Related Party Transactions 

The following schedule describes the amounts payable to related parties as of June 30, 2021:

On March 8, 2019, we entered into a deed of assignment of debt with Nova Minerals Ltd. and Thompson Bros to facilitate the reassignment of the related party loan from Nova Minerals Ltd. to our company. Thereby, we are now a party to an amount owing from Thompson Bros of C$1,519,013 (approximately US$1,115,773) as of June 30, 2020. In consideration for the assignment, we issued one of our common shares to Nova Minerals Ltd. The related party loan is non-interest bearing and with no fixed repayment date or terms.

As of June 30, 2021 and 2020, we had C$236,402 (approximately US$190,585) and C$205,648 (approximately US$165,792), respectively, due to our parent company, Nova Minerals Ltd. This money was lent to us by Nova Minerals Ltd. to fund our startup as well as ongoing accounting, legal and general corporate costs.

Debenture Sales

In February 2021, the Company issued convertible debt (the “Debentures”) for a total of $865,263 (approximately US$697,568) (the “Subscribed Amount”). The Debentures were sold at an original issue discount of approximately 5% for proceeds of $805,000 (approximately US$648,984), net of a $15,000 (approximately US$12,093) cash commission.

Under the terms of the Agreement, the Subscribed Amount plus interest accrued, at a rate which should be the higher of (i) 12% per annum or (ii) Wall Street Prime Rate (currently approximately 3.3%) + 7%, is convertible, at the option of the Debenture holder, into common shares of the Company at a price that is the lesser of (i) C$1.25 (approximately US$1.01) per share or (ii) a 20% discount to the price of a Liquidity Transaction (defined below). The conversion feature expires (the “Expiry Date”) on the earlier of twenty-four months from execution, or the closing of a registered public offering (the “Liquidity Transaction”).

In the event of a default, interest accrues at the lesser of (i) 24% per annum or (ii) the maximum legally authorized rate. The Company has the right to repay the note prior to maturity at 110% of the then outstanding principal and interest. The Company must provide 30 days’ notice and the Lender shall have the right to convert prior to the 30-day notice expiration.

The remaining undiscounted principal balance outstanding of the Debentures as at June 30, 2021 was $865,263 (US$ 697,568).

Contractual Obligations commitments and contingencies

As of June 30, 2021 and 2020 we had C$236,402 (approximately US$190,585) and C$205,648 (approximately US$165,792), respectively, due to our parent company, Nova Minerals. This money was lent to us by Nova Minerals to fund our startup as well as ongoing accounting, legal and general corporate costs. This loan is non-interest bearing and with no fixed repayment date or terms.

The Company only undiscounted liabilities are accounts payable and accrued liabilities and amounts due to related parties, which are due within one year and as at June 30, 2021 totaled $541,767 (US$436,768) (June 30, 2020 – $125,786).

On December 2, 2020, the Company entered into a consulting agreement with its CEO, cancellable on three-months’ notice. As part of his remuneration package, the Company’s CEO is entitled to the following compensation:

Except as indicated above, at June 30, 2021, we did not have other long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates as well as, to a lesser extent, inflation.

Interest Rate Risk

We are exposed to market risks in the ordinary course of our business. Our cash and short-term investments include cash in readily available checking accounts and guaranteed investment certificates. These securities are not dependent on interest rate fluctuations that may cause the principal amount of these assets to fluctuate.

Foreign Currency Exchange Risk

The majority of our cash flows, financial assets and liabilities are denominated in Canadian dollars, which is our functional and reporting currency. We are exposed to financial risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates. Currency risk is limited to the proportion of our business transactions denominated in currencies other than the Canadian dollar, primarily for capital expenditures, debt and various operating expenses such as salaries and professional fees. We also purchase property, plant and equipment in Canadian dollars. We do not currently use derivative financial instruments to reduce our foreign exchange exposure and management does not believe our current exposure to currency risk to be significant.

We estimate that we will receive net proceeds of approximately US$18.31 million in this offering, based upon an assumed initial public offering price of US$7 per share, which is the midpoint of the estimated range of the initial public offering price shown on the cover page of this prospectus, assuming no exercise of the over-allotment option and after deducting underwriting discounts and commissions and the estimated offering expenses payable by us. Assuming that we convert the full amount of the net proceeds from this offering into Canadian dollars, a 10.0% appreciation of the U.S. dollar against the Canadian dollar, from the exchange rate of C$1.2404 per US$1.00 as of June 30, 2021 to a rate of C$1.36444 per US$1.00, will result in an increase of approximately C$2,210,393 in our net proceeds from this offering. Conversely, a 10.0% depreciation of the U.S. dollar against the Canadian dollar, from the exchange rate of C$1.2404 per US$1.00 as of June 30, 2021 to a rate of C$1.49754 for $1.00, will result in a decrease of C$2,210,393 in our net proceeds from this offering.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Critical Accounting Policies

The following discussion relates to critical accounting policies for our company. The preparation of financial statements in conformity with IFRS requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

The financial statements of the Company are prepared in its functional currency, determined on the basis of the primary economic environment in which the entity operates. Given that operations are in Canada, the presentation and functional currency of the Company is the Canadian dollar.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the transaction dates. At each reporting date, monetary items denominated in foreign currencies are translated into the entity’s functional currency at the then prevailing rates and non-monetary items measured at historical cost are translated into the entity’s functional currency at rates in effect at the date the transaction took place.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are included in the statements of loss and comprehensive loss for the period in which they arise.

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash consist of cash on hand, and deposits held with banks.

Title to exploration and evaluation assets including mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing historical characteristic of many properties. The Company has investigated title to all its mineral properties and, to the best of its knowledge title to all its properties are in good standing.

The Company accounts for exploration and evaluation assets in accordance with IFRS 6 – Exploration for and evaluation of mineral properties (“IFRS 6”). Once the legal right to explore a property has been acquired, costs directly related to exploration and evaluation are recognized and capitalized, in addition to the acquisition costs. These expenditures include but are not limited to acquiring licenses, researching and analyzing existing exploration data, conducting geological studies, exploration drilling and sampling and payments made to contractors and consultants in connection with the exploration and evaluation of the property. Costs not directly attributable to exploration and evaluation activities, including general administrative overhead costs, are expensed in the year in which they occur.

Acquisition costs incurred in obtaining legal right to explore a mineral property are deferred until the legal right is granted and thereon reclassified to mineral properties. Transaction costs incurred in acquiring an asset are deferred until the transaction is completed and then included in the purchase price of the asset acquired.

When a project is deemed to no longer have commercially viable prospects to the Company, exploration and evaluation expenditures in respect of that project are deemed to be impaired. As a result, those exploration and evaluation expenditure costs, in excess of the estimated recoverable amount, are written off to the statement of loss and comprehensive loss.

The Company assesses exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.

Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered a mine under development. Exploration and evaluation assets are also tested for impairment before the assets are transferred to development properties.

As the Company currently has no operational income, any incidental revenues earned in connection with exploration activities are applied as a reduction to capitalized exploration costs.

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

At each reporting date, the Company reviews the carrying amounts of its assets to determine whether there are any indicators of impairment. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.

Where the asset does not generate cash inflows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset belongs. Any intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired. An asset’s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or CGU is estimated to be less than it carrying amount, the carrying amount is reduced to the recoverable amount and an impairment loss is recognized immediately in the statement of loss and comprehensive loss. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized. A reversal of impairment is recognized in the statement of loss and comprehensive loss.

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature, they are measured at amortised cost and are not discounted. The amounts are unsecured.

If convertible debt can be converted to equity at a fixed conversion rate at the option of the holder, the liability component of convertible debentures is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The conversion component is initially valued at fair value based on generally accepted valuation techniques, with the residual value of the convertible debt allocated to loan liability and warrant components. Subsequent to initial recognition, the liability component of a convertible debenture is measured at amortized cost using the effective interest method and accreted to face value over the term of the convertible debenture.

If convertible debt is convertible to equity at a variable conversion rate, where the quantity of shares or units into which the debt is convertible varies based on changes in variables affecting calculation of the conversion price, the value of the conversion component is first calculated and classified as a derivative liability, with the residual value allocated to the loan liability component, which is recognized as a liability and, where applicable, to warrants issued to debenture holders, which are recognized in reserves. Subsequent to initial recognition, the liability component of a convertible debenture is measured at amortized cost using the effective interest method and accreted to face value over the terms of the convertible debenture. The conversion component of the convertible debentures is remeasured to fair value at the end of each reporting period using the Black Scholes valuation model, with gains or losses on remeasurement recognized in income and loss.

Any difference between the proceeds (net of transaction costs) and the redemption value is recognized as an adjustment to accretion expense over the period of the borrowings using the effective interest method.

Convertible debt is classified as current liability unless the Company has an unconditional right to defer settlement of the liability, or a portion of the liability, for at least 12 months after the reporting date.

Common shares are classified as share capital. Costs directly attributable to the issue of common shares are recognized as a deduction from share capital, net of any tax effects.

Share purchase warrants are classified as a component of equity. Share purchase warrants issued along with shares in an equity unit financing are measured using the residual approach, whereby the fair value of the warrant is determined after deducting the fair value of the shares from the unit price less applicable financing costs. Share purchase warrants issued for broker/financing compensation, are recognized at the fair value using the Black-Scholes option pricing model at the date of issue. Share purchase warrants are initially recorded as a part of warrant reserves in equity at the recognized fair value. Upon exercise of the share purchase warrants the previously recognized fair value of the warrants exercised is reallocated to share capital from warrant reserves. The proceeds generated from the payment of the exercise price are also allocated to share capital.

Proceeds received from the issuance of flow-through shares are restricted to be used only for Canadian resource property exploration expenditures within a two-year period. The portion of the proceeds received but not yet expended at the end of the year is disclosed separately.

The issuance of flow-through common shares results in the tax deductibility of the qualifying resource expenditures funded from the proceeds of the sales of such common shares being transferred to the purchasers of the shares. On the issuance of such shares, the Company bifurcates the flow-through shares into a flow-through share premium, equal to the estimated fair value of the premium that investors pay for the flow-through tax feature, which is recognized as a liability, and equity values of share capital and/or warrants. As the related exploration expenditures are incurred, the Company derecognizes the premium liability and recognizes the related recovery.

Income tax reported in the statement of loss and comprehensive loss for the period presented comprises current and deferred income tax. Income tax is recognized in the statement of loss and comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current income tax for each taxable entity in the Company is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the reporting date, and includes any adjustments to tax payable or recoverable with regards to previous periods.

Deferred income tax is determined using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred income tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using the expected future tax rates enacted or substantively enacted at the reporting date.

A deferred income tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred income tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities, when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis.

The following are the Company’s accounting policies under IFRS 9:

Investments and other financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it’s carrying value is written off.

Impairment of financial assets

The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

Financial assets at amortized cost

Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less any impairment. They are classified as current assets or non-current assets based on their maturity date. Gains and losses on derecognition of financial assets classified amortized cost are recognized in profit or loss.

Financial liabilities

Where the fair value option is taken for financial liabilities, the part of a fair value change relating to the Company’s own credit risk is recorded in other comprehensive income rather than in profit or loss, unless this creates an accounting mismatch. Financial liabilities are recognized initially at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost. Any difference between the amounts originally received, net of transaction costs, and the redemption value is recognized in profit and loss over the period to maturity using the effective interest method.

Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the reporting period. The diluted loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding on a diluted basis. The weighted average number of shares outstanding on a diluted basis takes into account the additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting period.

Other comprehensive loss is the change in net assets arising from transactions and other events and circumstances from non-owner sources. Comprehensive loss comprises net loss and other comprehensive loss. Foreign currency translation differences arising on translation of foreign subsidiaries in functional currencies other than the reporting currency would also be included in other comprehensive loss.

Leases

In January 2016, the IASB published a new accounting standard, IFRS 16 - Leases (“IFRS 16”) which supersedes IAS 17 - Leases. IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value.

The Company adopted IFRS 16 effective July 1, 2019. As the Company does not have any material lease agreements, the adoption of this standard did not materially impact the financial statements.

There are no accounting standards issued but not yet effective that are expected to have a material impact on the financial statements.

CORPORATE HISTORY AND STRUCTURE

Our Corporate History

We were incorporated in the Province of Manitoba, Canada under The Corporations Act (Manitoba) on May 25, 2018. We have three wholly owned subsidiaries, Snow Lake Exploration, Snow Lake Crowduck and Thompson Bros (formerly Manitoba Minerals Pty Ltd).

Snow Lake Exploration was incorporated by us on May 25, 2018 in Manitoba, Canada. Snow Lake Exploration is an operating company formed to conduct the exploration and development of mineral resources.

Snow Lake Crowduck was incorporated by us on May 25, 2018 in Manitoba, Canada. Snow Lake Crowduck is an asset holding company and holds all of the ownership interests in 20 mineral claims of Block A and 18 mineral claims of Block B on the TBL property.

Thompson Bros was incorporated by our parent company, Nova Minerals, on May 11, 2016 under the name Manitoba Minerals Pty Ltd., or MMPL, in Melbourne, Australia. On March 8, 2019, we acquired all of the outstanding common shares of Thompson Bros from Nova Minerals by agreeing to exchange with Nova Minerals 47,999,900 of our common shares for all of the issued common shares of Thompson Bros. On July 14, 2019, we changed the name of MMPL to Thompson Bros. The 20 Block A claims held by Thompson Bros have been transferred to Snow Lake Crowduck. Thompson Bros has been deregistered in Australia and Manitoba.

