The following discussion and analysis of the operations, results, and financial position of Azincourt Energy Corp. ("the Company") for the year ended September 30, 2021 should be read in conjunction with the Company's audited financial statements and related notes for the year ended September 30, 2021. The Company's management is responsible for the preparation and presentation of the financial statements and this MD&A. The effective date of this report is January 24, 2022. All figures are presented in Canadian dollars, unless otherwise indicated.
The Company was incorporated pursuant to the provisions of the Business Corporations Act (British Columbia) on April 7, 2011. The Company is in the business of exploration, development and exploitation of mineral resources in Canada. The Company's primary objective is to explore mineral properties to a stage where they can be developed profitably or sold to a third party.
The Company is conducting exploration activities on the East Preston Project in Saskatchewan, Canada, the ELC Project and Hatchet Lake Project in Peru.
HIGHLIGHTS FOR THE YEAR ENDED SEPTEMBER 30, 2021 AND SUBSEQUENT PERIOD UP TO JANUARY 24, 2022:
On January 19, 2021, the Company completed a private placement of 30,000,000 flow- through units at $0.05 per unit for total proceeds of $1,500,000. The Company incurred share issue costs of $34,578, issued 2,240,896 finders' fee warrants, and issued 2,240,896 finders' fee common shares relating to the private placement.
On January 26, 2021, the Company completed the first tranche of a private placement by issuing 17,750,000 non flow-through units at $0.05 per unit for total proceeds of $887,500. The Company incurred share issuance costs of $21,542 and issued 168,000 finders' fee warrants relating to the private placement.
On March 3, 2021, the Company closed the second tranche of a private placement by issuing 2,000,000 flow-through and 65,080,000 non flow-through units at $0.05 per unit for gross proceeds of $100,000 and $3,254,000, respectively. The Company incurred share issuance costs of $143,718, issued 4,796,000 finders' fee warrants, and issued 3,180,000 finders' fee common shares valued at $365,700 relating to the private placement.
On March 5, 2021, the Company issued 10,000,000 common shares to 1177865 BC Ltd. as part of the ELC Project option agreement, valued at $950,000. The Company incurred $5,425 of costs relating to the share issuances.
On September 29, 2021, the Company completed the first tranche of a non-brokered private placement of 60,805,988 non flow-through units at $0.07 per unit, 10,933,459 flow-through units at $0.075 per unit and 14,285,714 charity flow-through units at $0.093 per unit for gross proceeds of $6,405,000. In relation to the private placement, the Company incurred finders' fees of $491,725, share issue costs of $44,916 and issued 6,593,437 finders' fee warrants valued at $382,000.
During the year ended September 30, 2021, 6,350,000 stock options were exercised for gross proceeds of $317,500.
During the year ended September 30, 2021, 12,568,657 warrants were exercised for gross proceeds of $879,806.
On April 7, 2020, the East Preston option agreement with Skyharbour and Dixie Gold was amended to extend the due date of the $400,000 payment to March 31, 2021. In consideration for the extension, the Company issued 2,500,000 common shares each to Skyharbour and Dixie Gold at $0.05 per share valued at $250,000. $200,000 cash option payment was paid to Dixie Gold as at September 30, 2021. On February 12, 2021, the Company amended its agreement with Skyharbour whereby in lieu of paying $200,000 of cash, the Company would pay exploration expenditures on the property of up to $200,000 and any deficiency by March 31, 2021 would be paid in cash. Total work expenditures paid by the Company as at March 31, 2021 were $108,830 which was recorded as exploration and evaluation costs and the remaining $91,170 was paid in cash as option payment during the year ended September 30, 2021.
On October 12, 2021, the Company completed a non-brokered private placement of 17,071,428 non flow-through units at $0.07 per unit and 6,666,667 flow-through units at $0.075 per unit for gross proceeds of $1,695,000. In relation to the private placement, the Company paid finders' fees of $135,600, paid share issue costs of $34,145 and issued 1,899,047 finders' fee warrants.
On November 9, 2021, the Company entered into an option agreement with ValOre Metals Corp. ("ValOre") to earn up to 75% interest in the Hatchet Lake Uranium Project ("Hatchet Lake") which consists of six mineral claims located in Saskatchewan, Canada. Pursuant to the agreement, the Company will make staged cash payments totalling $850,000, issue common shares with a value of $1,750,000 and incur certain exploration expenditures totalling $4,000,000 over 3 years. In connection with the grant of the Option, the Company paid a finders' fee of $105,000. On December 1, 2021, the Company paid $100,000 of option payment, issued 2,837,684 common shares valued at $250,000 and paid $105,000 of finders' fee.
