UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

FORM 10-Q

 

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28,November 30, 2021
OR
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-39437

 

Commission File Number: 001-39437

CORVUS GOLD INC.

CORVUS GOLD INC.

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(Exact Name of Registrant as Specified in its Charter)

 

British Columbia, Canada	98-0668473
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1750-700 West Pender Street
Vancouver, British Columbia, Canada	V6C 1G8
(Address of Principal Executive Offices)principal executive offices)	V6C 1G8 (Zip code)Code)

 

Registrant’s telephone number, including area code: (604) 638-3246

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:		Trading Symbol		Name of each exchange on which registered:
Common Shares, no par value		KOR		Nasdaq Capital Market

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒         No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒          No ☐

 

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Small reporting company ☒
	Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒

 

As of April 7, 2021,January 14, 2022, the registrant had 126,811,970127,003,470 Common Shares outstanding.

 

 

 

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PART II. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(Expressed in Canadian dollars)

Nature and continuance of operations (note 1)2)

Subsequent events (notes 1, 7, and 11)

Approved on behalf of the Directors:

“Jeffrey Pontius”                  Director

“Anton Drescher”                 Director

These accompanying notes form an integral part of these condensed interim consolidated financial statements

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Expressed in Canadian dollars)

These accompanying notes form an integral part of these condensed interim consolidated financial statements

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Expressed in Canadian dollars)

NINESIX MONTHS ENDED

NOVEMBER 30,

Supplemental cash flow information (note 8)10)

These accompanying notes form an integral part of these condensed interim consolidated financial statements

CORVUS GOLD INC.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)

(Unaudited)

(Expressed in Canadian dollars)

NINESIX MONTHS ENDED FEBRUARY 28,NOVEMBER 30, 2021

These accompanying notes form an integral part of these condensed interim consolidated financial statements

CORVUS GOLD INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On September 13, 2021, the Company announced that the Company and AngloGold Ashanti Limited (“AngloGold Ashanti”) have entered into a definitive arrangement agreement pursuant to which AngloGold Ashanti has agreed to acquire the remaining 80.5% of common shares of the Company (“Common Shares”) not already owned by AngloGold Ashanti at a price of C$4.10 per Common Share (the “Consideration”) in cash (the “Transaction”).  The Transaction was subject to the approval of: (a) 662/3% of the votes cast by (i) the holders of Common Shares (the “Shareholders”), including votes attached to Common Shares held by AngloGold Ashanti, present in person or represented by proxy at the special meeting relating to the Transaction; and (ii) the Shareholders and the holders of options, voting together as a single class, present in person or represented by proxy at the special meeting relating to the Transaction; and (b) a simple majority of the votes cast by the Shareholders present in person or represented by proxy at the special meeting relating to the Transaction, excluding votes attached to Common Shares held by AngloGold Ashanti and its affiliates and any other person as required to be excluded under section 8.1(2) of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.  In addition to securityholder approval, the Transaction was subject to the receipt of court approval and other customary closing conditions for transactions of this nature.

For the period ended November 30, 2021, the Company has incurred $1,852,414 (2020 - $nil) in transaction costs consisting of consulting fees, investor relations expenses, office and miscellaneous, professional fees, regulatory fees and travel expenses related to the Transaction.

A special meeting of Shareholders and optionholders of the Company was held on January 6, 2022 where the requisite approvals of the Shareholders and optionholders noted above were received.  On January 11, 2022 the Company obtained the final court order from the Supreme Court of British Columbia with respect to the Transaction.  The completion of the Transaction is anticipated to occur on or about January 18, 2022.

On August 25, 2010, International Tower Hill Mines Ltd. (“ITH”) completed a Plan of Arrangement (the “Arrangement”) whereby its existing Alaska mineral properties (other than the Livengood project) and related assets and the North Bullfrog mineral property and related assets in Nevada (collectively, the “Nevada and Other Alaska Business”) were indirectly spun out into a new public company, being Corvus Gold Inc. (“Corvus” or the “Company”). As part of the Arrangement, ITH transferred its wholly-owned subsidiary Corvus Gold Nevada Inc. (“Corvus Nevada”) (which held the North Bullfrog property), to Corvus and a wholly-owned Alaskan subsidiary of ITH, Talon Gold Alaska, Inc. sold to Raven Gold Alaska Inc. (“Raven Gold”), the Terra, Chisna, LMS and West Pogo properties. As a consequence of the completion of the Arrangement, the Terra, Chisna, LMS, West Pogo and North Bullfrog properties were transferred to Corvus.

