authorities. We may not be able to obtain or renew licenses or permits that are necessary to our operations, including, without limitation, an exploitation license, or the cost to obtain or renew licenses or permits may exceed what we believe we can recover from the Lithium Lane Properties. Any unexpected delays or costs associated with the licensing or permitting process could delay the development or impede the operation of a mine, which could adversely impact our operations and profitability.

The Lithium Lane Properties may face indigenous land claims

The Lithium Lane Properties may now or in the future be the subject of indigenous land claims. The legal nature of land claims is a matter of considerable complexity. The impact of any such claim on our ownership interest in the Lithium Lane Properties cannot be predicted with any degree of certainty and no assurance can be given that a broad recognition of indigenous rights in the area in which the Lithium Lane Properties is located, by way of a negotiated settlement or judicial pronouncement, would not have an adverse effect on our operations. Even in the absence of such recognition, we may at some point be required to negotiate with and seek the approval of holders of such interests to facilitate exploration and development work on the Lithium Lane Properties, there is no assurance that we will be able to establish a practical working relationship with the indigenous groups in the area which would allow is to ultimately develop the Lithium Lane Properties.

Opposition to our mining and business activities could disrupt our business.

In recent years, governmental and non-governmental agencies, individuals, communities and courts have become more vocal and active with respect to their opposition to certain mining and business activities. This opposition may take on forms such as road blockades, applications for injunctions seeking work stoppages, refusals to grant access to lands or to sell lands on commercially viable terms, lawsuits for damages or to revoke or modify licenses and permits, issuances of unfavorable laws and regulations, and other rulings that could be contrary to our interests. In addition, these actions can occur in response to our activities or the activities of other unrelated entities. Opposition to our mining and business activities is beyond our control. Any such opposition may disrupt our business and may result in increased costs, which could have a material adverse effect on our business and financial condition

Volatility in lithium prices and lithium demand may make it commercially unfeasible for us to develop our Lithium Lane Properties.

The development of our Lithium Lane Properties is dependent on the continued growth of the lithium market, and the continued increased demand for lithium chemicals by emerging producers of electric vehicles and other users of Li-ion batteries. These producers and the related technologies are still under development and a continued sustained increase in demand is not certain. To the extent that such demand does not manifest itself, and the lithium market does not continue to grow, or existing producers increase supply to satisfy this demand, then our ability to develop our Lithium Lane Properties will be adversely affected. Our lithium exploration and development activities may be significantly adversely affected by volatility in the price of lithium. Mineral prices fluctuate widely and are affected by numerous factors beyond our control such as global and regional supply and demand, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, and the political and economic conditions of mineral-producing countries throughout the world. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our lithium activities not producing an adequate return on invested capital to be profitable or viable.

There can be no guarantee that our interest in the Lithium Lane Properties is free from any title defects.

We believe we have taken reasonable steps to ensure proper title to the Lithium Lane Properties exists. However, there can be no guarantee that our interest in the Lithium Lane Properties is free from any title defects, as title to mineral rights involves certain intrinsic risks due to the potential problems arising from the unclear conveyance history characteristic of many mining projects. There is also the risk that material contracts between us and relevant government authorities will be substantially modified to the detriment of us or be revoked. There can be no assurance that our rights and title interests will not be challenged or impugned by third parties.

Our mining operations are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals and other critical supplies.

Our exploration programs and possible future mining operations are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals, and other critical supplies. If we are unable to obtain the requisite critical supplies in time and at commercially acceptable prices or if there are significant disruptions in the supply of electricity, water or other inputs to the mine site, our business performance and results of operations may experience material adverse effects.

We may experience an inability to attract or retain qualified personnel.

Our success depends to a large degree upon our ability to attract, retain and train key management personnel, as well as other technical personnel. If we are not successful in retaining or attracting such personnel, our business may be adversely affected. Furthermore, the loss of our key management personnel could materially and adversely affect our business and operations.

As our business becomes more established, it will also be required to recruit additional qualified key financial, administrative, operations and marketing personnel. There will be no guarantee that we will be able to attract and keep such qualified personnel and if we are not successful, it could have a material and adverse effect on our business and results from operations.

Failure to comply with federal, provincial and/or local laws and regulations could adversely affect our business.

Our mining operations are subject to various laws and regulations governing exploration, development, production, taxes, labor standards and occupational health, mine safety, protection of endangered and protected species, toxic substances and explosives use, reclamation, exports, price controls, waste disposal and use, water use, forestry, land claims of local people, and other matters. This includes periodic review and inspection of the Lithium Lane Properties that may be conducted by applicable regulatory authorities.

Although the exploration activities on the Lithium Lane Properties have been and, we expect, will continue to be carried out in accordance with all applicable laws and regulations, there is no guarantee that new laws and regulations will not be enacted or that existing laws and regulations will not be applied in a way which could limit or curtail exploration or in the future, production. New laws and regulations or amendments to current laws and regulations governing the operations and activities of mining or more stringent implementation of existing laws and regulations could have a material adverse effect on us and cause increases in capital expenditures costs, or reduction in levels of exploration, development and/or production.

Failure to comply with applicable laws and regulations, even if inadvertent, may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. We may also be required to reimburse any parties affected by loss or damage caused by our mining activities and may have civil or criminal fines and/or penalties imposed against us for infringement of applicable laws or regulations.

Failure to comply with environmental regulation could adversely affect our business.

All phases of our operations with respect to the Lithium Lane Properties will be subject to environmental regulation. Environmental legislation involves strict standards and may entail increased scrutiny, fines and penalties for non-compliance, stringent environmental assessments of proposed projects and a high degree of responsibility for companies and their officers, directors, and employees. Changes in environmental regulation, if any, may adversely impact our operations and future potential profitability. In addition, environmental hazards may exist on the Lithium Lane Properties that are currently unknown. We may be liable for losses associated with such hazards or may be forced to undertake extensive remedial cleanup action or to pay for governmental remedial cleanup actions, even in cases where such hazards have been caused by previous or existing owners or operators of the properties, or by the past or present owners of adjacent properties or by natural conditions. The costs of such cleanup actions may have a material adverse impact on our operations and future potential profitability.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations as well as environmental laws.

We currently report our financial results under IFRS, which differs in certain significant respect from U.S. generally accepted accounting principles.

We report our consolidated financial statements under IFRS. There have been and there may in the future be certain significant differences between IFRS and United States generally accepted accounting principles, or U.S. GAAP, including differences related to revenue recognition, intangible assets, share-based compensation expense, income tax and earnings per share. As a result, our financial information and reported earnings for historical or future periods could be significantly different if they were prepared in accordance with U.S. GAAP. In addition, we do not intend to provide a reconciliation between IFRS and U.S. GAAP unless it is required under applicable law. As a result, you may not be able to meaningfully compare our consolidated financial statements under IFRS with those companies that prepare consolidated financial statements under U.S. GAAP.

Foreign currency fluctuations could affect our profitability and the value of our assets and shareholders’ equity.

Our operations are subject to foreign currency fluctuations. Our future revenues are primarily in U.S. dollars, while some of our operating expenses and cash balances expenses are measured in Canadian dollars. The fluctuation of the Canadian dollar in relation to the U.S. dollar will consequently have an impact upon our profitability and may also affect the value of our assets and shareholders’ equity.

Our assets and operations are subject to economic, geopolitical, and other uncertainties.

Economic, geopolitical, and other uncertainties may negatively affect our business. Economic conditions globally are beyond our control. In addition, the outbreak of hostilities and armed conflicts between countries can create geopolitical uncertainties that may affect both local and global economies. Downturns in the economy or geopolitical uncertainties may cause future customers to delay or cancel projects, reduce their overall capital or operating budgets, or reduce or cancel orders which could have a material adverse effect on our business, results of operations and financial condition.

Our operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral rights, could result in loss, reduction, or expropriation of entitlements.

In addition, the financial markets can experience significant price and value fluctuations that can affect the market prices of equity securities and other companies in ways that are unrelated to the operating performance of these companies. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of our common shares.

Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on our business.

Several governments or governmental bodies have introduced or are contemplating legislative and/or regulatory changes in response to concerns about the potential impact of climate change. New legislation and increased regulation regarding climate change could potentially impose significant costs on us, and on our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs necessary to comply with such regulations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the emotional and political significance and uncertainty surrounding the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will ultimately affect our financial condition, operating performance, and ability to compete. Furthermore, even without such regulation, increased awareness, and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations are highly uncertain, could be particular to the geographic circumstances in areas in which we operate and may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels, and changing temperatures. These impacts may adversely impact the cost, production, and financial performance of our operations.

As we face intense competition in the mineral exploration and exploitation industry, there can be no assurance that we will be able to compete effectively with other companies.

The mining industry and lithium mining sector is very competitive. Our competition is from larger, established mining companies with greater liquidity, greater access to credit and other financial resources, newer or more efficient equipment, lower cost structures, more effective risk management policies and procedures and/or a greater ability than us to withstand losses. Our competitors may be able to respond more quickly to new laws or regulations or emerging technologies or devote greater resources to the expansion or efficiency of their operations than we can. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties. Accordingly, it is possible that new competitors or alliances among current and new competitors may emerge and gain significant market share to our detriment.

As a result of this competition, we may have to compete for financing and be unable to acquire financing on terms we consider acceptable. We may also have to compete with the other mining companies for the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees or we may not be able to compete successfully against current and future competitors, and any failure to do so could have a material adverse effect on our business, financial condition, results of operations and prospects as well as our exploration programs may be slowed down or suspended, which may cause us to cease operations as a company.

We may be subject to potential conflicts of interest.

We may be subject to potential conflicts of interests, as certain directors of our company are, and may continue to be, engaged in the mining industry through their participation in corporations, partnerships, or joint ventures, which are potential competitors of our company. Situations may arise in connection with potential acquisitions in investments where the other interests of these directors and officers may conflict with the interests of our company. Our directors and officers with conflicts of interest will be subject to the procedures set out in the related Canadian law and regulations.

We may not meet cost estimates.

A change in the timing of any projected cash flows due to capital funding or, once in production, production shortfalls or labor disruptions would result in delays in receipt of such cash flows and in using such cash to fund operating activities and, as applicable, reduce debt levels. This could result in additional loans to finance capital expenditures in the future.

The level of capital and operating cost estimates which are used for determining and obtaining financing and other purposes are based on certain assumptions and are fundamentally subject to considerable uncertainties. It is very likely that actual results for the Lithium Lane Properties will differ from our current projections, estimates and assumptions, and these differences may be significant. Moreover, experience from actual mining may identify new or unexpected conditions that could decrease operational activities, and/or increase capital and/or operating costs above, the current estimates. If actual results are less favorable than we currently estimate, our business, results from operations, financial condition and liquidity could be materially adversely affected.

We may pursue opportunities to acquire complementary businesses, which could dilute our shareholders’ ownership interests, incur expenditure, and have uncertain returns.

We may seek to expand through future acquisitions of either companies or properties. Future acquisitions may require us to expend significant amounts of cash, resulting in our inability to use these funds for other business or may involve significant issuances of equity. Future acquisitions may also require substantial management time commitments, and the negotiation of potential acquisitions and the integration of acquired operations could disrupt our business by diverting management and employees’ attention away from day-to-day operations. The difficulties of integration may be increased by the necessity of coordinating geographically diverse organizations, integrating personnel with disparate backgrounds, and combining different corporate cultures.

Any future acquisition involves potential risks, including, among other things: (i) mistaken assumptions and incorrect expectations about mineral properties, mineral resources and costs; (ii) an inability to successfully integrate any operation our company acquires; (iii) an inability to recruit, hire, train or retain qualified personnel to manage and operate the operations acquired; (iv) the assumption of unknown liabilities; (v) limitations on rights to indemnity from the seller; (vi) mistaken assumptions about the overall cost of equity or debt; (vii) unforeseen difficulties operating acquired projects, which may be in geographic areas new to us; and (viii) the loss of key employees and/or key relationships at the acquired project.

At times, future acquisition candidates may have liabilities or adverse operating issues that we may fail to discover through due diligence prior to the acquisition. If we consummate any future acquisitions with unanticipated liabilities or that fails to meet expectations, our business, results of operations, cash flows or financial condition may be materially adversely affected. The potential impairment or complete write-off of goodwill and other intangible assets related to any such acquisition may reduce our overall earnings and could negatively affect our balance sheet.

Legal proceedings may arise from time to time.

Legal proceedings may arise from time to time. Such litigation may be brought from time to time in the future against us. Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Other than as disclosed elsewhere in this prospectus, we are not currently subject to material litigation, nor have we received an indication that any material claims are forthcoming. However, due to the inherent uncertainty of the litigation process, we could become involved in material legal claims or other proceedings with other parties in the future. The results of litigation or any other proceedings cannot be predicted with certainty. The cost of defending such claims may take away from management’s time and effort and if we are incapable of resolving such disputes favorably, the resultant litigation could have a material adverse impact on our financial condition, cash flow and results from operation.

Land reclamation requirements may be burdensome.

Land reclamation requirements are generally imposed on companies with mining operations or mineral exploration companies to minimize long-term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents or reasonably re-establish pre-disturbance landforms and vegetation. To carry out reclamation obligations imposed on us in connection with exploration, potential development, and production activities, we must allocate financial resources that might otherwise be spent on exploration and development programs. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.

If key personnel leave our company, we would be harmed since we are heavily dependent upon them for all aspects of our activities.

We are heavily dependent on our officers and directors, the loss of whom could have, in the short-term, a negative impact on our ability to conduct our activities and could cause additional costs from a delay in the exploration and development of our Lithium Lane Properties.

The obligations associated with being a public company will require significant resources and management attention, and we will incur increased costs because of becoming a public company.

As a public company, we will face increased legal, accounting, administrative and other costs and expenses that we have not incurred as a private company, and we expect to incur additional costs related to operating as a public company. After the completion of this offering, we will be subject to the reporting requirements of the Exchange Act, which requires that we file annual and other reports with respect to our business and financial condition, as well as the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Public Company Accounting Oversight Board, and the listing requirements of Nasdaq (if our common shares are approved for listing), each of which imposes additional reporting and other obligations on public companies. As a public company, we will be required to, among other things:

We expect these rules and regulations, and any future changes in laws, regulations and standards relating to corporate governance and public disclosure, which have created uncertainty for public companies, to increase legal and financial compliance costs and make some activities more time consuming and costly. These laws, regulations and standards are subject to varying interpretations, in many cases, due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Our investment in compliance with existing and evolving regulatory requirements will result in increased administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities, which could have a material adverse effect on our business, financial condition and results of operations.

We also expect that being a public company will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These increased costs may require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.

We are subject to global economic risks.

In the event of a general economic downturn or a recession, there can be no assurance that our business, financial condition, and results of operations would not be materially adversely affected. Moreover, the occurrence of unforeseen or extended catastrophic events, including the COVID-19 pandemic, and the emergence of a future pandemic or other widespread health emergency (or concerns over the possibility of such an emergency), could create economic and financial disruptions. These types of challenges can impact commodity prices, including for lithium, as well as currencies and global debt and stock markets. As a result of the ongoing COVID-19 pandemic, or in the case of a future pandemic or other widespread health emergency, quarantine or other requirements or circumstances may require the Company to change the way it conducts its business and operations, including require the Company to reduce or cease operations at some or all its facilities for an indeterminate period. Furthermore, our critical supply chains may similarly be disrupted for an indeterminate amount of time. All these factors could have a material impact on the Company’s business, operations, personnel and financial condition.

These types of challenges may impact our ability to obtain equity, debt, or other financing on terms commercially reasonable to us, or at all. Additionally, these types of factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. If these types of challenges occur, or if there is a material deterioration in general business and economic conditions, our operations could be adversely impacted, and the trading price of our securities could be adversely affected.

The Company’s business financial condition and results of operations may be further negatively affected by economic and other consequences from Russia’s military action against Ukraine and the sanctions imposed in response to that action in late February 2022. While the Company expects that any direct impacts of the pandemic and the war in the Ukraine will be limited, the indirect impacts on the economy and on the mining industry and other industries in general could negatively affect our business and may make it more difficult for us to raise equity or debt financing. There can be no assurance that the Company will not be impacted by future adverse consequences that may be brought about on its business, results of operations, financial position, and cash flows in the future.

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:

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.

Risks Related to This Offering and Ownership of Our Common Shares and Common Share Purchase Warrants

An active trading market for our common shares and Common Share Purchase Warrants may never develop or be sustained.

We have applied to list our common shares and Common Share Purchase Warrants on Nasdaq. However, currently, in the United States, our common shares trade on the OTCQB. The OTCQB is an inter-dealer, over-the-counter market that provides significantly less liquidity than other national or regional exchanges. Securities traded on the OTCQB are usually thinly traded, highly volatile, have fewer market makers and are not followed by analysts. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTCQB. Quotes for stocks listed on the OTCQB are not listed in newspapers. Therefore, prices for securities traded solely on the OTCQB may be difficult to obtain and holders of our securities may be unable to resell their securities at or near their original acquisition price, or at any price.

We cannot predict at what prices our common shares or Common Share Purchase Warrants will trade and there can be no assurance that an active trading market will develop or be sustained. Commencing on December 12, 2011, our common shares began trading on the CSE. We have not developed other liquidity on this exchange, and we cannot guarantee that we will do so in the future. There is a significant liquidity risk associated with an investment in the Company.

We cannot assure you that an active trading market for our common shares or Common Share Purchase Warrants will develop on Nasdaq or elsewhere or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our common shares or Common Share Purchase Warrants will develop or be maintained, the liquidity of any trading market, your ability to sell our common shares or Common Share Purchase Warrants when desired, or the prices that you may obtain for your common shares or Common Share Purchase Warrants.

The market price of our common shares and Common Share Purchase Warrants may fluctuate, and you could lose all or part of your investment.

After this offering, the market price for our common shares and Common Share Purchase Warrants is likely to be volatile, in part because our shares have not been traded publicly on Nasdaq. In addition, the market price of our common shares and Common Share Purchase Warrants may fluctuate significantly in response to several factors, most of which we cannot control, including:

The public offering price of Units has been determined by negotiations between us and the underwriters based upon many factors and may not be indicative of prices that will prevail following the closing of this offering. Volatility in the market price of our common shares and Common Share Purchase Warrants may prevent investors from being able to sell their common shares or Common Share Purchase Warrants at or above the public offering price. As a result, you may suffer a loss on your investment.

The price of our common shares and Common Share Purchase Warrants could be subject to rapid and substantial volatility. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common shares.

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with a relatively small public float, we may experience greater share price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization companies. In particular, our common shares and Common Share Purchase Warrants may be subject to rapid and substantial price volatility, low volumes of trades, and large spreads in bid and ask prices. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common shares.

In addition, if the trading volumes of our common shares or Common Share Purchase Warrants are low, persons buying or selling in relatively small quantities may easily influence the price of our common shares. This low volume of trades could also cause the price of our common shares or Common Share Purchase Warrants to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our common shares or Common Share Purchase Warrants may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our common shares or Common Share Purchase Warrants. As a result of this volatility, investors may experience losses on their investment in our common shares or Common Share Purchase Warrants. A decline in the market price of our common shares or Common Share Purchase Warrants also could adversely affect our ability to issue additional common shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our common shares or Common Share Purchase Warrants will develop or be sustained. If an active market does not develop, holders of our common shares or Common Share Purchase Warrants may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

We may not be able to satisfy listing requirements of the Nasdaq Capital Market or obtain or maintain a listing of our common shares or Common Share Purchase Warrants.

If our common shares and Common Share Purchase Warrants are listed on the Nasdaq Capital Market, we must meet certain financial and liquidity criteria to maintain such listing. If we violate Nasdaq listing requirements, our common shares or Common Share Purchase Warrants may be delisted. If we fail to meet any of Nasdaq’s listing standards, our common shares or Common Share Purchase Warrants may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on Nasdaq outweighs the benefits of such listing. A delisting of our common shares or Common Share Purchase Warrants may materially impair our shareholders’ ability to buy and sell our common shares or Common Share Purchase Warrants and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common shares or Common Share Purchase Warrants. The delisting of our common shares or Common Share Purchase Warrants could significantly impair our ability to raise capital and the value of your investment.

