The following discussion of our financial condition and results of operations
should be read in conjunction with our unaudited consolidated financial
statements and the notes to those financial statements appearing elsewhere in
this Report.
This Quarterly Report contains forward-looking statements. Forward-looking
statements for Brazil Minerals, Inc. reflect current expectations, as of the
date of this Quarterly Report, and involve certain risks and uncertainties.
Actual results could differ materially from those anticipated in these forward-
looking statements as a result of various factors. Factors that could cause
future results to materially differ from the recent results or those projected
in forward-looking statements include: unprofitable efforts resulting not only
from the failure to discover mineral deposits but also from finding mineral
deposits that, though present, are insufficient in quantity and quality to
return a profit from production; market fluctuations; government regulations,
including regulations relating to royalties, allowable production, importing and
exporting of minerals, and environmental protection; competition; the loss of
services of key personnel; unusual or infrequent weather phenomena, sabotage,
government or other interference in the maintenance or provision of
infrastructure as well as general economic conditions.
Description of Business
We are a U.S. mineral exploration and mining company with projects and
properties in essentially all battery metals to power the Green Energy
Revolution - lithium, rare earths, nickel, cobalt, graphite, and titanium. Our
current focus is on developing our hard-rock lithium project located in a
premier pegmatitic district in Brazil - as lithium is essential for batteries in
electric vehicles. Additionally, through subsidiaries, we participate in iron,
gold, and quartzite projects. We also own multiple mining concessions for gold,
diamond, and industrial sand.
All of our mineral projects and properties are located in Brazil and, as of the
date of this Report, our mineral rights portfolio for battery metals includes
approximately 62,926 acres (255 km2) for lithium, 30,009 acres (121 km2) for
rare earths, 57,900 acres (234 km2) for nickel, 22,050 acres (89 km2) for
titanium, and 14,507 acres (59 km2) for graphite. We believe that we have one of
the largest battery metals exploration footprints among publicly listed
companies.
Currently we are primarily focused on advancing and developing our hard-rock
lithium project located in the state of Minas Gerais, Brazil, where some of our
high-potential mineral rights are adjacent to or near large lithium deposits
that belong to a large, publicly traded competitor. Our Minas Gerais Lithium
Project is our largest endeavor and consists of 48 mineral rights spread over
46,659 acres (190 km2) and predominantly located within the Brazilian Eastern
Pegmatitic Province which has been surveyed by the Brazilian Geological Survey
and is known for the presence of hard rock formations known as pegmatites which
contain lithium-bearing minerals such as spodumene and petalite. In general,
lithium derived from pegmatites is less costly to purify for uses in high
technology applications than lithium obtained from brine. Such applications
include the battery supply chain for electric vehicles ("EVs"), an area of
expected high growth for the next several decades.
We also own 44.41% of the shares of common stock of Apollo Resources Corporation
("Apollo Resources"), a private company currently primarily focused on the
development of its initial iron mine, expected to start operations and revenues
in early 2023. We also own approximately 24.56% of Jupiter Gold Corporation
("Jupiter Gold"), a company focused on the development of gold projects and a
quartzite mine, and whose shares of common stock are quoted on the OTCQB under
the symbol "JUPGF". The results of operations from both Apollo Resources and
Jupiter Gold are consolidated in our financial statements under U.S. GAAP.
3
Table of Contents
As the self-titled "Mineral Resources Company for the Green Energy Revolution,"
we are deeply committed to Environmental, Social, and Corporate Governance
("ESG") causes. We have an ESG Chief who coordinates our efforts in these
important matters. Within the last few years, we planted more than 6,000 trees
of diverse types for the benefit of local populations in areas in which we
operate and constructed over 1,000 small retention walls to preserve and enhance
dirt access roads used by such communities. Separately, many of our work needs
have been specifically delegated to firms owned or managed by women and
minorities.
We are an exploration stage company and we have no "reserves" as such term is
defined by Regulation S-K, Subpart 1300 ("S-K 1300").
Operational Update
During the second quarter of 2022 and continuing to date, we have significantly
advanced our knowledge of the Neves Area, one of the 48 mineral rights that
comprise our Minas Gerais Lithium Project. We have continuously drilled the
Neves Area and have identified several spodumene bodies; spodumene is the main
mineral containing lithium in hard rock pegmatitic projects such as ours. One of
our latest drill holes yielded a zone of over 27 meters of spodumene, a result
that our lithium experts qualified as very positive and indicative of the
potential of the Neves Area. Geochemical results from Neves have included a
reading of 2.86% Li2O. We have two qualified persons under S-K 1300 who are
responsible for the technical advancement of our Minas Gerais Lithium Project.
SLR Consulting Ltd., a premier independent company, is finalizing an initial
report on the Neves Area.
Given our belief in the strength of our lithium holdings, and our desire to
provide a clear message to our shareholders, and current and potential partners,
we announced on July 18, 2022, that we will be changing our corporate name to
Atlas Lithium Corporation, and such change is expected to take effect before the
end of 2022.
As previously disclosed, we are actively working towards a desired uplisting to
the Nasdaq Capital Market, and this process includes various steps, some of
which are completed while others are in the process of being completed during
the third quarter of 2022.
Results of Operations
Three Months Ended June 30, 2022 Compared to the Three Months ended June 30,
2021
Revenue for the three months ended June 30, 2022 totaled $2,367, compared to
revenue of $1,645 during the three months ended June 30, 2021 representing an
increase of 44%. This revenue comes from sales of industrial sand during the
rainy season. Industrial sand is a residual business line as we are primarily
focused on our lithium exploration as described above.