Our Claims History

On April 21, 2016, an agreement between Strider Resources Ltd, or Strider Resources, and Ashburton Ventures Inc., or Ashburton Ventures (now known as Progressive Planet Solutions Inc., or PPSL), was entered into pursuant to which Ashburton Ventures acquired the right to earn up to a 100% interest in the TBL property then owned by Strider Resources and consisting, at that time, of the 20 Block A claims, subject to a 2% net smelter royalty payable to Strider Resources, by meeting certain cash and share requirements to Strider Resources and certain expenditure requirements on the TBL property exploration project.

On September 26, 2016, Ashburton Ventures entered into an agreement with MMPL (now known as Thompson Bros) pursuant to which MMPL acquired the right to earn up to a 95% interest in the TBL property, subject to the 2% net smelter royalty payable to Strider Resources, by funding the option requirements of Ashburton Ventures in its agreement with Strider Resources of April 21, 2016. This agreement was amended on April 12, 2017, to reduce the maximum MMPL could earn to an 80% interest in the TBL property.

In the fall of 2016, to meet the expenditure requirements of the previously mentioned agreements, a modest program of prospecting and soil sampling was completed on the TBL property, followed by a five hole (1,007 m) drill program on the TBL property.

In March to April of 2018, Snow Lake Crowduck staked the 18 Block B claims.

On November 14, 2018, PPSL entered into a separate agreement with us pursuant to which we agreed to purchase the remaining 20% interest in the TBL property from PPSL, subject to the 2% net smelter royalty payable to Strider Resources, in exchange for 2,400,000 (post consolidation) of our common shares. 300,000 (post consolidation) of these shares were issued to Strider Resources.

On November 15, 2018, an agreement among Strider Resources, PPSL and us was entered into to enable us to purchase of 100% of the TBL property from Strider Resources.

On March 8, 2019, as amended on April 1, 2019, we entered into an agreement with Nova Minerals and MMPL to purchase MMPL from Nova Minerals in exchange for 9,599,980 of our common shares.

On April 12, 2019 we fulfilled our contractual obligations with Strider Resources and exercised our option to acquire the 100% ownership interest in the TBL Property, subject to the 2% net smelter royalty payable to Strider Resources, 80% of which was in the name of MMPL at that time. In consideration of this acquisition, we issued 2,100,000 (post consolidation) of our common shares to PPSL and 300,000 (post consolidation) shares Strider Resources.

On February 11, 2020 we purchased from Thompson Bros (formerly MMPL) the 80% interest in the TBL property held by Thompson Bros. After this transaction, we owned 100% of the TBL property interest.

On February 25, 2020 we transferred our 100% interest in the TBL property to our wholly owned subsidiary, Snow Lake (Crowduck) Ltd. This interest remains subject to a 2% net smelter royalty payable to Strider Resources.

On May 22, 2020, we changed the recordation of the TBL property claims so that the entire TBL property made up of 38 claims covering 5596 hectares of land became registered in the name of Snow Lake (Crowduck) Ltd. Claim credits that we were entitled to were used to extend the expiry of all of the TBL property claims to 2023 and beyond.

From May 21, 2021 through June 9, 2021 an additional 22 claims covering 3,187 hectares of land were staked by Snow Lake (Crowduck) Ltd.  The status of these claims is pending with the Manitoba Department of Agriculture and Resource Development and until the claims are deemed to be active by the Manitoba Department of Agriculture and Resource Development they could be cancelled, rejected or otherwise not become the property of Snow lake (Crowduck) Ltd. If all of the new the claims which were staked are successfully included in our claim package, the entire land package would total of 60 claims covering 8,783 hectares.

To date, we have invested a limited amount of capital in the Thompson Brothers Lithium Project and historical drilling on the TBL property has been limited as well. To prove our lithium resource on the TBL property, we will need to engage in a drilling program that will require additional capital expenditure. We expect that this offering will provide us with the funds needed to complete our planned exploration drilling program, to generate the required data to prove our resources. We cannot provide any assurance, however, that we will be able to raise the required capital, through this offering or otherwise, on terms acceptable to us, if at all.

Our Corporate Structure

The chart below presents our corporate structure:

Thompson Bros (Lithium) Pty Ltd. has been deregistered in Australia and Manitoba.

INDUSTRY

Information included in this prospectus relating to our industry consists of estimates based on reports compiled by professional third-party organizations and analysts, data from external sources, our knowledge of the industry in which we operate, and our own calculations based on such information. While we have compiled, extracted, and reproduced industry data from external sources, including third-party, industry, or general publications, we have not independently verified the data. Similarly, while we believe our management estimates to be reasonable, they have not been verified by any independent sources. Forecasts and other forward-looking information with respect to industry and ranking are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus.

Market Overview

Mining accounts for a significant portion of Canada’s economy. Natural Resources Canada² pegged domestic mineral production at C$47 billion (approximately US$37.89 billion) in 2018. Canada’s mining and exploration companies are also important players in the international mining industry. Manitoba hosts the historic Tanco mine, which sits atop the world-class Tanco lithium-cesium-tantalum deposit and is located at Bernic Lake. The Tanco pegmatite was first discovered in the 1920s and ultimately developed into a large deposit of spodumene, one of the primary minerals mined for its lithium content. While the Tanco mine first opened in 1969 as a tantalum operation, it was not until the 1980s that it began mining spodumene as a pyroceramic. In fact, one of the major uses of the Tanco spodumene was as an ingredient in Corningware cookware³.

Historically, the Tanco mine’s production focused on spodumene for industrial use with minimal focus on lithium production. With the advent and growth of lithium battery-powered cars, interest has developed in the Tanco mine region in the search for, and exploration of, lithium-rich spodumene deposits.

Lithium-bearing pegmatites occur across the Province of Manitoba including in areas such as Snow Lake, Red Sucker Lake, Gods Lake and Cross Lake, all hosting known pegmatite lithium deposits. The emergence of the Electronic vehicle, or EV, market has spurred investment and mining interest in Manitoba for lithium exploration activity with New Age Metals, Grid Metals, and Snow Lake’s neighbor Far Resources being a few of the mining companies exploring for lithium in Manitoba.

Lithium Production – Supply, Demand and Price Trends

Lithium prices almost tripled between mid-2015 and mid-2018 as the world’s fleet of electric vehicles hit 5 million and the auto industry began to become concerned regarding the supply of raw materials. As can be seen in the lithium spot price charts below, from mid-2018 through the beginning of 2021, lithium prices declined steadily. Recently, lithium prices have begun to rise again, we believe, reflecting an increase in demand for battery powered vehicles.

