Foremost Lithium Resource & Technology Ltd.
This management's discussion and analysis of financial position and results of operations ("MD&A") is prepared as of August 29, 2022 and should be read in conjunction with the unaudited condensed interim consolidated financial statements of Foremost Lithium Resource & Technology Ltd. ("Far" or the "Company") for the period ended June 30, 2022 with the related notes thereto. The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS").
All dollar amounts included therein and in the following MD&A are expressed in Canadian dollars except where noted.
Further information regarding the Company and its operations are filed electronically on the System for Electronic Document Analysis and Retrieval (SEDAR) in Canada and can be obtained from www.sedar.com .
Except for statements of historical facts relating to the Company, this MD&A contains "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements are made as of the date of this MD&A and the Company does not intend and does not assume any obligation to update these forward-looking statements, except as required by applicable securities laws.
Forward-looking statements may include, but are not limited to, statements with respect to the future price of metals, the estimation of mineral resources, the realization of mineral resource estimates, the timing and amount of future exploration programs, capital expenditures, success of exploration activities, permitting timelines, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage, the completion of transactions and future listings and regulatory approvals. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information in this MD&A includes, among other things, disclosure regarding: the Company's mineral properties as well as its outlook, statements with respect to the success of exploration activities, permitting timelines, costs and expenditure requirements for additional capital, regulatory approvals, as well as the information under the headings "Overall Performance", "Liquidity" and "Capital Resources".
In making the forward looking statements in this MD&A, the Company has applied certain factors and assumptions that it believes are reasonable, including that there is no material deterioration in general business and economic conditions; that the timing, costs and results of the Company's proposed exploration programs are consistent with the Company's current expectations; that the Company receives regulatory and governmental approvals and permits for its properties on a timely basis; that the Company is able to obtain financing for its properties on reasonable terms and on a timely basis; that the Company is able to procure equipment and supplies in sufficient quantities and on a timely basis; that engineering and exploration timetables and capital costs for the Company's exploration plans are not incorrectly estimated or affected by unforeseen circumstances or adverse weather conditions; that any environmental and other proceedings or disputes are satisfactorily resolved.
However, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors may include, among others, actual results of current and proposed exploration activities; actual results of reclamation activities; future metal prices; accidents, labor disputes, adverse weather conditions, unanticipated geological formations and other risks of the mining industry; delays in obtaining governmental or regulatory approvals or financing or in the completion of exploration activities, as well as those factors discussed in the section entitled "Risks and Uncertainties" in this MD&A. Although the Company has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.
Foremost Lithium Resource & Technology Ltd.
The technical information in this MD&A has been reviewed by Lindsay Bottomer, P. Geo, and Mark Fedikow, P. Geo. Both are qualified persons as defined by Canadian National Instrument 43-101Standards of Disclosure for Mineral Projects ("NI 43- 101").
This MD&A is dated as of August 29, 2022.
The Company owns or holds options on four Manitoba lithium exploration projects: the 100% owned Zoro property, Jean Lake optioned from Mount Morgan Resources Ltd., Peg North optioned from Strider Resources Limited and Grass River Lithium projects near Snow Lake, Manitoba, and the Hidden Lake project, located in Northwest Territories, which is optioned from 92 Resources Corp. The Company is actively exploring both projects.
The Company also owns a 100% interest in the Winston property, a gold and silver property located in New Mexico, USA, subject to certain underlying payment obligations and permitted encumbrances.
The Company currently has two subsidiaries, Sequoia Gold & Silver Ltd., a British Columbia Company, and Sierra Gold & Silver Ltd, a New Mexico company ("Sierra"). Sierra holds the Company's Winston property in New Mexico, USA.
The Zoro Lithium project totals approximately 3,603 hectares located near the east shore of Wekusko Lake in west-central Manitoba, approximately 20 km east of the mining town of Snow Lake, 249 km southeast of Thompson and 571 km northeast of Winnipeg and is comprised of the Zoro 1 claim, the Manitoba property, and the Zoro North claims.