We have considerable discretion as to the use of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.

The proceeds from this offering are to be used for resource development activities, technical studies and reports, general corporate purposes, and general business expenses. However, we have considerable discretion in the application of the proceeds. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate or other purposes with which you do not agree or that do not improve our profitability or increase our share price. The net proceeds from this offering may also be placed in investments that do not produce income or that lose value. Please see “Use of Proceeds” below for more information.

You will experience immediate and substantial dilution because of this offering.

As of March 31, 2023, our net tangible book value was approximately $(2,909,922) (US$(2,151,513)), or approximately $(0.73) (US$(0.54)) per share taking into account the Share Consolidation of 1-for-50 on July 5, 2023. Since the effective price per share of our common shares being offered in this offering is substantially higher than the net tangible book value per share, you will suffer substantial dilution with respect to the net tangible book value of the common shares you purchase in this offering. Based on the assumed public offering price of US$5.50 per share being sold in this offering forth on the cover page of this prospectus, and our net tangible book value per share as of March 31, 2023, if you purchase shares in this offering, you will suffer immediate and substantial dilution of US$4.31 per share US$4.15 per share if the underwriters exercise the over-allotment option in full) with respect to the net tangible book value of the common shares. See the section titled “Dilution” for a more detailed discussion of the dilution you will incur if you purchase shares in this offering. 

The Share Consolidation could cause our stock price to decline relative to its value before the split and decrease the liquidity of our common shares.

We effected a Share Consolidation of our issued and outstanding common shares on July 5, 2023 in order to achieve a sufficient increase in our stock price to enable us to qualify for listing on the Nasdaq Capital Market. There is no assurance that that the Share Consolidation will not cause an actual decline in the value of our outstanding common shares. The liquidity of our common shares may be affected adversely by the Share Consolidation given the reduced number of shares that will be outstanding following the Share Consolidation, especially if the market price of our common shares does not increase as a result of the Share Consolidation. In addition, the Share Consolidation may increase the number of stockholders who own odd lots (less than 100 shares) of our common shares, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

Following the Share Consolidation, we cannot assure you that we will be able to comply with listing standards of the Nasdaq Capital Market.

We have applied to list our common shares on the Nasdaq Capital Market in connection with this offering. Following the Share Consolidation, we expect that our common shares will be eligible to be quoted on the Nasdaq Capital Market. For our common shares to be so listed, we must meet the current listing standards of the Nasdaq Capital Market, including the minimum bid price requirement. There can be no assurance that the market price of our common shares following the Share Consolidation will remain at the level required for continuing compliance with the minimum bid price requirement of the Nasdaq Capital Market. It is not uncommon for the market price of a company’s common shares to decline in the period following a Share Consolidation. If the market price of our common shares declines following the Share Consolidation, the percentage decline may be greater than would occur in the absence of the Share Consolidation. In addition, other factors unrelated to the number of shares of our common shares outstanding, such as negative financial or operational results, could adversely affect the market price of our common shares and jeopardize our ability to meet or maintain the minimum bid price requirement of the Nasdaq Capital Market. If we fail to comply with the minimum bid price requirement, our securities could be delisted. 

In addition to the minimum bid price requirement of the Nasdaq Capital Market initial listing standards, we cannot assure you that we will be able to comply with the other standards that we are required to meet in order to maintain a listing of our common shares on the Nasdaq Capital Market. For example, we may lose an independent director on our Audit Committee, who cannot readily be replaced. Our failure to meet these requirements may result in our common shares sold in this offering being delisted from the Nasdaq Capital Market, irrespective of our compliance with the minimum bid price requirement.

If our common shares were to be delisted from the Nasdaq Capital Market, our common shares could revert to trading on the OTCQB Market or another over-the-counter platform following any delisting from Nasdaq Capital Market. Any such delisting of our common shares could have an adverse effect on the market price of, and the efficiency of the trading market for, our common shares, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and less coverage of us by securities analysts, if any. Also, as we are seeking additional equity capital, it could have an adverse effect on our ability to raise capital in the public or private equity markets.

We do not expect to declare or pay dividends in the foreseeable future.

We do not expect to declare or pay dividends in the foreseeable future as we anticipate that all cash will be used to grow our business. Therefore, holders of our common shares will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common shares could be negatively affected.

Any trading market for our common shares may be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our common shares could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our shares, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our common shares could be negatively affected.

The sale of shares by our directors and senior officers may adversely affect the market price for our shares.

Sales of significant amounts of common shares held by our senior officers and directors, or the prospect of these sales, could adversely affect the market price of our common shares. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.

Our common shares and Common Share Purchase Warrants may be traded infrequently and in low volumes, which may negatively affect the ability to sell shares or warrants.

Our common shares and Common Share Purchase Warrants may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares or Common Share Purchase Warrants at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community who can generate or influence sales volume, and that even if we came to the attention of such institutionally oriented persons, they tend to be risk-averse in this environment and would be reluctant to follow an early stage company such as ours or purchase or recommend the purchase of our shares until such time as we became more advanced and viable. Consequently, there may be periods of several days or more when trading activity in our shares or Common Share Purchase Warrants is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common shares or Common Share Purchase Warrants will develop or be sustained. Due to these conditions, we can give you no assurance that you will be able to sell your shares or Common Share Purchase Warrants at or near bid prices or at all if you need money or otherwise desire to liquidate your shares or Common Share Purchase Warrants. Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded in the over-the-counter market. These factors may have an adverse impact on the trading and price of our securities and could result in the loss by investors of all or part of their investment.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions against us or our management named in the prospectus based on foreign laws.

We are incorporated in the Province of British Columbia, Canada under The Corporations Act (British Columbia). We conduct our operations outside the United States and substantially all of our assets are located outside the United States. In addition, many of our directors and executive officers and the experts named in this prospectus reside outside the United States, and a significant amount of their assets are located outside the United States. As a result, service of process upon such persons may be difficult or impossible to effect within the United States. Furthermore, because a substantial portion of our assets, and substantially all the assets of our directors and officers and the Canadian experts named herein, are located outside of the United States, any judgment obtained in the United States, including a judgment based upon the civil liability provisions of United States federal securities laws, against us or any of such persons may not be collectible within the United States. In Canada, provincial and territorial reciprocal enforcement of judgments legislation sets out the procedure for registering foreign judgments and this procedure varies depending on the province or territory of the enforcing court. If a foreign judgment originates from a jurisdiction not captured by the applicable provincial or territorial reciprocal enforcement of judgments or enforcement of foreign judgments legislation, the foreign judgment may be capable of enforcement at common law and the party seeking to enforce the foreign judgment must commence new proceedings in the domestic or enforcing court. For more information regarding the relevant laws of Canada, see “Enforceability of Civil Liabilities.”

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

Upon the completion of this offering, we will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of Nasdaq Press releases relating to financial results. Material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

As a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of our shares.

We are exempted from certain corporate governance requirements of Nasdaq by virtue of being a foreign private issuer. As a foreign private issuer, we are permitted to follow the governance practices of our home country in lieu of certain corporate governance requirements of Nasdaq. As result, the standards applicable to us are considerably different than the standards applied to domestic U.S. issuers. For instance, we are not required to:

Although we do not currently intend to rely on these “home country” exemptions, we may rely on some of these exemptions in the future. As a result, our shareholders may not be provided with the benefits of certain corporate governance requirements of Nasdaq.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on September 30, 2023. 

In the future, we would lose our foreign private issuer status if, among others, (1) more than 50% of our outstanding voting securities, which we intend to determine based on the voting power of our common shares and high voting shares on a combined basis are directly or indirectly held of record by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, more than 50% of our assets are located in the United States or our business is administered principally in the United States. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms including consolidated financial statements prepared under US GAAP, and which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer. These expenses would relate to, among other things, the obligation to present our financial information in accordance with U.S. GAAP in the future. Additionally, a loss of our foreign private issuer status would divert our management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Future issuances of our common shares or securities convertible into, or exercisable or exchangeable for, our common shares, or the expiration of lock-up agreements that restrict the issuance of new common shares or the trading of outstanding common shares, could cause the market price of our common shares to decline and would result in the dilution of your holdings.

Future issuances of our common shares or securities convertible into, or exercisable or exchangeable for, our common shares, or the expiration of lock-up agreements that restrict the issuance of new common shares or the trading of outstanding common shares, could cause the market price of our common shares to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our common shares. In all events, future issuances of our common shares would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lockups expire, could adversely affect the market price of our common shares. In connection with this offering, we will enter into a lock-up agreement that prevents us, subject to certain exceptions, from offering additional shares for up to 180 days from the commencement of the sale of this offering, as further described in the section titled “Underwriting.” In addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements may be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, our common shares may become available for resale, subject to applicable law, including without notice, which could reduce the market price for our common shares.

Future issuances of debt securities, which would rank senior to our common shares upon our bankruptcy or liquidation, and future issuances of preferred shares, which could rank senior to our common shares for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common shares.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our common shares. Moreover, if we issue preferred shares, the holders of such preferred shares could be entitled to preferences over holders of common shares in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred shares in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our common shares must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our common shares.

We expect to be a “passive foreign investment company”, which may have adverse U.S. federal income tax consequences for U.S. investors.

We believe we were a “passive foreign investment company” (a “PFIC”) within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) for our most recently completed taxable year and based on the nature of our business, the projected composition of our gross income and the projected composition and estimated fair market values of our assets, we expect to be a PFIC for our current taxable year and may be a PFIC in subsequent tax years. If we are a PFIC for any year during a U.S. taxpayer’s holding period of common shares, Pre-Funded Warrants, Common Share Purchase Warrants, or Warrant Shares (as defined below under the heading “Material United States and Canadian Income Tax Considerations — U.S. Federal Income Taxation Considerations”), then such U.S. taxpayer generally will be required to treat any gain realized upon a disposition of the common shares, Pre-Funded Warrants, Common Share Purchase Warrants, or Warrant Shares or any so-called ‘‘excess distribution’’ received on its common shares, Pre-Funded Warrants or Warrant Shares as ordinary income, and to pay an interest charge on a portion of such gain or distribution. In certain circumstances, the sum of the tax and the interest charge may exceed the total amount of proceeds realized on the disposition, or the amount of excess distribution received, by the U.S. taxpayer. Subject to certain limitations, these tax consequences may be mitigated if a U.S. taxpayer makes a timely and effective QEF Election (as defined below) with respect to the common shares, Pre-Funded Warrants and Warrant Shares or a Mark-to-Market Election (as defined below) with respect to the common shares and Warrant Shares. A U.S. taxpayer generally may not make a QEF Election with respect to the Common Share Purchase Warrants or a Mark-to-Market Election with respect to the Pre-Funded Warrants or Common Share Purchase Warrants. In addition, U.S. taxpayers should be aware that there can be no assurances that we will satisfy the record keeping requirements that apply to a QEF (as defined below), or that we will supply U.S. taxpayers with information that such U.S. taxpayers are required to report under the QEF rules, in the event that we are a PFIC. Thus, U.S. Holders may not be able to make a QEF Election with respect to their common shares, Pre-Funded Warrants and Warrant Shares. A U.S. taxpayer who makes a Mark-to-Market Election generally must include as ordinary income each year the excess of the fair market value of the common shares or Warrant Shares over the taxpayer’s basis therein. Each potential investor who is a U.S. taxpayer should review the discussion below under the heading “Material United States and Canadian Income Tax Considerations — U.S. Federal Income Taxation Considerations — Passive Foreign Investment Company Rules” in its entirety and should consult its own tax advisor regarding the tax consequences of the PFIC rules and the acquisition, ownership, and disposition of the common shares, Pre-Funded Warrants, Common Share Purchase Warrants, and the Warrant Shares.

Proposed legislation in the U.S. Congress, including changes in U.S. tax law, and the Inflation Reduction Act of 2022 may adversely impact us and the value of the common shares, Pre-Funded Warrants, Common Share Purchase Warrants and Warrant Shares.

Changes to U.S. tax laws (which changes may have retroactive application) could adversely affect us or holders of the common shares, Pre-Funded Warrants, Common Share Purchase Warrants and Warrant Shares. In recent years, many changes to U.S. federal income tax laws have been proposed and made, and additional changes to U.S. federal income tax laws are likely to continue to occur in the future.

The U.S. Congress is currently considering numerous items of legislation which may be enacted prospectively or with retroactive effect, which legislation could adversely impact our financial performance and the value of the common shares, Pre-Funded Warrants, Common Share Purchase Warrants and Warrant Shares. Additionally, states in which we operate or own assets may impose new or increased taxes. If enacted, most of the proposals would be effective for the current or later years. The proposed legislation remains subject to change, and its impact on us and purchasers of the common shares, Pre-Funded Warrants, Common Share Purchase Warrants and Warrant Shares is uncertain.

In addition, the Inflation Reduction Act of 2022 includes provisions that will impact the U.S. federal income taxation of corporations. Among other items, this legislation includes provisions that will impose a minimum tax on the book income of certain large corporations and an excise tax on certain corporate stock repurchases that would be imposed on the corporation repurchasing such stock. It is unclear how this legislation will be implemented by the U.S. Department of the Treasury and we cannot predict how this legislation or any future changes in tax laws might affect us or purchasers of the common shares, Pre-Funded Warrants, Common Share Purchase Warrants and Warrant Shares.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common shares less attractive to investors.

Upon the completion of this offering, we will qualify as an “emerging growth company” under the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our consolidated financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our common shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Because we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our common shares less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common shares.

There may be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions by the SEC.

We are exposed to potential risks from legislation requiring companies to evaluate internal controls under Section 404A of the Sarbanes-Oxley Act of 2002. As an emerging growth company, we will not be required to provide a report on the effectiveness of our internal controls over financial reporting until our second annual report, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are an emerging growth company. We have not yet evaluated whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such evaluations. If we are not able to meet the requirements of Section 404a in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.

There is no public market for the Pre-Funded Warrants being offered by us in this offering.

There is no established public trading market for the Pre-Funded Warrants and we do not expect a market to develop. In addition, we do not intend to apply to list the Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system, including the OTCQB, CSE, or Nasdaq. Without an active market, the liquidity of the Pre-Funded Warrants will be limited, which may adversely affect their value.

Holders of Pre-Funded Warrants or Common Share Purchase Warrants purchased in this offering will have no rights as common shareholders until such holders exercise their Pre-Funded Warrants or Common Share Purchase Warrants and acquire our common shares.

Until holders of Pre-Funded Warrants or Common Share Purchase Warrants acquire our common shares upon exercise thereof, such holders will have no rights with respect to our common shares underlying the Pre-Funded Warrants and Common Share Purchase Warrants. Upon exercise of the Pre-Funded Warrants or Common Share Purchase Warrants, the holders will be entitled to exercise the rights of a common shareholder only as to matters for which the record date occurs after the exercise date.

The Common Share Purchase Warrants and Pre-Funded Warrants are speculative in nature.

The Common Share Purchase Warrants and Pre-Funded Warrants do not confer any rights of common share ownership on its holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire common shares at a fixed price for a limited period of time. Following this offering, the market value of the Common Share Purchase Warrants and Pre-Funded Warrants, if any, is uncertain and there can be no assurance that the market value of the Common Share Purchase Warrants and Pre-Funded Warrants will equal or exceed their imputed offering price. The Common Share Purchase Warrants and Pre-Funded Warrants will not be listed or quoted for trading on any market or exchange. There can be no assurance that the market price of the common shares will ever equal or exceed the exercise price of the Common Share Purchase Warrants and Pre-Funded Warrants, and consequently, it may not ever be profitable for holders of the Common Share Purchase Warrants and Pre-Funded Warrants to exercise the Common Share Purchase Warrants or the Pre-Funded Warrants.

The form of Common Share Purchase Warrant and the form of Pre-Funded Warrant designate the state and federal courts sitting in the City of New York, Borough of Manhattan as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of Common Share Purchase Warrants or Pre-Funded Warrants, as the case may be. The warrant agency agreement designates that disputes relating to such agreement may be litigated in courts located within the Borough of Manhattan in the City of New York. In all three instances, the forum provisions could limit the ability of holders of Common Share Purchase Warrants and Pre-Funded Warrants, as applicable, to obtain a favorable judicial forum for disputes with the Company.

The form of Common Share Purchase Warrant and form of Pre-Funded Warrant provide that (i) legal proceedings concerning the interpretation, enforcement and defense of the Common Share Purchase Warrant and Pre-Funded Warrant, as applicable, will be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan and (ii) that the parties thereto irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. The warrant agency agreement entered into with Continental Stock Transfer & Trust (the “Warrant Agency Agreement”) provides that actions and proceedings relating to or arising from, directly or indirectly, the Warrant Agency Agreement may be litigated in courts located within the Borough of Manhattan in the City and State of New York.

Notwithstanding the foregoing, these provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act, Exchange Act or any other claim for which the federal district courts of the United States are the sole and exclusive forum.

Any person or entity purchasing or otherwise acquiring any interest in the Common Share Purchase Warrants or Pre-funded Warrants, as applicable, will be deemed to have notice of and to have consented to the forum provisions in the applicable agreement. If any action, the subject matter of which is within the scope the forum provisions of the applicable agreement, is filed in a court other than a court of the State of New York (a “foreign action”) in the name of any holder of the Common Share Purchase Warrants or Pre-Funded Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.

These forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company, which may discourage such lawsuits. Alternatively, if a court were to find these provisions inapplicable or unenforceable with respect to one or more actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations. See sections entitled “Description of Share Capital”. 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and elsewhere in this prospectus. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

This prospectus also contains certain data and information, which we obtained from various government and private publications. Although we believe that the publications and reports are reliable, we have not independently verified the data. Statistical data in these publications includes projections that are based on several assumptions. If any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Although we will become a public company after this offering and have ongoing disclosure obligations under United States federal securities laws, we do not intend to update or otherwise revise the forward-looking statements in this prospectus, whether because of new information, future events or otherwise.

USE OF PROCEEDS

After deducting the estimated underwriters’ discounts and offering expenses payable by us, we expect to receive net proceeds of approximately US$3.7 million from this offering, assuming none of the warrants issued in this offering are exercised, and assuming no issuance of Pre-Funded Warrant Units in lieu of Common Share Units (or approximately US$4.4 million if the underwriters exercise the over-allotment option in full), based on an assumed public offering price of US$5.50 per Common Share Unit set forth on the cover page of this prospectus.

We plan to use the net proceeds of this offering as follows:

In the event that we raise additional capital, we may use such additional proceeds to the development of other resources or for similar purposes. The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. Our management, however, will have broad discretion in the way that we use the net proceeds of this offering. Pending the final application of the net proceeds of this offering, we intend to invest the net proceeds of this offering in short-term, interest-bearing, investment-grade securities. See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Shares—We have considerable discretion as to the use of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.”

Pending our use of the net proceeds from this offering, we may invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.

DIVIDEND POLICY

We have never declared or paid cash dividends on our common shares. We currently intend to retain all available funds and any future earnings for use in our exploration business and do not anticipate paying any cash dividends on our common shares soon. We may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common shares. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. Further, under the terms of the BCBCA, we are prohibited from declaring or paying a dividend if our board has reasonable grounds for believing that we are, or would after the payment be, unable to pay our liabilities as they become due, or the realizable value of our assets would thereby be less than the aggregate of our liabilities and stated capital. See also “Risk Factors— Risks Related to This Offering and Ownership of Our Common Shares—We do not expect to declare or pay dividends in the foreseeable future.”

CAPITALIZATION

The following table sets forth our cash and capitalization as of March 31, 2023:

The pro forma information below is illustrative only and our capitalization following the completion of this offering is subject to adjustment based on the public offering price of the Units and other terms of this offering determined at pricing, and assumes no exercise of any warrants offered in this offering and no issuance of any Pre-Funded Warrant Units in lieu of Common Share Units. You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

If the underwriters exercise the over-allotment option in full, each of our as adjusted cash, share capital, total shareholders’ equity and total capitalization would be US$4,826,957, US$23,958,382, US$12,082,436, US$12,082,436, respectively.

