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EXPLORATION AND EVALUATION ASSETS

6 Months Ended

Jun. 30, 2024

4. EXPLORATION AND EVALUATION ASSETS


	Botswana
	Selebi $			Selkirk $			Total $

Balance, December 31, 2022		8,251,518			327,109			8,578,627
Addition costs		483,883			-			483,883
Foreign currency translation		(449,878	)		(17,834	)		(467,712	)
Balance, December 31, 2023		8,285,523			309,275			8,594,798
Foreign currency translation		100,535			3,752			104,287
Balance, June 30, 2024		8,386,058			313,027			8,699,085

The following is a description of the Company’s exploration and evaluation assets and the related spending commitments.

Botswana Assets - Selebi and Selkirk

On September 28, 2021, the Company executed the Selebi Asset Purchase Agreement (“the “Selebi APA”) with the BCL liquidator to acquire the Selebi Assets formerly operated by BCL. On January 31, 2022, the Company closed the transaction and ownership of the Selebi Assets transferred to the Company.

Pursuant to the Selebi APA, the aggregate purchase price payable to the seller for the Selebi Assets shall be the sum of $76,862,200 (USD 56,750,000) which amount shall be paid in three instalments:

●	$2,086,830 (USD 1,750,000) payable on the closing date. This payment has been made.

●	$33,860,000 (USD 25,000,000) upon the earlier of: (a) approval by the Botswana Ministry of Mineral Resources, Green Technology and Energy Security (“MMRGTES”) of the Company’s Section 42 and Section 43 Applications (further extension of the mining license and conversion of the mining license into an operating license, respectively), and (b) on the expiry date of the study phase, January 31, 2025, which can be extended for one year with written notice.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

●	The third instalment of $40,632,000 (USD 30,000,000) is payable on the completion of mine construction and production start-up (commissioning) by the Company on or before January 31, 2030, but not later than four years after the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 Applications.

●	Payment of care and maintenance funding contribution in respect of the Selebi Assets for a total of $6,164,688 (USD 5,178,747) from March 22, 2021 to the closing date. This payment has been made.

The total acquisition cost of the Selebi Assets included the first instalment of $2,086,830 (USD 1,750,000) and the payment of the care and maintenance funding contribution of $6,164,688 (USD 5,178,747) for the assets. As per the terms and conditions of the Selebi APA, the Company has the option to cancel the second and third payments and give back the Selebi Assets to the liquidator in the event where the Company determines that the Selebi Assets are not economical. The Company also has an option to pay in advance the second and third payments in the event where the Company determines that the Selebi Assets are economical.

In addition to the Selebi APA, the purchase of the Selebi Assets is also subject to a contingent compensation agreement as well as a royalty agreement with the liquidator.

PNRC also negotiated a separate asset purchase agreement (the “Selkirk APA”) with the liquidator of TNMC to acquire the Selkirk deposit and related infrastructure formerly operated by TNMC on January 20, 2022. The transaction closed on August 22, 2022.

The Selkirk APA does not provide for a purchase price or initial payment for the purchase of the assets. The acquisition cost of the Selkirk Mine of $327,109 (USD 244,954) was the care and maintenance funding contribution from April 1, 2021 to the closing date of the Selkirk APA. The Selkirk APA provides that if the Company elects to develop the Selkirk Mine first, the payment of the second Selebi instalment of $33,860,000 (USD 25,000,000) would be upon the approval by the Minister of MMRGTES of the Company’s Section 42 and Section 43 Applications (further extension of the Selkirk mining license and conversion of the Selkirk mining license into an operating license, respectively). For the third Selebi instalment of $40,632,000 (USD 30,000,000), if the Selkirk Mine were to be commissioned earlier than the Selebi Mines, the payment would trigger on the Selkirk Mine’s commission date.

On August 16, 2023, the Company entered into a binding commitment letter with the liquidator of BCL Limited, which is subject to customary final documentation, to acquire a 100% interest in two additional deposits (“Phikwe South” and the “Southeast Extension”) located adjacent to and immediately north of the Selebi North mine. The impact is to extend the northern boundary of the Selebi Mining License by 3.7 kilometres and increase the Selebi Mining License area from 115.0 square kilometres to 153.7 square kilometres. While the remaining historic resources at Phikwe South and the Southeast Extension occur within the expanded Selebi Mining License, the amended license intentionally does not include the historic mine workings and infrastructure at these previously-producing properties, and the Company has no liability for historic environmental issues at those sites.

The upfront cost to the Company to acquire these additional mineral properties is USD1,000,000. In addition, the Company agreed to additional work commitments of USD5,000,000 in the aggregate over the next four years. As a result of the extension of the Selebi Mining License, the remaining asset purchase obligations of the Company outlined in the original Selebi Mines asset purchase agreement with the Liquidator will each increase by 10%, $7,436,000 (USD 5,500,000) in total, while the trigger events remain unchanged. The existing 2% net smelter royalty (“NSR”) held by the Liquidator with respect to production from the Selebi Mining License will also apply to production from these additional deposits, subject to the Company’s existing buy-back right for 50% of the NSR (Note 10). The acquisition of the Phikwe South and the Southeast Extension deposits has not yet closed as at June 30, 2024.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)

General Exploration Expenses

Details of the general exploration expenses by nature are presented as follows:

For the six months ended June 30, 2024:

	Selebi $		Selkirk $		Other $		Total $
Site operations & administration		476,534		25,268		95,715		597,517
Care and maintenance		1,375,283		-		-		1,375,283
Geology		1,537,368		33,297		-		1,570,665
Drilling		3,333,892		135,656		-		3,469,548
Geophysics		529,177		18,106		-		547,283
Engineering		3,238,434		24,178		-		3,262,612
Environmental, social and governance		89,611		-		-		89,611
Metallurgy and processing		5,574		25,068		-		30,642
Technical studies		147,345		48,047		-		195,392
Health and safety		96,589		43		-		96,632
Mine re-development		19,091		25,486		-		44,577
Total		10,848,898		335,149		95,715		11,279,762

For the six months ended June 30, 2023:

	Selebi $		Selkirk $		Other $		Total $
Site operations & administration		421,070		27,857		77,572		526,499
Care and maintenance		1,587,152		-		-		1,587,152
Geology		1,713,621		265,614		-		1,979,235
Drilling		1,517,072		6,523		-		1,523,595
Geophysics		891,036		17,792		-		908,828
Engineering		2,070,020		14,020		-		2,084,040
Environmental, social and governance		30,296		-		-		30,296
Metallurgy and processing		39,744		80,622		-		120,366
Technical studies		8,047		7,650		-		15,697
Health and safety		146,637		-		-		146,637
Total Botswana projects		8,424,695		420,078		77,572		8,922,345

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2024

(Expressed in Canadian dollars)