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    FEO   CA67524Q1321

OCEANIC IRON ORE CORP.

(FEO)
Delayed Quote. Delayed Bourse de Toronto - 10/25 05:00:00 pm
0.125 CAD   --.--%
08/18OCEANIC IRON ORE : June/21 Financials
PU
08/18OCEANIC IRON ORE : June/21 MD&A
PU
08/18Oceanic Iron Ore Corp. Reports Earnings Results for the Second Quarter Ended June 30, 2021
CI
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Oceanic Iron Ore : March/21 MD&A

05/18/2021 EDT

Oceanic Iron Ore Corp.

Management's Discussion and Analysis of Financial Condition and Results of Operations Three months ended March 31, 2021 and 2020

The following is management's discussion and analysis ("MD&A") of the results and financial condition of Oceanic Iron Ore Corp. ("Oceanic" or the "Company") and should be read in conjunction with the accompanying unaudited condensed interim consolidated financial statements and related notes for the three months ended March 31, 2021 and 2020, as well as the audited consolidated financial statements and related notes for the year ended December 31, 2020 (the "Annual Financial Statements"). The Company reports its financial statements in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. All figures are reported in Canadian, dollars unless otherwise indicated.

Certain information included in this discussion may constitute forward looking statements. Forward looking statements are based on current expectations and entail various risks and uncertainties. These risks and uncertainties could cause or contribute to actual results that are materially different from those expressed or implied. Please see the section entitled "Forward Looking Statements" of this document for further detail on forward looking statements. The effective date of this report is May 18, 2021.

Description of Business

The Company was incorporated on March 8, 1986 under the British Columbia Business Corporations Act. Its common shares are traded on the TSX Venture Exchange (the "TSXV") under the symbol "FEO".

The Company is focused on the exploration and development of the Ungava Bay iron property (the "Property") in Nunavik, Québec, which the Company acquired in November 2010. The Property comprises three project areas: Hopes Advance (also referred to as the "Project" throughout), Morgan Lake and Roberts Lake, which cover over 35,999 hectares of iron formation and are located within 20 - 50 km of tidewater. The Company has a 100% interest, subject to a 2% net smelter returns royalty ("NSR") in the Property. The Company's NSR holders are each entitled to annual advance NSR payments of $100,000 until the commencement of commercial production on the Company's Hopes Advance Project. Advanced royalty payments are deductible from actual royalty payments subsequent to the commencement of commercial production.

In December 2019, the Company announced the results of a revised and re-scoped National Instrument 43-101 Preliminary Economic Assessment in respect of the Company's Hopes Advance Project ("Study"). The objective of the Study was to rescope the Project profile and production scale using Measured and Indicated Mineral Resources estimated within three of the 10 defined deposits from Hopes Advance in order to reduce the up-front capital required to bring the Project to commercial production.

Qualified Person

Eddy Canova, P.Geo., OGQ(403), a Qualified Person as defined by NI 43-101, has reviewed and is responsible for the technical information contained in this document.

Highlights and key business developments

Since the prior quarter, the Company:

  • completed a non-brokered private placement of convertible debentures issued on March 10, 2021 in the amount of $1,557,548 (the "Financing"). The subscribers to the Financing were issued Series C convertible debentures (the "2021 Debentures") which earn interest at a rate of 8.5% per annum over a 60-month term (the "Term"), payable quarterly. The principal amount of the 2021 Debentures is convertible to Units ("Unit") during the Term at the election of the subscriber at a price of $0.19 per Unit. Each Unit will consist of 1 common share of the Company and 1 share purchase warrant of the Company, with each whole warrant entitling the holder to purchase one common share of the Company at a price of $0.19 per common share until March 10, 2026. The 2021 Debentures are secured with a

Page 1

Oceanic Iron Ore Corp.

Management's Discussion and Analysis of Financial Condition and Results of Operations Three months ended March 31, 2021 and 2020

first ranking charge against the assets of the Company, ranking pari-passu with all other secured debenture holders.

Overall Performance and Discussion of Operations

The following information for the three months ended March 31, 2021 and 2020 ("Q1 2021" and "Q1 2020", respectively) was derived in conjunction with the Unaudited Condensed Interim Financial Statements for the three months ended March 31, 2021 and 2020 which are available on www.sedar.com.

Q1 2021

Q1 2020

Expenses

$

58,750

Consulting and management fees

$

58,750

Directors' fees

7,500

7,500

License and insurance

4,780

5,956

Office and general

4,418

3,181

Professional fees expense

19,472

12,602

Rent

2,541

2,951

Share-based payments

30,934

7,270

Transfer agent and regulatory

6,195

3,621

Wages and benefits

23,110

16,975

Loss from operations

(157,700)

(118,806)

Other (expenses) income

(63,818)

(Loss) gain on non-cash derivative liabilities

216,076

Convertible debenture accretion expense

(70,756)

(55,682)

Net (loss) income and comprehensive (loss) income for the period

$

(292,274)

$

41,588

(Loss) income per common share

$

(0.00)

Basic and diluted

$

0.00

The factors affecting the change in net loss for the periods presented included:

Share-based compensation

Share-based compensation for Q1 2021 increased by $23,664 compared to Q1 2020. This was due to the fact that the Company granted an additional 3,405,000 stock options at a weighted average exercise price of $0.14 per option during the year ended December 31, 2020, which continued to vest during Q1 2021.

