UrbanGold Minerals Inc - Management's Discussion and Analysis Quarterly Highlights
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UrbanGold Minerals Inc.
Management’s Discussion and Analysis
Quarterly Highlights
For the six-month period ended November 30, 2020
1The following quarterly highlights of the financial condition and results of the operations of UrbanGold Minerals
Inc. (“UrbanGold” or “the Corporation”) constitutes management’s discussion and analysis (“MD&A”) of its financial
performance on expenditures and progress toward achieving our business objectives and milestones for the six-
month period ended November 30, 2020 (“Q2-21 YTD”).
This discussion should be read in conjunction with the accompanying condensed unaudited interim financial
statements of the Corporation and the notes thereto for Q2-21 and with MD&A, the Corporation's Audited Financial
Statements for the years ended May 31, 2020 and 2019, and the notes thereto.
Management is responsible for the preparation of the financial statements and this MD&A. The financial
statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). This
MD&A and the related financial statements are available under UrbanGold's issuer profile on SEDAR
(www.sedar.com) and on UrbanGold's website (www.urbangoldminerals.com).
This MD&A is subject to the same disclaimers in respect of forward-looking information as have been provided in
the annual MD&A. Investors are cautioned that any forward-looking statements are not guarantees of future
performance and actual results or developments may differ materially from those projected in the forward-looking
statements. The forward-looking information is only provided as of the date of this MD&A, being January 21, 2020.
All dollar figures in this MD&A are expressed in Canadian dollars, unless stated otherwise.
Description of Business
The Corporation was incorporated under the Canada Business Corporation Act on June 21, 2017. It is engaged
in the evaluation, acquisition, and exploration of mineral properties for precious metals with its activities focused
in prospective areas of Quebec, Canada. The Corporation’s common shares are listed on the TSX Venture
Exchange (the “Exchange”) under the symbol UGM.
Q2-2021 and Subsequent to this Quarter-End Highlights
Acquisition and sale of properties
In Fiscal 2020, the Corporation significantly increased its land position in the Troilus area by staking or acquiring
claims, in addition to forging a strategic partnership with Argonaut Gold Inc. (“Argonaut”). In June 2020, the
Corporation and Argonaut entered into a formal joint venture agreement (the “Joint Venture”), whereby the
Corporation was granted a 50% stake in the 17 claims held by Argonaut, and Argonaut was granted a 50% stake
in the surrounding claims within an established area of interest held under the Corporation’s control. The combined
claims form the Bullseye property.
The Corporation holds several blocks of mineral claims in the Troilus area that are 100%-owned by the Corporation
and are not part of the Joint Venture. These claims are named the Pallador property. On July 7, 2020, the
Corporation expanded its land position in the Troilus area by acquiring 77 claims totaling 4,182 hectares from
SOQUEM. This latest acquisition, owned 100% by the Corporation, is centrally located in the area and is
considered at this time to be part of the Pallador property.
On June 29, 2020, The Corporation entered into an option agreement (the "Option Agreement") with Goliath
Resources Inc. ("Goliath") for its Lac James property. This property, 100%-owned by the Corporation, consists of
28 claims and is located in the Chibougamau area, Quebec. Goliath may earn a 100% interest in this property
over a period of one (1) year.
2Financings
On June 3, 2020, the Corporation closed a non-brokered private placement consisting of 8,000,000 units at a price
of $0.125 per unit for gross proceeds of $1,000,000.
On September 10, 2020, the Corporation closed a non-brokered private placement consisting of 4,166,667 units
at a price of $0.24 per unit for gross proceeds of $1,000,000.
During the six-month period ended November 30, 2020, 843,093 warrants were exercised for total proceeds of
$116,910 and an additional 1,216,646 warrants were exercised for total proceeds of $140,189 in December 2020.
Qualified Person
The scientific and technical information contained in this MD&A has been reviewed and approved by Mathieu
Stephens, P.Geo., the Corporation’s Qualified Person under National Instrument 43-101 Standards of Disclosure
for Mineral Projects. Mr. Stephens is an officer and a director of the Corporartion.