The table above excludes the following shares:

DILUTION

If you invest in Units in this offering, your interest will be diluted to the extent of the difference between the public offering price per Common Share Unit and our net tangible book value per common share after this offering. Dilution results from the fact that the assumed public offering price per Common Share Unit is substantially in excess of the net tangible book value per common share attributable to the existing shareholders for our presently outstanding common shares.

Our net tangible book value was approximately $(2,909,922) US$(2,151,513)), or approximately $(0.73) (US$(0.54)) per common share, as of March 31, 2023 based on the number of common shares outstanding, after giving effect to the Share Consolidation. Our net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting net tangible book value per share after giving effect to this offering.

After giving effect to our sale of 909,090 common shares in this offering (assuming no Pre-Funded Warrant Units are sold in this offering and excluding the common shares issuable upon the exercise of the Common Share Purchase Warrants being offered in this offering) at an assumed public offering price of US$5.50 per Common Share Unit, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts, non-accountable expense allowance and estimated offering expenses, our pro forma as adjusted net tangible book value as of March 31, 2023 would have been approximately US$1,561,736 or approximately US$0.32 per share after giving effect to the Share Consolidation. This amount represents an immediate increase in pro forma net tangible book value of US$0.86 per share to existing shareholders and an immediate dilution in pro forma net tangible book value of US$5.18 per share to purchasers of our common shares in this offering, as illustrated in the following table.

If the underwriters exercise their over-allotment option in full, the pro forma as adjusted net tangible book value per common share, as adjusted to give effect to this offering, would be US$0.45 per share, and the dilution in pro forma net tangible book value per share to new investors purchasing common shares in this offering would be US$5.05 per share.

A $1.00 increase (decrease) in the assumed public offering price of US$5.50 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) the net tangible book value per common share after giving effect to this offering by US$0.17 per common share and the dilution in net tangible book value per common share to new investors in this offering by US$0.83 per common share, assuming no change to the number of common shares offered by us as set forth on the cover page of this prospectus, no exercise of over-allotment option and after deducting underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.

The pro forma information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual public offering price of our common shares and other terms of this offering determined at pricing.

The tables above exclude the following shares:

To the extent that outstanding options or warrants, or the Common Stock Purchase Warrants offered in this offering, are exercised, you may experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities may result in further dilution to our shareholders.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis summarize the significant factors affecting our operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this prospectus. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements because of various factors, including those discussed below and elsewhere in this prospectus, particularly in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

The consolidated financial statements for the years ended March 31, 2023, and 2022 are prepared pursuant to IFRS and audited in accordance with the standards of the U.S. Public Company Accounting Oversight Board. As permitted by the rules of the SEC for foreign private issuers, we do not reconcile our consolidated financial statements to U.S. generally accepted accounting principles.

The numbers presented in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section does not reflect the Share Consolidation.

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) was prepared as of March 31, 2023 and should be read in conjunction with the audited consolidated financial statements of Foremost Lithium Resource & Technology Ltd. for the year ended March 31, 2023 with the related notes thereto. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

All figures are in Canadian dollars, unless otherwise noted.

Overview

We are an exploration stage company engaged in lithium exploration in the Province of Manitoba, Canada focused and committed to become one of the first North American companies to produce SC6 used to produce high quality battery-grade LiOH. LiOH is a strategic battery mineral mainly consumed in the production of cathode materials for Li-ion batteries. Li-ion batteries power the daily use of consumer electronics, enable electrification of the transportation sector, and provide stationary grid storage, critical to developing a clean-energy economy.

Overall Performance

Foremost Lithium Resource & Technology Ltd. (formerly FAR Resources Ltd.) was incorporated under the BCBCA on July 7, 2005 (Number: BC0729352). The Company changed its name to Foremost Lithium Resource & Technology Ltd. on January 4, 2022. The Company currently has two wholly owned subsidiaries, Sequoia Gold & Silver Ltd., a British Columbia Company (“Sequoia”), and Sierra Gold & Silver Ltd, a Nevada company (“Sierra”). Sequoia is inactive and has no assets. Sierra holds the Company’s Winston property in New Mexico, USA.

Our corporate address is Suite 2500 - 700 West Georgia Street, Vancouver, British Columbia V7Y 1B3 Canada. Our company email address is info@foremostlithium.com. Our registered office is located at Suite 2500 - 700 West Georgia Street, Vancouver, British Columbia V7Y 1B3 Canada. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42^nd Street, 18th Floor, New York, N.Y. 10168.

Our primary focus is currently conducting exploration for lithium at our Lithium Lane Properties. Our objective is to develop a world-class lithium mine in the mining friendly Canadian province of Manitoba and to provide SC6 to LiOH producers in North America, strategically located to supply the U.S. “Auto Alley” and the European battery market via our nearby access to the Hudson Bay Railway and the Port of Churchill. With our commitment to the environment, corporate social responsibility, and sustainability, we aim in the longer term to derive substantial revenues from the sale of SC6 to LiOH producers that sell to the growing electric vehicle and stationery (e.g., residential, utility and industrial) battery storage markets in the U.S. and abroad. With access to renewable energy produced in Manitoba, we expect to supply lithium processed exclusively with the benefit of power produced from fully sustainable, local sources.

Recent Developments

Little Granite

Our Company successfully negotiated the final cash payment required to exercise its option on the Little Granite Claims in October 2022 from US$380,000 to US$75,000 which was satisfied through the issuance of a non-interest-bearing promissory note to an arm’s length vendor. An initial US$25,000 payment was made on October 15, 2022 and the final two US$25,000 payments were and are due in April 2023 and October 2023. Following these amendments, Foremost Lithium has acquired The Little Granite Property for an aggregate consideration of US$186,000, versus aggregate consideration of US$434,000 under the original terms.

Emerging Growth Company

Upon the completion of this offering, we will qualify as an “emerging growth company” under the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our consolidated financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our common shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Results of Operations

Comparison of the year ended March 31, 2023, and 2022

During the year ended March 31, 2023, the Company earned no revenue and had a comprehensive income of $956,578 (US$707,267) compared to $4,150,922 for the year ended March 31, 2022.

Total expenses for the year ended March 31, 2023, were $3,640,550 (US$2,691,719) compared to $4,073,745 for the corresponding year ended March 31, 2022.

The table below details the significant changes in major expenditures from 2023 and 2022.

The Company incurred a $5,100 unrealized loss on long-term investments during the year ended March 31, 2023 (2022 - $Nil) related the value of certain shares of Alchemist Mining Inc. being held by the Company for investment purposes. See Note 4 of the Company’s Financial Statements accompanying this MD&A.

During the year ended March 31, 2023, the Company completed the sale of its 60% interest in its Hidden Lake Project in Yellowknife, NWT to Youssa PTY Ltd., an Australian private Company resulting in a gain on sale of property of $3,500,000.

Expenses incurred for three months ended March 31, 2023

During the three-months ended March 31, 2023, the Company earned no revenue and had a comprehensive income of $321,952 (US$238,042), compared to a comprehensive loss of $3,034,432 for the three months ended March 31, 2022.

Total expenses before other items for the three-months ended March 31, 2023, were $184,560 (US$136,458) compared to $2,860,767 for the corresponding three months ended March 31, 2022.

The table below details the significant changes in major expenditures from 2023 and 2022.

SELECTED ANNUAL INFORMATION

During the year ended March 31, 2023, income and comprehensive income increased to $956,578 (US$707,267) compared to loss of $4,150,922 for the year ended March 31, 2022. The increase was primarily due to gain on sale of property of $3,500,000 (US$2,587,800) during the current year. During the year ended March 31, 2023, total assets increased to $13,300,444 (US$9,833,970) compared to $7,918,078 for the year ended March 31, 2022. The increase was primarily due to exploration expenditures incurred on all three properties the Company owns.

During the year ended March 31, 2022, loss and comprehensive loss increased to $4,150,922 compared to $2,612,308 for the year ended March 31, 2021. The increase was primarily due to increased personnel due to change in management and granting of options during the current year. During the year ended March 31, 2022, total assets increased to $7,918,078 compared to $6,924,574 for the year ended March 31, 2021. The increase was primarily due to prepaid expenses and deposits at year end due to timing and terms of payment and exploration expenditures incurred on all three properties the Company owns.

SUMMARY OF QUARTERLY RESULTS

A summary of selected financial information for the eight most recently completed quarters is set out below and should be read in conjunction with the Company’s consolidated Interim Financial Statements and related notes for such periods:

Note 1: Based on the weighted average number of common shares outstanding during the period.

During the quarter ended March 31, 2023, expenses decreased to $184,560 (US$136,458) compared to $1,814,129 for the quarter ended December 31, 2022. The decrease was primarily attributable to management fees of $111,250 (US$82,255) (December 31, 2022 - $189,000), professional fees of $385,945 (US$285,357) (December 31, 2022 - $676,854) and share-based payments reversal of $501,462 (US$370,767) (December 31, 2022 – expense of $776,916).

During the quarter ended December 31, 2022, expenses increased to $1,814,129 (US$1,341,387) compared to $882,298 for the quarter ended September 30, 2022. The increase was primarily attributable to management fees of $189,000 (US$139,741) (September 30, 2022 - $83,251), professional fees of $676,854 (US$500,447) (September 30, 2022 - $359,961) and share-based payments of $776,916 (US$574,430) (September 30, 2022 - $208,426).

During the quarter ended September 30, 2022, expenses increased to $882,298 (US$652,346) compared to $759,563 for the quarter ended June 30, 2022. The increase was primarily attributable to investor relations of $67,967 (US$50,253) (June 30, 2022 - $28,252), management fees of $83,251 (US$61,553) (June 30, 2022 - $56,318), and professional fees of $359,961 (US$266,145) (June 30, 2022 - $154,214).

During the quarter ended June 30, 2022, expenses decreased to $759,563 (US$561,599) compared to $2,860,767 for the quarter ended March 31, 2022. The decrease was primarily attributable to management fees of $56,318 (US$41,640) (March 31, 2022 - $61,885), share-based payments of $331,548 (US$245,137) (March 31, 2022 - $2,333,019), and forgiveness of debt $Nil (March 31, 2022 - $100,355).

During the quarter ended March 31, 2022, expenses increased to $2,860,767 compared to $826,797 for the quarter ended December 31, 2021. The increase was primarily attributable to management fees of $61,885 (December 31, 2021 - $213,179), share-based payments of $2,333,019 (December 31, 2021 - $149,200), and forgiveness of debt $100,355 (December 31, 2021 - $Nil).

During the quarter ended December 31, 2021, expenses increased to $826,797 compared to $128,491 for the quarter ended September 30, 2021. The increase was primarily attributable to investor relations of $137,434 (September 30, 2021 - $14,003) due to the Company’s effort to raising awareness in the market, management fees of $213,179 (September 30, 2021 - $50,100), professional fees of $143,049 (September 30, 2021 - $21,858) due to an increase in legal fees relating to the replacement of the board of directors and change in management and share-based payments of $149,200 (September 30, 2021 - $Nil) for options granted.

During the quarter ended September 30, 2021, expenses decreased to $128,491 compared to $257,690 for the quarter ended June 30, 2021. The decrease was primarily attributable to consulting of $16,711 (June 30, 2021 - $73,656) due to the timing of consulting fees recorded, investor relations of $14,003 (June 30, 2021 - $70,000) and professional fees of $21,858 (June 30, 2021 - $41,753).

During the quarter ended June 30, 2021, expenses decreased to $257,690 compared to $1,341,394 for the quarter ended March 31, 2021. The decrease was primarily attributable to investor relations of $70,000 (March 31, 2021 - $200,175), office of $12,137 (March 31, 2021 - $178,668) due to interest expenses on the outstanding balance of accounts payable during the comparative period and share-based payments of $Nil (March 31, 2021 - $800,801) for options granted. 

Liquidity and Capital Resources

The consolidated financial statements were prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at March 31, 2023, the Company has had significant losses. In addition, the Company has not generated revenues from operations. The Company has financed its operations primarily through the issuance of common shares and short-term loans. The Company continues to seek capital through various means including the issuance of equity and/or debt. These circumstances cast significant doubt as to the ability of the Company to meet its obligations as they come due, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. These financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

The Company’s business financial condition and results of operations may be further negatively affected by economic and other consequences from Russia’s military action against Ukraine and the sanctions imposed in response to that action in late February 2022. While the Company expects any direct impacts, of the pandemic and the war in the Ukraine, to the business to be limited, the indirect impacts on the economy and on the mining industry and other industries in general could negatively affect the business and may make it more difficult for it to raise equity or debt financing. There can be no assurance that the Company will not be impacted by adverse consequences that may be brought about on its business, results of operations, financial position and cash flows in the future.

In order to continue as a going concern and to meet its corporate objectives, the Company will require additional financing through debt or equity issuances or other available means. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. 

Net cash provided by operating activities for the year ended March 31, 2023 was $2,454,989 (US$1,815,149) compared to $1,402,469 used during the year ended March 31, 2022. The difference was primarily due to the $3,500,000 (US$2,587,800) sale of a property, share-based payment expense related to options and PSU’s and changes in non-cash working capital items.

Net cash used in investing activities for the year ended March 31, 2023 was $797,824 (US$589,888), compared to $825,706 used during the year ended March 31, 2022, and consisted of acquisition costs and property expenditures during the period.

Net cash provided by financing activities for the year ended March 31, 2023 was $3,613,065 (US$2,671,397) compared to $2,071,417 during the year ended March 31, 2022. The increase was due to proceeds from loan proceed, private placements and from warrants and options exercised during the current period.

The Company is continuing its exploration program and will use its available working capital to continue this work. It is likely that the Company will need to obtain additional debt/equity financing in order to carry out further exploration programs on its properties depending on the results of recent exploration and to satisfy its business and property commitments for the ensuing year. The Company intends to rely on equity or debt financing from arm’s length parties to fund its operations for the upcoming year. The Company may find it necessary to issue shares to settle some of its existing debt obligations. There are no assurances that the Company will be successful in raising the necessary funds to maintain its current operations and explore its properties on commercially reasonable terms or at all.

CAPITAL RESOURCES

As of the date of the MD&A, the Company is continuing its exploration programs on the Zoro, Jean Lake, Peg North, Grass River Lithium Projects and Jol Lithium property. The Company intends to use available working capital and may issue additional common shares to cover the cost of this program.

The Company also has certain ongoing option/property payments and maintenance fees/taxes associated with its Zoro, Jean Lake, Grass River, and the Winston Property as more particularly described in “Overall Performance” above.

During the period from April 1, 2022 to August 16, 2023, the Company:

During the year ended March 31, 2023, the Company also paid:

During the year ended March 31, 2023, the Company entered into a loan agreement with a related party to borrow $1,145,520, inclusive of a prior advance of $145,520 (“Initial Advance”) included in short-term loans payable owing to a director of the Company. During the year ended March 31, 2023, the loan accrued interest at a rate of 8.35% (subsequently amended on May 1, 2023 to 11.35%), payable monthly, and matures on May 10, 2023 (subsequently amended to May 10, 2023). The loan is secured against all goods of the Company. The Company paid or accrued an aggregate of $86,478 in interest during the year ended March 31, 2023. As at March 31, 2023, the Company owed $1,143,998 of principal.

During the year ended March 31, 2023, the Company’s stock-based compensation expense included $804,016 relating to stock-options and PSU’s granted to current and former directors, officers and companies controlled by them and vested through the year.

The amounts due to related parties included in accounts payable and accrued liabilities are as follows:  

The amounts due are unsecured, non-interest bearing, and have no specific terms of repayment. 

Related Party Performance Share Units

For performance-based stock options and PSU’s with a market condition, a Monte Carlo simulation model is used to determine the fair value. The Monte Carlo model utilizes multiple input variables that determine the probability of satisfying the market conditions stipulated in the award. The expense recognized for performance-based options is based on an estimation of the probability of achieving the market condition and the timing of the achieving of the market condition, which is difficult to predict. The following assumptions were used at the time of grant: 

Effective January 17, 2022, amended September 7, 2022, the Company’s board of directors adopted a performance-based share unit plan (the “PSU Plan”) which reserved a fixed aggregate of 343,391 common shares (being 10% of the Company’s then issued and outstanding common shares”) for issuance upon the redemption of performance-based share award units (each a “PSU”). Under the terms of the PSU Plan, the Company is required to obtain shareholder approval for the PSU Plan within 3 years after its adoption, and at least every three years thereafter. Any PSUs issued are subject to a four month hold from date of issue. 

On January 31, 2022, the Company granted 280,000 PSU’s with a fair value of $4,156,210, to certain directors and officers under the Company’s PSU Plan. Of the 280,000 PSUs granted, 50,000 PSUs vested and became redeemable by the holders, and the remaining 230,000 PSUs were to vest and become redeemable only upon the achievement of certain closing price milestones ranging between $25.00 and $87.50 which will expire on January 31, 2025.

Of the 280,000 PSUs granted, 50,000 PSUs vested during the year ended March 31, 2022 and the remaining unvested PSUs were to be expensed straight line over 3 years. During the year ended March 31, 2022, the Company recognized share-based payment expense of $1,063,622. Of the 50,000 PSUs that vested, 30,000 were converted to common shares during the year-ended March 31, 2022. During the year ended March 31, 2023, the Company recognized share-based payment expense of $363,195 to the date of modification.

During the year ended March 31, 2023, the Company:

During the year ended March 31, 2023, 390,000 unvested PSUs were cancelled. Upon cancellation $723,496 of previously recognized share-based compensation expense was reversed from reserves to stock-based compensation.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

Interest Rate Risk

The Company has cash balances and interest-bearing debt. The Company’s cash does not have significant exposure to interest. 

Foreign Currency Exchange Risk

The Company is exposed to foreign currency risk on fluctuations related to cash, accounts payable and accrued liabilities, and option agreement payments that are denominated in a foreign currency. There is a risk in the exchange rate of the Canadian dollar relative to the US dollar and a significant change in this rate could influence the Company’s results of operations, financial position or cash flows. The Company has not hedged its exposure to currency fluctuations.

We estimate that we will receive net proceeds of approximately US$3.7 million in this offering, based upon an assumed public offering price of US$5.50 per share, assuming no exercise of the over-allotment option and after deducting underwriting discounts, non-accountable expense allowance and the estimated offering expenses payable by us. If we convert the full amount of the net proceeds from this offering into Canadian dollars, a 10.0% appreciation of the U.S. dollar against the Canadian dollar, from the exchange rate of C$1.3525 per US$1.00 as of March 31, 2023 to a rate of C$1.48775 per US$1.00, will result in an increase of approximately C$0.5 million in our net proceeds from this offering. Conversely, a 10.0% depreciation of the U.S. dollar against the Canadian dollar, from the exchange rate of C$1.3525 per US$1.00 as of March 31, 2023 to a rate of C$1.21725 for $1.00, will result in a decrease of C$0.5 million in our net proceeds from this offering.

Impact of Inflation

Over the past year, inflation has had a major impact on virtually all aspects of the economy, including the mining industry. Supply chain challenges and significant cost increases have impacted many mining producers with negative implications on the sector. While Foremost Lithium is not immune to inflationary drivers, our status as a junior explorer/developer, who is several years from production, has and will continue to mute inflationary pressure on our stock price and our ability to raise future capital. Furthermore, we believe our excellent working relationships with vendors will allow us to continue to successfully manage our exploration costs. The Company continues to benefit from working in a Province that is highly supportive of the Lithium mining industry and we expect to continue to benefit from future government grants.

The Company’s biggest safeguard against inflationary pressures is the ever-growing demand for Lithium resources to supply an exponentially growing EV market. All of the Company’s attributes, including proximity to the growing North American EV market with readily available transportation options, abundant hydroelectric power and highly promising resource assets favorably position Foremost Lithium to withstand inflationary pressures in the short term.