Source: Fastmarkets

In 2019, the world consumed approximately 315,000 tonnes of lithium carbonate equivalent, or LCE, a 21% increase from the 261,000 tonnes consumed in 2018, according to the December 2019 Resources and Energy Report on Lithium from the Australian government⁴. World lithium production is estimated to have grown to 470,000 tonnes in 2019, up 18% from 2018⁵. In 2019, oversupply in the lithium market caused a significant pull back on price. At the end of 2018/beginning of 2019, Fastmarkets reported 99.5% lithium carbonate battery-grade spot prices, CIF China, Japan & Korea, of US$13,000-$15,000 per tonne⁶. In 2019, prices declined throughout the year. In June 2019, Fastmarkets reported 99.5% lithium carbonate battery-grade spot prices, CIF China, Japan & Korea, of US$11,000-$12,500 per tonne⁷, and by the end of December 2019, prices of US$8,000-$9,500 per tonne were reported⁸. The 99.5% lithium carbonate battery-grade spot prices for Europe and the U.S. were reported at US$10,000-$11,500 per tonne⁹.

Lithium prices plummeted in 2019, as a result of oversupply in the market and a slowdown in EV growth. This oversupply was attributed, primarily, to a number of new spodumene mines entering production in Australia. In China, in June 2019, the government cut subsidies for New Energy Vehicles, or NEVs, in half, by as much as 25,000 yuan (US$3,600) per vehicle¹⁰. Chinese NEV sales then began falling in July 2019 resulting in a reduction in NEV sales by 47% in October compared with the same month in the previous year¹¹. These changes caused lithium consumers to hold back on purchases.

As lithium prices declined, high cost, marginal producers began to cut production and halt expansion plans. For example, in August 2019, Albemarle Corporation announced it would delay construction plans for approximately 125,000 tonnes of additional lithium processing capacity due to the effect of oversupply on lithium prices¹². Pilbara Minerals postponed stage two and three expansion plans at its Pilgangoora lithium-tantalum project in Western Australia that were projected to result in the production of an additional 7.5 million tonnes of lithium ore a year¹³.

In November 2019, Albemarle and Mineral Resources put their Wodgina project into care and maintenance indefinitely¹⁴. Albemarle indicatd that the Wodgina mine would remain idle until demand for spodumene warranted a re-start¹⁵. Nemaska Lithium suspended operations in October 2019 at its Whabouchi lithium mine and applied for creditor protection in December 2019, thus removing planned production of 37,000 tonnes of LiOH and 205,000 tonnes of lithium concentrate from the market¹⁶. In In 2020, the outlook for lithium pricing continued to be bearish with commentators such as Morgan Stanley expecting lithium prices to fall further or to at least be stable in 2021 and 2022¹⁷. January 2020, Galaxy Resources announced that in response to market conditions, it had reviewed operations at Mount Cattlin facility, resulting in a reduction in operations by approximately 60%¹⁸.

We expect that the reduction in lithium production from the cutbacks referenced above will work through the lithium supply chain resulting in a reduction in lithium stockpile levels and an increase in lithium pricing and demand.

The chart below shows the 2019 percentage breakdown of lithium demand by category of use.

Source: Roskill¹⁹

As can be seen in this chart, in 2019, rechargeable batteries accounted for 54% of total lithium demand, consisting almost entirely of Li-ion battery technology. Though the rise of hybrid and electric vehicle sales leading up to 2020 brought expectations of increased demand for lithium compounds, falling EV sales in the second half of 2019 in China, the largest market for EVs, and a global reduction in EV sales in 2020, caused by the onset of the COVID-19 pandemic and related lockdowns, halted lithium demand growth, impacting demand from both battery and industrial applications. Countering this 2019 and early 2020 decrease in lithium demand, James Jeary of CRU Group noted that “The main surprise in the lithium market this year [2020] was on the demand side,” he told INN²⁰ during a January 2021 interview. “EV sales were hugely resilient, particularly in Europe. Even in China, the recovery of sales in H2 after a sluggish H1 has been very strong.”

Increasing Lithium Demand

According to FastMarkets.com (see table above), demand for battery grade lithium is now expected to almost triple by 2025 to more than 850 thousand metric tonnes. The recent decline and cutbacks in upstream investment, however, could result in the market undersupply during the next few years. We believe that it is clear that investment needs to be made in lithium mining now to meet the upcoming expected increase in demand. Fastmarkets predicts the need for 16 new lithium mines of average size to go online prior to 2025. Roskill maintains the view that future refined lithium supply will remain tight, with a period of sustained supply deficit in the mid-2020s²¹ It is our understanding that further additions to lithium production capacity for mined and refined lithium products will be required to keep pace with demand growth, led by battery applications.

Demand for lithium is increasing outside of the EV market. According to the India Brand Equity Foundation²², electronics manufacturing is expected to grow at an annual rate of 30% between 2020 to 2025. Lithium primary cell batteries are central units in many consumer electronics goods. Major manufacturers in the primary battery market include Hitachi Maxell, Ultralife, Energizer, FDK Corporation, Tadiran, Vitzrocell, EVE Energy, Panasonic, SAFT, Varta, Duracell, EnerSys Ltd., Gp Batteries, Excell Battery Co., and Bren-tronics. The global lithium primary batteries market is expected to grow from $11.28 Billion in 2020 to $12.24 Billion in 2021 at a compound annual growth rate (CAGR) of 8.5%.²³ The table below shows the expected growth of the consumer electronics lithium battery market in USD billions from 2020 to 2025²⁴.

The expectation of strong demand growth in the lithium market and related higher raw material prices has led some market participants to look at the economic viability of recycling to solve the projected lithium supply shortage. The table below presents a projection of the compound annual growth rate for the value of raw materials present in Li-ion batteries available for recycling.

Source: Engineering.com²⁵

Roskill’s longer term scenarios show strong growth for lithium demand over the coming decade; Roskill forecasts demand to exceed 1.0Mt LCE in 2027, with growth in excess of 18% per year to 2030²⁶.

We believe that the long-term outlook for lithium products remains strong. In research by Signumbox published in April 2019 and commissioned by Deutsche Lithium for their feasibility study, SignumBox indicated that it anticipated a global annual demand for lithium chemicals to reach approximately 1,700,000 tonnes of LCE by 2037, equating to an average annual growth rate of approximately 11.5% over the next 20 years²⁷. A key theme at the Fastmarkets’ 11th Lithium Supply and Markets Conference (June 11, 2019) was that global lithium demand could outpace supply in the coming years, with the number of new projects expected to fall short of expected production amid doubts on capital availability and low lithium prices²⁸.

Key Market Growth Drivers - EVs

Although Lithium has multiple industrial and consumer electronics applications, the most prominent application is battery production. Future lithium demand is heavily linked to future EV production. We believe that a robust U.S. climate change policy agenda that includes plans to facilitate the ramping up of EV production and government-mandated targets for EV market penetration is a positive catalyst for further growth in lithium demand.