Abbreviation
The following abbreviations are used in this MD&A:
Abbreviation Period/Definition Abbreviation Period/Definition
Q1-2021 June 1 to August 31, 2020 Q1-2020 June 1 to August 31, 2019
Q2-2021 September 1 to November 30, 2020 Q2-2020 September 1 to November 30, 2019
Q2-2021 YTD June 1 to November 30, 2020 Q2-2020 YTD June 1 to November 30, 2019
G Grams oz. Ounce
Au Gold g/t grams/metric tonne
M Meters Mt or tonne Metric ton, equal to 2,240 pounds
Km Kilometers NSR Net smelter return
Exploration Activities
In Q2-21 YTD, total exploration expenditures of $984,597 on the Statement of Loss and Comprehensive Loss
($1,193,200 in Q2-20 YTD) are net of Quebec refundable exploration tax credits of $230,417 ($647,894 in Q1-20
YTD) and proceeds from option and sale payments of $72,000 (Nil in Q2-20 YTD).
Exploration expenditures consist of mineral claims acquisition and maintenance costs totaling $431,899 ($119,899
in Q2-20 YTD) and exploration expenses totaling $855,115 ($1,721,195 in Q2-20 YTD), mostly on the Pallador
properties.
The Corporation’s exploration expenditures were as follows:
Three months ended Six months ended
November 30 November 30,
2020 2019 2020 2019
$ $ $ $
Mineral acquisition and maintenance costs (22,900) 55,862 359,899 119,899
Exploration expenses, net of tax credits 97,413 789,368 624,698 1,073,301
74,513 845,230 984,597 1,193,200
3Three months ended Six months ended
November 30, November 30,
Mineral acquisition and Interest 2020 2019 2020 2019
maintenance costs
$ $ $ $
Quebec
Pallador 100% - 5,901 415,050 14,686
Bullseye 50% - 36,741 - 57,213
StarGold 100% - 3,374 1,531 18,374
Monaco 100% - - 2,650 7,819
Monarch 100% - - 308 -
Kiyask 100% - - 330 -
Other properties 100% 9,100 9,846 12,030 21,807
Sub-total 9,100 55,862 431,899 119,899
Proceed from option and sale
payments - (32,000) - (72,000) -
(22,900) 55,862 359,899 119,899
Three months ended Six months ended
November 30, November 30,
Exploration expenses, net of tax credits 2020 2019 2020 2019
$ $ $ $
Quebec
Pallador 167,302 176,347 811,750 259,911
Bullseye (15,111) 1,045,030 16,024 1,187,726
StarGold - 39,767 400 138,925
Monaco 400 600 1,600 81,892
Monarch 1,200 - 1,600 500
Kiyask 1,000 - 9,695 -
Other properties 4,485 17,432 14,046 52,241
Sub-total 159,276 1,279,176 855,115 1,721,195
Less: tax credits (61,863) (489,808) (230,417) (647,894)
97,413 789,368 624,698 1,073,301
The Company owns two distinct properties situated in the Frotet greenstone belt, located approximately 100
kilometres north of the town of Chibougamau, Quebec. These properties are accessible by an all-weather gravel
road (Route du Nord) and a network of forestry roads that gives direct access to a good portion of the properties.
The two properties are the wholly owned Pallador property and the Bullseye property, which is a 50/50 joint venture
with Argonaut.
The area is known to host several important discoveries, namely the past producing Troilus gold-copper mine, the
Tortigny and Lessard base metal deposits, the Moblan lithium deposit, and several other mineralized bodies,
including the Baie Moleon and Demaures base metals projects, the Freegold gold project, and the Cressida
project. A considerable number of gold, silver, copper, and zinc occurrences have also been identified in this area.
Recent exploration activities were undertaken in the area by several companies, including Troilus Gold Mines
(“Troilus Gold”), Kenorland Minerals (“Kenorland”), Xterra Resources, and Fancamp Exploration. The area has
seen considerable consolidation and staking over the past year. Troilus Gold has acquired most of the O3 Mining
and Globex Mining assets, while Kenorland has acquired 24 claims from O3 Mining in a $900,000 cash deal, and
UrbanGold has acquired properties from O3 Mining, Quebec Precious Metals (“QPM”), and SOQUEM Inc
(“SOQUEM”).
4Pallador property
The Pallador property consists of 490 claims totalling 26,585 hectares, distributed in several blocks of claims.