Income (expenses) associated with convertible debentures

During Q1 2021 the Company recorded non-cash fair value loss associated with the convertible debentures in the amount of $63,818. This compares to fair value gains recorded in Q1 2020 of $216,076. The non- cash fair value adjustment on convertible debentures for Q1 2021 relates predominantly to the 2021 Debentures and the slight appreciation of the Company's share price between the date of the Financing and March 31, 2021.

Accretion expense for Q1 2021 increased by $15,074, compared to Q1 2020, predominantly due to the 2021 Debentures issued during Q1 2021.

Page 2

Oceanic Iron Ore Corp.

Management's Discussion and Analysis of Financial Condition and Results of Operations Three months ended March 31, 2021 and 2020

Liquidity and Capital Resources

While the financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due, certain conditions and events result in a material uncertainty casting significant doubt on the validity of this assumption. For Q1 2021, the Company incurred a net loss of $292,274 and as at March 31, 2021 had an accumulated deficit of $36,250,564.

The Company's ability to continue on a going concern basis for and beyond the next twelve months depends on its ability to successfully raise additional financing for continued operations and for the necessary capital expenditures required to achieve planned principal operations. The Company continues to pursue a number of options to improve its financial capacity, including securing a strategic partner to further advance the Hopes Advance project. While 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 acceptable to the Company. These material uncertainties cast significant doubt upon the Company's ability to continue as a going concern.

Factors that could affect the availability of financing include the Company's performance, the state of international debt and equity markets which may be adversely impacted by uncertainty arising from the ongoing novel coronavirus ("COVID-19") pandemic, investor perceptions and expectations, the retention of key executive management and the state of global financial and metals markets.

The Company's cash flow activities have been summarized as follows:

Q1 2021

Q1 2020

Cash used in operating activities

$

(712,336)

$

(48,606)

Cash used in investing activities

(12,324)

(24,648)

Cash provided by (used in) financing activities

1,405,966

(33,947)

Change in cash and cash equivalents during the period

681,306

(107,201)

Cash and cash equivalents, beginning of period

46,632

422,788

Cash and cash equivalents, end of period

$

727,938

$

315,587

The Company's undiscounted commitments as at March 31, 2021 were as follows:

March 31, 2021

Less than 1 year

1 - 3 years

4 - 5 years

Total

Accounts payable and accrued liabilities

$

226,282

$

-

$

-

$

226,282

Due to related parties

76,351

-

-

76,351

Convertible debenture - liability component

201,134

2,045,032

1,847,359

4,093,526

Advance royalty payable

300,000

200,000

600,000

1,100,000

$

803,767

$

2,245,032

$

2,447,359

$

5,496,159

Additionally, in order to maintain current rights of tenure to exploration tenements, the Company is required to incur minimal expenditures of $77,653 in respect of claim renewal fees and minimum work requirements during 2021.

Page 3

Oceanic Iron Ore Corp.

Management's Discussion and Analysis of Financial Condition and Results of Operations Three months ended March 31, 2021 and 2020

As at March 31, 2021, the Company recorded the convertible debentures issued in 2017, 2018 and 2021 at a combined carrying value of $7,160,369, representing the discounted face value of the debentures of $200,543 and the fair value of the non-cash embedded derivative liability of $6,959,826. However, the total future cash outflows associated with the repayment of the principal of the 2017 Debentures ($760,000), 2018 Debentures ($837,500) and 2021 Debentures ($1,557,548) cannot exceed the combined amount of principal of $3,155,048 plus any accrued interest. Furthermore, provided that the Company's share price remains in excess of the prevailing conversion price of the 2017 Debentures ($0.10/unit), 2018 Debentures ($0.10/unit) and 2021 Debentures ($0.19/Unit), management expects that the 2017 Debentures, 2018 Debentures and 2021 Debentures will be converted into units (comprised of one common share and one share purchase warrant each) and that the future cash outflows associated with the redemption of convertible debentures would be as low as $nil. The fair value of the non-cash embedded derivative liabilities does not represent a future cash liability to the Company.

In addition, management expects that the conversion of the 2017 Debentures, 2018 Debentures and 2021 Debentures could in fact result in cash inflows to the Company as the associated warrants are exercisable at prices of $0.10 per warrant, $0.05 per warrant, and $0.19 per warrants, respectively, which were lower than the Company's current prevailing share price as at March 31, 2021.