As can be seen in the chart on page 2 above, the leading driver for the growth in lithium consumption has been battery production. Future lithium demand is heavily linked to future EV production. The majority of lithium production and downstream EV battery supply is currently based in China. We believe that with governments seeking to prevent supply line bottlenecks and shortages due to geopolitical or other factors, there will be increasing demand for local, i.e., U.S. and Canadian, lithium production. We also believe that climate change policy agendas as well as government mandated targets for EV market penetration will be positive catalysts for a growth in lithium demand over the coming years.

Due to serious issues surrounding global warming, we believe that it has become imperative to implement energy transformation. The Paris Agreement between counties around the world is an effort to collaborate on this transformation. It is estimated that to maintain the global temperature rise within 1.5 degrees, the consumption of electric energy as a renewable energy source will rise from 24 percent to 86 percent by 2050²⁹.This means that the EV industry should flourish in the coming years. Countries around the world have already formulated plans to support this change. For example, Japan and Germany have set plans to ban gas operated vehicles by the year 2050. It is estimated that global sales of new energy-efficient passenger vehicles are expected to reach 12 million in 2025, and the compound growth rate will reach 32.5% from 2019 to 2025. By 2030, the number of EVs on the road is expected to rise to 125 million³⁰.

Annual global EV sales by market. (Source: Bloomberg New Energy Finance.)

Government Growth Drivers for the Lithium Battery Market

The primary drivers of this forecasted growth in EV sales, as demonstrated in the table below, are expected to be government policies (particularly in China), new regulations (particularly in Europe), and steadily increasing consumer adoption, as evidenced by a wider availability of EV models being produced by original equipment manufacturers, or OEMs.

Source: Livant IPO filing³¹

Governments have instituted incentives and other subsidies to support the development of EVs by automotive OEMs and to increase consumer adoption of EVs.

After entering commercial markets in the first half of the last decade, electric car sales have soared. Only about 17,000 electric cars were on the world’s roads in 2010. By 2019, that number had grown to 7.2 million EVs, 47% of which were in China. ³² The Chinese government has declared that the electric vehicle industry is of strategic importance over the long term. The “new energy” vehicle industry is one of ten industries targeted as a key effort to further the Chinese government’s “Made in China” initiative by 2025. In addition to China, several other countries have also announced plans to phase out and eventually replace internal combustion engine, or ICE, vehicles with EV models. Countries such as France, Norway, and the UK have all set dates for these bans, with Norway’s being the most aggressive, as all new car sales in Norway must be zero emissions (battery EV or fuel cell) by 2025.³³

To meet these target dates, governments will need to provide assistance to the EV industry, in general, and to the lithium mining sector, in particular, by supportive actions such as removing red tape for new mining projects. Some projects are already seeing such support as American Lithium announced receipt in March 2021 of a grant to support the development of a lithium hydroxide plant in Nevada³⁴. E3 Metals Corp, an Alberta, Canada based lithium exploration company, announced a Canadian federal government grant for expanded lithium extraction technology research with the University of Alberta.³⁵

We believe the growth in the EV market worlwide has been aided by various incentive programs extended by the national governments to both automakers and consumers. In the graphic below, for example, government of Singapore is advertising their program to encourage EV adoption by offering incentives to consumers.

In September 2017, China issued a New Energy Vehicles (including BEVs and PHEVs) credit mandate, which became effective in 2019, and in 2018, the Chinese government adjusted its subsidy policy to favor BEVs that offer longer driving ranges. Additionally, federal tax credit incentives in the United States of up to $7,500 have also been made available for persons buying certain hybrid and all-electric cars.³⁶

In response to the changing government policies and incentives favoring EVs, various OEMs have announced plans to expand EV production lines in the future. The chart below summarizes EV production plans from many major OEMs.

Source: Livant IPO filing³⁷

In addition to expanding their offering of EV models, automotive OEMs are focused on improving total energy density and reducing weight in batteries to increase the driving range of EVs. To achieve these improvements, EV battery manufacturers are increasingly using high nickel content cathode materials that contain less cobalt and more nickel, while the lithium content remains largely unchanged.

High nickel content cathode technologies include lithium nickel-cobalt-aluminum oxide, or NCA, and lithium nickel-manganese-cobalt oxide containing 80% nickel, or NMC 811. NCA cathodes are already used in leading EV models, and automotive OEMs’ roadmaps for new EV models indicate an increasing transition to NMC 811 style batteries. Due to the underlying chemistry, battery-grade lithium hydroxide, the type of lithium we expect to mine, is required in the manufacturing of high nickel content cathode material, whereas lithium carbonate, produced from lithium brine, is used in lower energy density EV battery applications.

Ideal Location

The Thompson Brothers Lithium Project is ideally located in North America’s “Auto Alley.” With the Hudson Bay Railway having a railhead 30 km from our project, the TBL property has access to means of transportation to bring our lithium product north to the Port of Churchill, for shipment to Europe, or South to Auto Alley. The map below shows the extended reach of CN’s rail lines into the US Auto Alley.

Additionally, Manitoba is a green province, with 97%³⁸ of electricity derived from renewable sources. This offers the potential to have a nearly net zero mine and production plant producing renewable products.

CN’s network of rail lines. Source: CN website

If one compares the map above to the map of the North American auto industry below, it can be seen that Snow Lake’s Thompson Brothers Lithium Project is strategically situated to access and address this market.

U.S “AutoAlley”.

Source: Global Infrastructure Connectivity Alliance³⁹

The maps below present a more detailed depiction of the location of U.S. automotive plants, primarily in the “Auto Alley.”

Source: MarkLines – Automotive Industry Portal

bUSINESS

Overview

We are an emerging lithium chemicals and exploration company focused on the development of our 100% owned Thompson Brothers Lithium property, or the TBL property, in the historic and preeminent mining center of Snow Lake, Manitoba, Canada. Our goal is to become a strategic supplier of battery-grade lithium hydroxide to the growing electric vehicle battery and battery storage markets. Our primary asset is the TBL property, which consists of 38 contiguous mining claims located 20 km from Snow Lake, Manitoba. To capitalize on the fast-growing lithium market, our main focus is to monetize the resources and reserves held in the TBL property. This property has an S-K 1300 compliant indicated and inferred mineral resource estimate of approximately 11.1 million tonnes of lithium bearing ore consisting of an Indicated Resource of 9,082,600 tonnes of lithium bearing ore grading 1.00% Li₂O, for 91,200 Li₂O tonnes, and an Inferred Resource of 1,967,900 tonnes of lithium bearing ore grading 0.98% Li₂O, for 19,300 Li₂O tonnes.