The Company was incorporated on April 13, 2010 under the Business Corporations Act (British Columbia). These condensed interim consolidated financial statements reflect the cumulative operating results of the predecessor, as related to the mineral properties that were transferred to the Company from June 1, 2006.

The Company is engaged in the business of acquiring, exploring and evaluating mineral properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. At February 28,November 30, 2021, the Company had interests in properties in Nevada, U.S.A.

The business of mining and exploration involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company has no source of revenue, and has significant cash requirements to meet its administrative overhead and maintain its mineral property interests. The recoverability of amounts shown for mineral properties is dependent on several factors. These include the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these properties, and future profitable production or proceeds from disposition of mineral properties. The carrying value of the Company’s mineral properties does not reflect current or future values.

These condensed interim consolidated financial statements have been prepared on a going concern basis, which presume the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. The Company’s ability to continue as a going concern is dependent upon achieving profitable operations and/or obtaining additional financing.

In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future within one year from the date the condensed interim consolidated financial statements are issued. There is substantial doubt upon the Company’s ability to continue as going concern, as explained in the following paragraphs.

The Company has sustained significant losses from operations, has negative cash flows, and has an ongoing requirement for capital investment to explore its mineral properties.  As at February 28,November 30, 2021, the Company had working capital deficit of $3,609,670$12,901,122 compared to working capital deficit of $14,568,048$2,011,551 as at May 31, 2020.2021.  The Company entered into a loan agreement with AngloGold Ashanti North America Inc. (“AngloGold North America”) to fund up to USD 20,000,000 towards the ongoing permitting and pre-development work at the Company’s properties (note 5). As at November 30, 2021, the Company has drawn $18,541,000 (USD 15,000,000) from the loan agreement. On September 13, 2021, the Company announced that the Company and AngloGold Ashanti have entered into the Transaction (note 1). Based on its current plans, budgeted expenditures, and cash requirements, the Company does not have sufficient cash to finance its current plans for at least 12 months from the date the condensed interim consolidated financial statements are issued.

The Company expects that it will need to raise substantial additional capital to accomplish its business plan over the next several years.  There is no assurance that additional capital or other types of financing will be available if needed or that these financings will be on terms at least as favourable to the Company as those previously obtained, or at all. As well, there can be no assurance that the Company will not be impacted by adverse consequences that impact the global financial markets as a whole, including any adverse consequences that may be brought about by pandemics, or increased severity of existing pandemics, which may reduce resources, share prices and financial liquidity and which may severely limit the financing capital available in the mineral exploration sector. Should such financing not be available in that time-frame, the Company will be required to reduce its activities and will not be able to carry out all of its presently planned exploration and development activities on its currently anticipated scheduling.

These condensed interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue in business.

All currency amounts are stated in Canadian dollars unless noted otherwise.

These condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended May 31, 20202021 as filed in our Annual Report on Form 10-K. In the opinion of the Company’s management these condensed interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position at February 28,November 30, 2021 and the results of its operations for the ninesix months then ended. Operating results for the ninesix months ended February 28,November 30, 2021 are not necessarily indicative of the results that may be expected for the year ending May 31, 2021.2022. The 20202021 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

The preparation of these condensed interim consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these condensed interim consolidated financial statements, and the reported amounts of revenues and expenses during the period. These judgments, estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.

Basis of consolidation

These condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries (collectively, the “Group”), Corvus Gold (USA) Inc. (“Corvus USA”) (a Nevada corporation), Corvus Nevada (a Nevada corporation), Raven Gold (an Alaska corporation), SoN Land and Water LLC (“SoN”) (a Nevada limited liability company) and Mother Lode Mining Company LLC (a Nevada limited liability company). All intercompany transactions and balances were eliminated upon consolidation.

LossEarnings (loss) per share

Basic loss per share is calculated using the weighted average number of common sharesCommon Shares outstanding during the period. The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on earnings (loss) per share is calculated presuming the exercise of outstanding options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to repurchase common sharesCommon Shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive. For the period ended February 28,November 30, 2021, 12,255,00012,005,000 outstanding stock options (2020 – 12,345,000)9,825,000) were not included in the calculation of diluted earnings (loss) per share as their inclusion was anti-dilutive.

The Company had the following activity related to capitalized acquisition costs:

The following table presents costs incurred for exploration and evaluation activities for the six months ended November 30, 2021:

The following table presents costs incurred for exploration and evaluation activities for the ninesix months ended February 28, 2021:

The following table presents costs incurred for exploration and evaluation activities for the nine months ended February 29,November 30, 2020:

The Company’s North Bullfrog project consists of certain leased patented lode mining claims and federal unpatented mining claims owned 100% by the Company.