On November 10, 2021, the Company completed a non-brokered private placement of 7,034,570 non flow-through units at $0.07 per unit and 14,333,334 flow-through units at $0.075 per unit for gross proceeds of $1,567,420. In relation to the private placement, the Company paid finders' fees of $70,000, paid share issue costs of $17,875 and issued 933,333 finders' fee warrants.
On January 12, 2022, the Company signed an agreement with FOBI AI Inc. ("FOBI"), to settle $250,000 of debt owing to FOBI with issuance of 3,333,333 common shares at a deemed price of $0.075 per share. The indebtedness relates to consulting fees performed by FOBI. The issuance of the shares is still subject to approval of the TSX-V Exchange.
Subsequent to September 30, 2021, 5,100,000 warrants were exercised for proceeds of $357,000.
MINERAL PROPERTY EXPLORATION
EAST PRESTON PROJECT - Athabasca Basin, Canada
As at September 30, 2021, the Company incurred total acquisition costs of $2,225,065 (September 30, 2020 - $1,933,895) pursuant to an option agreement to acquire a 70% interest in the East Preston Project. Earn in under the option agreement was completed in February of 2021, with Azincourt holding a 70% interest in the Project. Following the acquisition of the interest, the Company formed a joint venture with Skyharbour Resources Ltd. and Dixie Gold Inc. with the remaining 30% interest split evenly between Skyharbour and Dixie Gold. Dixie Gold has elected to not participate in subsequent programs and dilute interest, and as such, current ownership stands with Azincourt at 72.8%, Skyharbour Resources at 15%, and Dixie Gold at 12.2%
The East Preston project is part of the formerly larger Preston Project explored by Skyharbour, and its predecessor partners. In excess of $4.7 million has been spent on the Preston uranium project to date, including ground gravity, airborne and ground electromagnetics, radon, soil, silt, biogeochem, lake sediment, and geological mapping surveys, as well as two exploratory drill programs. Fifteen high-priority drill target areas associated with six prospective exploration corridors have been successfully delineated at Preston through methodical, multiphased exploration work. AREVA has recently optioned the adjacent Preston Project for up to $7.3 million in exploration expenditures, highlighting the exploration prospectivity of the area.
The East Preston project has had extensive regional exploration work including: airborne electromagnetic (VTEM), magnetic and radiometric surveys, ground based Horizontal Loop EM (HLEM) and gravity, prospecting, sampling, and diamond drilling. Three prospective conductive, low magnetic signature corridors have been discovered on the property. The three distinct corridors having a total strike length of over 25 km, each with multiple EM conductor trends have been identified.
An approximately $1.2 million winter 2020 drill program focused on prospective targets generated from previous ground and airborne geophysical surveys in the Five Island Lakes area. Nine diamond drill holes totalling 2,431 meters were completed in three zones within a 7km x 2km area. All drill holes targeted combined electromagnetic ± gravity geophysical and geochemical anomalies in concert with structural/topographic discontinuities. East Preston hosts multiple closely spaced discreet graphitic conductor trends with coincident gravity low anomalies often indicative of alteration or thicker overburden due to enhanced glacial scouring over altered, or structurally disrupted basement.
The majority of proposed holes tested multiple subparallel EM conductors (A-zone and B-zone conductor corridors), in an area of marked structural disruption. Portions of the A-zone were drilled during the 2019 winter campaign verifying that the conductor hosts significant graphite in strongly deformed (sheared) host rocks that offer both fluid pathways and a reducing host rock conducive to uranium deposition.
Three main target areas were drill tested with promising basement lithologies and graphitic structures intersected along with associated, anomalous Rare Earth Element ("REE") mineralization and favourable alteration. The basement lithologies and litho-tectonic setting at
East Preston are very similar and appear analogous to the Patterson Lake South-Arrow-Hook Lake/Spitfire uranium deposits' host rocks and setting, and the recognition of REE mineralization setting appears to represent a basement mineralizing system similar to sandstone-hosted REE mineralization associated with uranium deposition observed at the Wheeler River project in the eastern Athabasca. The East Preston basement-hosted REE mineralization is LREE>HREE, whereas, the sandstone-hosted MAW Zone is HREE dominant, which could be related to original source-rock contents, fluid travel pathways/chemistries and depositional conditions (basement versus sandstone style). However, the presence of similar HREE mineralization in basement structures displaying silica and boron enrichment at East Preston confirms mineralizing basement fluid systems were active and, although this system is not uranium-bearing, the litho-tectonic setting and conditions remain highly prospective for basement-host uranium mineralization discovery in the vicinity. Follow-up drilling is warranted at both A-Zone and B-Zone conductor trends as both infill drilling and strike extension testing.
The 2020 drill program included additional drilling in the Swoosh zone, an over seven-kilometre- long east-west structural lineament with strongly anomalous, spatially consistent geochemical anomalies (lake sediments, radon, soil) and coincident magnetic and gravity geophysical anomalies. This zone is located along strike -- approximately five kilometres southwest of the A- zone. No graphitic rocks or anomalous geochemistry was intersected at Swoosh, and no additional follow up work is planned.