The Thompson Bros Lithium Project is ideally located in the Province of Manitoba, Canada, where 97% of the electrical energy supply is from hydro- electric renewable sources. The region of Snow Lake, where the TBL Property is situated, is mining friendly, and the Hudson Bay Railway runs within 30km of the TBL property. The Hudson Bay rail runs north to the Port of Churchill which supplies access to Europe by ship, or south to the EV manufacturing markets in Michigan and the southern US. we intend to be the first producer of battery grade lithium in North America using fully renewable sources of energy to power all of our future mining operations. Our belief is that investors and customers will demand ethically mined commodities created through the use of renewable energy sources enabling the ecologically friendly development of the electric vehicle market as a viable alternative to ICE powered vehicles. We intend to be a leader in these efforts and our TBL property’s location provides for that unique opportunity.

We are in the process of exploring our TBL property expecting that following a planned two-phase exploration program we will be in a position to move towards the development of our mineral resources, and, ultimately to the establishing of commercial operations. We are planning to complete a preliminary economic assessment, or PEA, which we have already begun, in the coming months. The PEA will then be expanded into a preliminary feasibility study, or PFS, which will be used to seek additional funding for the development of the TBL property. The studies will review the test work, process design, vendor furnished equipment packages and other mine development requirements as well as cost estimates for the possible development of a commercial spodumene floatation plant. In addition, the studies will examine permitting and potential environmental issues for the proposed floatation plant locations as well as operational expenditures and capital expenditures, which will be inputted into a general economic model.

We engage in our exploration of lithium mineral resources through two subsidiaries: Snow Lake Exploration and Snow Lake Crowduck. Snow Lake Exploration is our operating company and Snow Lake Crowduck is our asset holding company. The TBL property is located in north central Manitoba, measuring about 15 km by 6 km, comprises 38 contiguous mineral claims covering 5,596 hectares (approximately 13,828 acres) and straddles Crowduck Bay at the northeastern end of Lake Wekusko. The property includes two blocks of claims that we own. Block A comprises 20 contiguous mineral claims, covering 2,277 hectares (approximately 5626.59 acres). Block B comprises 18 contiguous mineral claims covering 3,319 hectares (approximately 8,201.43 acres). The Block B claims were staked by Snow Lake Crowduck in March and April of 2018 and, along with the Block A claims, are 100% owned by Snow Lake Crowduck. Our subsidiary, Thompson Bros, which owned our 20 Block A claims before they were transferred to Snow Lake Crowduck, has been deregistered in Australia and Manitoba.

Our Exploration Target – Thompson Brothers Lithium Project – Indicated and Inferred Resources

On June 3, 2021, our parent company, Nova Minerals, announced the existence of an S-K 1300 compliant indicated and inferred lithium mineral resource at our Thompson Brothers Lithium Project in central Manitoba, Canada. The main features of this resource, as reflected in the table below, can be characterized as follows:

We note that the ranges of potential tonnage and grade (or quality) of the lithium resource at our Thompson Brothers Lithium Project are conceptual in nature. We have conducted insufficient exploration of our Thompson Brothers Lithium Project to estimate a mineral resource (i.e., a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction), and it is uncertain whether further exploration will result in the estimation of a mineral resource. Our Thompson Brothers Lithium Project exploration target, therefore, does not represent, and should not be construed to be, an estimate of a mineral resource or a mineral reserve.

Our lithium resource is comprised entirely from one spodumene pegmatite dyke (the TB1 Dyke) as defined by our 2017/2018 drill programs with approximately 4,800 meters drilled during that period. This main dyke is close to additional lithium bearing mineralization that is as yet undefined and does not comprise part of the existing resource. The resource remains open at depth and along strike in both the north and south directions which will be among targets for the next phase of drilling.

Estimation was conducted only within the mineralized pegmatite with internal and external waste excluded as identified by hard boundaries. Interpretation occurred on a two dimensional sectional basis then combined to form a three dimensional volume model of the in-situ pegmatite dyke. No waste material in the host country rock was estimated.

The resource was estimated using Micromine software with an inverse distance squared interpolation method due to insufficient data available to suit variography and kriging.

The resultant resource is classified as containing both indicated and inferred resource in accordance with S-K 1300 when taking into consideration, data density, deposit geometry, likely extensions and possible interpretation alternatives. A sufficient number of holes required to provide more than an indicated category confidence in the Thompson Bros resource have not been drilled. We have not completed any economic modelling or reporting and, therefore, the available, historical drilling information is considered early stage, and the risk of the failure of additional drilling to provide confirmation of our indicated and inferred resource is great. To date, a limited amount of capital has been invested in the Thompson Brothers Lithium Project and the future success of the project will rely heavily on the availability of additional capital which may not be available to us on favorable terms, if at all. Future capital investment in us may result in dilution of your investment in our ordinary shares and a failure to confirm our resource may result in a failure of our business and the complete loss of your investment.

Geology and Interpretation

The dyke in the Thompson Brothers Project has been modelled as an intrusion into a pebble metaconglomerate/greywacke group of host sediments. The dyke has been interpreted as sub vertical, dipping between 2.5° – 8.5° towards 130° azimuth. The strike of the body has minor variations around a general trend azimuth of 040° and an interpreted plunge of 5° to the north based on visual trends seen from the assays. The dyke carries both mineralized and unmineralized pegmatite as identified by the presence of spodumene as the lithium bearing mineral. Spodumene is considered the most important lithium ore mineral due to its high lithium content. Only the lithium bearing pegmatite has been modelled in this instance which extends for a total length of 1,012 m ranging in true thickness from a maximum of 18 m to a minimum of 1.8 m however, mineralization has not been closed off either at depth or to the north or south of the drilled area.

The dyke is generally orientated between 20° and 40° offset from the apparent foliation in the surrounding country rock and there is outcropping evidence of additional mineralized and unmineralized pegmatite in the area that is yet to be defined in terms of size and or orientation.

Drilling

All holes were drilled with diamond providing NQ sized core. The total number of meters drilled during our 2017/2018 exploration program was 4804.92 m from 24 holes with a maximum depth of 371 m. Holes were drilled at varying angles to allow multiple intersections and multiple holes to be drilled from single drill locations to minimize earthworks and clearing.

Sampling

Core was logged by professional consulting geologists and sampled on a geological basis. Sample lengths were typically 1 m intervals but some samples were as small as 0.14 m or as large as 1.75 m. Core was halved with a diamond saw and placed into plastic sample bags for delivery to SRC Geoanalytical Laboratories in Saskatoon, Canada for sample preparation and analysis. QA/QC sampling consisted of the regular insertion of blanks, reject duplicates, and Certified Reference Standards within each 20 sample batch.

Sample Analysis

Core samples were crushed to better than 70% -2 mm and a 1 kg split was pulverized to better than 85% passing 75μm. All samples were analyzed using SRC procedure code ICP1 using total and partial digestions and ICP analysis. SRC uses Internal QA/QC procedures to monitor the accuracy and precision of their work.