Price Risk

The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices of gold and lithium, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

Critical Accounting Policies

The following discussion relates to critical accounting policies for our company. The preparation of consolidated financial statements in conformity with IFRS requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our consolidated financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often because of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to consolidated financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our consolidated financial statements:

Cash and cash equivalents

Cash and cash equivalents are comprised of cash on hand and cash equivalents. Cash equivalents are short-term, highly liquid holdings that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. The Company does not currently hold any cash equivalents.

Foreign currency translation

The functional currency for the Company and its subsidiaries is the currency of the primary economic environment in which the entity operates.  Transactions in foreign currencies are translated to the functional currency of the entity at the exchange rate in existence at the date of the transaction.  Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated at the period end date exchange rates.

The functional currency of the parent entity, Sequoia Gold & Silver Ltd., and Sierra Gold & Silver Ltd. is the Canadian dollar, which is also the presentation currency of our consolidated financial statements.

Government grants

Government grants are recognized when there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the period the expense costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, the cost of the asset is reduced by the amount of the grant and the grant is recognized as a reduced depreciation expense over the expected useful life of the asset.

Mineral properties – exploration and evaluation assets

Pre-exploration costs

Pre-exploration costs are expensed in the year in which they are incurred.

Exploration and evaluation expenditures

Once the legal right to explore a property has been acquired, all costs related to the acquisition, exploration and evaluation of the property are capitalized. These direct expenditures include such costs as materials used, surveying costs, drilling costs, payments made to contractors, and depreciation on plant and equipment during the exploration phase. Costs not directly attributable to exploration and evaluation activities, including general administrative overhead costs, are expensed in the period in which they occur.

When a project is deemed to no longer have commercially viable prospects to the Company, exploration and evaluation expenditures in respect of that project are deemed to be impaired. As a result, those exploration and evaluation expenditure costs, in excess of estimated recoveries, are written off to profit or loss.

The Company assesses exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under development and is classified as “mines under construction”. Exploration and evaluation assets are tested for impairment before the assets are transferred to development properties.

As the Company currently has no operational income, any incidental revenues earned in connection with exploration activities are applied as a reduction to capitalized exploration costs.

Exploration and evaluation assets are classified as intangible assets.

The Company enters into farm-out arrangements, whereby the Company will transfer part of a mineral interest, as consideration, for an agreement by the transferee to meet certain exploration and evaluation expenditures which would have otherwise been undertaken by the Company. The Company does not record any expenditures made by the farmee on its behalf. Any cash or other consideration received from the agreement is credited against the costs previously capitalized to the mineral interest given up by the Company, with any excess consideration accounted for as a gain on disposal.

The Company accounts for mining tax credits on a cash basis and are applied as a reduction to capitalized exploration costs.

Provision for environmental rehabilitation

The Company recognizes liabilities for legal or constructive obligations associated with the retirement of exploration and evaluation assets and equipment. The net present value of future rehabilitation costs is capitalized to the related asset along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value.

The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related assets with a corresponding entry to the rehabilitation provision.

Decommissioning obligations:

The Company’s activities may give rise to dismantling, decommissioning and site disturbance re-mediation activities. A provision is made for the estimated cost of site restoration and capitalized in the relevant asset category.

Decommissioning obligations are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. Subsequent to the initial measurement, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The increase in the provision due to the passage of time is recognized as finance costs whereas increases due to changes in the estimated future cash flows are capitalized. Actual costs incurred upon settlement of the decommissioning obligations are charged against the provision to the extent the provision was established.

Contingencies

A contingent liability is a possible obligation, and a contingent asset is a possible asset, that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. A contingent liability may also be a present obligation that arises from past events that is not recognized because it is not probable that an outflow of economic resources will be required to settle the obligation or the amount of the obligation cannot be measured reliably.

Impairment of non-financial assets

At the end of each reporting period the carrying amounts of the Company’s long-lived assets, including mineral property interests, are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Financial instruments

IFRS 9 uses a single approach to determine whether a financial asset is classified and measured at amortized cost or fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments and the contractual cash flows characteristics of the financial asset.

The classification of debt instruments is driven by the business model for managing the financial assets and their contractual cash flow characteristics. Debt instruments are measured at amortized cost if the business model is to hold the instrument for collection of contractual cash flows and those cash flows are solely principal and interest.

If the business model is not to hold the debt instrument, it is classified as fair value through profit or loss (“FVTPL”). Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payments of principal and interest.

The Company classifies its financial assets into one of the categories described below, depending on the purpose for which the asset was acquired. Management determines the classification of its financial assets at initial recognition.

Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL, for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at fair value through other comprehensive income (“FVTOCI”).

Fair value through profit or loss (“FVTPL”) – Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statement of loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial asset held at FVTPL are included in the statement of loss in the period in which they arise. Derivatives are also categorized as FVTPL unless they are designated as hedges.

Fair value through other comprehensive income (“FVTOCI”) - Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently, they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.

Financial assets at amortized cost - A financial asset is measured at amortized cost using the effective interest method if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset’s contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.

The following table shows the classification and measurement of the Company’s financial instruments under IFRS 9:

Financial liabilities other than derivative liabilities are recognized initially at fair value and are subsequently stated at amortized cost. Transaction costs on financial assets and liabilities other than those classified at FVTPL are treated as part of the carrying value of the asset or liability. Transaction costs for assets and liabilities at FVTPL are expensed as incurred.

Impairment of financial assets at amortized cost

The Company recognizes the expected credit losses (“ECL”) model on a forward-looking basis on financial assets that are measured at amortized cost, contract assets and debt instruments carried at FVTOCI.

At each reporting date, the Company measures the ECL for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the ECL for the financial asset at an amount equal to twelve month expected credit losses. The Company applies the simplified method and measures a loss allowance equal to the lifetime expected credit losses for trade receivables.

The Company recognizes in profit and loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized. The loss allowance was $Nil as at March 31, 2023.

Derecognition of financial assets and financial liabilities

A financial asset is derecognized when the contractual right to the asset’s cash flows expire; or if the Company transfers the financial asset and substantially all risks and rewards of ownership to another entity.

The Company derecognizes financial liability when its obligations are discharged, cancelled or expired.

Income taxes

Income tax expense comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity. Current tax expense is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded using the liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affects neither accounting nor taxable loss, or differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

Loss per share  

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the year. For the year ended March 31, 2023, 141,118 (2022 – 239,300) stock options & performance stock options, 18,584 (2022 – 281,344) warrants and Nil (2022 – 250,000) performance share units were not included in the calculation of dilutive earnings per share as their inclusion was anti-dilutive.

Loss per share is calculated using the weighted average number of common shares outstanding during the year.

Share-based payments

The Company grants stock options to acquire common shares of the Company to directors, officers, employees and consultants.  An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.

The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized in share-based payment reserve over the vesting period. Consideration paid for the shares along with the fair value recorded in share-based payment reserve on the exercise of stock options is credited to capital stock. When vested options are cancelled, forfeited, or are not exercised by the expiry date, the amount previously recognized in share-based payment reserve is transferred to accumulated losses (deficit). The Company estimates a forfeiture rate and adjusts the corresponding expense each period based on an updated forfeiture estimate.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment.  Otherwise, share-based payments are measured at the fair value of goods or services received. Where the terms and conditions of options are modified, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

For performance share units and stock options with vesting containing a market condition, the grant date fair value is measured using the Monte Carlo model to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The expense recognized for performance-based stock options is based on an estimation of the probability of achieving the market condition and the timing of the achieving of the market condition, which is difficult to predict. The fair value is recognized straight line over the life of the performance share units or stock options which vest based on a market condition. Upon achieving a market condition, the awards shall vest, and any unvested fair value related to the vested awards will be accelerated and recognized.

Share issue costs

Share issue costs are deferred and charged directly to capital stock on completion of the related financing. If the financing is not completed, share issue costs are charged to operations. Costs directly identifiable with the raising of capital will be charged against the related capital stock.

Valuation of equity units issued in private placements

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. 

The fair value of the common shares issued in the private placements was determined to be the most easily measurable component and were valued at their fair value, as determined by the closing quoted bid price on the announcement date. The balance, if any, was allocated to the attached warrants. Any fair value attributed to the warrants is recorded as reserves.

Leases

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.

Leases of right-of-use assets are recognized at the lease commencement date at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, and otherwise at the Company’s incremental borrowing rate. At the commencement date, a right-of-use asset is measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received.

Each lease payment is allocated between repayment of the lease principal and interest.  Interest on the lease liability in each period during the lease term is allocated to produce a constant periodic rate of interest on the remaining balance of the lease liability.  Except where the costs are included in the carrying amount of another asset, the Company recognizes in profit or loss (a) the interest on a lease liability and (b) variable lease payments not included in the measurement of a lease liability in the period in which the event or condition that triggers those payments occurs.  The Company subsequently measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses; and adjusted for any remeasurement of the lease liability.  Right-of-use assets are depreciated over the shorter of the asset’s useful life or the lease term, except where the lease contains a bargain purchase option a right-of-use asset is depreciated over the asset’s useful life.

When the Company enters into a sublease, it determines at lease inception date whether each sublease is a finance lease or an operating lease based on whether the contract transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the sublease is a financial lease: if not then it is an operational lease.

For financial leases, and when the Company acts as intermediate lessor, it recognizes a sublease receivable and derecognizes the right-of-use assets relating to the head lease that it transfers to the sub leases. Right-of-use assets and net investment in sublease receivables relating to the subleases are measured in the same way as the right-of-use assets and lease liabilities for the head lease, using the same discount rate for the actualization of future payments to be received.

New accounting standards issued and effective

Certain new standards, interpretations, and amendments to existing standards have been issued by the IASB or IFRC that are mandatory for accounting years beginning on or after January 1, 2022. New accounting pronouncements that are not applicable or are not consequential to the Company have been excluded in the preparation of these consolidated financial statements.

These amendments are effective for reporting periods beginning on or after January 1, 2022. The adoption of this new accounting standard had no material impact on the Company’s consolidation financial statements for the current year. 

A number of new standards, and amendments to standards and interpretations, are not effective and have not been early adopted in preparing these consolidated financial statements. The following accounting standards and amendments are effective for reporting periods beginning on or after January 1, 2024:

Classification of Liabilities as Current or Non-current (Amendments to IAS 1) - The amendments to IAS1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date.

The adoption of this new accounting standard is not expected to have a material impact on the Company’s consolidation financial statements.

CORPORATE HISTORY AND STRUCTURE

Our Corporate History

The Company was incorporated as FAR RESOURCES LTD. under the BCBCA on July 7, 2005 (Number: BC0729352). The Company changed its name to Foremost Lithium Resource & Technology Ltd. on January 4, 2022. The Company currently has two wholly owned subsidiaries: Sequoia Gold & Silver Ltd. (“Sequoia”), a British Columbia Company, and Sierra Gold & Silver Ltd., a Nevada company (“Sierra”). Sequoia is inactive and has no assets. Sierra holds the Company’s Winston property in New Mexico, USA.

Our Corporate Structure

The chart below presents our corporate structure:

Figure 1 – Company Organizational Chart

The registered office of the Company is Suite 2500 - 700 West Georgia Street, Vancouver, British Columbia V7Y 1K8 Canada. The Company is a Canadian natural resource exploration company engaged in the exploration and development of mineral resources.

INDUSTRY

All Eyes are on Manitoba

Mining accounts for a significant portion of Canada’s economy. Natural Resources Canada pegged domestic mineral production at $47 billion (approximately US$37.89 billion) in 2018. Canada’s mining and exploration companies are also important players in the international mining industry. Manitoba hosts the historic Tanco mine, which sits atop the world-class Tanco lithium-cesium deposit and is located at Bernic Lake. The Tanco pegmatite was first discovered in the 1920s and ultimately developed into a large deposit of spodumene, one of the primary minerals mined for its lithium content.

Figure 2 - Map showing the proximity between Foremost Lithium’s projects and the historic Tanco Mine.

The Tanco Mine “Tanco”, operated by Sinomine Rare Metal Resources Group, is located 600km due south of the historic mining town of Snow Lake, Manitoba with easy access along transportation corridors. Tanco recently published that it will be investing $176 milllion into a concentrator to increase production from processing 500 tons of lithium per day to 3,000 per day. Tanco currently one of the only producing lithium spodumene concentrate mine in North America.

Manitoba is increasingly becoming the hub of battery metals and situations such as these find our company in an excellent position to be the potential source for Tanco’s lithium feedstock. We met with Tanco in early November and Tanco informed us that they are currently processing 500 tons of lithium per day tons but had plans to increase this sixfold to 3,000 tons a day in 2023. With Tanco’s aggressive plans to ramp up production, Foremost Lithium is an ideal location.

Industry

On October 28, 2022, the Canadian Government provided some clarity regarding the Investment Canada Act in connection to the critical mineral sectors1. The Canadian Government is setting a precedent for block State-Owned Enterprises from investing into Canadian-owned critical mineral companies and ordered Chinese investment to divest immediately from Canada including the following three companies, Power Metals Corp, Lithium Chile Inc., and Ultra Lithium Inc. While Canada continues to welcome foreign direct investment, a decision to act decisively was made if investments are deemed threatening to its national security and its critical minerals supply chains, both at home and also abroad.

Canada and the United States are promoting domestic investment into these critical mineral sectors through different programs like The Inflation Reduction Act. Crucial for critical battery minerals, it implements a $7,500 EV credit tax offer. This law puts Canada in a privileged position and will deepen investment into with lithium exploration companies like Foremost Lithium, as EV manufacturers and other suppliers scramble to source and secure their critical minerals with an FTA partner. Canada’s Critical Minerals Strategy is laid out as a six area of focus which includes driving research, accelerating timelines for mines and exploration, building infrastructure among other drivers which aids could assist our ability to move forward effectively with our Lithium Lane properties.

Manitoba Mineral Development Fund “MMDF” was launched by the Government of Manitoba in August 2020 with the specific goal of jump-starting mineral and economic development initiatives and aims to support new economic development opportunities that capitalize on existing assets and infrastructure across Manitoba. It’s a supports strategic projects that capitalize on mineral potential within the province and helps accelerate Manitoba’s position as a world leader for responsible mineral development. We have been awarded the maximum allowable amount of $300,000 in 2021, and were awarded the grant a second time in 2022 to help support our 2022/2023 exploration program and help advance our Snow Lake Lithium projects.

Lithium-bearing pegmatites occur across the Province of Manitoba including in areas such as the Tanco mine, Wekusko Lake Pegmatite Field, Red Sucker Lake, Gods Lake and Cross Lake, which all host known pegmatite lithium deposits. With the emergence of the electronic vehicle, or EV, the market has spurred investment and mining interest in Manitoba for lithium exploration activity, with New Age Metals, Grid Metals, and Snow Lake being a few of the mining companies exploring for lithium in Manitoba.

Lithium Production – Historical Supply, Demand and Price Trends

Benchmark Minerals data shows that lithium prices have increased by over five times between July 2019 and July 2022, as the world’s fleet of EVs surpassed 5 million and the auto industry began to become concerned regarding the supply of raw materials. Though the price of lithium has not continued to rise at its previous rapid pace, Benchmark continues to predict strong lithium prices in the coming years.

Figure 3 – Lithium Price Assessment (Source: Benchmark Minerals)

In 2022 report, McKinsey predicted that lithium carbonate equivalent (“LCE”) demand will increase from 500 tonnes in 2021 to between 3-4 million tonnes in 2030. McKinsey further states “In 2020, slightly above 0.41 million metric tons of LCE were produced; in 2021, production exceeded 0.54 million metric tons . . .”. There is a substantial gap between current supply and expected demand that will need to be satisfied.

Fastmarkets provided their forecast in March of 2023 suggesting that the demand from battery electric vehicles (BEVs) would increase the compound annual growth rate (CAGR) 20% to 2.28 million tonnes of lithium carbonate equivalent (LCE) in 2033 from 321,000 tonnes of LCE in 2022.

Increasing Lithium Demand – Electric Vehicle Transition

Although lithium has multiple industrial and consumer electronics applications, the most prominent application is battery production. Future lithium demand is heavily linked to future EV production.

Countries around the world have already formulated plans to support this change, as shown in the tables below. Government policies, new regulations (particularly in Europe), and steadily increasing consumer adoption, as evidenced by a wider availability of EV models being produced by original equipment manufacturers, or OEMs, are all expected to be significant drivers in increasing EV sales.

The Chinese government has declared that the EV industry is of strategic importance over the long term. Several countries have also announced their intentions to phase out and eventually replace internal combustion engines, or ICE, vehicles with EV models. Countries such as France, Norway, and the UK have all set dates for these bans, with Norway’s being the most aggressive, as all new car sales in Norway must be zero emissions (battery EV or fuel cell) by 2025.

Figure 4 - Recent Government Announcements (Source: Thomson Reuters)

In response to the changing government policies and incentives favoring EVs, various OEMs have announced plans to expand EV production lines in the future.

In addition to expanding their offering of EV models, automotive OEMs are focused on improving total energy density and reducing weight in batteries to increase the driving range of EVs. To achieve these improvements, EV battery manufacturers are increasingly using high nickel content cathode materials that contain less cobalt and more nickel, while the lithium content remains largely unchanged. Due to the underlying chemistry, battery-grade LiOH, the type of lithium we expect to be produced from the output of mine, is required in the manufacturing of high nickel content cathode material, whereas lithium carbonate, produced from lithium brine, is used in lower energy density EV battery applications.

As a result of these drivers, battery manufacturer Contemporary Amperex Technology has estimated that global sales of new energy-efficient passenger vehicles will reach 12 million in 2025¹, and the compound growth rate will reach 32.5% from 2019 to 2025. By 2030, the number of EVs on the road is expected to rise to 125 million.

Figure 5 - Annual Global EV Sales by Market (Source: Bloomberg New Energy Finance)

To meet these targets, governments will need to help the EV industry, in general, and the lithium mining sector, in particular, by supportive actions such as removing red tape for new mining projects. Some projects are already seeing such support, as in October of 2022, a $141.7 million grant, from the U.S. Department of Energy (“DOE”) was announced to Piedmont Lithium to support the construction of a LiOH plant in Tennessee, and a Canadian federal government grant to E3 Metals Corp, for expanded lithium extraction technology research with the University of Alberta.

Demand for lithium is also increasing outside of the EV market. According to the India Brand Equity Foundation, electronics manufacturing is expected to grow at an annual rate of 30% between 2020 to 2025. Lithium primary cell batteries are central units in many consumer electronics goods. Major manufacturers in the primary battery market include Hitachi Maxell, Ultralife, Energizer, FDK Corporation, Tadiran, Vitzrocell, EVE Energy, Panasonic, SAFT, Varta, Duracell, EnerSys Ltd., Gp Batteries, Excell Battery Co., and Bren-tronics. The global lithium primary batteries market is expected to grow from $11.28 billion in 2020 to $12.24 billion in 2021 at a compound annual growth rate, or CAGR of 8.5%. The table below shows the expected growth of the consumer electronics lithium battery market in US$ billions from 2020 to 2025.

Figure 6 - Global Lithium Primary Batteries Market (Source: The Business Research Company)

Many battery cell manufacturers have made financial commitments for new Li-ion plants. Benchmark Minerals “gigafactory” tracker has gone from 70 planned new facilities in 2019 to 205 in April 2021. RK Equity’s battery cell forecast is approximately 3,400 GWh in 2030. On its current trajectory, planned capacity could easily reach 8,500-10,000 GWh; however, battery raw material shortages, particularly lithium, will limit the actual volumes achieved in 2030. At battery pack prices of $60-$75/kWh, Li-ion batteries are economically competitive for all storage applications.

Figure 7 - Global Gigafactories Forecast (Source: Benchmark Minerals and RK Equity Forecast)

According to FastMarkets.com, demand for battery grade lithium is now expected to almost triple by 2025 to more than 850 thousand metric tonnes, and to exceed 1.0Mt LCE in 2027, with growth in excess of 18% per year to 2030.

