TEXAS MINERAL RESOURCES CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)
You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and related
notes appearing elsewhere in this Annual Report. This discussion and analysis
contains forward-looking statements that involve risks, uncertainties and
assumptions. See “Cautionary Note Regarding Forward-Looking Statements.” Our
actual results may differ materially from those anticipated in these
forward-looking statements as a result of many factors, including, but not
limited to, those set forth under “Risk Factors” and elsewhere in this Annual
Report.
Overview
We are a mining company engaged in the business of the acquisition, exploration
and development of mineral properties. We currently own a 20% membership
interest in
GLO to explore and develop a 950-acre rare earths project located in
County, Texas
with primary terms of approximately 19 and 18 years, each currently have
remaining terms of approximately nine years and provisions for automatic renewal
if
9,345 acres adjacent to the
develop a metallurgical process to concentrate or otherwise extract the metals
from the
geotechnical work, and permitting necessary for a bankable feasibility study and
then to extract mineral resources from the
Project
contain any probable mineral reserves or proven mineral reserves under Item 1300
of Regulation S-K.
Rare earth elements are a group of chemically similar elements that usually are
found together in nature – they are referred to as the “lanthanide series.”
These individual elements have a variety of characteristics that are critical in
a wide range of technologies, products, and applications and are critical inputs
in existing and emerging applications. Without these elements, multiple
high-tech technologies would not be possible. These technologies include:
? cell phones,
? computer and television screens,
? battery operated vehicles,
? clean energy technologies, such as hybrid and electric vehicles and wind
power turbines,
? fiber optics, lasers and hard disk drives,
? numerous defense applications, such as guidance and control systems and
global positioning systems,
? advanced water treatment technology for use in industrial, military and
? outdoor recreation applications
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Because of these applications, global demand for REE is projected to steadily
increase due to continuing growth in existing applications and increased
innovation and development of new end uses. Interest in developing resources
domestically has become a strategic necessity as there is limited production of
these elements outside of
continue to fund our participation interest in the
impacted by future prices for
History of the
In
Project
Foundation
our Common Stock. We also agreed to support the Foundation through an annual
payment of
Grande Basin
and well-known fishing lake near
exclusive surface access to the area for the potential development and mining of
the
In
purchase the surface rights covering the
and, separately, a lease to develop the water necessary for the potential
Top Project
approximately 5,670 acres over the mining lease and the additional acreage
adequate to site all potential heap leaching and processing operations as
currently anticipated by the Company. The option may be exercised for all or
part of the option acreage at any time during the primary term of the mineral
lease as defined above. The “primary term” of the GLO mineral leases and the
option is through
payment of
surface at the time of exercising the option. The ground water lease secures the
right to develop the ground water within a 13,120-acre lease area located
approximately 4 miles from the
existing water wells. It is anticipated that all potential water needs for the
covered by this water lease. This lease has an annual minimum production payment
of
production payments of
is greater, is required. This lease remains effective as long as the mineral
lease is in effect.
In
of rhyolite, transported and crushed the ore to 80% passing an approximate
one-inch screen. This rock is now stockpiled and is expected to be used in the
contemplated pilot plant development.
In
membership interest in
As a part of our ongoing operations, we will occasionally investigate new mining
opportunities. We may also incur expenses associated with our investigations.
These costs are expensed as incurred until such time when we have agreements in
place to purchase such mining rights.
Investment Company Act Exclusion
Section 3(a)(9) of the 1940 Act provides that a company “substantially all of
whose business consists of owning or holding oil, gas, or other mineral
royalties or leases, or fractional interests therein, or certificates of
interest or participation in or investment contracts relative to such royalties,
leases, or fractional interests” is not an investment company within the meaning
of the 1940 Act. The Company has determined that this exemption applies to it
giving consideration to the following four factors:
? the exempted activity (ownership of our certificate of interest in the
underlying mineral leases) constitutes "substantially all" of our
business;
? we own, and do not trade, in the certificate of interest in the mineral
leases or the underlying mineral leases;
? mineral leases qualify as an eligible asset for purposes of the exception;
and
? a membership interest in a limited liability company constitutes a
"certificate of interest or participation in" or an "investment contract
relative to" the eligible assets.
The Company intends to continue to conduct its business operations in order to
continue to be excluded from the definition of an “investment company” under the
1940 Act.
Our financial statements have been prepared assuming that the Company will
continue as a going concern.
Our financial statements have been prepared assuming that the Company will
continue as a going concern. The Company has an accumulated deficit from
inception through
achieve profitable operations, and projects further losses in the development of
its business. At
approximately
concern is dependent upon its ability to obtain the necessary financing to meet
its obligations and pay its liabilities arising from normal business operations
when they come due.