Cost of goods sold for the three months ended June 30, 2022 totaled $26,343, as
compared to cost of goods sold of $24,105 during the three months ended June 30,
2021 representing a increase of 9%. Cost of goods sold is primarily comprised of
labor, fuel, and repairs and maintenance on our mining equipment.
Gross loss for the three months ended June 30, 2022 totaled $23,976, compared to
gross loss of $22,460 during the three months ended June 30, 2021, representing
an increase of 6.75%.
Operating expenses for the three months ended June 30, 2022 totaled $989,294,
compared to operating expenses of $740,540 during the three months ended June
30, 2021, representing an increase of 34%. The increase was mostly due to higher
general and administrative expenses related to public company costs and higher
compensation cost of officers and directors.
As a result, we incurred a net loss attributable to our stockholders of
$871,016, or $0.00 per share, for the three months ended June 30, 2022, compared
to a net loss attributable to our stockholders of $826,674, or $0.00 per share,
during the three months ended June 30, 2021.
Six Months Ended June 30, 2022 Compared to the Six Months ended June 30, 2021
Revenue for the six months ended June 30, 2022 totaled $2,844, compared to
revenue of $6,104 during the six months ended June 30, 2021 representing a
decrease of 53%. This revenue comes from sales of industrial sand during the
rainy season. Industrial sand is a residual business line as we are primarily
focused on our lithium exploration as described above.
Cost of goods sold for the six months ended June 30, 2022 totaled $36,198, as
compared to cost of goods sold of $47,094 during the six months ended June 30,
2021 representing a decrease of 23%. Cost of goods sold is primarily comprised
of labor, fuel, and repairs and maintenance on our mining equipment. The
decrease is explained by reduced production activities and mining costs
partially attributable to our exploratory efforts.
Gross loss for the six months ended June 30, 2022 totaled $33,354, compared to
gross loss of $40,990 during the six months ended June 30, 2021, representing an
improvement of 19%.
Operating expenses for the six months ended June 30, 2022 totaled $1,816,611,
compared to operating expenses of $1,852,836 during the six months ended June
30, 2021, representing a decrease of 2%.
As a result, we incurred a net loss attributable to our stockholders of
$1,402,506, or $0.00 per share, for the six months ended June 30, 2022, compared
to a net loss attributable to our stockholders of $1,542,696, or $0.00 per
share, during the six months ended June 30, 2021.
4
Table of Contents
Liquidity and Capital Resources
As of June 30, 2022, we had cash and cash equivalents of $393,864 and a working
capital deficit of $413,094.
Net cash used by operating activities totaled $1,327,301 for the six months
ended June 30, 2022, compared to net cash used of $98.400 during the six months
ended June 30, 2021 representing an increase in cash used of $1,228,901. Net
cash used in investing activities totaled $247,163 for the six months ended June
30, 2022, compared to net cash used of $957,978 during the six months ended June
30, 2021, representing a decrease in cash used of $710,815. Net cash provided by
financing activities totaled $1,910,960 for the six months ended June 30, 2022,
compared to $877,812 during the six months ended June 30, 2021, representing an
increase in cash provided of $1,033,148.
We have limited working capital, have historically incurred net operating
losses, and have not yet received material revenues from the sale of products or
services. These factors create substantial doubt about our ability to continue
as a going concern.
Our primary sources of liquidity have been derived through proceeds from the (i)
issuance of debt and (ii) sales of our equity and the equity of one of our
subsidiaries. Our ability to continue as a going concern is dependent upon our
capability to generate cash flows from operations and successfully raise new
capital through debt issuances and sales of our equity. We have no plans for any
significant cash acquisitions in the foreseeable future.
Currency Risk
We operate primarily in Brazil which exposes us to currency risks. Our business
activities may generate intercompany receivables or payables that are in a
currency other than the functional currency of the entity. Changes in exchange
rates from the time the activity occurs to the time payments are made may result
in us receiving either more or less in local currency than the local currency
equivalent at the time of the original activity.
Our condensed consolidated financial statements are denominated in U.S. dollars.
Accordingly, changes in exchange rates between the applicable foreign currency
and the U.S. dollar affect the translation of each foreign subsidiary's
financial results into U.S. dollars for purposes of reporting in the
consolidated financial statements. Our foreign subsidiaries translate their
financial results from the local currency into U.S. dollars in the following
manner: (a) income statement accounts are translated at average exchange rates
for the period; (b) balance sheet asset and liability accounts are translated at
end of period exchange rates; and (c) equity accounts are translated at
historical exchange rates. Translation in this manner affects the shareholders'
equity account referred to as the foreign currency translation adjustment
account. This account exists only in the foreign subsidiaries' U.S. dollar
balance sheets and is necessary to keep the foreign subsidiaries' balance sheets
in agreement.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our financial instruments consist of cash and cash equivalents, loans to a
related party, accrued expenses, and an amount due to a director. The carrying
amount of these financial instruments approximates fair value due either to
length of maturity or interest rates that approximate prevailing market rates
unless otherwise disclosed in our financial statements. If our estimate of the
fair value is incorrect at June 30, 2022, it could negatively affect our
financial position and liquidity and could result in our having understated our
net loss.
5
Table of Contents
Recent Accounting Pronouncements
Our consolidated financial statements are prepared in accordance with U.S. GAAP.
Our significant accounting policies are described in Note 1 of the financial
statements. We have reviewed all recent accounting pronouncements issued to the
date of the issuance of these financial statements, and we do not believe any of
these pronouncements will have a material impact on us.
© Edgar Online, source Glimpses