Figure 8 - Battery-Grade Hydroxide Demand/Supply Forecast (Source: RK Equity)

The recent decline and cutbacks in upstream investment, however, could result in the market undersupply during the next few years. We believe that it is clear that investment needs to be made in lithium mining now to meet the expected increase in demand. Fastmarkets predicts the need for 16 new lithium mines of average size to go online prior to 2025. Roskill maintains the view that future refined lithium supply will remain tight, with a period of sustained supply deficit in the mid-2020s. It is our understanding that further additions to lithium production capacity for mined and refined lithium products will be required to keep pace with demand growth, led by battery applications.

Figure 9 - Lithium Demand Forecast (Source: Benchmark)

Benchmark is aware of 40 lithium mines that have been in operation — producing lithium — in 2022. By 2050, Benchmark sees a need for 234 more lithium mines if there’s no battery recycling underway. While much emphasis is put on the as the electric vehicle demand as the driver for the lithium market, Benchmark Mineral Intelligence actually puts stationary energy storage demand by that time — ⅔ of the 11.2 million tonnes expected to be produced each year by then, It has concluded that the lithium market needs to scale up to 25 times or more of the 2021 level by 2050.

Lithium Supply Race

S&P Global reported at the beginning 2023, that five of the six lithium projects originally scheduled for commissioning in 2022 have been pushed back to 2023 and market deficits would continue to grow if a similar scenario repeated this year. They suggested that 80% of the global lithium supply would come from hard-rock lithium projects in the coming 1 to 2 years and all developing projects have the option of selling direct-shipping ore (“DSO”) in addition to standard concentrate products when there is slow progress in developing the processing plant. This aligns with our own strategy of the DSO shipping method and takes advantage of the deficit in supply and will be able to meet the demand forecasted in the lithium market.

Figure 10 – Account of Expected Hard-Rock Lithium Projects (Source: S&P Global)

Increasing Demand for Locally Sourced Lithium in North America

North America is expected to follow the same global trend towards EVs and away from ICEs. RK Equity is forecasting a 36% per annum EV sales growth in the U.S. between 2020 and 2030. Sharply increasing sales will be driven by the U.S.’s desire to cut 2030 emissions by approximately 50% from 2005 levels. The Inflation Reduction Act that was passed in 2022, has played a role with incentivizing automobile choices, by offering $7,500 credit on the purchase of new EVs to consumers.

Figure 11 - Forecast U.S. EV sales and penetration (Source: RK Equity)

U.S. EV consumers continue to prefer long-range and fast charging EVs. In 2022, the average battery pack size for of small battery electric cars ranged 25 kWh in China, while in comparison, the average ranged closer to about 60 kWh. RK Equity is forecasting an average battery pack size of 80 kWh for EVs sold in the U.S. in 2025. Based on these forecasts, U.S. EV sales could only equal half the number of EVs as China, and the GWh’s deployed would be roughly equal. RK Equity is forecasting the GWh’s deployed in U.S. EVs will rise by a factor of 30 over the decade to approximately 600 GWh (~500KT LCE battery-grade demand).

Figure 12 - BEV and PHEV Sales and Sales Share Forecast (Source: Loren McDonald/EVAdoption)

Figure 13 - U.S. Average Battery Pack Size and GWh Deployed (Source: RK Equity)

Most new EVs sold in the U.S. will use a high nickel cathode requiring LiOH. RK Equity is forecasting 85%-90% hydroxide usage for U.S. cathodes in 2025. Thus, Foremost Lithium’s supply of SC6 to North American based processors of LiOH will be ideally suited and timed to engage with the U.S. market.

Figure 14 - OEMs and Cathode Choice

The U.S. currently has approximately 15KT LCE of local chemical production capacity – a fraction of the 500KT LCE demand in 2030 as we forecasted. Therefore, we forecast that the United States and North America will need to greatly increase their supply of lithium. There is a narrow window to create a regional lithium supply chain that is both scalable and sustainable with a low carbon footprint. We believe that the quickest route to scaling greenfield lithium production in North America is hard rock to hydroxide.

Figure 15 - Cost Comparison for Hydroxide (Source: McKinsey & Co.)

We believe it is highly likely that the U.S. and North America will emulate Europe’s battery raw material strategy and target a high percentage of local lithium chemical production. If the U.S. and North America do pursue that course, there are a limited number of locations to available to supply the lithium production needed.

Ideal Location

The available pool of spodumene concentrate projects in historic mining jurisdictions is limited. We view Manitoba, Quebec, and Ontario hard rock assets as future strategic suppliers of SC6 to the North American and possibly European battery supply chains.

Figure 16 - Spodumene Concentrate Projects in Canada and Europe (Source: Piedmont Lithium)

According to the International Energy Agency (“IEA”), Canada’s electricity generation is over 80% renewables and nuclear, while China and Australia electricity generation is over 75% coal, oil and natural gas. Additionally, Manitoba is a green province, with 97% of electricity derived from renewable sources. This offers the potential to have a nearly net zero SC6 processing plant. Therefore, with a reduced production and transport carbon footprint and no need for customers to hold higher inventory levels, we believe domestic North American hydroxide supply will trade at a $1,000 per tonne premium to China.

Figure 17 - Electricity Generation by Source (Source: Our World in Data)

The Lithium Lane Properties are ideally located to take advantage of both hard rock strategic lithium assets and a favorable source of renewable energy for lithium mining and processing in Manitoba. In addition, the Lithium Lane Properties are strategically located in North America’s “Auto Alley.” With the Hudson Bay Railway having a railhead 30 km from our project, the Lithium Lane Properties have access to means of transportation to bring our lithium product north to the Port of Churchill, for shipment to Europe, or South to Auto Alley. The map below shows the extended reach of CN’s rail lines into the US Auto Alley.

Figure 18 – Network of Rail Lines (Source: CN Website)

If one compares the map above to the map of the NAFTA superhighway below, the Lithium Lane Properties are strategically situated to access and address this market.

Figure 19 - U.S. “NAFTA Superhighway” (Source: Peaktraffic.org)

Recent Volatility in Lithium Prices

Since January 2023, the price of lithium has dropped substantially, even as sales of EVs have increased. Some analysts believe that the decreases were caused by short-term factors, while others suggest that the drop is more permanent. However, many experts have noted that despite such decreases, the price for lithium remains high relative to historical levels and that additional sources of lithium supply will be necessary to meet the increasing demand for EVs.

In May 2023, Morgan Stanley published a report stating that it believed that lithium market had reached a turning point, at least for now. Morgan Stanley noted that carbonate prices in China, which have decreased since hitting records in November 2022, have rallied on renewed optimism over EV demand.

According to the report, “although China’s EV sales and battery production are back in growth mode after a lackluster start of the year, cathode and battery cell producers are still not fully back buying in the spot market, but sentiment is clearly improving, and their lithium inventories appear to have eroded. Unlike for nickel and cobalt, we still model a full-year lithium market deficit for 2023, and we expect the recently oversupplied lithium market to become tighter again for the remainder of 2023. We see some upside risk to our 2H23 base case forecast for an average China lithium carbonate price of $25/kg.”

BUSINESS

Overview

Foremost Lithium Resource & Technology Ltd. is an exploration stage company that is primarily engaged in the hard-rock exploration and acquisition of lithium properties in Canada.

Our goal is to become a strategic supplier to processors of battery-grade LiOH to supply the growing electric vehicle battery and battery storage markets. There are several positive tailwinds for lithium demand, particularly hydroxide in the United States. The global lithium-ion battery market size is expected to reach US $182.53 billion by 2030. We believe it is highly likely that North America will emulate Europe’s battery raw material strategy and target a high percentage of local lithium chemical production. The United States currently has approximately 15KT LCE of local chemical production capacity – a fraction of the 500KT LCE demand in 2030 as we forecasted. As hard rock to hydroxide offers the shortest greenfield route to increased supply, and Foremost Lithium’s land position hosts significant potential, projects such as Foremost Lithium’s Lithium Lane Properties will be seen as strategic in the years to come.

We hold or have option to acquire interests in mining claims covering over 43,000 acres (17,500 hectares) primed for exploration with our four main core Lithium Lane Properties, as well as our Jol Property, located in the province of Manitoba, Canada.

We also have a secondary ambition acquired of pursuing precious metal exploration on our Winston Property located in New Mexico, USA. We the Lac Simard South Property in May 2023, with 12 identified pegmatites in Quebec, Canada.

We currently consider the four Lithium Lane Properties to be our material properties, while our Winston Property, Lac Simard South Property, and our Jol Property mining claim in Manitoba, Canada, are considered to be non-material properties. All of our properties are in the exploration stage.

Figure 1 - Location map of Foremost Properties in North America

Lithium Lane Properties

Our primary focus is on exploration on and eventually the development of our Lithium Lane Properties, which in aggregate encompass 78 discrete claims totaling over 43,000 acres (17,500 hectares), consisting of: (1) the Zoro Property; (2) the Jean Lake Property; (3) the Grass River Property; and (4) the Peg North Property. Our Lithium Lane Properties are located in close proximity to each other, in west-central Manitoba, east of the historic mining friendly town of Snow Lake. Each of these properties consists of undeveloped provincial land on which we hold mining claims or options to acquire or earn interests in mining claims and are predominately surrounded by black spruce and jack pine forest with sufercial sediments such as trembling aspen.

We are in the business of exploring our Lithium Lane Properties. We expect that following a planned six-phase exploration approach will demonstrate potential further S-K 1300 compliant resources and will lead to delineating a lithium resource to direct ship ore (“DSO”) to a production facility in the area to create a revenue stream.

Figure 2 - Claims Map of Foremost’s Lithium Lane Properties

Local Environment

The Lithium Lane Properties are ideally located in the Province of Manitoba, Canada, where 97% of the electrical energy supply is from hydro-electric renewable sources. The region of Snow Lake, where the Lithium Lane Properties are situated, is mining friendly, and the Hudson Bay Railway runs within 30km of the Lithium Lane Properties. The valley located directly east of the property could serve as a potential tailing storage area. Winter access roads to the property can be used for hauling purposes. The Snow Lake region is marked by short, cool summers and long, cold winters. The region has a sub-humid high boreal climate. The Hudson Bay rail runs north to the Port of Churchill which supplies access to Europe by ship, or south to the EV manufacturing markets in Michigan and the southern United States.

Property Geology and Lithium Mineralization

To date, a total of over $10.7 million has been spent on exploration works on the Lithium Lane Properties, with most of the work has been applied to the Zoro Property. The Zoro, Jean Lake, Peg North, and Grass River spodumene bearing, lithium-enriched pegmatite dyke clusters occur on either side of the Crowduck Bay Fault. To the east of Wekusko Lake there are three main clusters of spodumene-bearing pegmatite dykes known as the Thompson Brothers, Sherritt Gordon and Zoro pegmatites. The Thompson Brothers (Violet) and Sherritt Gordon type pegmatites and appear to connect or extend onto the Company’s Jean Lake and Peg North projects. The Green Bay (Zoro) pegmatites are located about 5km east of the Thompson Brothers property. Lithium Projects are bound by the Crowduck Bay Duck Fault as well are situated along the “Thompson Brothers Lithium Trend (TBL)”, known to be associated for lithium-enriched pegmatite dyke clusters.

Zoro Property

At the Zoro Property, we have conducted exploration and completed an S-K 1300 technical report summary that declares a Li₂O inferred mineral resource. The Li₂O inferred mineral resource estimate for the Zoro Property as of March 31, 2023 is 1,074,567 tonnes in situ at a grade of 0.91% Li₂O, with a cut-off of 0.3% Li₂O and metallurgical recovery of 90%. To date, the Zoro Property is the only project where the Company has a S-K 1300 compliant initial assessment report with an inferred mineral resource estimate. This S-K 1300 compliant technical report summary was prepared to support ongoing exploration and development by the Company. Its primary goal was to review existing and newly discovered lithium pegmatite dykes on the property based on exploration work finished before July 2018. It would utilize the related geoscientific database to demonstrate sufficient technical merit to continue the assessment of known pegmatite dykes and to explore for repetitions of this style of mineralization. The Company has drilled 10,000 meters of core and documented a total of 16 spodumene mineralized pegmatite dykes on the Zoro Property. Based on the 2023 S-K 1300 compliant report, a base case in situ inferred mineral resource for Dyke 1 on the property was determined. The reporting cut-off is 0.3 percent Li2O and the metallurgical recovery is 90%. Dyke 1 contains 1,074,567 tonnes at 0.91% Li2O, from which we infer 9,700 tons of inferred Li₂O and 24,000 tons of inferred Li₂CO₃using a conversion rate of 2.473.

The inferred resource on the Zoro Property is entirely from a single high-grade lithium bearing spodumene pegmatite dyke (Dyke-1) partially outcropping at surface on the Zoro Property. The Company has subsequently discovered a total of sixteen (16) spodumene mineralized pegmatite dykes which remain open for further drilling to build substantial additional S-K 1300 compliant resources and completed a successful April 2022 drill program. The Company completed UAV-assisted magnetic and Lidar surveys which integrate data sets with MMI soil geochemical data, mapping and prospecting data as well as drill core data. The Company will use this data to determine the most effective step out and infill drill program. Simultaneously, the Company successfully completed its program with Glencore Canada (“XPS”) to process an initial 500 kg mini bulk sample of spodumene-bearing pegmatite from Dyke-1 into a SP6 technical specification spodumene concentrate into battery-grade LiOH and Li2CO3 while maximizing lithium recovery and significant CAPEX and OPEX savings.

Jean Lake Lithium and Gold Property

In August 2021, the Company discovered two beryl pegmatite outcrops on the Jean Lake Property which assayed high-grade lithium. These high-grade assay results included 3.89 Li2O% to 5.17% Li2O%. As a result of airborne magnetics, the Company defined 14 high priority drill targets on Jean Lake Property – including the two “Beryl” pegmatites. Prior to drilling, all drill targets were identified through a combination of prospecting, soil and rock chip geochemical surveys and UAV-assisted magnetic surveys. The Company commenced its 3,000 meter 24-hole drill program in December of 2022 and recently announced the results in June of 2023, including that it had identified and provided preliminary dimensions for a high-grade zone of lithium mineralization at one of its beryl pegmatite Dykes, the “B1” dyke.

Grass River Lithium Property

The Company is currently aware of 17 historically mapped and drilled spodumene mineralized pegmatite dykes on the Grass River Property which have yet to be fully delineated or drilled to S-K 1300 standards (previous 1959 results are not applicable although they clearly evidence 7 spodumene mineralized pegmatites). We have completed UAV-assisted magnetic and Lidar surveys and intend to integrate that data with the historical mapping and prospecting data, and historical drill core data with interpretation expected to be released in the third quarter of 2023. Over the second and third quarters of 2023, the Company will undertake prospecting and targeted MMI soil geochemical surveys over areas of specific interest identified from the drone magnetic survey in preparation for a future drill programs.

Peg North Lithium Property:

The Company acquired the Peg North Property in the second quarter of 2022 and has used targeted MMI, together with boots on the ground prospecting, to delineate the five (5) historically documented spodumene pegmatites on the property in the second and third quarters of 2022. The Company flew airborne geophysics over the entire property in 2022. During the second and third quarters of 2023, the Company will undertake prospecting and Mobile Metal Ion soil geochemical surveys over areas of specific interest identified from drone magnetic surveys for the same program as outlined in the Grass River Property.

Project Timelines

The Table below summarizes our current status and next major milestone activity: 

Figure 3 - Project Timeline

Foremost Lithium’s Phased Mineral Exploration Process

We intend to analyze each of the Lithium Lane Properties in detail to determine their current status and scheduled future activities. This is the fundamental execution strategy that we employ to create unlock world-class hard rock lithium resources in Snow Lake, Manitoba, Canada.

How Data Adds Value from Prospecting to Production

Finding world-class hard rock lithium mineralized spodumene mine requires judicious and methodical work. Our approach is to have a dedicated experienced technical team use all available modern subsurface characterization techniques together with historical field data. The primary question we pose to ourselves at this stage is: “Where do we look and how do we find it?” Deploying exploration capital is fundamental to gaining the requisite data, which is then processed into knowledge and understanding of the lithium deposit.

Phase 1: Acquire Quality Claims

No amount of exploration budget can find minerals on land that doesn’t have minerals. There are two key factors that have allowed us to acquire our properties.

Phase 2: Prospecting

After acquiring a property, we conduct our first pass prospecting of outcrop areas, which focuses on known pegmatites as well as additional lithium-bearing pegmatites. Includes surficial geochemical surveys including MMI to help delineate new targets and is integrated with other geoscientific databases.

Phase 3: UAV-Borne Magnetic Surveys

In this phase, we use UAV-Borne magnetic surveys to aid us utilize 3D technology to define the extent and magnetic signature of the spodumene pegmatite dykes and enclosing geologic environment. LiDAR technology records detailed ground elevation measurements via laser light high resolution 3D imagery at a 2-centimeter accuracy. The survey helps with exploration, improving field work planning, and with the delineation of drill target.

UAV-flown high resolution magnetic data lends itself very well to finding new prospective drill targets with precision using high-resolution drones. We conducted a UAV-borne magnetic survey on the Lithium Lane Properties in 2022. The UAV system’s resolution has provided excellent litho-structural detail over the Lithium Lane Properties and has generated detailed 3D models of the magnetic sources on the properties. Magnetic surveys can provide valuable exploration information such as depth to source, dip of the body as well as the overall shape and morphology of the lithological unit. The resolution of the survey allows targeting of bedrock structures which may host lithium pegmatite deposits, which when coupled with 3D products from inversion of magnetic survey data provides an excellent source of information for us to define drill-targets based on their magnetic signatures including both magnetic and non-magnetic targets. The drone magnetometer surveys were flown with a flightline azimuth of 070º and flight-line spacing of 25m. Tie lines were established at 250m spacing with a total of 7,472.7-line km over the Lithium Lane Properties.

Phase 4: Preparation

After the survey is conducted, we scientifically define drill targets via preparatory work programs and de-risk the targets with final visual reference.

Phase 5: Drilling

The first four phases allow us to determine a number of targets. On each target, we construct a well thought through thesis of where economic mineralization exists, and the put the thesis into practice once exploration drill rigs are brought to site. The drilling phase includes the following steps:

Phase: 6: Discovery

Discovery is the most exciting part of the process. This phase is when the resource is uncovered, and interpretation of the quality and quantity of ore comes to realization. All of the information learned in the previous phases inform the specific targeting and subsequent drilling of high value exploration targets.

Additional Phases

Assessment

When initial drilling yields positive results, we will start step out drilling to see how far the mineralization extends along a strike azimuthal trend, and if it goes deeper. Once we have more information on these boundaries, we can commence infill drilling, which is drilling in the gaps between existing holes to build confidence in the cumulative size and grade of the mineralization, to provide more information that can be used to determine if we have a discovery. We have drilled 70 exploration holes, which represent just over 10,000m of diamond drill core on our Zoro Property. That core has been logged and integrated into our 3D data model. Assay results on 60 of the 70 exploration holes are currently inside our 3D data model.

Once the drill core has evidenced a discovery of Li2O mineralized spodumene pegmatites then estimation can begin to determine how large the deposit is. At this stage, we can produce an S-K 1300 compliant mineral resource estimate.

Deposit Definition

Scientists and geologists will work together to analyze and define a deposit from samples sent out to a laboratory and determine whether the quality and quantity of Li2O is sufficient to move into production of ≥ 6% Li2O spodumene concentrate (SC6), and potentially upgrade that SC6 into LiOH with the benefit of a chemical processing facility.

Mineral Resource Calculation

At this vital stage, we will lay out the tonnage and grade of the deposit. Different methods are used in accordance with the ore geology, geometry and boundaries. Some of the steps involved will be:

Development Decision & Financing

At this stage, we will develop finance and production plans to ensure funds for mine construction and mine operations. By this point, we will have a clear vision of the deposit and its potential and decide whether to move the resource into production.

