MINCO CAPITAL CORP.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR YEAR ENDED DECEMBER 31, 2021

This Management's Discussion and Analysis ("MD&A") of Minco Capital Corp. ("we", "our", "us", "Minco Capital" or the "Company") has been prepared by management on the basis of available information up to April 6, 2022, and should be read in conjunction with the audited financial statements and related notes thereto prepared by management for the year ended December 31, 2021. The Company's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

Except as noted, all financial amounts are expressed in Canadian dollars. All references to "$" and "dollars" are to Canadian dollars and all references to "US$" are United States dollars. Some dollar amounts are rounded to thousands ('000) for discussion purposes.

Additional information of the Company is available under the Company's profile on SEDAR atwww.sedar.com.The Company's audit committee reviews the financial statements and the MD&A, and recommends approval to the Company's board of directors.

Minco Capital was incorporated in 1982 under the laws of British Columbia, Canada. The Company changed its name from Minco Gold Corporation to Minco Capital Corp. on February 25, 2019. Our corporate office is in Vancouver, British Columbia. The Company's common shares are traded on the TSX Venture Exchange ("TSX-V") under the symbol "MMM" and on the OTCQB Market tier in the USA ("OTCQB") under the symbol "MGHCF".

On August 14, 2018, the Company was informed by the OTC Markets that the Company's OTCQX bid price and market capitalization had closed below US$0.10 and US$5 million, respectively, for more than 30 consecutive calendar days. On this basis, the OTC Markets advised the Company that it no longer met the Standards for Continued Qualification for the OTCQX International tier as per the OTCQX Rules for International Companies section 3.2.b.1. A cure period of 180 calendar days, granted to regain compliance, expired on February 11, 2019. During this period, the Company did not meet the applicable criteria for 10 consecutive trading days but remained trading on the OTCQX. On June 4, 2019, the Company received notice from the OTC Markets that it was eligible to transition from the OTCQX to the OTCQB market tier - the Company completed the transition and commenced trading on the OTCQB market tier on June 25, 2019.

As at the date of this MD&A, the Company had 46,771,881 common shares and 4,840,000 stock options outstanding.

Table of Contents

1.

Highlights for the Year

During the year ended December 31, 2021, the Company:

  • a) had $1,091,000 gain from its investments, excluding the market value decrease in 11 million common shares of Minco Silver Corporation ("Minco Silver"). Included in such gain, $110,000 of realized gain was from disposal of certain common shares, $950,000 of unrealized gain was from the market value increase in its investment portfolio, and earned $31,000 of dividends and interest (Details refer to Item 2 and 3, below).

  • b) acquired common shares and warrants of public companies for a total cost of $1,840,459.

  • c) received an approval from the TSX Venture for a renewal of the normal course issuer bid ("NCIB") for a term of one year ending March 31, 2022. Under the NCIB program, the Company may acquire up to 2,388,594 shares or 5% of the Company's issued and outstanding common shares.

    During the year ended December 31, 2021, the Company acquired 1,285,000 common shares of the Company with an original cost of $1,063,622 for a total payment of $105,688. The difference of $957,934 between the purchase price paid and the original cost was recorded as a credit to retained earnings.

  • d) The coronavirus ("COVID-19") has slowed down the global economy and caused volatility in the global financial markets. The outbreak of COVID-19 and its impact on the global financial markets has had an adverse effect on the Company's investments. The extent to which COVID-19 may impact the Company's business will depend on the duration of the outbreak, travel restrictions, the effectiveness of actions and vaccine taken to contain and treat the disease. Although it is not possible to reliably estimate the financial impact, the Company's investment value declined $1,250,001 during the year ended December 31, 2021.

1.1.

Subsequent events

Subsequent to the year ended December 31, 2021, the Company invested in additional equities of public companies at a total cost of $88,510 and disposed certain investments for total proceeds of $505,634.

Subsequent to the year ended December 31, 2021, the Company acquired 436,000 common shares of the Company with an original cost of $334,490 for a total payment of $33,531 under the NCIB program. The difference between price paid and original cost was recorded as a credit to retained earnings. The Company has cancelled 436,000 of those shares.

On March 31, 2022, the Company renewed the NCIB for a term of one year ending March 31, 2023. Under the renewed NCIB program, the Company may repurchase for cancellation up to 2,300,000 or 5% of the Company's issued and outstanding common shares.

1.2.