Zoro 1 Claim (Snow Lake, Manitoba, Canada)
The Company owns a 100% undivided interest in the Zoro 1 claim totaling approximately 52 hectares in size. The Company acquired the Zoro 1 claim in 2017 for a purchase price of 7,000,000 common shares of the Company, $50,000 cash, and a non- interest-bearing promissory note for $100,000 (paid). In addition, the Company paid a finder's fee of 1,000,000 common shares to an arm's length third party in connection with the acquisition of the Zoro 1 claim. Further details of the Company's acquisition of the Zoro 1 claim are included in the Financial Statements and Annual Filings.
Manitoba and Green Bay Lithium Claims (Snow Lake, Manitoba, Canada)
The Company has earned a 100% interest in all lithium-bearing pegmatite dykes on three contiguous claims in Manitoba by paying $250,000 in cash and issuing $250,000 in shares (2,724,674 shares issued). The claims include the Zoro 1, Manitoba and Green Bay properties.
The property is subject to a 2% NSR. The Company can acquire an undivided fifty percent interest in the NSR, being one-half of the NSR or a 1% Net Smelter Return from Strider by making a $1,000,000 cash payment to Strider, together with all accrued but unpaid NSR at the time, prior to the commencement of commercial production.
During the option period, the Company is responsible for carrying out and administering exploration, development, and mining work on the property and for maintaining the property in good standing.
Foremost Lithium Resource & Technology Ltd.
Grass River Claims ("GRC") (Snow Lake, Manitoba, Canada
During January 2022, the Company announced the acquisition of The Grass River Claims, located in the historic mining district of Snow Lake Manitoba, 6.5 kilometers east of the Zoro lithium property. The Grass River Claims ("GRC") consist of 27 claims totaling 14,873 acres and hosts multiple pegmatites exposed in outcrop and 7 drill-indicatedspodumene-bearing pegmatite dykes. This acquisition significantly expands the Company's Snow Lake Lithium project by 130% to an amalgamated 26,276 acres making the Company the second largest lithium focused exploration company in Snow Lake.
Jol Lithium Claim (Snow Lake, Manitoba, Canada)
In July 2022, the Company entered into an option agreement to acquire a 100% interest in the MB3530 claim in the Snow Lake area in Manitoba. To earn the interest, the Company paid $8,000 and issued 18,181 common shares. The property is subject to a 2% NSR.
MB3530 encompasses 25 hectares (62 acres) situated due North from the Company's Jean Lake project and due West of the Company's Zoro project.
PEG North Claims (Snow Lake, Manitoba, Canada)
In July 2022, the Company into an option agreement to acquire a 100% interest in the Peg North claims located in the historic Snow Lake mining district in Manitoba. To earn the interest, the Company will pay $750,000 in cash (paid $100,000) and $750,000 in shares (issued 526,316 shares valued at $100,000) and incur $3,000,000 of exploration expenditures. The property is subject to a 2% NSR.
The Peg North Claims consist of 28 claims hosting five known pegmatite dykes, [Cerny, et. al.1981] 1 and captures the northern extension of the Crowduck Bay Fault and surrounding area, known for its lithium-enriched pegmatite dyke clusters. The acquisition pursuant to the Option Agreement will significantly expand the Company's Snow Lake lithium holdings by 16,697 acres (6,757 hectares) to an amalgamated 43,031 acres (17,414 hectares) in the prospective Snow Lake pegmatite fields.