Non-Core Assets

Winston

The Winston Property has promising geology and is also an exciting opportunity for our Company. This 2,800 acre land package has returned promising gold/silver samples in the past, and based on these higher grade samples, the Company would plan a drill program with additional capital. We are exploring the possibility of spinning out this property, which could result in dividend shares to our shareholders. We would also consider engaging in a joint venture with a precious metals focused participant.

Jol Property

We completed the acquisition of a 25 acre (62 hectare) property (the “Jol Property”) situated due north from the Jean Lake Property, and due west of Zoro Property, on July 12, 2022. This small parcel of land is situated in an area historically noted for high critical metal nickel and copper contents, although there has been no exploration follow-up in recent times. The property is also within the area of geological influence of the Crowduck Bay Fault, and as such offers the potential to host lithium-bearing pegmatite dykes. We intend to conduct further exploration on the property and may also consider selling the property to any interested buyers.

Lac Simard South Property

This property is situated near a lithium-dense area of Quebec, Canada in an active lithium camp with established concentrators and refineries consisting of 80 mining claims covering approximately 11,482 acres (4,647 hectares). This location offers year-round access with proximity to infrastructure enabling us to explore and drill during all seasons. We anticipate future exploration to commence in early 2024 on the 12 pegmatites that were identified from satellite imagery. These pegmatites are located approximately 120km southwest from The NAL Lithium Processing Plant (A Piedmont/Sayona Joint Venture), and 80km southwest of Val-D’or, a logistics hub for mining services. With close proximity to refineries and concentrators and easy access to infrastructure, we intend optimize the advantages the property offers, and maximize these key benefits.

Marketing and Advertising

We intend to solidify and broaden our engagement with strategic partners by delivering a saleable SC6 Li2O product. Our DMS and flotation of DMS Middlings, together achieved a global lithium recover of 81.6% at a spodumene concentrate grade of 5.88%, demonstrating that our spodumene concentrate is capable of producing both battery grade lithium carbonate (Li2CO3) or lithium hydroxide (LiOH), while returning an extremely favourable OPEX/CAPEX to our Company.

Manitoba is currently home to one of the only hard-rock lithium mines in North America, the world-class Tanco Mine, which is only 600km from the Zoro Property, and provides us an opportunity to create a near-term revenue stream by the DSO (Direct Shipping Ore) to mines in our area. Lithium supply has not grown in lockstep with demand, and battery manufacturers as well as electric vehicles makers have been sourcing and securing their lithium supply farther in advance. We feel this provides us a great strategic opportunity to solidify contracts with long-term partners.

Our Customers

Chemical companies that convert SC6 to LiOH and Electric Vehicle Manufacturers would be the primary direct and indirect customers. These include Tesla, Rivian, General Motors, BMW, Nissan, Mercedes, Jaguar, and Audi automobile manufacturers, among others. We believe that, assuming we prove our lithium resources and operate a functioning lithium ore mining and processing facility, we will be well positioned to be a supplier of choice to these OEMs, based on the competitive economics enabled by our well-situated geographical location, renewable energy sources, and mining friendly government regime.

Competition

We face intense competition in the mineral exploration and exploitation industry on an international, national, and local level. We compete with other mining and exploration companies, many of which possess greater financial resources and technical facilities than we do, in connection with the exploration and mining of suitable properties as well as the engagement of qualified personnel. The lithium exploration and mining industry is fragmented, and we are a very small participant in this sector. Many of our competitors explore for a variety of minerals and control many different properties around the world. Many of them have been in business longer than we have and have established more strategic partnerships and relationships and have greater financial accessibility than we have. We are also subject to competition from other large national and international mining companies such as Sayona Mining Limited and Frontier Lithium Ltd. In our view, given the expected level of demand for lithium, it will be a seller’s market so there will be many customers interested in the lithium we extract.

Intellectual Property

We do not have any registered intellectual property rights.

Facilities

Our corporate address is 2500 - 700 West Georgia Street, Vancouver, British Columbia V7Y 1B3 Canada. Currently, we do not maintain any office or operational facilities other than a leased space used to store our core samples in Snow Lake Manitoba. We believe that we will be able to obtain adequate facilities, principally through leasing, to accommodate our future expansion plans.

Employees

We currently have two full-time employees.

Our other officers and advisers work for us as independent contractors under consulting agreements. These agreements require consultants to protect our confidential information during their engagement with us. In addition, these consulting agreements include typical non-compete clauses that prohibit the consultants from entering competitive employment relationships while they are working for us.

Insurance

We currently insure our directors and officers through our D&O insurance policy. We currently do not insure against mine exploration and development risks.

Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these, or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition, or operating results.

On December 22, 2021, we commenced litigation against former management, Gammack and Dinning, shortly after they were replaced as directors following our contested shareholder meeting. The claim is for unspecified damages in addition to approximately $150,000 of compensation to Gammack and Dinning that was not paid. We dispute that the amounts were owing or that the contracts were validly entered into prior to the payments being made. We garnished their bank accounts and the amounts claimed were paid by certain banks into court.

On May 12, 2022, Gammack and Dinning filed a counterclaim for damages relating to their termination including a two-year change of control payments under the alleged management contracts which would total approximately $400,000. We consented to the release of $150,000 that had been garnished to be paid out of court to the defendants.

The parties have reached an agreement to settle the claim and counterclaim by the release of the funds held in court to the defendants, which has occurred and the payment of $10,000 in total for costs to the defendants, which funds have been paid. The parties have exchanged releases. The consent dismissal order dismissing the claim and counterclaim has been filed with the court.

During the year ended March 31, 2022, the Company filed a claim against certain previous directors of the Company for wrongful transfer of funds in the amount of $157,185 for alleged deferred compensation to these directors. As a result of the claim against the Company, alleging that they are entitled to the compensation that had been garnished, and are also entitled to termination or change of control clauses as per their alleged management agreements. The amounts were garnished and later released as part of the settlement agreement detailed below. The previous directors have also filed a counter claim against the Company, alleging that they are entitled to the compensation that has been garnished and being held in escrow, and are also entitled to termination or change of control clauses as per their alleged management agreements. The alleged management agreements would entitle each of the two directors to 12 months compensation in lieu of notice to termination without cause or 24 months of compensation if their agreements were terminated and within 6 months of a change of control of the Company, which includes a change in power to elect a majority of the board of directors or otherwise direct the management of the Company through proxies, voting agreements, or otherwise. Per the counter claim, the management agreement containing these clauses had allegedly been executed during the year prior to their dismissal and the change in control. During the year March 31, 2023, the Company reached an agreement to settle the claim and counterclaim by the release of the funds held in court to the defendants and a nominal payment which has been made.

During the year ended March 31, 2023, the Company received correspondence from legal counsel to a former officer and alleging the former officer was in an employment relationship with the Company and the Company failed to pay him wages and severance, claiming damages from alleged wrongful dismissal, bad faith damages and related claims. The claim also alleged that the Company did not have the legal right to cancel 130,000 outstanding PSU’s. The Company has made an assessment on the validity of the claims and, intends to defend the matter vigorously. This matter is in the early stages and we are unable to reasonably determine the outcome or estimate any potential losses, and, as such, have not recorded a loss contingency.

Government Regulation

Our business is subject to a variety of laws and regulations applicable to companies’ conducting business in the mining industry. In Canada, mining law is divided between the federal and provincial governments. Ownership of lands and minerals belongs to the province in which they are located. Within the Province of Manitoba, mining activity is regulated by the Department of Agriculture and Resource Development and is governed primarily by provisions of The Mines and Minerals Act (Manitoba) together with its accompanying regulations and guidelines. The provinces have jurisdiction over mineral exploration, development, conservation, and management. The federal government shares jurisdiction with the provinces on some related matters (taxation and the environment) and has exclusive jurisdiction over areas such as exports and foreign investment controls. Federal and provincial legislation affecting mining activities tends to fall into two main categories: (a) private matters of title and taxation; and (b) economic, social, and environmental policies.

PROPERTIES

Material Properties – The Lithium Lane Properties

Zoro Property

Portions of this section regarding the Zoro Property are derived from the S-K 1300 technical report summary, “Technical Report on the Zoro Lithium Project, Snow Lake, Manitoba”, with an effective date of March 31, 2023, prepared by Mark Fedikow and Scott Zelligan, Qualified Persons under S-K 1300. Mr. Fedikow is a consultant and officer of the Company, serving as the Company’s Vice President Exploration. Mr. Zelligan is a self-employed, independent resource geologist and is not an employee of the Company. Neither Mr. Fedikow nor Mr. Zelligan is affiliated with any other entity that has an ownership, royalty or other interest in the property.

The Zoro Property is an exploration stage property located in west-central Manitoba 249 km southeast of Thompson and 571 km north-northeast of Winnipeg and approximately 20 km east of the town of Snow Lake. Nearby infrastructure includes a power line servicing the town of Snow Lake approximately 5 km south of the property, the Snow Lake airport and an all-weather gravel road 11 km west of the property, and a rail link located at Wekusko siding, 20 km to the south of the small historic gold mining community of Herb Lake Landing which is 30 km south of the property. The nearest road link is a seasonal gravel road on the east side of Wekusko Lake that accesses the village of Herb Lake Landing and Provincial Highway 392 to the south.

Figure 1 – Depicts the Zoro Property with its 16 spodumene dykes

Access to the property is by either helicopter or fixed-wing aircraft, or by driving north on provincial highway 39 to Bartlett’s Landing, taking a 20km boat ride across Wekusko Lake, and using drill roads and ATV trails the remainder of the way. Based upon the UTM Grid, the property is located at coordinates 455,000 meters east and 6,085,000 meters north, as illustrated in Figure 1 above (GPS coordinates are 54.8575, -99.6461) The Zoro Property has no mineral reserves under S-K 1300. The S-K 1300 mineral resource estimate for the property is included below, under “Mineral Resource Estimates”. The book value of the property as of March 31, 2023 was $6.562 million. The Zoro Property is comprised of 16 mineral claims totaling 8,377 acres (3,390 hectares).

Property and Ownership

On April 28, 2016, the Company entered into an option agreement granting it an option to purchase the rights to the lithium and related lithium compounds or mineralization of the Zoro 1 mineral claim in exchange for certain payments of common shares and cash. The Company made initial payments of common shares and $50,000 in cash. On April 28, 2017, the option agreement was amended and the Company completed the purchase of the rights to the lithium and related lithium compounds or mineralization of the Zoro 1 in consideration for additional common shares of the Company and a non-interest-bearing promissory note for $100,000 that was paid in due course.

On August 4, 2016, the Company entered into an option agreement with Strider Resources Limited (“Strider”) granting the Company the option to acquire an undivided 100% interest in all lithium-bearing pegmatite dykes on claim Jake 3558 (P3558F) and a 350-metre-wide strip along the northeast edge of claim Jake 3558 that includes portions of adjacent claims Bert 6304 (MB6304) and Bert 797 (MB797), subject to a 2% net smelter return royalty, or NSR. The optioned interest did not include any interest in and to any mineral not contained within or immediately adjacent to or contiguous with the lithium-bearing pegmatite dykes. On September 13, 2019 the Company completed the acquisition of the optioned interest. The consideration was common shares of the Company and $250,000 in cash. Pursuant to the option agreement, the Company retains a right to repurchase one-half of the 2% NSR for $1,000,000 at any time prior to commercial production.

On September 20, 2017, the Company entered into a second option agreement with Strider, granting the Company the option to acquire an undivided 100% interest in all lithium-bearing pegmatite dykes on claims Jake 9 (P3031F), Jake 1054 (MB 1054), Jake 2655 (MB 2655), Jake 3557 (MB 3557), Jake 54199 (W54199), Jake 10 (P3032F), Jake 2412 (MB 2412), Jake 2413 (MB 2413), Jake 54745 (W54745), CRO 5734 (MB 5734) subject to a 2% NSR. The optioned interest did not include any interest in and to any mineral not contained within or immediately adjacent to or contiguous with the lithium-bearing pegmatite dykes. The consideration was common shares of the Company, $250,000 in cash and the expenditure of at least $500,000 in exploration expenses. Pursuant to the second option agreement, the Company retains the right to repurchase one-half of the 2% NSR for $1,000,000 at any time prior to commercial production. Finally, the Company acquired an option to the claims BAZ 12131 (MB12131) and BAZ 12133 (MB12133) upon mutual agreement by both parties, which claims were added to the second option agreement. The two additional Baz claims were staked by Strider on December 2017, as they were within a 2 km area of influence and were then registered with the Manitoba Mines Branch on January 10, 2018.

The optioned interest provides indirect right, title, and interest in and to all lithium bearing pegmatite dykes contained in, on or under the property and including, without limitation, all related commercial pegmatite minerals (“Pegmatite Minerals”). The option interest does not include any interest in gold and other precious metals or minerals or ore containing same, base metals or minerals or ore containing same, diamonds, garnets, amphiboles, and talc in or on the property. No negotiations are required for access to the property and surface rights reside with the Manitoba government. In Manitoba, a mining claim is physically staked on the ground by blazing the outline of the claim with an axe or chainsaw and erecting claim posts at the corners and along the outline of the claim. The time, claim name and claim staker’s identification is marked on a claim tag which is affixed to the claim posts. Exploration work is physically undertaken on the claim and this work is described in an assessment report that when approved by the Manitoba government assessment geologist provides credits that can be applied to the claim to keep the claim in good standing. Costs to maintain a claim are calculated at a rate of $12.50 per hectare annually for a claim held for less than 10 years. After 10 years the rate doubles to $25.00 per hectare.

Claim, Size and Expiry and Year Cost

Figure 2 - Regional geology map of the Flin Flon-Snow Lake Greenstone Belt

Geology

Zoro Lithium Pegmatites

General and detailed geology for the Zoro Property is depicted in the figures below. Mapping was performed by the Manitoba Geological Survey on the property. The Zoro Property is underlain by ocean floor volcanic rocks of the Roberts Lake allochthon and lesser amounts of missi group sedimentary rocks. The ocean floor rocks comprise mafic volcanic and related intrusions and the missi group consists of sandstone, siltstone, mudstone and quartzo-feldspathic gneiss and migmatite. These lithologies are flanked to the south by missi group calc alkaline and tholeiitic basalt and rhyolite to dacite ash flow tuff and flows and to the east and west more missi group sedimentary rocks. The ocean floor mafic volcanic rocks adjacent to the dykes consist of a fine- to medium-grained strongly foliated dark green lithology. These andesitic to basaltic lithologies are locally interbedded with volcaniclastic sedimentary rocks and all are intruded by a quartz-phyric granite intrusion. The flows are generally fine- to medium-grained, massive with a 50°-70° lineation and strikes of N10°-30°E and steep northwest dips. Localized quartz veins, quartz laminae and associated iron carbonate veinlets are also present in outcrop adjacent to lineaments interpreted to represent faults. Minor arsenopyrite was noted in the quartz veins and laminae. These rocks are locally rusty-weathered and crosscut by veinlets of iron carbonate and quartz. Minor arsenopyrite and pyrite was observed in the quartz veins and laminae.

Figure 3 - General Geology of the Wekusko Lake Pegmatite Field Region.with Zoro Claims for Context

The pegmatite dykes generally strike northwest to north-northwest with steep dips and crosscut the regional foliation at a low angle. The dykes tend to be concentric in internal structure and the grain size of the constituent minerals (potassium feldspar, quartz, spodumene and black tourmaline) coarsens towards the center of the dykes. This pattern may be locally interrupted by patches of saccharoidal albite, large muscovite aggregates and coarse albite stringers with garnet and beryl. Spodumene is concentrated in the cores of the dykes. Some of the dykes have been split into sub-parallel veins by post-emplacement tectonic activity.

Detailed geologic observations of the pegmatites on the property were initially hampered by caved, filled and overgrown trenches. However, after trench cleaning and mucking and the availability of drill core Martins et al. (2017) provide a detailed description of Dyke 1. It is a north-trending, near-vertical body that extends for at least 280m along strike, with a maximum thickness of approximately 35m. The presence of country-rock alteration was not noted in historical drill logs however, the mineral holmquistite (Li2(Mg, Fe2+)3Al2Si8O22(OH)2) was recently identified in the mafic volcanic host rock during field examinations, indicating metasomatic alteration associated with pegmatite intrusion. Rock and mineral analyses demonstrate that a broad metasomatic geochemical and mineralogical halo is present. The development of holmquistite-bearing assemblages is controlled by the introduction of Li into the country rock during pegmatite emplacement. These assemblages reflect greenschist-facies metamorphic conditions and are only found in amphibolitic wall rock, usually replacing hornblende, pyroxene or biotite (Heinrich, 1965; London, 1986). Based on historical and recent field and laboratory work zonation in the Dyke 1 pegmatite can be defined as follows: (1) the wall zone, composed predominantly of quartz, microcline and muscovite, with accessory tourmaline, hornblende, biotite and rare beryl and spodumene; (2) the intermediate zone, with medium-sized crystals of microcline, albite, quartz, muscovite and spodumene (<5%); (3) the central zone, with abundant spodumene (locally up to 50% but more commonly varying between 10% and 30%), albite, quartz and locally pollucite, and accessory apatite, tourmaline, pyrrhotite, lepidolite, columbite-group minerals and Fe-Mn–phosphate minerals; (4) the core zone, composed mainly of quartz with small- to medium-grained spodumene crystals (although locally 15–20cm crystals of spodumene are observed) in a quartz matrix, with minor tourmaline and muscovite.

Dyke 1 pegmatite is the largest and best studied dyke on the Zoro Property. It is a north-south trending, near vertical body that extends for at least 280m in length and a maximum known thickness of approximately 35m. An apparent lack of alteration in the country rock is commonly described in the historical drill logs with only a local description of brecciation of the mafic volcanic rocks associated with a network of quartz veins. Recent field work identified Holmquist in the mafic volcanic country rock, indicating metasomatic alteration associated with the pegmatite intrusion, and litho geochemical analyses demonstrate that a broad metasomatic halo was developed. Holmquist-bearing assemblages are a function of the activity of lithium introduced into the pegmatite’s wall rock. These assemblages reflect greenschist facies metamorphic conditions and are only found in amphibolite wall rock usually replacing hornblende, pyroxene, or biotite (Heinrich, 1965; London, 1986). Based on historical and recent drill log descriptions the zonation in the Dyke 1 pegmatite can be defined as follows:

Based on historical descriptions and recent preliminary petrographic work, three stages of spodumene growth can be identified. The first is a primary phase greenish spodumene, and the second is a spodumene plus quartz intergrowths possibly after petalite breakdown (Cerny and Ferguson, 1972). The third phase consists of late bands of very fine-grained spodumene crystals that crosscut other mineral phases or surround feldspars and muscovite grains. Locally, spodumene crystals can be surrounded by fine-grained mica described in historical drill logs as purple, possibly Li-mica or lepidolite. This could be indicative of a late Li-enriched episode (possibly auto- metasomatism) responsible for the formation of the later mica. Acicular opaque minerals of the columbite group are present, and locally late bands of fluorite were reported in historic assessment files associated with fractures in the pegmatite. The latest event identified in the thin section is characterized by late Fe-rich, quartz-calcite stringers with no definite direction that crosscut the pegmatite. Deformation is visible in the thin section in the feldspars and muscovite (kink bands in muscovite are commonly observed) suggesting that the pegmatites are pre- to syndeformational.