Off-Balance Sheet Arrangements

As at March 31, 2021, the Company had no off-balance sheet arrangements.

Summary of Quarterly Results

Below is a summary of results for the eight most recently completed quarters in accordance with IFRS:

March 31, December 31, September 30,

June 30,

2021

2020

2020

2020

Revenues (Note 1) Share-based compensation Loss from Operations

(Loss) gain on non-cash derivative liabilities Net (loss) income

Basic and diluted (loss) income per share

$

-

$

-

$

-

$

-

$

(30,934)

$

(71,650)

$

(88,045)

$

(146,742)

$

(157,700)

$

(211,789)

$

(191,512)

$

(256,381)

$

(63,818)

$

(2,709,576)

$

(507,102)

$

(573,086)

$

(292,274)

$

(2,979,890)

$

(756,147)

$

(886,053)

$

(0.00)

$

(0.03)

$

(0.01)

$

(0.01)

March 31, December 31, September 30,

June 30,

2020

2019

2019

2019

Revenues (Note 1)

$

-

$

-

$

-

$

-

Share-based compensation

$

(7,270)

$

(19,803)

$

(33,932)

$

(41,427)

Loss from Operations

$

(118,806)

$

(194,791)

$

(152,206)

$

(168,813)

(Loss) gain on convertible debenture derivative liability

$

216,076

$

1,563,568

$

135,577

$

(695,591)

Net (loss) income

$

41,588

$

1,267,992

$

(99,833)

$

(946,570)

Basic and diluted (loss) income per share

$

0.00

$

0.02

$

(0.00)

$

(0.01)

Note 1 - As the Company has yet to achieve commercial production from its mineral related assets, the Company has no revenue to report during the financial reporting periods noted above.

Page 4

Oceanic Iron Ore Corp.

Management's Discussion and Analysis of Financial Condition and Results of Operations Three months ended March 31, 2021 and 2020

As demonstrated in the above table, the differences in net loss (income) from one quarter to another is predominantly due to the non-cash losses or gains recognized on the fair value adjustments to the derivative liability component contained in the convertible debentures. The Company uses option pricing models to value the derivative component of the convertible debentures, and this relies on a combination of observable and unobservable market inputs (including changes in the Company's share price from one period-end to another).

The table above also reflects that the Company did not report material variances in loss from operations from one quarter to another and that (in all material respects), fluctuations correlate with changes in the amount of share-based compensation recognized in any particular period. The amount of share-based compensation varies predominantly based on (i) the number of stock options granted during a fiscal year and (ii) the price of the Company's common shares at the grant date.

Critical Accounting Policies and Critical Accounting Estimates

Full disclosure of the Company's accounting policies and significant accounting judgments and estimation uncertainties in accordance with IFRS can be found in Note 3 of the Company's Annual Financial Statements.

Financial Instruments and Other Instruments

Financial Risk Management

The Company is exposed in varying degrees to a variety of financial instrument related risks. The board approves and monitors the risk management processes.

Credit Risk

Credit risk arises from the potential for non-performance by counterparties of contractual financial obligations. The Company's exposure to credit risk is on its cash and cash equivalents and receivables. The Company has concentration of risk with respect to cash being held with one large Canadian financial institution. The Company's credit risk is mitigated by maintaining its financial liquid assets with highly reputable counterparties. The maximum exposure to credit risk is equal to the carrying value of the financial assets noted above.

Liquidity Risk

Liquidity risk is the risk that the Company cannot meet its obligations as they fall due. The Company's cash and cash equivalents are invested in business accounts and are available on demand. The Company manages liquidity risk by preparing and maintaining cash forecasts, which illustrate cash spent to date and the Company's cash needs over the short term. Contractual undiscounted cash flow requirements for financial liabilities as at March 31, 2021 are included in the "Liquidity and Capital Resources" section of this MD&A.

The Company's ability to continue operations in the normal course of business is dependent on several factors, including the ability to secure additional financing. In addition, the recoverability of the amounts shown for mineral properties are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production, all of which are uncertain.

Page 5

Disclaimer

Oceanic Iron Ore Corp. published this content on 18 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 June 2021 07:29:03 UTC.


ę Publicnow 2021
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Financials
Sales 2020 - - -
Net income 2020 -4,58 M -3,70 M -3,70 M
Net Debt 2020 5,50 M 4,45 M 4,45 M
P/E ratio 2020 -4,46x
Yield 2020 -
Capitalization 11,7 M 9,50 M 9,49 M
EV / Sales 2019 -
EV / Sales 2020 -
Nbr of Employees -
Free-Float 43,5%
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Managers and Directors
Bing Pan Chief Executive Officer
Chris Batalha Chief Financial Officer & Secretary
Steven G. Dean Executive Chairman
John Douglas Reynolds Independent Director
Gordon Bruce Keep Independent Director
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