Exploration at the Zoro Lithium Project, Snow Lake, Manitoba
On July 3, 2019, the Company announced assay results from the fifth drilling program at its 100% owned Zoro Lithium Project, near Snow Lake, Manitoba. 3,054 metres of drilling across 22 holes identified five new pegmatite dykes, bringing the total to
Zoro includes thirteen (13) identified pegmatite dykes. Diamond drilling, prospecting, and sampling programs conducted in 2016 through 2019 confirmed the presence of lithium in the spodumene bearing pegmatites. Five drill programs have been completed to date, delivering high-grade lithium assays from all drill holes. Metallurgical studies on material collected from four 2018 drill holes at Dyke 1 are ongoing. The Company previously assessed the amount of high-grade lithium spodumene in Dyke 1 through a 2017/2018 winter drill program, reaching the dyke's deeper levels (>150 metres). Additionally, the winter drill program was designed to expand to Dykes 5 and 7, to test historic results and recent assay results from trench and outcrop sampling of both dykes. During the 2017/18 winter drill program, the Company also discovered a previously unknown spodumene bearing pegmatite dyke. The discovery was made during the 2,472-metre,19-hole drill program, as described in Company's news releases on January 19 and February 13, 2018. The discovery of this additional dyke was made by drill- testing a Mobile Metal Ions (MMI) soil geochemical anomaly bringing the total of known high-grade lithium mineralized spodumene pegmatite dykes on the Zoro Lithium Project to eight. Further results from the winter drill program included narrow intercepts from shallow drill holes testing Dykes 2, 5 and 7. Of these, Dyke 5, tested by drill hole FAR18-30, intersected 1 metre of 1.2% Li2 O. Overall the results for each of these dykes were consistent with historic exploration results. The Company has posted the results of all drill programs and laboratory testing on its website at www.foremostlithium.com
The successful drill testing of a Mobile Metal Ions ("MMI") soil geochemical anomaly in 2017 and the discovery of high-grade Dyke 8 has provided the rationale for expanding these surveys to the remainder of the property. A helicopter-assisted crew of
Foremost Lithium Resource & Technology Ltd.
field technicians extended the current MMI survey coverage on the property with the collection of 784 soil samples. The new 2018 data has defined numerous extensions to anomalies identified in previous MMI surveys on the Project, thereby increasing the target size for diamond drilling. A total of 18 new targets have been delineated and will be the focus of the contracted March 2022 1,500-metre drill program. 12 new targets were identified in December 2021 of which the top 10 shall be drill tested by the MMDF subsidized March 2022 drill program.
A helicopter-assisted geological mapping crew has undertaken the first new mapping on the Zoro lithium Project area since the 1950s. The project was undertaken to provide an interpretation of the geological setting of the spodumene- bearing pegmatite dykes and any post-depositional structural overprints that may have affected the current location of the dykes. The mapping project was augmented by a drill core sampling program with the intent of assessing mineralogical and geochemical tools for vectoring towards additional pegmatites on the property. Both aspects of this summer's work form the basis of an M.Sc. thesis program currently being undertaken at the University of Western Ontario under the guidance of Professor Robert Linnen and Dr. Tania Martins of the Manitoba Geological Survey. A preliminary map at a scale of 1:4000 has been produced and establishes the geological setting for 8 known spodumene-bearing pegmatite dykes on the property. Mineralogical studies are ongoing.
The Company completed additional drill core sampling from Dyke 1 on the Zoro Lithium Project in 2020 to provide material for the metallurgical survey, which was completed by SGS Mineral Services at their Lakefield facility. A 2020 peer reviewed technical publication co-authored with SGS Mineral Services concluded that spodumene-bearing pegmatite from Zoro Dyke 1 can be processed using industry standard metallurgy to produce a 6% battery-grade lithium (Li2 O) concentrate1 .
The 2016 intersection of 0.113% tantalum (Ta2 O5 ) in drill hole DDH FAR16-001 and the presence of elevated tantalum assays on the property has encouraged the Company to further evaluate tantalum potential. The mineral tantalite (Mn, Fe) (Ta, Nb)2 O6 is the primary source of the metal tantalum. It is a dark blue gray, dense, and very hard mineral rarely found in pegmatites and is used in the electronics industry for capacitors and high-power resistors. It is also used to make alloys to increase strength, ductility, and corrosion resistance. The metal is used in dental and surgical instruments and implants, as it causes no immune response.