An early winter 2021 ground geophysical targeting program was completed in January to generate and refine targets supporting future drill programs based on the existing property-wideheli-borne VTEM survey results where numerous untested graphitic conductive corridor trends have been identified for follow up. The program consisted of 40.5 line-km of helicopter- supported Horizontal Loop Electromagnetic (HLEM) ground geophysical surveying in six grid target areas. The survey was successful in delineating several conductors over the six selected target areas, G1, G2, G3, K, Q and H (see Figure 2). Many of the conductors show strong well- defined responses and have been recommended for drill test follow-up.
A winter 2021 exploration program was planned to follow-up encouraging results from previous drilling and incorporate new targets generated during the latest ground geophysical program. The program was to be a minimum 10+ hole, up to 2,500 metre diamond drill campaign. The program was terminated after the completion of 1,195 meters in 5 drill holes due to unseasonably warm weather in early March, with safety and security concerns resulting from the early break-up. Preliminary results indicate that the conductive corridor through the A to G Zones contains a thick graphitic package and associated complex structural pattern ideal for the placement of uranium mineralization. Anomalous and elevated uranium levels were encountered in three of the five holes completed with all five drill holes wide zones of breccia and sheared graphitic faulting over a 50 m interval. Elevated uranium was identified above a graphitic breccia.
A summer 2021 exploration program was carried out with a 2,514 km airborne radiometric survey over the previously unsurveyed southern portion of the property in early August. The survey was successful in highlighting radiometric anomalies worthy of follow-up, particularly in the previously identified G- and Q-zones. Geological mapping and prospecting to follow-up on the identified anomalies was conducted in late August to early September and will be of benefit in refining drill targets in the area.
An extensive 6,000 to 7,000 meter program consisting of 25-35 drill holes is being planned for the winter of 2022. This program will continue where the Winter 2021 drill program halted
prematurely and focus on the G-zone and move on to the K- and Q-zones.ELC PROJECT - Peru
As at September 30, 2021, the Company has incurred total acquisition costs of $1,689,750 (September 30, 2020 - $739,750).
On September 5, 2018, and amended on October 16, 2019, July 29, 2020 and on February 3, 2021, the Company entered into an option agreement with 1177865 BC Ltd. whereby the Company may acquire an undivided 100% interest in the Escalara ("ELC") Project, located in Peru. The Company was required to issue a further 1,000,000 common shares, complete cash payments of $350,000 and incur exploration expenditures of $2,500,000 to acquire the property. Under the terms of the amended agreement on February 3, 2021, the Company agreed to exercise the option immediately with the issuance of 10,000,000 common shares. 1177865 BC Ltd. has waived all further cash payments and expenditures under the option agreement and assigned ownership of the ELC Project to the Company.
The ELC project consists of six Escalara project concessions covering a combined area of 5,500 hectares of prospective exploration targets for volcanic hosted supergene/surficial uranium and lithium on the Picotani Plateau, Puno, Peru. Located in a mineral-rich district where mining giants like Minsur and Rio Tinto operate, as well as growing mid-tiers and juniors like Bear Creek Mining and Plateau Energy Metals. Surface rock samples obtained in 2017 from the ELC project were processed by ALS Minerals, in Lima, Peru, and returned values of up to 3,560 ppm uranium and 153 ppm lithium. Historical samples taken from the ELC project have yielded values up to 6,812 ppm uranium.
In 2018 Azincourt initiated first phase ground work that included detailed reconnaissance to locate favourable outcroppings and known host rock formations, focused ground radiometric geophysical surveys using hand portable scintillometers to test for elevated radioactivity at surface, and a comprehensive channel sampling program. Sampling at the priority ELC project has identified two new prospective uranium areas measuring an estimated combined 6.5 kilometers. Rock grab samples yielded highlight laboratory results of up to 8,061 ppm uranium (0.95% U3O8). Additional highlight samples return 6,812 ppm, 6,126 ppm, 3,560 ppm and 3,438 ppm uranium. 11 rock samples reporting above 1,000-ppm uranium (0.12% U3O8)*.
Rock grab samples are selective by nature and do not necessarily represent average grades on the property
LITHIUM PROJECTS - Manitoba, Canada
The Company has decided not to pursue acquiring interest in the Lithium Projects, therefore total acquisition costs of $228,603 have been written off as at September 30, 2020.
The technical information respecting East Preston, in this MD&A, has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43-101 and reviewed on behalf of the company by C. Trevor Perkins, P.Geo., Vice President of Exploration of Azincourt Energy, and a Qualified Person ("QP") as defined by National Instrument 43-101.
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