Estimation Methodology

Estimation was conducted in Micromine software with parent cell dimensions of 1 m across strike, 25 m along strike and 5 m vertically to account for the vertically dipping narrow mineralization geometry and the sparse data availability nominally around 110 m vertically between intercepts and 100 m horizontally along strike. Sub-celling was used along the deposit margins to honor the interpreted wireframes. Deposit orientations were measured manually on screen and assigned within the estimation parameters.

Samples were composited to 1 m length weighted intervals with any residual added to the end of the intersection. No high grade cuts were deemed necessary due to the lack of any significant outliers although a 0.5% Li₂O grade was used as a minimum basis for interpretation.

Li₂O was estimated using an orientated inverse distance squared method along with discretization of 2x2x2 to avoid overly localized estimates. The model was interpolated with a single mineralization domain but conducted systematically due to minor variation in structural orientations within the dyke. The primary search ellipse radius used 120 m along strike, 2 m across strike and 120 m vertically oriented to the azimuth, dip and plunge of the respective structural orientations identified. A secondary search of 240 m x 8 m x 240 m was used to fill any remaining empty cells after the primary search.

A density factor of 2.75t/m³ was used for reporting of tonnes based on documented averages for pegmatite globally and a recent resource report from FAR Resources for their Zoro Lithium project located approximately 3km west of the TBL property.

Both statistical and visual validation methods were conducted prior to final reporting.

Cut-off Grades

CIM Definition Standards for a Mineral Resource as a “concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality that there are reasonable prospect for eventual economic extraction.” In our case, a cut-off grade of 0.3% Li₂O was used for resource reporting. This 0.3% Li₂O cut-off grade was used to measure our resources as, according to our S-K 1300 Report, that is a reasonable grade necessary to cover estimated production costs in accordance with the following criteria (in US dollars):

Classification

The resource is classified entirely as a combination of indicated and inferred in accordance with the S-K 1300 when taking into consideration, data density, deposit geometry, likely extensions and possible interpretation alternatives.

Other Modifying Factors

A preliminary metallurgical test was conducted to determine possible concentrate grade recoverable from the Thompson Bros deposit. The test returned a concentrate grade of 6.37% Li₂O from a composite sample of 1.4% Li₂O indicating the potential to make a commercial product from the Thompson Bros pegmatite. No engineering studies have been conducted however, given the sub vertical nature of the deposit, underground mining is anticipated to be the method of extraction.

Location and Description of TBL Property

The TBL property is located in north central Manitoba, approximately 20 km (12.4 miles)_east of the mining community of Snow Lake.

The TBL property measures approximately 15 km by 6 km, comprises 38 contiguous mineral claims covering 5,596 hectares (approximately 13,828 acres) and straddles Crowduck Bay at the northeastern end of Lake Wekusko. The property is centered on UTM coordinates 455,000 E 6,080,000 N (NAD83, Zone 14) and lies within the National Topographic System map sheet 63JSE13. The property includes 2 blocks of claims which we own. The map below shows an outline of our claims area as well as a proposed pipeline route to the nearest rail road junction.

Snow Lake is located some 684 km north of Winnipeg, a 7-hour (700 km) drive on well maintained, paved roadways. Daily flights are available from Winnipeg to both Flin Flon and Thompson. Flin Flon is a 2 hour (200 km) drive west on paved highway to Snow Lake. Thompson is a 2.5 hour (260 km) drive northeast from Snow Lake on paved highway.

The TBL property is located in the Churchill geological province at the eastern end of the Flin Flon Belt. The Flin Flon Belt (1.92-1.88 Ga) is one of the largest Proterozoic volcanic-hosted massive sulphide districts in the world. The east-trending Flin Flon Volcanic Belt (230 X 50 km) is interpreted to be remnant of a Paleoproterozoic orogenic mountain belt which developed as new ocean basin and arc crust interacted with Archean rocks of the Hearne and Superior cratonnes along complex convergent plate boundaries.

The TBL property is bisected by the regional Crowduck Bay Fault. The rocks on the eastern side of this fault consist of folded Missi Group sandstones (greywackes) and conglomerates, part of the Eastern Missi Block. To the west, across the fault, the property is underlain by plutonic rocks intruding turbidites of the Burntwood Group, part of the Wekusko Lake Block.

There are two main clusters of spodumene-bearing pegmatite dykes on the property known as the Thompson Brothers and Sherritt Gordon lithium pegmatites. These dyke clusters occur on either side of the Crowduck Bay Fault. The dykes are all tabular in form, but each cluster has a distinct orientation. Additional north-northeast trending pegmatite dykes have been mapped along the Crowduck Bay Fault corridor towards the north.

Thompson Brothers Lithium Pegmatites

The Thompson Brothers dykes are located on the east shore of Grass River linking Wekusko Lake with Crowduck Bay. Here, three mineralized dykes, the TB-1, 2 and 3, intrude Missi Group pebble to cobble conglomerates and greywackes. The Thompson Brothers dykes were drilled by Thompson Brothers in 2017 and 2018.

Dyke TB-1 strikes 040° and dips about 85o SE. The Thompson Brothers deposit has been drill tested over a 1Km strike and to a vertical depth of 1/2 Km. The deposit averages 7 to 10m in true width. The mineralized dyke remains open to depth and along strike. Dyke TB-2 occurs to the north of TB-1 has been traced for about 400 m along strike. Based on limited drilling, dyke TB-2 is up to 2.8 m thick and its orientation is interpreted to be sub-parallel to dyke TB-1. Dyke TB-2 could represent the faulted northern extension of dyke TB-1 or an en-echelon, dilational structure. Dyke TB-2 remains open along strike to the north and to depth. Dyke TB-3 is located about 250 m to the northwest of dykes TB-1 and 2. TB-3 has been traced for about 150 m along strike. The TB-3 pegmatite is up to 2.0 m thick, strikes 040° and dips about 080° towards the northwest. In general, the Thompson Brothers dykes appear concordant with the northeast-trending foliation and strata.

Sherritt Gordon Lithium Pegmatites

On April 10, 2018, we announced the discovery of a second pegmatite cluster on the TBL property. As part of our compilation of historical data, our consulting geologists discovered details on a cluster of spodumene-bearing pegmatite dykes located about 2 km southwest of the recently drilled Thompson Brothers pegmatite. This cluster, known as the Sherritt Gordon pegmatites, intrudes the outermost quartz diorite phase of the Rex Lake Pluton and was traced about 600 m along strike by Sherritt Gordon Mines Limited in the 1940s. Dyke SG-1 ranges from 1.5 to 5 m in width and dips 80o to the southwest. Dyke SG-2 is thinner and located about 70 m to the northeast of SG-1 and dips 50o – 70o southwest.