On October 9, 2009, a US subsidiary of ITH at the time (Corvus Nevada) completed the acquisition of all of the interests of Redstar Gold Corp. (“Redstar”) and Redstar Gold U.S.A. Inc. (“Redstar US”) in the North Bullfrog project, which consisted of 6six leases covering 33 patented mining claims. The leases have an initial term of ten years, and for so long thereafter as mining activities continue on the claims or contiguous claims held by the Company.Company:

The Company is required to pay annual advance minimum royalty payments (recoupable from production royalties) for as long as there are mining activities continuing on the claims or contiguous claims held by the Company. The required annual advance minimum royalty payments are:

The lessor is entitled to receive a separate NSR royalty related to all production from the leased property of the various individual leases which may be purchased by the Company as follows:

The various NSR royalties above relate only to the property covered by each specific lease and are not cumulative.

The Company has an option to purchase a property related to 12twelve patented mining claims for USD 1,000,000 at any time during the life of the lease (subject to the net smelter return (“NSR”) royalty of 4% which may be purchased by the Company for USD 1,250,000 per 1% (USD 5,000,000 for the entire royalty).

Pursuant to a purchase agreement made effective June 9, 2017 between Corvus Nevada and Goldcorp USA, Inc. (“Goldcorp USA”), Corvus Nevada has acquired 100% of the Mother Lode property (the “Mother Lode Property”). In addition, Corvus Nevada staked two additional adjacent claim blocks to the Mother Lode Property. In connection with the acquisition, the Company issued 1,000,000 common sharesCommon Shares at a price of $0.81 per common shareCommon Share to Goldcorp USA. The Mother Lode Property is subject to an NSR in favour of Goldcorp USA. The NSR pays 1% from production at the Mother Lode Property when the price of gold is less than USD 1,400 per ounce and an additional 1% NSR for a total of 2% NSR when gold price is greater than or equal to USD 1,400 per ounce.

On June 7, 2019, the Company completed the sale of the royalties where four non-core Alaskan royalty interests owned by Corvus were sold to EMX Royalty Corporation (“EMX”) for a purchase price of $350,000. In connection with the Alaskan royalty package sale, the Company incurred $31,463 in legal fees, resulting in a total cost recovery for the Alaska Royalty Interest of $318,537.

The general terms of the Alaskan royalty package sale include:

Acquisitions

The acquisition of title to mineral properties is a detailed and time-consuming process. The Company has taken steps, in accordance with industry norms, to verify title to mineral properties in which it has an interest. Although the Company has taken every reasonable precaution to ensure that legal title to its properties is properly recorded in the name of the Company (or, in the case of an option, in the name of the relevant optionor), there can be no assurance that such title will ultimately be secured.

Environmental Expenditures

The operations of the Company may in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for future removal and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically proven and economically feasible measures.

Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. Estimated future removal and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.

The Company has estimated the fair value of the liability for asset retirement that arose as a result of exploration activities to be $343,280$346,176 (USD 270,000) ( May 31, 20202021 - $373,103326,691 (USD 270,000)). The fair value of the liability was determined to be equal to the estimated remediation costs. Due to the early stages of the project, and that extractive activities have not yet begun, the Company is unable to predict with any precision the timing of the cash flow related to the reclamation activities.

On May 4, 2021, the Company entered into a loan agreement with AngloGold North America to fund up to USD 20,000,000 towards the ongoing permitting and pre-development work at the Company’s North Bullfrog project as well as ongoing exploration at its Mother Lode property. Highlights of the agreement for the USD 20,000,000 unsecured loan (the “Loan”) included:

On May 11, 2021, the Company drew $6,048,000 (USD 5,000,000) from the Loan. On June 28, 2021, the Company drew $6,167,500 (USD 5,000,000) from the Loan. On September 15, 2021, the Company further drew $6,325,500 (USD 5,000,000) from the Loan. The amount available to the Company under the Loan as at November 30, 2021 was USD 5,000,000. The Company has estimated the fair value of the Loan to be $17,567,800 at an effective interest rate of 8.10% which was recorded in note payable. As a result, the recorded note payable is lower than its face value, the difference of $973,200 was recorded to contributed surplus.

During the period ended November 30, 2021, the Company recognized accretion by recording $480,651 (2020 - $nil) and recognized interest expenses by recording $17,159 (2020 - $nil) in interest expenses. As at November 30, 2021, the note payable, including interest payable, amounted to $18,706,454 (USD 14,623,557) ( May 31, 2021 - $5,742,007 (USD 4,756,467).