Net asset value

As at December 31, 2021, the Company's net asset value was $0.21 per share while the Company's common shares traded at $0.07 per share. The Company believes that the market price of its common shares does not reflect their underlying value. Pursuant to the NCIB program, the Company has been repurchasing and cancelling its common shares and believes it is an appropriate use of the Company's fund to benefit all remaining shareholders by increasing their equity interest in the Company.

2.

Investments at Fair Value

The fair values of financial instruments with quoted bid and ask prices are based on the price within the bid-ask spread that are most representative of fair value and may include closing prices in exchange markets. The Company considers the closing share price of investments issued by public entities at each reporting date as the fair value. Also, the Company applies the Black Scholes option pricing model to value public companies' share purchase warrants at the reporting date.

The Company has the following investments as at December 31, 2021:

Number of Shares/Units Held

Fair value

Equities of public resource companies: Top ten resource companies by fair value

-Minco Silver Corporation (i)

-Amerigo Resources Ltd. -Asante Gold Corp. -Neo Lithium Corp. -Amarillo Gold Corp. -Solaris Resources Inc.

-Neo Performance Materials Inc. -Hudson Resources Inc.

-Rare Element Resources Ltd. -Global X Lithium & Battery ETF

Others

Equities of a private company (El Olivar Imperial) (ii) Debentures:

-Convertible debenture: IBC Advanced Alloys 8.25%

Trust units

-Sprott physical platinum palladium

#

11,000,000

309,000

333,334

50,000

715,000

16,230

11,000

2,117,857

120,000

1,750 various

400,000 100,000

6,050

$

3,630,000

451,140

406,748

316,000

293,150

274,936

223,080

190,607

190,170

187,298

2,243,842 - 95,000 104,621

Equity, total

Share warrants, various

8,606,592 436,000

Total

9,042,592

(i) As at December 31, 2021 and 2020, the Company's investment in public entities includes 11,000,000 common shares of Minco Silver, which was approximately 18% of Minco Silver's outstanding shares.

Minco Silver holds a 90% interest in the Fuwan silver deposit, situated along the northeast margin of the prospective Fuwan Silver Belt in Guangdong, China and 51% interest in the Changkeng gold project, located contiguous to, and part of the same mineralized system. Further information with respect to Minco Silver may be found at Minco Silver's website,www.mincosilver.ca.The Company has held its investment in Minco Silver since the spin-off of Minco Silver from the Company in 2005.

The change in share price of Minco Silver has a greater impact on the Company's performance than the balance of the portfolio. As at December 31, 2021, the share price of Minco Silver closed at $0.33 (2020 - $0.53) and the fair market value of Minco Silver's 11 million common shares was $3,630,000 (2020 - $5,830,000), which accounted for 40% of the Company's investment portfolio by fair value (2020 - 67%). Included in $1,250,001 of unrealized loss reported for the year ended December 31, 2021, there was $2,200,000 of unrealized loss from shares of Minco Silver, which offset by $949,999 of unrealized gain from the remainder of the investment holdings.

(ii) On December 22, 2016, the Company acquired 5.9% or 400,000 units ("Unit') of El Olivar Imperial SAC ("El Olivar"), a privately held Peruvian corporation, at US$1.00 per Unit through a private placement. Each Unit consists of one Class A voting preferred share and 1.5 Class A share purchase warrant (the "EI Warrant"), with each full warrant entitling the holder to purchase one additional Class A voting share at a price of US$1.00. Such warrants expired in 2019.

One director of the Company is also a director, an officer, and a significant shareholder of El Olivar.

As part of the consideration for the investment in El Olivar, the Company was entitled to receive an annual cash dividend in U.S. dollars equal to 6% of the total invested amount, calculated from the closing date of investment and payable starting on June 22, 2018. However, due to delays in project construction, no dividends have been paid. The Company has not accrued the dividend receivable given that El Olivar has not started its operations and the timing and structure of the initial dividend payment is uncertain.

During 2020, El Olivar restarted design work and initial construction of a tailings processing plant. Due to Covid-19 travel restrictions, plant construction began in Canada with the intention of shipping it to Peru during 2021 or as soon as possible under COVID-19 protocols. EI Olivar intends to raise additional funds in 2021 to complete civil works and installation of the plant.

In accordance with Level 3 of the fair value hierarchy, the Company impaired its investment of $545,293 (US$400,000) in El Olivar as at December 31, 2019. During the year ended December 31, 2021, there was no change in management's assessment and this investment remains impaired.