UrbanGold first undertook work in the southeast portion of the main Pallador block in 2018 that consisted of surface
geophysics (electro-magnetic survey) and a small follow-up drill program. Geophysical anomalies were principally
explained by the presence of graphitic mudstone with minor amount of sulphides. A helicopter-borne magnetic
survey was completed over the western portion of the block in November 2019. The Pallador property has grown
considerably since the fall of 2019, with the original Pallador block now being referred to as the Main Pallador
block. In the spring of 2020, field work consisting of prospecting, geological mapping, and soil sampling focused
on this Main block, especially in its northwest portion. On July 27th, 2020, Kenorland announced a major gold
discovery adjacent to this area, with a drill program focused in an area some 400m to 2,000m from the common
boundary. Multiple holes intersected gold values of interest, including one having intersected 8.47 g/t Au over
29m. An additional helicopter-borne magnetic survey and a ground induced polarization geophysics program were
completed in this area by UrbanGold in August and September 2020. This work determined, with a high degree
of confidence that the same geological formations which host the gold mineralization on the adjacent Kenorland
property, continue into the northwest portion of the Main Pallador block.
In December 2020, the Corporation started a drill program on the Regnault block located immediately south and
on strike with the current extent of Kenorland’s recent gold discovery. Four drill holes totalling 1,095 metres were
completed in December 2020, with an additional 6 holes totalling approximately 1,600 metres to be completed in
January 2021.
In May 2020, UrbanGold announced the acquisition of the Chemin Troilus Property from QPM Corporation. The
property, consisting of 61 claims totaling 3,314 hectares, is adjacent to UrbanGold's land package. During the
summer of 2020, field work that consisted of prospecting and geological mapping was conducted on this portion
of the Pallador property, now named the Golden Road block, having been merged with previously staked claims.
Six drill holes totalling 1,608 metres were completed on the Golden Road block in a summer/fall program that was
designed to test a combination of geophysical and geochemical targets, as well as sites adjacent to where gold-
bearing boulders had been located down-ice from the targeted area. Highlights include drill holes UPR-20-01,
where 10.5 g/t Au was intersected over 0.5 metres, and UPR-20-06, that intersected a wide anomalous gold-silver
zone of 21.2 metres grading 0.15 g/t Au and 1.56 g/t Ag (news release Dec 21, 2020). Data regarding this new
5prospective zone, where no historical drilling has been recorded, is being reviewed to determine the scope of
future exploration work for the immediate area.
In July 2020, UrbanGold acquired 100% of the Dileo-Nord property owned by SOQUEM. The 4,182 hectare
property is adjacent to UrbanGold’s existing claims. The drill-ready property has several targets of interest that
are in the process of being reviewed in greater detail by UrbanGold geologists. Preliminary surface exploration
work was undertaken in the summer of 2020, with results pending.
The Larabel block was acquired by map staking between May 2019 and August 2019. It was deemed prospective
owing to its similarity to the Troilus Gold mine geological context and also due to the area having had very little
historical exploration. The block overlies a volcanic sequence located within the pressure shadow of the Ceintré
Pluton, a large intrusive body. Airborne geophysics had also identified several conductors within the same area.
Surface exploration and geological work commenced on the Larabel block during the summer of 2019. A 6-man
crew, including two geologists, spent approximately two weeks prospecting key areas that produced the discovery
of a new occurrence at Larabel. An induced polarisation (“IP”) survey was conducted over the area and was
followed-up with a small drilling program that did not encounter any drill intersections of interest.
BullsEye property
The BullsEye property consists of 158 claims (8,588 hectares) mostly located in the middle of the Frotet
Greenstone belt. The underlying geology is deemed prospective for gold, copper, and silver mineralization given
its location along a major shear zone and on strike with mineralization located on an adjacent property. Compilation
of historical data has revealed several gold indicators on the property, including fuchsite, carbonates, sericite, and
biotite within an orogenic context. A reinterpretation of historical geophysics by the Corporation has also identified
new electromagnetic targets that are yet to be investigated.
On September 4, 2019, UrbanGold entered into an agreement with gold producer Argonaut, an arm's length party,
to earn a 50% interest in their 17 claims with the intention of combining those claims under option with the
surrounding claims held by the Corporation, to thereby form the Bullseye Property. As part of the transaction, a
50% interest in the surrounding claims under UrbanGold’s control would be granted to Argonaut once the
conditions of UrbanGold’s earn-in is completed (conditions met in March 2020).
From August 2019 to September 2019, a line-cutting program totalling 75 kms was completed on both the Freegold
and Larabel blocks, which was followed by 72.6 km of induced polarization geophysics that was completed by the
end of September 2019. Numerous chargeability anomalies were identified and a few select targets were
designated to be immediately drilled.