The Sherritt Gordon, or SG, dykes intrude the outermost quart diorite phase of the compositional zoned Rex Lake Pluton on the west side of the Grassy River narrows. Both dykes display some pinch and swell structures along strike, as well as slight changes in strike. Dyke SG-1 has been traced for about 500 meters, striking 1200 and dipping 800 to the southwest. Dyke SG-1 ranges from 10 cm to 5 meters in width and splits into 3 thinner subparallel dykes at its southeastern end. Dyke SG-2 has been traced for almost 400 m, striking parallel to SG-1 at about 70 m towards the east. The dyke dips 500-700 to the southwest and its width varies between 1.5 cm and 4 meters. The SG-1 pegmatite has been drill tested to a depth of 50 meters and remains open. If both dykes continue to depth, they could merge or intersect at a depth of about 160 meters.

A third outcropping pegmatite dyke (Grassy River pegmatite) is located about 150 meters south of the SG dykes. Here, three spodumene bearing outcrops have been mapped more than a 150 m strike length, trending east.

History of TBL Property and Exploration Status

No records documenting the original discovery of lithium enriched pegmatite dykes on the TBL property have been located. Since the early 1940s various portions of the current TBL property have been explored by several companies. Certain target areas on the TBL property have been known as the “Sherritt Gordon Property,” the “Violet Property” and the “Strider Lithium Property.” The TBL property has recently been renamed to acknowledge the contribution of the Thompson brothers who worked the TBL property early in its history.

The highlights of the exploration history are summarized as follows:

In 1942, Sherritt Gordon Mines drilled and cored 20 holes (632 meters), testing one of 2 spodumene bearing pegmatite dykes on the east side of the narrows linking Wekusko Lake to Crowduck Bay. These dykes were originally staked in 1931 by Peer Kobar.

In 1956, Combined Developments Ltd. explored parts of the property. The area was prospected, mapped and 26 cored drill holes were completed on the TB-1 pegmatite (2,356 meters).

From 1976 until 1987, the Thompson brothers explored part of the property. They completed several trenches and sampling. In 1978, they cored their first drill hole to a depth of 28.2 meters in 1979, hole #1 was deepened to 58.6 meters. In 1981, the Thompson brothers cored their second drill hole. Hole #2 was drilled to a depth of 61 meters.

In 1989, Lakefield Research metallurgical test work produced a spodumene concentrate from a sample taken from a trench on claim ADD 13. The assay head grade of the rock sample was 2.93% Li₂O. The resulting concentrate was 5.19% Li₂O.

In 1995, minor trenching and sampling of the TB-1 dyke was completed by Strider Resources. In 1996, a 1,600-meter by 400-meter grid was cut by Strider Resources with lines spaced at 50 meter intervals. In 1997, a three-hole drill program, totaling 930 meters, was completed.

In April 2016, Ashburton Ventures (now known as Progressive Planet Solutions Inc.) optioned the TBL property, at that time consisting of the 20 Block A claims, from Strider Resources and entered into an option financing agreement with Thompson Bros (then known as Manitoba Minerals PTY Ltd.), at that time Nova Minerals’s wholly-owned subsidiary. Through financing provided by MMPL, parts of the property were prospected, and an attempt was made to locate the historical drill holes. Nine surface samples of pegmatite were assayed. In the fall of 2016, a modest program of prospecting and soil sampling was completed. In the winter of 2017, five drill holes targeting the TB-1 pegmatite totaling 1,007 meters were cored.

In March and April 2018, Snow Lake Crowduck staked an additional 18 (Block B) mineral claims (3,319 hectares, approximately 8,201.43 acres) contiguous with the original TBL property (20 claims, 2,277 hectares, approximately 5626.59 acres).

During the winter of 2018, Thompson Bros (then MMPL) cored 19 drill holes totaling 3,798 meters focusing on the Block A, Thompson brothers pegmatite cluster. Drill sections and plans were prepared, and interpretations of the geology and mineralization were completed. A project data base was created and a model for the deposit has been developed.

In July 2021, we completed an S-K 1300 compliant resource estimate of an Indicated Resource of 9,082,600 tonnes of lithium bearing ore grading 1.00% Li₂O, for 91,200 Li₂O tonnes, and an Inferred Resource of 1,967,900 tonnes of lithium bearing ore grading 0.98% Li₂O, for 19,300 Li₂O tonnes. This S-K 1300 Report was prepared by Canmine Consultants and Nuterra Geoscience, each of whom served as Qualified Persons as that term is defined in S-K 1300. This estimate was prepared taking into consideration data density, deposit geometry, likely extensions and interpretive alternatives. A density factor of 2.70 t/m3 was used. Surpac version 6.4.1 was the software used to create the geological model and to estimate the resources. As indicated elsewhere in this prospectus, assuming we raise the necessary funds in this offering, we intend to proceed with a two-phase exploration program on the TBL property including the completion of a PEA.

Historical Mineral Processing and Metallurgical Testing

The Saskatchewan Research Council (SRC) completed a preliminary metallurgical testing program on the Thompson Brother Lithium Project (Xia, L. and Adeoye, A., 2018). The primary objective of this preliminary testing program was to produce a spodumene concentrate with +6.0 % Li₂O.

Test work was completed on a 55 kg composite sample of 67 individual assay reject samples crushed to -2.0 mm (10 mesh) received from SRC Geoanalytical Laboratories. All of the 67 individual assay rejects were combined and homogenized to create a composite feed sample. A head assay sample was taken from the homogenized composite sample for ICP analysis. The ICP analysis OLD indicated that the composite graded 1.43% Li₂O.

The composite sample was ground to 100% passing 300 μm before being classified into two fractions: coarse fraction (53-300 μm) and fine fraction (-53 μm). Before flotation, de-sliming and magnetic separation were performed to minimize the interference of ultra fines (-38 μm) and magnetic (iron) materials on the flotation.

Preliminary flotation tests indicated that a spodumene concentrate with +6.0 % Li₂O could be readily produced from the samples provided. The flotation process included one stage mica flotation, one stage spodumene rougher flotation, and five stages of cleaner flotations. H₂SO₄ was used to adjust the flotation pH in mica flotation. ArmacHT was used as the mica collector. Oleic acid was used as the spodumene collector. Vanofroth was used as the frother in all flotations. The reagent conditioning and dosages were not optimized.

Good spodumene concentrate can be produced from both coarse fraction (53-300 μm) and fine fraction (38-53 μm). A 43.3 % coarse recovery and a 22.9 % fine flotation recovery were achieved with concentrate grade of 6.35 % Li₂O and 6.37% Li₂O, respectively. A total 1905.5 g coarse spodumene concentrate with 6.35 % Li₂O and 377.9 g fine spodumene concentrate with 6.37 % Li₂O were produced. Mass balance and flotation optimization were not considered.

Xia and Adeoye recommend a second stage of test work including:

Currently, more advanced metallurgical testing is being conducted. We cannot be sure, however, when new test results will be available or what they will show.