On July 9, 2018, the Company announced that it had received the first ever resource estimate for Dyke 1 on its Zoro Lithium Property. Dyke 1 contains an inferred resource of 1,074,567 tonnes grading 0.91% Li2 O, 182 ppm Be, 198 ppm Cs, 51 ppm Ga, 1212 ppm Rb, and 43 ppm Ta (at a cut-off of 0.3% Li2 O). Dyke 1 is open at depth and to the north and south where additional exploration is ongoing. The estimate has an effective date of July 6, 2018, and was prepared by Scott Zelligan P. Geo., an independent resource geologist of Coldwater, Ontario. Dyke 1 is one of eight known spodumene- mineralized pegmatite dykes on the property. The remaining dykes are currently the object of ongoing exploration including drill-testing. Inferred Mineral Resources are not Mineral Reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. There has been insufficient exploration to define the inferred resources as an indicated or measured mineral resource, however, it is reasonably expected that the most of the Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration. There is no guarantee that any part of the mineral resources discussed herein will be converted into a mineral reserve in the future. Please refer to the Company's new release dated July 9, 2018, for further details regarding this resource estimate and the methodologies, procedures and assumptions used to estimate same. The Company has filed the NI 43-101 Technical Report on SEDAR.
1 Grammatikopoulos, et. al. (2020), "Mineralogical Characterization and Preliminary Beneficiation
of the Zoro Lithium Project, Manitoba, Canada." Mining, Metallurgy & Exploration, Society for Mining, Metallurgy & Exploration Inc. 2020 https://doi.org/10.1007/s42461-020-00299-2
Foremost Lithium Resource & Technology Ltd.
Chain of Custody, Quality Control and Quality Assurance, and Data Verification
Drill core for assay purposes was sawn in half after logging and core mark-up by the Company's geologist. Samples were collected based on an appropriate sample interval and washed to remove mud from cutting the core with the core saw. The core sample was placed into a clear plastic bag and the sample number written on the bag. An assay tag was inserted into the sample bag, one tag was inserted into the core box marking the sample location and the third tag was retained in storage. All core samples were placed into a white vinyl pail with a sample inventory, labeled and stored in a locked facility until enough samples were available for shipping. At this point the sample pails were taken to the local shipping company and loaded into a sealed transport truck. A bill of lading was signed by the geologist after the number of sample pails were counted and the shipping address confirmed. Receipt of the sample pails was acknowledged by the assay laboratory. Blanks, duplicate samples, and internal standard reference materials were included with each sample batch.
All data used to estimate the above reported mineral resource estimate, including sampling, analytical, and test data, has been verified by Scott Zelligan, P.Geo., from the original sources. This includes a site visit to the Zoro Lithium Project, review of previously drilled intervals in person, and a comparison of the drill hole database to drill logs and assay certificates.
A Permit to Extract a Bulk Sample
On January 6, 2022, the Company announced that it has received a permit from the Province of Manitoba to extract a 500kg bulk sample from its Zoro Lithium Property.
The Company plans to extract a 500-kilogram bulk sample of spodumene-bearing pegmatite from Dyke 1 on its Zoro Lithium Project. The bulk sample will be shipped to a reputable third party for metallurgical testing and process development. A 2020 peer reviewed technical publication co-authored with SGS Mineral Services concluded that spodumene-bearing pegmatite from Zoro Dyke 1 can be processed using industry standard metallurgy to produce a 6% battery-grade lithium (Li2O) concentrate
On February 8, 2022, the Company announced an upcoming 1500 metre diamond drill program scheduled to commence in the first week of March in 2022 on its 100% percent owned Zoro Lithium Project in Snow Lake, Manitoba. The Company has secured, and contracted Bodnar Drilling of St. Rose du Lac, Manitoba and Gogal Air Services to provide rotary air support, core storage, and preparation facilities for this upcoming program.
Prior to this upcoming 2022 drill program, a total of fifty-eight historic diamond drill holes have been drilled on the Zoro property. From the previous 2018 drilling campaign, 8 lithium mineralized spodumene pegmatite dykes were documented on the property. Of these Dyke 1 and Dyke 8 are the most prominent and remain open at depth and along strike to perform additional in-fill drilling and delineate additional tonnage of resource.
On March 14, 2022, the Company announced that field operations have commenced for its ten (10) diamond drill hole ("DDH") 1,500-meter program. This is the first drilling program for the Company since 2018. The focus of this drill program was to test ten (10) new spodumene pegmatite targets on the Zoro project. Drill core samples were shipped to Activation Laboratories (Ancaster, Ontario) for assaying services. Drill and helicopter pads for each of the 10 holes were cut and prepared by Moss Line cutting of Snow Lake. Figure 1 below shows an image of the location of the FM-21-064 drill pad.
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