The Green Bay pegmatite group (GB)

This group is located about 4.5 km east-northeast of the Violet-Thompson dyke. It consists of 7 dykes intruding metabasalts of the Amisk Group, in a 2 km zone trending approximately 55° from the westernmost, and largest, pegmatite (Mulligan1965). The individual dykes strike northwest to north-northwest with subvertical dips, mostly crosscutting the northeast regional foliation of the metabasalts. The pegmatite group is located inside two divergent faults striking east-northeast and north-northeast. If they are interpreted as conjugate horizontal shears, the attitude of the pegmatites would correspond to the theoretical orientation of associated tension fractures (Mulligan 1965). Out of the seven pegmatites present, the westernmost (GB) and largest was examined in detail, and two minor dykes neighboring to the east (GBB and GBC) have been sampled for geochemical characterization. The GBA dyke is largely drift-covered and poorly exposed in trenches over 250 metres along strike, which is approximately 350° with vertical dip. The width varies between 3 and 20 metres. The pegmatite contacts crosscut the regional schistosity at a low, and variable, angle. The dyke is roughly concentric in internal structure. Coarsening of grain size of the main constituents—K-feldspar, quartz, spodumene, and black tourmaline—towards the centre of the body is only locally interrupted by patches of saccharoidal albite, larger aggregates of muscovite, and by coarser albite stringers carrying garnet and beryl. Spodumene is concentrated in, but not confined to, the core. Sicklerite, most probably an alteration product of triphylite, is exceptional. The GBB and GBC dykes show similar internal structure and composition, but they are much more influenced by post consolidation tectonic activity, which is very sporadic in the GBA dyke. They split into several subparallel veins, and they generally show much more active structural evolution than the main dyke. Spodumene occurs in them only in centrally located patches.

As evident from the preceding descriptions, the mineralogy of all three pegmatite groups is practically identical despite the widely separated locations, different attitudes, and individualized internal structures. The only difference observed in the field lies in the distinct enrichment of the GBA dyke in tourmaline and beryl, particularly towards its northern end; in the other pegmatites, these two minerals are much less abundant. Geochemical characteristics show a close relationship between the Sherritt-Gordon and Violet- Thompson groups, and a much more advanced fractionation in the Green Bay pegmatites. This is shown repeatedly by the plots of K/Rb vs. Cs in K-feldspars and muscovite, and by the Na/ Li vs. Cs plot of beryl (Fig. 165). In the Green Bay group, the highest degree of fractionation is attained in the small dykes GBB and GBC.

Figure 4 - Geological setting of the Zoro Property.

History

The Zoro1 pegmatite dykes are located on the north side of a small lake between Roberts Lake and the south end of Crowduck Bay. Early in 1953, Cs No. 3-10, 12 (P 26973-80, 82), S.R. No. 1-6 (P 7877-82) and Linda 1 (P 26983) were staked by Mrs. Johanna Stoltz, Eric Stoltz, Carl Stoltz and Edwin Stoltz, and Key No. 1-4, 8-14 (P 27159-62, 27226-27, 27164-68) were staked by John Tikkanen, Hjalmar Peterson, and Loren Fredeen. These were cancelled the following year. Lit Nos. 11-5 (P 31758-62) was staked by J.J. Johnson in 1954. In 1955 Lit Nos. 6-1l8 (P 35014-26) were added by J.A. Syme. All the Lit claims were assigned to Green Bay Uranium Limited in 1956 which changed its name to Green Bay Mining & Exploration Ltd.

Early in 1956, before drilling commenced, samples containing more than 2% Li2O were reported (Northern Miner, January 12, 1956). A shipment of 136 kg (300 lbs.) of spodumene was sent to Ottawa for testing in 1956. This sample assayed 1.19% Li2O, with minor NbO5. Historic ore dressing tests concluded that good liberation and separation could not be affected (Mineral Dressing and Process Metallurgy Report in Green Bay Mining & Exploration Ltd., Corporation File). Over 6096 m (20 000 ft.) of diamond drilling was done on Lit No. 1-4, with at least 3048 m (10 000 ft.) of this on the main dyke. Results of the drilling on dykes 1, 3, 5 and 7 were reported to be “promising”. Assays of 2.42% to 7.28% Li2O were reported from Dyke 5 (Green Bay; Corporation File). Dyke 5 was apparently 305 m long x 12 m wide (1000 x 40 ft.); Dyke No. 7, over 457 m x 24 m (1500 x 80 ft.). Several of the holes went deeper than 305 m (1000 ft.). Drilling on Lit 10, 16 and 17 amounted to 1950 m (6399 ft.). Gold was also found on the property, with a 3.3 kg (7.25 lb.) sample across 3.4 m (11 ft.) yielding 0.17 ounces per ton gold (Green Bay; Corporation File). The claims were assigned to J.A. Syme in 1963. Several airborne surveys were done in the area between 1948 and 1973:

After the historical drillhole locations were determined, an excel drillhole database was compiled. All 78 historical PDF drill logs were entered into the database by hand. All relevant data was captured including survey data, major and minor lithologies, alteration, pegmatite mineral composition, structure, and assay data when available. A legend was created, and rock codes were assigned. Lithologies were consolidated when necessary to model the dykes in 3 dimensions. Historical drillholes that intersected Dyke 1 were de-surveyed in Studio EM (Datamine). Seventeen cross-sections (spaced at 25m intervals perpendicular to Dyke 1) and 7 plan maps (spaced at 50m elevation intervals below surface) were created for interpretation. Interpretations of the pegmatite, gneiss, schist, metavolcanics, and overburden were done by hand drawing. These interpretations were then scanned, digitized in AutoCAD, and wireframed in Studio EM. A model of the Dyke 1 pegmatite was created from the cross-sections and plan maps, which served as the basis for the Company’s drill targeting. Between November of 2016 and November of 2017, the Company conducted three small drilling programs on Dyke 1 to validate historical drilling results and to test the pegmatite farther along strike and at depth. A total of 19 drillholes summing 2,920.4m were drilled through these three exploration phases focused exclusively on Dyke 1. In the first quarter of 2018, the Company conducted a larger drilling program which not only continued the definition of Dyke 1 but also began drill testing other lithium bearing dykes on the property (Dykes 2, 4, 5 and 7).

Exploration

The disclosure of exploration results contained in this section is based on information and supporting documentation provided by a Qualified Person. Exploration by Foremost Lithium commenced in 2016 with prospecting, geological mapping, soil geochemical surveys, mineral and rock geochemical surveys and collaborative research by external agencies. These programs lead to four diamond drill campaigns. A total of 80 rock samples and 1640 soil samples have been collected and analyzed. Rock samples were collected from trenched and from limited outcrop. Soil samples were collected at 30m spacing along survey lines which were spaced 100m apart. These samples allow the company to generate potential diamond drill targets. To see results and methods of sampling, including analytical protocols, please review Section 8.1.3 of Zoro Technical Report Summary for rock samples, and Section 8.2 of the Zoro Technical Report Summary for soil samples.

Prospecting

Prospecting teams active on the Zoro Property have prepared existing outcrop exposures for sampling and mapping and have documented new outcrop exposures for follow-up. An expanded property position has resulted in part from these activities. The teams have also undertaken rock chip and soil geochemical MMI surveys to quantify and qualify historic lithium assays and assess overburden covered terrain for geochemical signatures of buried lithium-bearing pegmatite. Glacial and organic sediments are extensive on the property and blanket areas where the potential for additional pegmatite dykes and the delineation of potential drill targets is high.

Rock and Soil Geochemical Surveys

Rock and soil sampling surveys were undertaken to assess the property for indications of mineralization and to provide data for possible drill targets. Rock samples were collected from outcrop exposures as representative chip samples and as channel samples cut with a rock saw. Soil Samples were collected at 25 m sampling between 10 and 25 cm below the contact between organic and inorganic soil using a Dutch auger.

Sample locations were documented by way of handheld GPS. Quality assurance and quality control protocols were utilized from sample collection through laboratory submission. No sample bias was observed. A total of 80 outcrop rock samples, 165 channel samples and 1640 soil samples form the basis of the geochemical database. All samples were transported by helicopter in sealed rock pails to a locked storage facility in Snow Lake prior to shipping.

Rock samples were analyzed at Activation Laboratories in Ancaster (Ontario) using a multielement package after a total dissolution. Soil samples were analyzed with Mobile Metal Ions Technology, a partial and selective digestion, at SGS Mineral Services in Burnaby, B.C. Quality control and quality assurance programs accompanied both rock and soil analyses.

For further information regarding Foremost’s prospecting, see Section 8.1.1 of the Zoro Technical Report Summary.

Drilling

Between November fall of 2016 and January 2018, we have conducted four drilling programs on Dyke 1 and surrounding pegmatite dykes to validate historical drilling results and to test the pegmatite farther along strike and at depth.

To summarize these four drill programs:

Complete details of the drilling programs can be viewed in ‘Sections 9.1.1 through 9.1.4 in the S-K 1300 in Zoro’s Technical Report Summary”.

In March 2022, a ten-hole 1,509-meter drill program was undertaken to test MMI soil geochemical anomalies and assess the deeper levels of high-grade spodumene pegmatite Dyke 8 discovered in 2018. A new sixteenth spodumene-bearing pegmatite dyke on the Zoro Property was discovered during this program, which was intersected by two drill holes. DDH FM22-70 drilled at -50 degrees inclination intersected two pegmatite intercepts totaling 4.9 meters with up to 15% light green spodumene crystal aggregates. A second hole, DDHFM22-70B was drilled at a steeper inclination of -65 degrees to undercut the first pegmatite intersection and this hole intersected a five-meter intercept of the same spodumene mineralized pegmatite as hole FM22-70. High-grade spodumene pegmatite Dyke 8 was discovered on the Zoro Property in 2018 by the drill testing of a Mobile Metal Ions soil geochemical anomaly. Drill hole Far18-35 testing the MMI anomaly intersected 36.5 m of spodumene-bearing pegmatite.

Figure 5 - Location of Dyke 16 In Relation To Previously Discovered Pegmatite Dykes On The Zoro Property

Assay Results

A total of 8.28 metres of spodumene-bearing pegmatite was intersected by two drill holes, DDH FM22-70 and DDHF22-70B in 2022. Spodumene-bearing pegmatite was intersected between Intersections occurred over 3.36 meters and assayed 32.44m and 35.80m downhole. Assay results vary from 0.04% to 1.33% Li2O in 4 core samples. over 3.36m. Hole-DDHFM22-70B, drilled to undercut the first pegmatite intercept, intersected 4.92m of spodumene-bearing pegmatite with lithium contents varying from 0.04% to 1.05% Li2O in 5 core samples. Assay results from hole FAR18-35 included three separate intercepts of high-grade lithium including 12.3 m of 1.1% Li2O, 4.4 m of 1.2% Li2O, and 2.2 m of 1.5% Li2O (refer to Company press release dated April 26, 2022). To date, Dyke 8 has drill indicated dimensions of 120 m in length, 5-15 m in width and has been drilled to a depth of 157 m (Company press release, April 26, 2022).

Mineralogy

The Zoro Property comprises a minimum of sixteen (16) zoned pegmatite dykes that intrude Proterozoic Amisk Group volcanic and volcaniclastic rocks in a 2-km zone trending approximately 55° northwest (Mulligan, 1965 in Cerny et al., 1981; Fedikow et. al., 1993). The dykes strike north to northwest and dip vertically. Several have been described as gently dipping bodies (Bannatyne, 1985). The main, most westerly dyke or Dyke 1 outcrops along the west side of a ridge, 4.5 to 6m high, and intrudes siliceous metasedimentary rocks and amphibolite (Bannatyne, 1985). It is up to 27 m (90 ft.) wide at surface and is exposed in 16 historical cross-trenches over a length of 183m. Based on our Company’s drilling results, lithium mineralization has been defined for 265m along strike, up to 40m wide and to a depth of 265m, Individual dykes have lengths of approximately 244 m. The outer zones of the pegmatite dykes contain pink aplite and coarse feldspar, locally green muscovite, tourmaline, and occasionally beryl. Spodumene, quartz, cleavelandite, and tourmaline form core zones with interstitial coarse feldspar. Spodumene is usually coarse-grained and is sometimes altered. It is most prevalent in the central 9m (30 ft.) of the main dyke. In this dyke, spodumene crystals (up to 35 cm long) occur either in clusters, over widths of 6m or more, or associated with coarse tourmaline and perthite megacrysts; some spodumene crystals show a preferred orientation of 45° to 55° (Bannatyne, 1985). One of two parallel dykes south of the main outcrop, is 5m wide, and contains spodumene crystals in pods (up to 33 cm across). In other dykes, coarse grained spodumene is abundant in lenticular bands and fine-grained spodumene is distributed through aplitic patches (Bannatyne, 1985). Beryl occurs as white, anhedral to subhedral crystals less than 1 inch (2.5 cm) in diameter in three of the seven dykes. Columbite-tantalite and sparse minute grains of pyrite and chalcopyrite were found in thin sections (Green Bay Mining & Exploration Ltd., Corporation File).

Other Modifying Factors

A preliminary metallurgical test was conducted to determine possible concentrate grade recoverable from the Zoro dyke-1 deposit in 2020. Automated mineralogy, coupled with geochemical analyses and mineral chemistry, provide valuable quantitative data that can be used to guide the test work and explain recoveries and potential losses. Spodumene is the primary lithium mineral in the Zoro Property pegmatite and accounts for 96% of the total lithium. Lithium losses due to other than spodumene host minerals will be minimal and favor the project. Furthermore, liberation of spodumene is 88% for the calculated head for a P80 of 600 μm. Therefore, flotation can be conducted at relatively coarse particle size to recover the spodumene. Liberation of gangue minerals including quartz (89%), Na- and K-feldspars (94%), and micas (82%) is very good. These can theoretically be rejected. Preliminary test work, HLS and combined with magnetite separation, tests indicate that it is possible to produce a high-grade (close to 6% Li2O) SC6 lithium concentrate after the rejection of iron silicate minerals. Thus, most of the spodumene should be amenable to recovery by HLS and/or flotation. The mineralogical characteristics of the pegmatite favor the economic potential of the project.

We contracted XPS Expert Process Solutions (a Glencore company) to develop a process to refine spodumene concentrate (SC6 technical specification) into a saleable battery-grade lithium hydroxide product in the Spring of 2022. Our initial 2020 metallurgical test work, done in conjunction with SGS Canada Inc., indicated that it is possible to produce a high-grade 6% Li2O concentrate. Final test results confirmed in March of 2023 that Dense Media Separation (“DMS”) and flotation of DMS Middlings together, achieved a global lithium recovery of 81.6% at a spodumene concentrate grade of 5.88% Li2O. Pyrometallurgical and hydrometallurgical testing on the DMS spodumene concentrate have shown that the final product is amenable to a flowsheet, capable of producing both battery grade lithium products, Lithium Carbonate (Li2CO3) and Lithium Hydroxide (LiOH).

The Dyke 1 metallurgical program was initiated in June of 2022 after receipt of a permit from the Manitoba government and the collection of a 489 kg of spodumene-mineralized pegmatite from historic trenches exposing Dyke 1 on the Zoro Property.

Results of Test Work

The Zoro Dyke 1 metallurgical program investigated the feasibility of lithium beneficiation by dense media and dry magnetic separation with the goal of producing a 6% Li2O concentrate from a Master Composite, at a fairly coarse particle size of -12.7/+0.5 mm. Completed HLS, DMS, and dry magnetic separation test work confirms that heavy liquid separation (HLS) demonstrates excellent potential for the recovery of an on-spec lithium concentrate from the Master Composite by dense media separation. The global lithium recovery to a cumulative HLS non-magnetic sink product at an interpolated 6% Li2O grade was high at 73.5%, at a projected SG cut-point of 2.88. Results from HLS testing were confirmed in the DMS pilot plant. DMS processing followed by dry magnetic separation produced a 5.93% Li2O spodumene concentrate, at a global lithium recovery of 66.9%, in approximately 27% of the mass which is in good agreement with the HLS results. The iron contents in the final lithium concentrates from both HLS and DMS were slightly above the 1% Fe2O3 requirement, but still acceptable for subsequent hydrometallurgical lab testing. Further improvements on the recovery of lithium can be realized by incorporating flotation and wet high-intensity magnetic separation (WHIMS) in the flowsheet to treat the DMS middlings and -0.5 mm fines. Favourable metallurgical characteristics and processing of the Dyke 1 mineralogically representative bulk sample have been confirmed by this two-phase program. The result provides confidence in the metallurgical character of spodumene-bearing pegmatite as exploration proceeds on the Zoro Property.

Mineral Resource Estimates

Cut-off Grades

For purposes of establishing prospects of economic extraction, the cut-off grade is the grade that distinguishes material deemed to have no economic value (it will not be mined in underground mining or if mined in surface mining, its destination will be the waste dump) from material deemed to have economic value (its ultimate destination during mining will be a processing facility). Other terms used in similar fashion as cut-off grade include net smelter return, pay limit, and break-even stripping ratio. A cut-off of 0.3 % was chosen as the base case and is deemed a reasonable prospect for economic extraction based on similar reporting on other comparable properties, as well as the relevant factors. As stated in our SK-1300 Report for the property, the author’s opinion is there isn’t a calculation for the cut-off grade. Future refinement of the deposit understanding will lead to a full economic grade cut-off calculation. The number is based mainly on industry standard reporting with a confirmation that in principle this will be economic through the initial pit optimization calculation.

Grade-tonnage summaries by Li2O (%) cut-off

The metal price used for this determination is based on a Spodumene concentrate of 6% Li2O and a price of 3,300 US$/t concentrate. The author feels this is reasonable given the long-term anticipated demand for the commodity, the long-term timeline of this project. The operating cost assumptions are sourced from comparable open pit projects in Canada. A cut-off grade of 0.3 % was used for reporting, based on comparable open pit projects in Canada and the open pit optimization results. Optimized pit shells were generated by an Open Pit Engineering consultant to establish reasonable prospects for eventual economic extraction. The pit shells were run on the regular model cells, with blocks measuring 2.5 x 2.5 x 2.5 m. The pit slope angle was set at 50° based on preliminary estimate of the rock quality. Key input assumptions are summarized in the table below. Comparable properties are referenced, and averages derived from publicly available industry databases.

This 0.3% Li2O cut-off grade was used to measure our resources as, according to our S-K 1300 Report, that is a reasonable grade necessary to cover estimated production costs in accordance with the following criteria (in US dollars):

Open Pit Optimization Inputs 

The Zoro dyke-1 mineral resource is classified entirely as an inferred mineral resource in accordance with the S-K 1300 when taking into consideration, data density, deposit geometry, likely extensions, and possible interpretation alternatives. For reporting purposes, the Zoro Property inferred mineral resource is tabulated Li2O (%). The author is unaware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that may negatively affect the economic extraction of the inferred resource.

Summary of In Situ Mineral Resources as of the end of fiscal year 2023

Zoro Property Inferred Mineral Resource

The foregoing resource estimation was completed by Scott Zelligan, P. Geo, Qualified Person, with an effective date of March 31, 2023. The Qualified Person has confirmed that there has been no change in the mineral resource estimation between March 31, 2022 and March 31, 2023, or between March 31, 2023 and the date of this prospectus. This resource covers only material within Dyke 1 at the Zoro Property. Our lithium resource is comprised entirely from one spodumene mineralized pegmatite dyke (the Zoro Dyke 1) as defined by our 2017/2018 drill programs. Dyke 1 is close to additional lithium bearing mineralization hosted in 15 spodumene pegmatite dykes that are yet undefined and does not comprise part of the existing resource. The resource remains open at depth and along strike in both the north and south directions.

Estimation was conducted only within the mineralized pegmatite with internal and external waste excluded as identified by hard boundaries. Interpretation occurred on a two-dimensional sectional basis then combined to form a three-dimensional volume model of the in-situ pegmatite dyke. No waste material in the host country rock was estimated.

Permitting

All mineral claims in good standing on Crown land in Manitoba are entitled to be explored without any permitting, except as indicated below. All mineral exploration programs in Manitoba require work permits for timber removal, shoreland alteration and road construction. These permits are issued annually by the provincial Department of Conservation and Climate. For more intrusive exploration, such as line cutting (using chain saws), overburden stripping, blasting and/or diamond drilling, a work permit granted under Section 7(1)(c) of The Crown Lands Act or Section 23 (1) of The Wildfires Act, Province of Manitoba is required. Permits address conditions for exploration that must be adhered to in a given work area based on the planned exploration activities.