The continuity of the Company's investments during the year ended December 31, 2021 is as follows:

Proceeds Unrealized

2020

Additions

Investment in public entities:

$

$

$

$

$

$

- Shares and partnership units

8,489,378

1,771,562

(379,634)

109,758

(1,584,093)

8,406,971

- Share purchase warrants

44,400

68,897

-

-

322,703

436,000

Investment in trust units:

113,232

-

-

-

(8,611)

104,621

Investment in convertible

debenture:

- IBC Advanced Alloys Corp.

75,000

-

-

-

20,000

95,000

Total

8,722,010

1,840,459

(379,634)

109,758

(1,250,001)

9,042,592

from Realized gains December 31, dispositions Gains (losses) 2021

December 31,

3.

Results of Operations

3.1

Selected annual information

Selected information for the fiscal year 2021, 2020 and 2019 is as follows:

2021

2020

2019

$

$

$

Loss from investments at fair value

(1,108,842)

(1,227,546)

2,501,150

Total assets

9,759,480

11,408,642

13,333,449

Long - term liabilities

12,687

49,191

92,832

Cash dividend

-

-

-

Net loss for the year

(1,624,040)

(1,964,735)

1,682,336

Loss per share - basic and diluted

(0.03)

(0.04)

0.03

3.2

Operating result comparison for the three months ended December 31, 2021 and 2020

2021

2020

Change

$

$

$

Dividend and interest income

16,028

6,129

9,899

Realized gain (loss) from investments

(7,187)

99,309

(106,496)

Unrealized gain from investments

139,189

991,485

(852,296)

148,030

1,096,923

(948,893)

Operating expenses

(159,720)

(65,242)

(94,478)

Foreign exchange loss

(4,921)

(60,081)

55,160

Net income (loss)

(16,611)

971,600

(988,211)

The amount of gain and loss of the investments depends on the performance of the entities that the Company invests in and will fluctuate from time to time depending on many factors, including but not limited to the overall economy, foreign exchange rate, metal prices, which are not controlled by the Company.

The change in share price of Minco Silver has a greater impact on the Company's performance than the balance of the portfolio.

For the three months ended December 31, 2021, there was $139,000 of the unrealized gain from investments. The market value of Minco Silver shares decreasing by $495,000 as at December 31, 2021 compared to its market value as at September 30, 2021. As at December 31, 2021, the market value of Minco Silver shares was $3,630,000 at $0.33 per share (September 30, 2021 - $4,125,000 at $0.375 per share). The unrealized gain from other investments were $634,000.

For the three months ended December 31, 2020, $991,000 of the unrealized gain from investments was mainly due to the market value of Minco Silver shares increasing by $495,000 as at December 31, 2020 compared to its market value as at September 30, 2020. As at December 31, 2020, the market value of Minco Silver shares was $5,830,000 at $0.53 per share (September 30, 2020 - $5,335,000 at $0.69 per share). The remaining net unrealized gain of $496,000 was from other investments.

The movement in connection with the operating expenses and other income (expenses) are discussed in section 3.2.1 and 3.2.2 respectively.

3.2.1

Operating Expenses for the three months ended December 31, 2021 and 2020

The Company's operating expenses for the three months ended December 31, 2021 and 2020 are as follows:

2021

2020

Change

ref

$

$

$

Accounting and audit

7,054

5,246

1,808

Amortization

9,408

9,421

(13)

Consulting

21,563

15,548

6,015

Directors' fees

5,500

5,500

-

Interest expense

1,021

1,683

(662)

Legal and regulatory

11,322

8,765

2,557

Office and administration

8,537

9,466

(929)

Investment evaluation

a

68,674

12,879

55,795

Salaries and benefits

21,494

20,896

598

Share-based compensation

b

4,325

(26,141)

30,466

Travel and transportation

822

1,979

(1,157)

159,720

65,242

94,478

The operating expenses increased by $94,000 during the three months ended December 31, 2021 compared to the prior year same period. Some highlights are as follows:

a) Investment evaluation expenses increased by $56,000 mainly due to an incentive fee of $55,000 accrued for a portfolio consultant.

b) Share-based compensation reversed by $26,000 during the three months ended December 31, 2020 mainly due to the forfeit of granted stock options.

3.2.2

Foreign exchange loss

The Company holds cash and investments denominated in US dollar from time to time. US dollar depreciated against Canadian dollars of 0.5% during the three months ended December 31, 2021 (2020 - 1.7%). As a result, the Company recorded $5,000 of foreign exchange loss for the three months ended December 31, 2020 (2020 - $60,000).

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Minco Capital Corporation published this content on 06 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 April 2022 22:32:06 UTC.