In the fall of 2019, the Corporation completed an initial drill program on its Bullseye and Larabel blocks as well as
the Argonaut claims that are under option. The 3,562-metre diamond drill program focused on new surface
discoveries made during summer exploration on geophysical targets and historical occurrences.
Drilling began in the southern portion of the Bullseye block where a strong geophysical anomaly is located on
strike with known gold mineralization. Alteration halos indicate a favorable context for mineralization. Surface
prospecting during the summer could not locate any outcrops in the area over the anomaly. The drill program also
focused on the Larabel block, located further north-east, where the geology is similar to major discoveries in the
area and where a gold occurrence was discovered with a surface grab sample.
The FreeGold zone was also targeted by the 2019 drill program. The objective was to validate historical drill results
as well as to test potential extensions of the gold mineralization. Digitization of the historical drill holes (all drilled
prior to 1990) indicates that the gold mineralization may be open in several directions. The drill program tested
these potential extensions along strike and at depth. A review of historical drill data indicated the presence of
possible parallel zones that were also tested.
Drill results have confirmed the presence of the FreeGold zone at depth, as well as the discovery of another
deeper zone that intersected 10.14 g/t Au and 3.77 g/t Ag over 1.8 metres (See news release dated December
23, 2019). The limited drilling at Larabel did not encounter any values of interest.
6An additional 369-metre drill program was also conducted on the Cressida block, which is part of the original
Argonaut claims. All three drill holes of this program intersected a mineralized zone, with hole UTC-19-03 returning
22 metres at 1.02 g/t Au, and hole UTC-19-02 that was drilled 230 metres to the northeast of UTC-19-03, recording
0.49 g/t Au over 33.5 metres (See news release dated February 4, 2020).
In June, 2020, both companies announced that they had entered into a formal joint venture on the Bullseye
property.
In December 2020, surface geophysics was completed on the Cressida block, where previous drilling identified
a gold-bearing zone located 14 km southwest of the former producing Troilus Gold-Copper mine. The surface
geophysics, consisting of a 27.2-kilometre induced polarization (“IP”) survey and a smaller 3D IP survey,identified
several high priority targets, including a strong chargeability anomaly coinciding with the known gold zone and
extending 500 metres to the northeast. Other untested chargeability targets are also present.
Following the review of the geophysics results with its partner, UrbanGold anticipates to undertake target selection
and a drilling program for this area.
Other Properties
UrbanGold holds several other properties. In most cases, limited work was conducted on them in Q2-2021 YTD.
Fiscal 2021 Budget
The anticipated expenditures on its mineral property claims to be conducted by the Corporation, and the related
budgets in fiscal 2021, are disclosed in the annual MD&A for the fiscal year ended May 31, 2020. Management
does not anticipate any material change from its plans disclosed in the annual MD&A.
Results of Operations
The following table summarizes the Corporation’s Statement of Loss and Comprehensive Loss for the six-month
periods ended November 30, 2020 and 2019:
Loss and Comprehensive Loss increased by $468,957 from $1,107,806 for Q2-20 YTD to $1,576,763 for Q2-21
YTD mainly due to:
a) a decrease of exploration expenditures of $208,603;
b) an increase in share-based expenses of $280,102; and
c) a decrease of flow-through shares premium of $228,159.
Exploration expenditures consist of mineral acquisition and maintenance costs and exploration expenses.
Mineral acquisition and maintenance costs decreased by $208,603 in Q2-2021 YTD as compared to Q1-
20YTD due to the outbreak of a new strain of coronavirus (COVID-19) since March 2020. The Corporation’s
exploration activities resumed progressively during the summer of 2020.
7Exploration expenses, net of tax credits by activity and property, covered in detail in the prior section, are as
follows:
Geology and
prospection Geophysics Geochem. Line-cutting Drilling Q2-21 YTD
$ $ $ $ $ $
Pallador 280,947 116,047 32,405 4,840 377,511 811,750
Bullseye 15,900 - - - 124 16,024
StarGold 400 - - - - 400
Monaco 1,600 - - - - 1,600
Monarch 1,600 - - - - 1,600
Kiyask 9,695 - - - - 9,695
Other properties 11,106 - 2,940 - 14,046
Sub-total 321,248 116,047 35,345 4,840 377,635 855,115
Tax credits (230,417)
624,698
Geology and
prospection Geophysics Geochem. Line-cutting Drilling Q2-20 YTD
$ $ $ $ $ $
Pallador 97,990 45,096 - 9,095 107,729 259,910
Bullseye 190,931 133,490 - 76,917 786,389 1,187,727
StarGold 125,007 9,303 4,615 - - 138,925
Monaco 78,776 - 3,116 - - 81,892
Monarch 500 - - - - 500
Other properties 44,982 1,000 5,364 - 895 52,241
Sub-total 538,186 188,889 13,095 86,012 895,013 1,721,195
Tax credits (647,894)
Total 1,073,301
Management fees increased by $78,397 to $137,425 for Q2-21 YTD compared with $59,028 for Q2-20 YTD.
Effective June 1, 2020, the Corporation entered into a full working time employment agreement with the President
& CEO of the Corporation. His remuneration of $70,097 is recorded under management fees this period (Q2-20
YTD consulting fee recorded under management fees ($21,000) and exploration expenditures ($39,500)).
Share-based payments increased by $280,102 to $286,717 for Q2-21 YTD compared with $6,615 for Q2-20
YTD. This increase is due to the granting of 1,550,000 stock options this period.
Professional and consulting fees increased by $30,622 to $72,614 for Q2-21YTD compared with $41,992 for
Q2-20YTD due mainly to a timing difference in audit services recording.
Flow-through shares premium decreased by $228,159 to $95,873 for Q2-21 YTD compared with $324,032 for
Q2-20 YTD. The decrease is mainly due to the reversal of the previous years’ liability related to the premium on
the December 2019 and 2018 flow-through shares financing respectively, in relation of the work completed.
COVID-19 implication
The outbreak of COVID-19 resulted in a major global health crisis which continues to have impacts on the global
economy and the financial markets at the date of completion of this MD&A. These events may cause significant
future changes in the Corporation’s ability to complete planned exploration and evaluation activities, meet its
obligations according to the terms of the flow-through financings, or our ability to obtain debt and equity financing.
Following these events, the Corporation has taken and will continue to take action to minimize the impact.
8Exploration activities
The Corporation’s exploration activities were suspended in response to the COVID-19 plan of the Government of
Quebec, and limited exploration activities were conducted from mid-March to the end of May 2020. During this
lockdown period, management dedicated its effort to strengthen its land position in the Troilus area by staking and
acquiring claims adjacent to the Corporation’s land package, in addition to forging a strategic partnership with
Argonaut by entering into a formal joint venture agreement in June 2020.
The Corporation’s exploration on its properties resumed in early June 2020. The Corporation developed a policy
to provide guidance to its personnel and consultants working in the James Bay region of Northern Quebec where
its properties are located, which included health prevention measures and communication plan with the
communities. Normal operations were conducted since resumption of its activities and there have been no known
cases in the Corporation’s workforce since the outbreak.
Effective January 8, 2020, a one-month lockdown has been imposed by the Government of Quebec for several
sectors of activity of the Quebec economy. Mineral exploration companies with commitments and essential work
to do are allowed to carry them out. The Corporation has postponed all non-essential work on the properties to
limit travel and the risk of contamination. However, the drilling program that was initiated in December on the
Pallador-Regnault property was completed in January 2021.
Flow-through commitments
On December 16, 2020, as a result of COVID-19, the Federal Government published draft legislative proposals
to protect jobs and safe operations at junior mining exploration companies by extending the timelines for spending
the capital they raise via flow-through shares by 12 months. Accordingly, the Corporation’s deadline to incur the
eligible exploration expenditure related to the December 2019 flow-through financing would be extended until
December 31, 2021. As of November 30, 2020, the Corporation has incurred $720,358 of this commitment leaving
$120,343 to be spent by December 31, 2021.
Financing
During periods of crisis, gold has proven to be a safe-haven asset. Gold’s intrinsic value was again confirmed with
all-time high values during this pandemic. The Corporation has taken steps to adequately finance its operations,
to maintain the status of its current exploration activities and keep its properties in good standing, to pay its ongoing
general and administrative expenses, and to meet its liabilities, obligations, and existing commitments for the
ensuing 12 months as they fall due. The completion of two non-brokered private placements for gross proceeds
of $2,000,000 in aggregate in June and September 2020 contributed to such financing.
Prospective information and risk factor
There can be no assurance that the Corporation's personnel and key consultant will not be impacted by these
pandemic diseases and ultimately see its workforce productivity reduced as a result of these health risks.
In addition, a significant outbreak of coronavirus could result in a widespread global health crisis that could
adversely affect global economies and financial markets, resulting in an economic downturn that could have an
adverse effect on the demand for precious metals and our future prospects.
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