Permitting of project exploration in Snow Lake is a well-defined process overseen by the local administrators. Permits required to advance this project to a development /construction stage are granted by the Departments of Environment, Wildlife, Fisheries, Historic Resources, and Mines. This process would likely take 6-8 weeks for review after completion of all other supplementary reports/studies completed.

The type and duration of the camp infrastructure required for exploration also dictates the type of permit required in Manitoba. Temporary camps established for less than one year are covered by a work permit, whereas a separate permit issued by the Manitoba Department of Labor - Fire Commissioners Office is required for exploration camps on Crown land established for periods longer than one year.

Obtaining permits for advanced exploration and exploitation requires consultations with government officials and are based on specific permit requirements.

Infrastructure

The Zoro Property is located 20km east of the town of Snow Lake. Nearby infrastructure includes a power line servicing the town of Snow Lake approximately 5 km south of the property, the Snow Lake airport and an all-weather gravel road 11 km west of the property, and a rail link located at Wekusko siding, 20 km to the south of Herb Lake Landing which is 30 km south of the property. The nearest road link is a seasonal road on the east side of Wekusko Lake that accesses the village of Herb Lake Landing and Provincial Highway 392 within 11km. Airstrip located 5 km to the north. The property is accessed through helicopter support and float plane charter company, operates from Snow Lake and provides easy access to the property.

Figure 6 - Showing nearby infrastructure and Zoro Property location

The town is a major support centre for smaller communities in northwestern Manitoba. There is a regional hospital in Flin Flon, a newly built shopping centre, and all the necessary infrastructure to support the local town. Hudson Bay Mining and Smelting Ltd. (“HBMS”) operates the Lalor mine and a concentrator to the south of Snow Lake.

The Snow Lake area has the necessary infrastructure in place to provide the basis for supporting other mining operations in the district. The HBMS operations represent the largest employer in the area. The presence of HBMS also provides the basis for secondary support and supply to local businesses. The municipal, regional, and provincial government activities in the area also provide significant employment. There are tourist camps and lumber operations in the district. Consequently, there is a stable and experienced workforce possessing the necessary skills in exploration and mining in the area.

Planned Work

A drone-assisted magnetic and Lidar survey was undertaken by EarthEx Geophysical Solutions Inc (“EarthEx”) between May 28 and June 15, 2022, and comprised 1,264.7-line km. Mapping and geochemical surveys compliments the magnetic survey and will provide a base for our planned summer follow-up exploration in 2023. This same approach to exploration has led to the discovery of 16 previously unknown spodumene-bearing pegmatite dykes and the delineation of multiple lithium targets. A field crew will be dispersed on the Zoro Property later in July or early August of this year to undertake prospecting, rock and soil geochemical surveys based on MMI Technology. Lidar surveys will support detailed prospecting and magnetic surveys. Data integration from the summer exploration program of 2023 will provide targets for a 2,000 meter helicopter-supported diamond drill for program with a projected start date is the latter part of the fourth quarter of 2023. A total of $1.80 million to support exploration efforts has been allocated from the use of proceeds of the offering towards the Zoro Property follow-up drill program.

Jean Lake Lithium and Gold Property

The Jean Lake Property is an exploration stage property situated along the Thompson Brother Trend in west-central Manitoba 15 kilometers east of the historic town of Snow Lake, Manitoba, Canada. The property is located at UTM coordinates 451,000mE and 6,078,000mN. (GPS coordinates are 54.82104, -99.77023). Access to the property is by fixed wing or rotary wing transportation from the community of Snow Lake or by boat from Bartlett’s Landing on Provincial Road 39. The Jean Lake Property has no mineral reserves or mineral resources under S-K 1300. The book value of the property as of March 31, 2023 was $2.659 million.

Figure 7 - Drone Magnetic Survey Map – different colors indicate highs and lows in the ground (the white gap in-between colors on map is powerline)

Property and Ownership

The Jean Lake Property consists of 5 mineral claims covering approximately 2,476 acres (1,002 hectares). We currently have no ownership interest in the Jean Lake Property, except for an option to acquire an interest, subject to completion of certain exploration activities and making certain payments of cash and shares.

On July 30, 2021, we entered into an option agreement with Mount Morgan Resources Ltd. (“Mount Morgan”) whereby Mount Morgan granted us the sole and exclusive right and option (the “Jean Lake Option”) to acquire an undivided 100% right, title and interest in and to the property. We may exercise the Jean Lake Option by making the following cash payments and common share issuances to Mount Morgan over a 48 -month period (the “Jean Lake Option Period”): (a) shares in the capital of the Company valued at $25,000, and $25,000 in cash within two business days following July 30, 2021; (b) shares in the capital of the Company valued at $50,000 and an additional $50,000 in cash on or before July 30, 2022 (in addition, we must spend $50,000 on Exploration expenses by July 30, 2022); (c) shares in the capital of the Company valued at $50,000 and an additional $50,000 in cash on or before July 30, 2023; (in addition, we must have spent an accumulated total of $100,000 on Exploration expenses by the second anniversary of July 30, 2021); (d) shares in the capital of the Company at $50,000 and an additional $50,000 in cash on or before July 30, 2024 (in addition, we must have spent an accumulated total of $150,000 on Exploration expenses by July 30, 2024); and (e) shares in the capital of the Company valued at $75,000 and additional $75,000 in cash on or before July 30, 2025 (in addition, we must have spent an accumulated $200,000 on Exploration expenses or before July 30, 2025). We have completed all share and cash payments due through and including the required July 30, 2022 payments. Upon the Company having completed all of the foregoing share issuances and cash payments and having incurred an aggregate of $200,000 in exploration expenditures within the foregoing deadlines, the Company shall have exercised the option to acquire all of Mount Morgan’s interest in the Jean Lake property, subject to Mount Morgan’s right to retain a 2% net smelter royalty over the Jean Lake Property (the “Jean Lake NSR”). The Company has the right to repurchase 1% of the Jean Lake NSR in consideration of a cash payment of $1,000,000 to Mount Morgan. Upon exercise of the option, at the Company’s request, Mount Morgan must deliver to the Company executed registerable transfers or evidence of ownership in favor of the Company. During the option period, the Company is responsible for maintaining the property in good standing including completing and filing all applicable assessment work or payments in lieu thereof, payment of applicable taxes and all other actions necessary to keep the property in good standing and clear of encumbrances. In addition, the Company has indemnified Mount Morgan against any claims arising as a result of environmental damage created as a result of the Company’s activities on the Jean Lake Property. The Company may terminate the option agreement at any time by giving written notice to Mount Morgan, or by electing not to exercise the option in full prior to the final option deadline. In the event that the Company fails to issue any shares or advance any payment when due, or in the event that the Company is in breach of any covenant, representation or warranty under the agreement, Mount Morgan may terminate the agreement if: a) Mount Morgan has provided written notice of such to the Company; b) the Optionee has not within 10 days from such notice cured such default and c) the required amount of Exploration expenses has not been expended. If the option is not exercised by the Company in full within the required deadlines, the agreement will terminate and the Company will hold no interest in the Jean Lake Property.

Jean Lake Property Claim Details

Figure 8 - Location of the Beryl Pegmatites B1, B2 and B3

Geology

The Jean Lake Property

is hosted by the Early Proterozoic (1.832 Ga) Rex Lake Plutonic Complex which is a circular intrusion 8 km in diameter. The property hosts the historic west-northwest striking Beryl lithium pegmatites rediscovered in August of 2021 in blasted trenches beneath 80 years of organic deadfall and glacial sediment. The 270-degree trending dykes are characterized by coarse grained light green spodumene crystals in a matrix of potassium feldspar, quartz, and muscovite. The host rocks are coarsely porphyritic gabbro. The property also hosts the shear zone-hosted Sparky gold occurrence discovered in 1918. The gold mineralization is associated with disseminated and near-solid fracture fillings consisting of fine grained to blocky arsenopyrite with lesser pyrite and chalcopyrite hosted within sheared and silicified massive basalt. The mineralization is developed within variably altered mafic to intermediate intrusive rocks of the Early Proterozoic Rex Lake Plutonic Complex (RLPC) that underpins the Jean Lake property. The B1 pegmatite is also hosted by the RLPC within structures trending at approximately 270o-290o. This intersection occurs in a shear zone at or near the base of the B1 pegmatite in fine grained gabbro.

The location of the Beryl Pegmatites (“B1” and “B2”) is illustrated on a Jean Lake claim map in figure 8. Another Beryl Pegmatite on the property (“B3”) is a pegmatite without visible spodumene.

History

The Sherritt-Gordon dyke 3 spodumene-bearing pegmatite on this property were first discovered in 1931 by prospecting and drilled in 1942 by Sherritt Gordon Mines but assays were not available. Thereafter, the Jean Lake Property remained unexplored until our company began exploration efforts in the late summer of 2021, and we re-discovered the Beryl Pegmatites by prospecting in August of 2021.

Gold History of the Area

The Jean Lake property is located 15km east of the historic mining town of Snow Lake, Manitoba and has long been recognized for its gold potential since the early 1900s. Historically, 5.5 million ounces of gold has been produced as a by-product of base metal copper-zinc massive sulphide type deposit production in addition to major gold deposits such as the New Britannia, Puffy Lake and Tartan deposits, with cumulative production of more than 1.5 million ounces of gold in the Flin Flon-Snow Lake greenstone belt. See Richardson, D.J. and Ostry, G. 1996: Gold Deposits of Manitoba, Manitoba Energy and Mines Economic Geology Report ER86-1, 114 pages.

Jean Lake Property – Gold History

In 1940, two bulk samples of mineralization weighing 22.7 and 22.2 kg. respectively, were sent to the Canada Department of Mines and Resources in Ottawa for testing from what was known as the Sparky Gold Property at the time (the current Jean Lake Property). The first bulk sample contained 16.46 g/t gold and 2.39 g/t silver. whereas the second bulk sample contained 241.71 g/t gold and 12.34 g/t silver. Fedikow, M.A.F., Athayde, P and Galley, A.G. 1993: Mineral deposits and occurrences in the Wekusko Lake area, NTS 63J/13; Manitoba Energy and Mines, Geological Services, Mineral Deposit Series No.14, 459 pages; Richardson, D.J. and Ostry, G. 1996: Gold Deposits of Manitoba, Manitoba Energy and Mines Economic Geology Report ER86-1, 114 pages. Gold exploration continued unabated in the area with high-grade gold mineralization documented from numerous past producing gold mines and properties hosting significant gold mineralization.

Exploration

The disclosure of exploration results contained in this section is based on information and supporting documentation provided by a Qualified Person.

Lithium

Five representative rock chip samples of spodumene-bearing mineralization were collected in August 2021 from blast material in two trenched locations of the Beryl pegmatites. Two of the samples were apple green, coarse grained spodumene and three samples were from straw-colored finer grained spodumene.

Samples were shipped to Activation Laboratories in Ancaster (Ontario) for analysis using the UT-7 method which uses a total dissolution of the sample by sodium peroxide fusion and ICP-MS finish. This analytical approach is the standard analytical technique used by the Company on its Zoro Property and Jean Lake Property for the analysis of pegmatite.

Results indicate all samples returned high-grade lithium contents regardless of the textural characteristics of the spodumene.

Lithium analyses for two styles of spodumene mineralization at the Beryl Pegmatite, Jean Lake Property, Snow Lake area, Manitoba.

Gold

Fifteen representative rock chip samples from the Jean Lake Property in 2021 returned assay results with maximum contents of 20.9 g/t gold. All but one sample exceeded 1 g/t gold. Gold assays are determined by fire assay using a 30-gram sample followed by an instrumental neutron activation finish.

All grab samples were representative of mineralization exposed in outcrop and in historic pits and were collected from pervasively silicified wall rock containing brecciated and mineralized quartz veins. The deformation observed in the rocks sampled is attributed to faults cutting the eastern portion of the Rex Lake Pluton which is bounded on the east by the crustal scale Crowduck Bay Fault.

Summary of 2021 Jean Lake Property

Laboratory contamination was not detected in the analysis of the samples based on the replicate analyses of the method blank. The analysis of both internal standards and International Reference Materials indicates the analyses are accurate and reproducible.

Ongoing exploration, consisting of prospecting and geochemical surveys, was continued in June 2022 utilizing the results from recently completed drone-assisted magnetic surveys. The drone surveys were conducted between November 29, 2021, and December 20, 2021, and comprised 483.4-line km. The technology was utilized to aid with new prospective drill targets by producing high-resolution images, to define the 3D location, shape, size, and distribution of potential spodumene rich pegmatite dykes. The Company’s exploration efforts have focused on lithium in pegmatite using a variety of exploration technologies, which not only have exposed potential for spodumene, but which also has demonstrated the potential for gold mineralization.

The follow-up of the magnetic data identified 14 high priority structural targets in the northern portion of the Jean Lake property which were used as drill targets in the most recent completed drill program. Magnetic interpretation helped identify the beryl pegmatites, which assayed at 3.89% and 5.17% Li20, trending along Snow Lake Lithium’s high-grade SG and GRP spodumene and GRP pegmatites. SGM-3, now referred to as the Beryl dyke or B1, which was re-discovered on the Jean Lake property in 2021 by prospecting beneath 80 years of organic and inorganic debris.

Permitting and Licensing

We have to take the necessary exploration efforts to define drill targets before making an application for permits. We utilize previously acquired UAV-assisted magnetic and Lidar survey results and new rock and soil geochemistry and prospecting to determine our targets. After summer field work is complete and drill targets are defined, we will make an application for a work (drill) permit at the Mining Permits office of the Manitoba Government. We will be required to submit the number of holes, location and metres on the application, or it will not be accepted by the Manitoba Government. Such permits generally are awarded within 3 weeks of application submission. For a full outline of permitting requirements in Manitoba, see “Properties – Zoro Property - Permitting”.

Infrastructure

The Jean Lake Property is located 15km east of the town of Snow Lake. See “Properties – Zoro Property - Infrastructure” for discussion of nearby infrastructure.

2022/23 Winter Drill Program

A drill program was announced on November 21, 2022, of which we identified 14 high quality targets through a combination of prospecting and airborne geophysics. The drill program tested a variety of targets on the property using the integrated results of magnetic surveys, rock and soil geochemical surveys and outcrop prospecting and commenced on December 2, 2022. In June 2023, we provided the results of the completed 3,002 meters inaugural diamond drill program. The drill program tested targets for lithium and gold, based on integrated prospecting, UAV-borne magnetic survey results, MMI soil geochemical surveys and outcrop rock chip analyses.

A total of 246 drill-core were collected and shipped to Activation Laboratories Ltd. in Ancaster Ontario. Sample collection, handling, preparation, and analysis are monitored with the implementation of chain-of-custody procedures and quality assurance-quality control (QA-QC) programs that follow industry best practices. The drill core samples are cut in half with a diamond saw and are submitted to Activation Labs for the determination of lithium and related elements and gold. Core samples are prepared by crushing to 80% to pass 2 millimeters, riffle split to obtain 250-gram aliquots, and pulverized to 95% passing 106 microns. Pulps for lithium analysis undergo sodium peroxide fusion to obtain a total dissolution and analyzed by ICP-MS using the UT-7 package thereby maintaining consistency with previous year’s analyses. Gold assays are analyzed by a 30-gram fire assay and INAA finish. For assays above 5 g/t Au, a sub-sample of the original pulp is re-assayed with a gravimetric finish. Samples with visible gold are analyzed by metallic screen assay.

Results

The Jean Lake drill program intersected numerous gold mineralized intervals at vertical depths up to 110 m below surface as well lithium at the B1 spodumene bearing pegmatite. The locations of drill holes that intersected gold mineralized intervals are illustrated in Figure 9, in addition to the B1 drill hole location. Details of the gold intersections are provided in chart table 1 which displays a summary of gold intersections in drill holes.

Figure 9. Lithium and Gold Intersections in 2022/2023 Drill Holes

Lithium B1-B2 Pegmatite

The historic B1 pegmatite was tested to assess the width and extent of observed high-grade spodumene mineralization exposed at surface. Drilling included a down dip hole to assess the vertical extent of the spodumene and the dimensions and attitude of the B1 pegmatite. Drilling combined with field observations have definitively concluded that both B1 and B2 are from a single pegmatite dyke with a strike length of greater than 325m. The drill program identified and provided preliminary dimensions for a high-grade zone of lithium mineralization at the B1 pegmatite. The vertical extent of high-grade lithium appears to be restricted to the upper portions of the B1 dyke exposed in outcrop at the drilled locations.

FM23-01A was drilled down plunge and intersected pegmatite to a depth of 41.3 metres. An intersection of a 3.35 metre zone of spodumene mineralization between surface and 3.35m assayed 1.26% Li2O. FM23-01 was drilled from north to south just north of the B1 exposure to undercut the surface exposure of high grade spodumene mineralization and intersected 20 m of pegmatite between 6 and 26 m. Spodumene was not observed in the core. No other significant Li2O assays were obtained from drill holes testing the B1 pegmatite in this campaign. The east end of the B1 pegmatite is marked by a trenched exposure of high-grade spodumene bearing granitic pegmatite originally referred to as the B2 pegmatite. FM23-06 was drilled at -45o to test the pegmatite beneath the trench and intersected a 4.4 m intercept of spodumene-bearing pegmatite between 32.88 and 37.3 m. The maximum lithium assay was 0.61% Li2O. FM23-07 was drilled at -60o to undercut hole FM23-06 and intersected a wider 10 m zone of pegmatite from 54.42-64.45 m but with lower lithium contents. The maximum Li2O assay from this drill hole was 0.2% Li2O from 10 core samples.

Gold

The 2022-2023 drill program documented gold mineralized intersections of variable widths in eight drill holes. The gold mineralized zones in drill core extend from surface to a vertical depth below surface of 110 m. A summary based on the observed characteristics of the gold intersections is outlined below in chart below and the general and specific characteristics of each gold mineralized intersection is discussed.

Drill hole FM23-01A, originally collared to test the down plunge extent of the spodumene mineralization in the B1 pegmatite intersected a 3.70-m-wide intercept of 2.47g/t gold in a silicified sheared mafic intrusion. Gold is associated with disseminated arsenopyrite, pyrite and chalcopyrite. The mineralized shear zone occurs between the base of the B1 pegmatite and the adjacent mafic intrusion at a point of rheologic difference.

Gold mineralization in DDH FM32-04A occurs within a zone of white to grey, fine-grained quartz veins with 1-2% disseminated arsenopyrite. The 11.27 g/t gold over 2.75 m includes a narrow zone of 91.8 g/t gold over 0.32 m is hosted within a dark grey-green, medium to coarse grained mafic intrusion. A broad zone of 7.66 m is the widest gold intercept of the drill program and is developed within an altered mafic intrusion. This mineralized zone consisted of 1-2% molybdenite and arsenopyrite occurring at the edges of a fine-grained white quartz vein. A higher but narrower zone of 102 g/t gold was obtained from a 0.48 m zone containing molybdenite. This elevated gold assay can be attributed to the presence of a very fine grain of visible gold in this assay sample interval.

To assess the area of the FM23-08 gold intercept DDH FM23-08A was drilled at 180 degrees in the opposite direction to assess the area for possible additional gold mineralization. The result was a 0.52 metres wide gold-bearing intercept. Drill holes FM23-13 and FM23-14 intersected narrow gold zones varying in width from 1.23 metres to 2.85 metres at depths between 120 metres and 154 metres, respectively. Distinctive alteration was noted to accompany the 0.68 m gold mineralized intercept of 3.04 g/t in FM23-22. The 3.49 m-wide near-surface gold intercept of 2.07 g/t in DDH FM23-25 occurs between 25.3 m and 28.79 m in a zone of white to dark green chloritic quartz veins.

Of interest is the occurrence of 2.46 g/t Au over 3.70m from 41.30m-45m inFM23-01A. Gold is associated with quartz veins and arsenopyrite.

Summary of Gold Intersections in Drill Holes