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In accordance with our current projected Budget, the Company does not have
sufficient capital to fund its (i) total cash calls expected during the fiscal
year ending
(ii) expected general and administrative expenses during the fiscal year ending
to make required cash calls to
its 20% ownership interest. Accordingly, the Company will be required to raise
additional capital to fund its obligations (pursuant to the Budget and to fund
general and administrative expenses) during the fiscal year ended
2023
necessary capital to fund its cash calls and expected general and administrative
expenses. We have no firm commitments for equity or debt financing and any
financing that may be obtained will be on a best efforts basis. Based on these
factors, there is substantial doubt as to the Company’s ability to continue as a
going concern for a period of twelve months from the issuance date of these
financial statements. The failure to obtain sufficient financing may cause us to
curtail or discontinue operations.
Liquidity and Capital Resources
At
our cash position was approximately
of approximately
on the
will have no operating revenues until we place one or more of our properties
into production. All properties are in the exploration stage.
During the fiscal year ending
Operating Agreement.
with advancing the
During the current fiscal year,
approximately
CIX/CIC processing of the
carried out at USARE’s facility in
the initial process development, this facility will either be relocated to or
replicated at the
established. This work will consist of mining and crushing approximately 40,000
tonnes of rhyolite and setting up and equipping a facility to conduct pilot
plant scale heap leaching. It is estimated that the
require additional time and further expenditure to complete a bankable
feasibility study. We plan to fund up to approximately
expected expenditures by
We do not have sufficient cash on hand to fund our portion of the Round Top
Budget during our current fiscal year. Therefore, we will need to raise
additional funding to implement our business strategy and to continue to fund
our portion of the Round Top Budget, the failure of which could cause us to
curtail or cease our operations. The most likely source of future financing
presently available to us is through the sale of our securities. Any sale of our
shares of Common Stock will result in dilution of equity ownership to existing
stockholders. This means that if we sell shares of Common Stock, more shares
will be outstanding and each existing stockholder will own a smaller percentage
of the shares then outstanding. Alternatively, we may rely on debt financing and
assume debt obligations that require us to make substantial interest and capital
payments. Also, we may issue or grant warrants or options in the future pursuant
to which additional shares of Common Stock may be issued. Exercise of such
warrants or options will result in dilution of equity ownership to our existing
stockholders. We have no firm commitment with respect to obtaining debt or
equity financing and, accordingly, we will be reliant upon a best efforts
financing strategy. Accordingly, there is no assurance that we will be able to
raise necessary capital to fund our portion of the Round Top Budget and our
general administrative expenses during the fiscal year ending
Results of Operations
Fiscal Years ended
Grant Income
Grants received from government and other agencies in advance of a specific
project’s expenses are deferred and recognized as other income in the statements
of operations in the period they are earned and the related project costs are
incurred. For the years ended
and
net of grant related expenses totaling approximately
respectively.
Revenue
During the fiscal year ended
the fiscal year ended
losses, we had an accumulated deficit of approximately
31, 2022
32
Operating expenses and resulting losses from operations.
We incurred exploration costs for the fiscal years ended
2021, in the amount of approximately
Expenditures during fiscal year 2022 were primarily for our obligation to fund
our portion of the cash requirements set forth by our joint venture agreement
with USARE. Currently eighty-percent of the expenditures associated with the
joint venture are funded by our joint venture partner, USARE.
Our general and administrative expenses for the fiscal year ended
2022
compensation for services. The remaining expenditures were primarily for
payroll, professional fees and other general administrative expenses necessary
for our operations.
Our general and administrative expenses for the fiscal year ended
2021
compensation for services. The remaining expenditures were primarily for
payroll, professional fees and other general administrative expenses necessary
for our operations.
We had losses from operations for the fiscal years ended
2021 totaling approximately
net loss for the fiscal year ended
approximately
approximately
respectively.
In
70% interest in
additional 10% interest in
transaction, the Company received total consideration of approximately
approximately
the carrying amount of mineral properties, or approximately
resulting gain on sale of interest in mineral properties in the amount of
approximately
(expense).
Off-Balance Sheet Arrangements
None
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on our results of operations,
financial position, or cash flow.
Critical Accounting Estimates
Management’s discussion and analysis of financial condition and results of
operations is based on our financial statements, which have been prepared in
accordance with
management to make assumptions, estimates and judgments that affect the reported
amounts of assets, liabilities, revenues, costs and expenses, and the related
disclosures of contingencies. Management bases its estimates on various
assumptions and historical experience, which are believed to be reasonable;
however, due to the inherent nature of estimates, actual results may differ
significantly due to changed conditions or assumptions. On a regular basis,
management reviews the accounting policies, assumptions, estimates and judgments
to ensure that our financial statements are fairly presented in accordance with
with certainty, actual results could differ from our assumptions and estimates,
and such differences could be material. Management believes that the following
critical accounting estimates and judgments have a significant impact on our
financial statements; Valuation of options granted to directors and officers
using the Black-Scholes model, and fair value of mineral properties. The
accounting policies are described in greater detail in Note 2 to our audited
financial statements for the fiscal year ended
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