A summary of the note payable activity is as follows:

Authorized

Unlimited common sharesCommon Shares without par value.

Share issuances

During the nine-month period ended February 28,November 30, 2021:

Stock options

Stock options awarded to employees and non-employees by the Company are measured and recognized in the Condensed Interim Consolidated Statement of Operations and Comprehensive Loss over the vesting period.

The Company has adopted an incentive stock option plan, first adopted in 2010 and then most recently amended in 2019 (the “Amended 2010 Plan”). The essential elements of the Amended 2010 Plan provide that the aggregate number of common sharesCommon Shares of the Company’s share capital that may be made issuable pursuant to options granted under the Amended 2010 Plan (together with any other shares which may be issued under other share compensation plans of the Company) may not exceed 10% of the number of issued shares of the Company at the time of the granting of the options. Options granted under the Amended 2010 Plan will have a maximum term of ten years. The exercise price of options granted under the Amended 2010 Plan will not be less than the greater of the market price of the common sharesCommon Shares (as defined by TSX, currently defined as the five day volume weighted average price for the five trading days immediately preceding the date of grant) or the closing market price of the Company’s common sharesCommon Shares for the trading day immediately preceding the date of grant), or such other price as may be agreed to by the Company and accepted by the TSX. Options granted under the Amended 2010 Plan vest immediately, unless otherwise determined by the directors at the date of grant.

A summary of the status of the stock option plan as of February 28,November 30, 2021, and May 31, 2020,2021, and changes during the periods are presented below:

The weighted average remaining contractual life of options outstanding at February 28,November 30, 2021 was 3.022.28 years ( May 31, 20202021 – 2.682.77 years).

Stock options outstanding are as follows:

*The Company’s share trading policy (the “Policy”) requires that all restricted persons and others who are subject to the Policy refrain from conducting any transactions involving the purchase or sale of the Company’s securities, during the period in any quarter commencing 30 days prior to the scheduled issuance of the next quarter or year-end public disclosure of the financial results as well as when there is material data on hand. In accordance with the terms of the Amended 2010 Plan, if stock options are set to expire during a restricted period and are not exercised prior to any such restriction, they will not expire but instead will be available for exercise for ten days after such restrictions are lifted. These stock options were exercised during the period ended February 28, 2021 after the restrictions were lifted.

The Company uses the fair value method for determining stock-based compensation for all options granted during the periods. The fair value ofThere were no stock options granted was $4,083,771 (2020 - $2,974,411), determined usingduring the Black-Scholes option pricing model based on the following weighted average assumptions:

Annualized volatility was determined by reference to historic volatility of the Company.period ended November 30, 2021 and 2020.

Stock-based compensation has been allocated to the same expenses as cash compensation paid to the same employees or consultants, as follows:

The Company entered into the following transactions with related parties:

As at February 28,November 30, 2021, included in accounts payable and accrued liabilities was $nil$68,024 ( May 31, 20202021 – $1,274)30,025) in expenses owing to companies related to officers, directors and officers of the Company.

These amounts were unsecured, non-interest bearing and had no fixed terms or terms of repayment. Accordingly, fair value could not be readily determined.

The Company has also entered into change of control agreements with officers of the Company. In the case of termination, the officers are entitled to an amount equal to a multiple (ranging from two times to three times) of the sum of the annual base salary or fees then payable to the officer, the aggregate amount of bonus(es) (if any) paid to the officer within the calendar year immediately preceding the Effective Date of Termination, and an amount equal to the vacation pay which would otherwise be payable for the one year period next following the Effective Date of Termination.

As of November 30, 2021, AngloGold Ashanti, through AngloGold Ashanti (USA) Exploration Inc. (“AngloGold (USA) Exploration”) owned 24,774,949 Common Shares representing approximately 19.5% of the total issued and outstanding Common Shares.

On May 4, 2021, the Company entered into a Loan with AngloGold North America (note 5). As at November 30, 2021, the note payable, including interest payable, to AngloGold North America amounted to $18,706,454 (USD 14,623,557) ( May 31, 2021 $5,742,007 (USD 4,756,467)).

As at November 30, 2021, included in accounts receivable was $33,643 ( May 31, 2021 – $nil) in expense recoveries from AngloGold North America.

The Company operates in 1one industry segment, the mineral resources industry, and in 2two geographical segments, Canada and the United States. All current exploration activities are conducted in the United States and Canada. The significant asset categories identifiable with these geographical areas are as follows: