UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2020.~~2021

☐ 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: 333-169701

Desert Hawk Gold Corp.

(Exact name of registrant as specified in its charter)

Nevada		82-0230997
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1290 Holcomb Ave. Reno, NV		89502
(Address of principal executive offices)		(Zip Code)

(775) 337-8057
(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered

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 and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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

☐ ☒

Smaller 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 ☒

Indicate the number of shares outstanding of the issuer’s common stock, as of November ~~12, 2020:~~16, 2021: 26,831,603.

DESERT HAWK GOLD CORP.

Form 10-Q

September 30, ~~2020~~2021

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	1

Item 1. Financial Statements	1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1715

Item 3. Quantitative and Qualitative Disclosures About Market Risk	2018

Item 4. Controls and Procedures	2018

PART II – OTHER INFORMATION	2119

Item ~~1A. Risk Factors~~3. Defaults Upon Senior Securities	2119

Item ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~4. Mine Safety Disclosures	2219

Item ~~4. Mine Safety Disclosures~~6. Exhibits	2219

~~Item 6. Exhibits~~SIGNATURES	22

~~SIGNATURES~~	2320

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

DESERT HAWK GOLD ~~CORP~~CORP.

CONDENSED BALANCE SHEETS ~~(unaudited)~~(UNAUDITED)

September 30, December 31,
2020 2019
ASSETS

CURRENT ASSETS
Cash $ 87,181 $ 2,116,432
Inventories (Note 5) 5,710,282 4,333,682
Prepaid expenses and other current assets 36,804 181,030
Total Current Assets 5,834,267 6,631,144

INVENTORY, non-current portion (Note 5) 697,302 -
PROPERTY AND EQUIPMENT, net (Note 6) 5,542,207 5,287,515
MINERAL PROPERTIES AND INTERESTS, net (Note 7) 3,681,092 3,729,637
RECLAMATION BONDS (Note 4) 759,726 759,351

TOTAL ASSETS $ 16,514,594 $ 16,407,647

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,470,034 $ 436,881
Accrued officer salary and director fees 21,005 -
Notes payable - equipment, current portion (Note 12) 982,917 1,302,239
Pre-Paid forward gold contract liability, current portion (Note 3) 2,546,549 189,351
Settlement of consulting contract payable (Note 14) 200,000 200,000
Total Current Liabilities 5,220,505 2,128,471

LONG-TERM LIABILITIES
Note payable - SBA (Note 11) 463,497 -
Notes payable - equipment (Note 12) 267,168 -
Asset retirement obligation (Note 13) 1,021,601 826,637
Pre-Paid forward gold contract liability (Note 3) 11,053,451 13,410,649
12,805,717 14,237,286
TOTAL LIABILITIES 18,026,222 16,365,757

COMMITMENTS AND CONTINGENCIES (Note 19)

STOCKHOLDERS’ EQUITY (DEFICIT) (Note 15)
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued or outstanding - -
Common stock, $0.001 par value, 100,000,000 shares authorized; 26,831,603 and 26,631,603 shares issued and outstanding 26,833 26,633
Additional paid-in capital 9,666,275 9,466,475
Accumulated deficit (11,204,736 ) (9,451,218 )
Total Stockholders’ Equity (Deficit) (1,511,628 ) 41,890

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 16,514,594 $ 16,407,647

	September 30, 2021			December 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	471,843		$	173,287
Accounts receivable		59,675			-
Inventories (NOTE 4 )		4,269,824			5,341,997
Prepaid expenses and other current assets		32,154			18,713
TOTAL CURRENT ASSETS		4,833,496			5,533,997
INVENTORIES (NOTE 4 )		1,466,297			1,505,020
PROPERTY AND EQUIPMENT, net (NOTE 5)		4,973,976			5,389,660
MINERAL PROPERTIES AND INTERESTS, net (NOTE 6)		3,707,316			3,785,868
RECLAMATION BONDS (NOTE 3)		947,084			758,011
TOTAL ASSETS	$	15,928,169		$	16,972,556

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	306,242		$	1,459,605
Royalties and upside participation payable (NOTE 7)		1,718,150			798,257
Accrued liabilities – officers and other wages (NOTE 13)		117,159			71,697
Notes payable – equipment, current portion (NOTE 8)		677,934			981,759
Settlement of consulting contract payable		200,000			200,000
Prepaid forward gold contract liability, current portion (NOTE 7)		11,053,494			3,336,618
Due to PDK in lieu of gold deliveries (NOTE 7)		4,404,500			-
TOTAL CURRENT LIABILITIES		18,477,479			6,847,936
LONG-TERM LIABILITIES
Note payable – equipment, net of current portion (NOTE 8)		119,071			226,427
Asset retirement obligation (NOTE 9)		1,331,808			1,233,514
Prepaid forward gold contract liability (NOTE 7)		-			10,263,382
TOTAL LONG-TERM LIABILITIES		1,450,879			11,723,323
TOTAL LIABILITIES		19,928,358			18,571,259
COMMITMENTS AND CONTINGENCIES (NOTE 4, 7 AND 13)
STOCKHOLDERS’ EQUITY
Preferred Stock, $.001 par value; 10,000,000 shares authorized, none issued or outstanding		-			-
Common Stock, $.001 par value; 100,000,000 shares authorized; 26,831,603 and 26,831,603 shares issued and outstanding, respectively		26,833			26,833
Additional paid-in capital		9,666,275			9,666,275
Accumulated deficit		(13,693,297	)		(11,291,811	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(4,000,189	)		(1,598,703	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	15,928,169		$	16,972,556

The accompanying notes are an integral part of these unaudited financial statements.

DESERT HAWK GOLD ~~CORP~~CORP.

CONDENSED STATEMENTS OF OPERATIONS ~~(unaudited)~~(UNAUDITED)

The accompanying notes are an integral part of these unaudited financial statements.

CONDENSED STATEMENTS OF ~~STOCKHOLDERS’ EQUITY (unaudited)~~CASH FLOWS (UNAUDITED)

The accompanying notes are an integral part of these unaudited financial statements.

Desert Hawk Gold Corp. (the “Company”), a Nevada Corporation, was incorporated on November 5, 1957. The Company commenced its current mining activities on May 1, 2009.

During the year ended December 31, 2009, the Company entered into Joint Venture Agreements with the Clifton Mining Company (“Clifton”), the Woodman Mining Company and the Moeller Family Trust for the lease of certain of their property interests in the Gold Hill Mining District of Utah. In 2011, the Company entered into an agreement with DMRJ Group, (a Platinum Partners related entity), which allowed for long term funding of the Kiewit project and helped to provide cash flow for operations during the period from 2009 until 2014 while the permitting process was ongoing. The final permit needed to begin development of the Kiewit property was received in January 2014 and development began in February 2014. Construction at the site was substantially complete on September 30, 2014. Revenue from the heap leach operation began in October 2014 with the first sales of gold concentrate.

Prior to March 2019, ongoing undercapitalization continued to hamper the Company’s ability to operate. Due to lack of funding, the Company was temporarily shut down beginning third quarter of 2017. On March 7, 2019, the Company successfully finalized a prepaid forward gold contract liability agreement (the Pre-Paid Forward Gold Purchase Agreement (the “Purchase Agreement”)) that provided funding and enabled production to resume later in 2019. See Note 3.

In the opinion of management, the accompanying unaudited interim balance sheets and statements of operations, cash flows and stockholders’ equity (deficit) contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of the Company as of September 30, ~~2020,~~2021, and the results of its operations and its cash flows for the ~~three~~three- and ~~nine month~~nine-month periods ended September 30, ~~2020~~2021 and ~~2019.~~2020. The operating and financial results for the Company for the nine months ended September 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021.

These unaudited interim financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (“U.S. GAAP”). These unaudited interim financial statements do not include all note disclosures required by U.S. GAAP on an annual basis, and therefore should be read in conjunction with the annual audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the Securities and Exchange Commission on ~~March 30, 2020.~~April 19, 2021.

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to U.S. GAAP and have been consistently applied in the preparation of the financial statements.

The Company’s financial statements are prepared using the accrual basis of accounting in accordance with U.S. GAAP.

Accounting for Stock Options and Stock Awards Granted to Employees and Nonemployees

All transactions in which goods or services are received for the issuance of shares of the Company’s common stock or options to purchase shares of common stock are accounted for based on the fair value of the equity interest issued. ~~For stock options, the~~The Company estimates the fair value of stock-based compensation using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of the fair value of stock-based compensation.

As a mining company, the revenue, profitability and future rate of growth of the Company are substantially dependent on the prevailing prices for gold and silver. The prices of these metals are volatile and affected by many factors beyond the Company’s control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors. A substantial or extended decline in commodity prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, access to capital and the quantities of resources that the Company can economically produce. Further, the carrying value of the Company’s property and equipment, net; mineral properties and interest, net; inventories and ore on leach pads are particularly sensitive to the outlook for commodity prices. A decline in the Company’s price outlook from current levels could result in material impairment charges related to these assets.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. ~~Significant~~Actual results could differ materially from those estimates.

The more significant areas requiring the use of management estimates ~~used~~and assumptions relate to metal prices and material resources that are the basis for future cash flow estimates utilized in ~~preparing these financial statements include those assumed~~impairment calculations and units-of-production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in ~~estimating the number of gold ounces in and costing of~~leach pad inventories, ~~the recoverability of the cost of mining claims, asset retirement obligation, stock-based compensation, determination of the~~ fair value of common stock issued and valuation allowances for deferred tax ~~assets~~assets. The Company bases its estimates on historical experience and ~~related valuation allowances. Actual~~on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results ~~could~~may differ from ~~those estimates.~~the amounts estimated in these financial statements.

Certain reclassifications have been made to conform prior periods’ amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ equity (deficit), and cash flows as previously reported.

The recovery of gold from certain oxide ores is achieved through the heap leaching process. Under this method, mineralized material is placed on a leach pad where it is treated with a chemical solution, which dissolves the gold contained in the material. The resulting “pregnant” solution is further processed in a plant where gold is recovered. The Company records ore on leach pad, solution in carbon columns in process and gold concentrate, at average production cost per gold ounce equivalent, less provisions required to reduce inventory to net realizable value. Production costs include the cost of mineralized material processed; direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities; amortization of property, equipment, and mineral properties; and mine administrative expenses. Costs are removed from ore on leach pads as ounces are recovered, based on the average cost per recoverable ounce of gold on the leach pad.

Estimates of recoverable gold on the leach pad are calculated from the quantities of material placed on the leach pad (measured tons added to the leach pad), the grade of material placed on the leach pad (based on assay data) and an estimated recovery percentage (based on ore type). The nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, actual gold ounces recovered are regularly monitored and estimates are refined based on actual results over time. As of September 30, ~~2020,~~2021, the Company had a limited operating history and actual results only over a short period of time. ~~Due to this, estimates of recoverable gold are based primarily on initial tests with only limited refinements.~~

Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from a leach pad will not be known until the leaching process is concluded. The quantification of material inventory on the leach pad is based on estimates of the quantities of gold at each balance sheet date that the Company expects to ~~recover.~~recover during the next 12 to 24 months. Inventory is stated at the lower of cost or net realizable value which for September 30, 2021 is net realizable value. A portion of the September 30, 2021 inventory has been classified as non-current. This classification has been made based on the amount of gold expected to be sold over the next twelve months based on annualized ounces sold year to date. See Note 5.4.

Sales of gold concentrate sold directly to customers are recorded as revenues and receivables upon completion of the performance obligations and transfer of control of the product to the customer. For concentrate sales, the performance obligation is met, the transaction price can be reasonably estimated, and revenue is recognized generally at the time of shipment at estimated forward prices for the anticipated month of settlement. Due to the time elapsed from shipment to the customer and the final settlement with the customer, prices at which sales of the Company’s concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to the estimated settlement metals prices until final settlement by the customer.

Sales and accounts receivable for concentrate shipments are recorded net of royalties and charges by the customer for treatment, refining, smelting losses, and other charges negotiated with the customers. Charges are estimated upon shipment of concentrates based on contractual terms, and actual charges typically do not vary materially from estimates. See Note 17.

Basic earnings (loss) per share includes no dilution and is computed by dividing net ~~loss~~earnings (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company.

For the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, common stock equivalents of 2,400,000 associated with the Company’s outstanding stock options were excluded from the calculation of diluted earnings per share because they were anti-dilutive due to the net loss for the periods then ended.

Concentrate Sales: The Company’s product consists of gold bearing carbon which is shipped offsite to be turned into an unrefined gold concentrate, which is then further refined to become gold and silver bullion. The Company’s performance obligation in these transactions is generally the transfer of concentrate to the customer. Management has determined the performance obligation is met when the gold concentrate has been processed into an unrefined gold concentrate and is ready to be shipped to the refinery and recognizes revenue at that time. Revenue is recognized upon the completion of the performance obligations and transfer of control of the product to the customer, and when the transaction price and number of ounces can be determined or reasonably estimated.

Processing Income: The Company processes ore for another company. Once processed, the unrefined gold concentrate is shipped to a refinery where it is refined into gold and silver bullion. The Company receives a percentage of the proceeds from the sale of the gold and silver concentrate which is paid to the Company by the seller within two days after the sale. Revenue is recognized upon the completion of the performance obligations and transfer of control of the product to the customer, and when the transaction price and number of ounces can be determined or reasonably estimated.

Sales and accounts receivable for sales are recorded net of charges from the customer which represent components of the transaction price. Charges are estimated by management upon transfer of risk based on contractual terms, and actual charges typically do not vary materially from management’s estimates. Revenue from the sale of concentrate may be subject to adjustment upon final settlement of estimated metal prices, weights and assays, and are recorded as adjustments to revenue in the period of final settlement of prices, weights and assays; such adjustments are typically not material in relation to the initial invoice amounts. Revenue proceeds from concentrate sales are recorded net of the impact of royalties and participation agreements.

As shown in the accompanying financial statements, the Company had an accumulated deficit of ~~$11,204,736~~$13,693,297 through September 30, ~~2020~~2021 and net loss of ~~$1,753,518~~$2,401,486 for the ~~nine month~~nine-month period ended September 30, ~~2020~~2021, along with negative working capital of $13,643,983 which raises substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company has not delivered gold ounces as scheduled on its prepaid forward gold contract and could be subject to default provisions within the related agreement (see Note 7). The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Although production ~~has~~ restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. ~~Although management has procured funding through a forward sales agreement (Note 3) they continue~~Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. The ability of the Company to continue as a going concern is dependent on the Company’s ~~management believes that it has sufficient funds~~ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and ~~continue production over the next twelve months, however there~~repay its liabilities arising from normal business operations when they are no assurances that will occur. The Company is currently engaged in discussions with another mining company regarding processing a limited amount of their ore at the Company’s Gold Hill site as a means of increasing revenue. A “pilot test” of their ore is in process.due.

The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and elsewhere, causing disruptions to the Company’s business operations and management. These disruptions are most evident in ~~our~~the Company’s ability to retain and house employees and properly manage them while maintaining proper social distancing and with delays in obtaining materials and supplies. There has also been a reduction in the availability of equipment financing. These disruptions continue to hamper operations. It is management’s belief that disruptions relating to COVID will be mitigated in the future as a large percent of the population becomes vaccinated.

In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair value measurements. The update was adopted as of January 1, 2020, and its adoption did not have a material impact on the Company’s financial statements.

In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update contains a number of provisions intended to simplify the accounting for income taxes. The update is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. ~~Management is evaluating the~~The update was adopted as of January 1, 2021, and its adoption did not have a material impact ~~of this update~~ on the Company’s financial statements.

Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

~~During the first quarter of 2019,~~At September 30, 2021 and December 31, 2020, the Company ~~entered into and closed~~has a ~~Pre-Paid Forward Gold Purchase Agreement (the “Purchase Agreement”)~~surety bond of $674,000 in an escrow account with ~~PDK Utah Holdings L.P. (“PDK”)~~the bonding company for reclamation of its property. This escrowed amount is held at Bank of New York, Mellon for the ~~sale and purchase by PDK of gold produced from~~Company’s benefit. It may not be released to the ~~Company’s mining property. Under~~Company without the ~~terms~~prior consent of the ~~original Purchase Agreement, PDK initially agreed to purchase a total~~surety bondholder. The escrowed amount does not earn interest.

In December 2020, the Company was notified by the Utah Department of ~~73,910 ounces of gold from~~Natural Resources that the ~~Company. The Company agreed to deliver ounces of gold produced from~~reclamation cost estimate for the Kiewit ~~property~~properties had been escalated from $1,348,000 to ~~PDK.~~$1,537,000, an increase of $189,000. The ~~Company would receive proceeds from PDK~~amount was remitted to the Utah Division of Oil, Gas and Mining on March 11, 2021.

Total reclamation bonds posted at September 30, 2021 and December 31, 2020 are $947,084 and $758,011, respectively, which consists of the ~~then current spot price less a discount specified in the Purchase Agreement. Prepayment was to be made in three tranches,~~above escrowed amount along with certificate of deposits held with the ~~initial tranche~~state of Utah for the remaining bonds on the property, including exploration bonds.

Inventories at September 30, 2021 and December 31, 2020 consists of the following:

Inventories at September 30, 2021 and December 31, 2020 were valued at net realizable value because production costs were greater than the amount the Company expected to receive on the sale of the estimated gold ounces contained in inventories. The adjustment to inventory was $1,265,018 and $204,127 at September 30, 2021 and December 31, 2020, respectively. A portion of the September 30, 2021 inventory has been classified as non-current. This classification has been made based on the amount of $11,200,000 having been made upon execution of the Purchase Agreement on March 7, 2019 (the “Initial Funding”), $4,500,000 for Tranche 2 to occur at least six months following the Initial Funding date, and $5,500,000 for Tranche 3 to occur at least 10 months following the Initial Funding date, provided that all conditions precedent for funding Tranches 2 and 3 are met. From the Initial Funding, the Company paid an upfront fee of $600,000 to PDK for expenses incurred in connection with the transaction. The first gold ~~delivery of 655 ounces is due December 2020.~~

The Purchase Agreement contains a royalty provision whereby royalties of 4% are due on gold and silver recovered from mining operations at the Kiewit site and sold by the Company to a third party. Royalties are payable within 30 days following the end of each fiscal quarter. Royalties payable at September 30, 2020 and December 30, 2019 were $149,988 and $36,074. The September 30, 2020 balance includes royalties payable for the second and third quarters of 2020. Payment of these royalties have been delayed with verbal permission by PDK.

The Purchase Agreement contains a participation payment whereby PDK receives a portion of the proceeds from gold sold by the Company to a third party. The amount of proceeds due to PDK is based upon a percentage of proceeds over a set gold price per ounce. Payment of this participation amount has been delayed with verbal permission of PDK. In addition, PDK may reduce the required number of ouncesexpected to be sold ~~in exchange for common shares of~~over the Company. As security for the obligations of the Company under the Purchase Agreement, the Company has granted PDK a security interest in all of the assets of the Company and has issued and recorded a Leasehold Deed of Trust, Assignment of Leases, Rents, As Extracted Collateral and Contracts, Security Agreement and Fixture Filing. The Purchase Agreement contains representations and warranties, as well as affirmative and negative covenants customarynext twelve months based on annualized ounces sold year to ~~a transaction of this nature.~~date.

On October 31, 2019, the Company and PDK amended the Purchase Agreement and entered into the Amended Pre-Paid Forward Agreement (the “Amended Agreement”) to adjust the second and third tranches paid to the Company, to reduce the total number of ounces of gold subject to the Purchase Agreement, and to revise other provisions therein. The second tranche was reduced from $4,500,000 to $1,600,000, and the third tranche was reduced from $5,500,000 to $1,400,000. The second tranche was received on October 31, 2019 upon execution of the Amended Agreement and the third tranche was received on December 27, 2019, with funds to be dedicated in accordance with the revised budget furnished with the Amended Agreement. The amendment also reduced the total number of ounces of gold to be delivered under the agreement from 73,910 to 47,045.

The prepayment has been accounted for as deferred revenue and is presented as a prepaid forward gold contract liability on the balance sheet at September 30, 2020 and December 31, 2019 with a total balance of $13,600,000 which is the $14,200,000 received from PDK in Tranches 1-3, less the $600,000 upfront fee paid by the Company in 2019.

~~Under the terms of the Amended Agreement, the Company is obligated to deliver gold in the following quantities:~~

The Amended Agreement also altered the total amount that PDK may reduce the number of ounces of gold to be delivered under the Amended Agreement in exchange for common shares of the Company. Under the Amended Agreement, PDK may reduce the required number of ounces by up to 8,000 ounces in exchange for common shares of the Company.

At September 30, 2020 and December 31, 2019, the Company has a surety bond of $674,000 in an escrow account with the bonding company for reclamation of its property. This escrowed amount is held at Bank of New York, Mellon for the Company’s benefit. It may not be released to the Company without the prior consent of the surety bondholder. The escrowed amount does not earn interest.

~~In March 2019, as part of the Amended Lease (Note 7), the Company returned the Cactus Mill property and the reclamation bond of $42,802 on that property to Clifton Mining Company.~~

Total reclamation bonds posted at September 30, 2020 and December 31, 2019 are $759,726 and $759,351, respectively, which consists of the above escrowed amount along with certificate of deposits held with the state of Utah for the remaining bonds on the property, including exploration bonds.

~~Inventories at September 30, 2020 and December 31, 2019 consists of the following:~~

Inventories at September 30, 2020 were valued at cost. Inventories at December 31, 2019 were valued at net realizable value because production costs were greater than the amount the Company expected to receive on the sale of the estimated gold ounces contained in inventories on December 31, 2019. A portion of the September 30, 2020 inventory has been classified as non-current. This classification was made based on the amount of gold expected to be sold over the next twelve months.

The following is a summary of property and equipment at September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

For the Kiewit property facilities, amortization ~~expense of $28,817 and $83,274, which is~~ based on total units of production was ~~recognized~~$20,412 and $28,817 for the three months ended September 30, 2021 and 2020, respectively. For the Kiewit property facilities, amortization based on total units for production was $38,170 and $83,965 for the nine months ended September 30, ~~2020. Amortization in the amount of $83,965~~2021 and ~~$44,423~~2020, respectively.

Depreciation expense on property and equipment was ~~recognized~~$222,804 and $231,824 for the three months ended September 30, 2021 and 2020, respectively. Depreciation expense on property and equipment was $658,337 and $653,453 and for the nine months ended September 30, ~~2019.~~2021 and 2020, respectively.

During the nine months ended September 30, 2021, the Company was required to return a CAT 740 Haul truck to Wheeler Machinery because the Company was 5 payments delinquent in its obligation on this note payable. The net carrying value of the equipment was $290,889 and the outstanding note payable balance was $86,806. A loss on disposal of equipment of $204,083 was recognized. The truck was purchased by a related party who in February began renting the truck to the Company on a month-to-month rental. See Note 11.

During the nine months ended September 30, 2021, the Company acquired a new HP4 crushing system in exchange for its HP3 crushing system which was returned to ICM Solutions, Inc. (“ICM”). Prior to the acquisition, the Company had been renting the HP4 crushing system from ICM and had an accrued rent payable of $158,000. ICM financed the acquisition of the new HP4 crushing system with a new note of $215,510 for the cost of the new equipment, plus accrued rent payable, less the trade-in value of the HP3 crushing system.

Mineral properties and interests as of September 30, 2021 and December 31, 2020 are as follows:

The Company is required to pay a 4% net smelter royalty (“NSR”) to PDK on revenues of gold and silver from the Kiewit gold property and the JJS properties.

NOTE 7 – ~~MINERAL PROPERTIES AND INTERESTS~~PREPAID FORWARD GOLD CONTRACT LIABILITY

~~Mineral properties and interests as of September 30, 2020 and December 31, 2019 are as follows:~~

~~On June 13,~~During 2019, the Company entered into an agreement whereby the Company acquired 20 claims adjacent to the Kiewit property from Ben Julian, LLC for $250,000, known as the JJS Property. Although drilling has commenced on this property, permitting has not been completed and ~~production has not yet begun.~~

~~In 2009, the Company entered into~~closed a ~~Joint Venture~~Pre-Paid Forward Gold Purchase Agreement (the “Purchase Agreement”) with ~~the Clifton Mining Company~~PDK Utah Holdings L.P. (“~~Clifton”~~PDK”) ~~and the Woodman Mining Company~~ for the ~~lease~~sale and purchase by PDK of ~~their property interests in~~gold produced from the ~~Gold Hill Mining District of Utah. In March 2019, the Company and Clifton entered into a Second Amended and Restated Lease Agreement (the “Amended Lease”).~~Company’s mining property. Under the terms of ~~this Amended Lease,~~ the ~~Company relinquished its leasehold interest in all but 10~~original Purchase Agreement, as amended, PDK agreed to purchase a total of ~~the patented mining claims, for which it retained only the surface rights, and 66~~47,045 ounces of ~~the unpatented lode mining claims previously held by~~gold from the Company. The ~~Cactus Mill~~Company agreed to deliver ounces of gold produced from the Kiewit property ~~was returned~~ to ~~Clifton Mining~~PDK and the Company ~~as part~~would then receive proceeds from PDK at the then current spot price less a discount specified in the Purchase Agreement. The Company has the option of ~~this agreement.~~paying cash to PDK for the number of ounces to be delivered each month at a rate of $500 per ounce. The Company received a net amount of $13,600,000 in 2019 for the future delivery of these gold ounces.

The Purchase Agreement contains a royalty provision whereby royalties of 4% are due to PDK on gold and silver recovered from mining operations at the ~~Amended Lease, the Company issued 5,500,000 shares of its common stock with a fair value of $2,200,000 which increased the carrying value of the mineral properties~~Kiewit site and ~~interests. In addition, the Company and Clifton entered into a Registration Rights Agreement to register for resale the shares issued to Clifton which requires~~sold by the Company to ~~register~~a third party. Under the ~~shares~~Purchase Agreement, the Company also pays a 5% withholding tax to the state of Utah on the PDK royalty payments. Royalties are payable within ~~18 months (which is September 7, 2020)~~30 days following the ~~initial funding received~~end of each fiscal quarter.

The Purchase Agreement contains a participation payment whereby PDK receives a portion of the proceeds from gold sold by the Company to a third party. The payment due to PDK is based upon a percentage of proceeds over a set gold price per ounce. The upside participation amounts are payable within four days following each sale.

In addition, under the Purchase Agreement, ~~(Note 3). In~~PDK may reduce the ~~event~~required number of ounces to be sold in exchange for up to 8,000 common shares of the Company. As security for the obligations of the Company ~~does not register~~under the ~~shares within~~Purchase Agreement, the ~~18-month period,~~Company has granted PDK a security interest in all of the assets of the Company and has issued and recorded a Leasehold Deed of Trust, Assignment of Leases, Rents, As Extracted Collateral and Contracts, Security Agreement and Fixture Filing. The Purchase Agreement contains representations and warranties, as well as affirmative and negative covenants customary to a transaction of this nature.

Under the terms of the Purchase Agreement, as amended, the Company is obligated to ~~pay Clifton a royalty equal to 2.5% of~~deliver gold in the ~~net smelter returns from the minerals generated from the Company’s mining claims. The registration of these shares was filed and became effective on April 14, 2020.~~following quantities:

No gold has been delivered under the ~~terms~~contract. As of ~~the initial 2009 Joint Venture Agreement, the Company was required to pay a 4% net smelter royalty (“NSR”) on base metals in all other areas except for production from the Kiewit gold property~~September 30, 2021 and a NSR on gold and silver, except for production from the Kiewit gold property, based on a sliding scale of between 2% and 15% based on the price of gold or silver, as applicable. The Company was also required to pay Clifton a 6% NSR on any production from the Kiewit gold property.

As part of the Purchase Agreement (Note 3) finalized in March 2019, these NSRs were bought out by the Company from Clifton and two other minority royalty holders at a cost of $900,000 which increased the carrying value of the mineral properties and interests. The buyer of the Purchase Agreement (Note 3), PDK, acquired a 4% NSR, previously held by Clifton, on the Kiewit property for $2,200,000. PDK remitted the funds for the NSR directly to Clifton. PDK will receive a 4% net NSR on proceeds from the sale of gold and silver from the Kiewit and JJS properties.

~~During the quarter ended March~~December 31, 2020, ~~the Company revised its estimate~~a cumulative of ~~gold~~8,809 and 655 ounces, respectively, were scheduled to be ~~produced from its mineral properties and interests. The updated estimate of total gold ounces~~delivered to be produced from the property considered actual gold ounce recoveries since production began and estimated ounces contained in mineral resources. The new estimate resulted in increased gold ounces at January 1, 2020 from 39,480 gold ounces to 98,066 gold ounces. Amortization of the mineral properties and interests based on total units of production was $54,316 and $156,748 for the three and nine-month periods ended September 30, 2020. Amortization for these periods was based on the updated estimate. Amortization for the three and nine-month periods ended September 30, 2019 was $170,959 and $184,837.

During 2018 and the first quarter of 2019, the Company entered into several short-term notes payable with the convertible debt holders (Note 9) and with the Company’s president. Total borrowed was $91,680 during the first quarter 2019 and $249,000 during the year ended December 31, 2018. The notes bore interest at 10%, had a 2% loan initiation fee, and were due in full on March 31, 2019. These short-term notes were repaid in full, including 10% interest and a 2% loan initiation fee, in March 2019 as part ofPDK under the terms of the Purchase Agreement. ~~There was no interest~~The ounces due but unpaid to PDK at September 30, 2021 have been reflected in “due to PDK in lieu of gold deliveries’ at the amount calculated based on the Company’s option to pay cash in lieu of delivery at $500 per ounce. The forward gold contract balance and the related contract expense ~~recognized on these loans~~ for the ~~three months~~nine-month period ended September 30, ~~2020 and September 30, 2019, respectively. Interest expense recognized on these loans was $5,820 for the nine months ended September 30, 2019.~~2021 are as follows:

AtOn December ~~31, 2018,~~1, 2020, the Company ~~had outstanding convertible promissory notes~~notified PDK that it would not be able to ~~two~~make the December delivery of ~~its minority shareholders, for a total~~gold and elected to use one of ~~$1,350,000 plus accrued interest of $456,750. All of these notes were paid in full, including accrued interest, on March 7, 2019 with funds received~~the delivery postponement options under the Purchase ~~Agreement.~~Agreement, as amended. This provision permits the Company to delay delivery by up to 30 days by delivering the amount of gold due within 30 days, plus interest calculated at the default interest rate, thereby causing the December ounces to be come due in January 2021. At the end of this 30-day extension period the Company was unable to deliver the December payment and the amount became due on January 25, 2021.

~~Interest expense recognized on~~As of September 30, 2021, and through the issuance of these ~~loans was $24,412~~financial statements, PDK has sent invoices to the Company for the ~~nine months ended September 30, 2019.~~

~~A capital lease was entered into~~deliveries and payments due. However, no notice of default on ~~June 20, 2016 with RMH Overhead, LLC for mining and crushing equipment valued at $185,618, some of which had~~the Purchase Agreement has been previously owned by the Company. RMH Overhead, LLC is an entity owned by the Company’s president, Rick Havenstrite. Lease payments were paid in full, including accrued interest and late fees, in March 2019 with funds received from PDK. The failure to make gold deliveries under the Purchase ~~Agreement. The equipment is being amortized over the estimated useful life~~Agreement, as amended, provides PDK with certain remedies, including termination of the ~~equipment. Accumulated amortization at December 31, 2018 was $66,292.~~agreement, demand for early payment of the entire delivery obligations, and enforcement of foreclosure rights against the assets pledged as security under the agreement. The Company ~~now owns the equipment which~~ is ~~included~~ in ~~property and equipment on the balance sheet. Interest expense recognized on this obligation under capital lease was $1,968 for the three and nine months ended September 2019,~~ongoing negotiations with ~~no interest recognized~~PDK in ~~2020.~~

~~In April 2020, the Company received a loan of $463,497 pursuant~~an effort to the SBA’s Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was enacted March 27, 2020. The loan, which was in the form of a Note dated April 16, 2020 issued by the Company, matures on April 9, 2025 and bears interest at a rate of 1% per annum, payable monthly commencing on August 15, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Underre-negotiate the terms of the ~~PPP, certain amounts~~agreement. Due to the delinquent status of the ~~loan may be forgiven if they are used for qualifying expenses~~deliveries and PDK’s rights under the default provisions of the Purchase Agreement, the Company has classified the entire liability balance owing as ~~described~~current on the September 30, 2021 balance sheet. Accrued interest of $65,792 and $ Nil is in ~~the CARES Act. Qualifying expenses include payroll costs, costs used to continue group health care benefits, mortgage payments, rent,~~included in accounts payable and ~~utilities. As~~accrued liabilities as of September 30, 2021 and December 31, 2020, ~~the Company has used funds from the loan to pay qualifying expenses. The Company intends to apply for forgiveness of the loan at which time grant income of $463,497 will be recognized.~~respectively.

The September 30, 2021 balance includes royalties payable for the second, third and fourth quarters of 2020 and the first, second and third quarters of 2021. The September 30, 2021 balance includes participation payments payable for the third and fourth quarters of 2020 and the first, second and third quarters of 2021. The following is a summary of royalties, upside participation and interest payable:

Arrangements have been made with Wheeler CAT and ICM Solutions, LLC to accelerate the payment schedules of their notes for the first few months of 2021, with no additional penalties other than interest, thereby allowing for the accounts to become current by May 2021.

Changes in the asset retirement obligation for the nine-month periods ended September 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

During the nine months ended September 30, 2019, the Cactus Mill property was returned to Clifton as part of the terms of the Amended Lease (Note 7). The net asset retirement cost of $17,120 and obligation of $40,802 relating to the Cactus Mill property were eliminated resulting in a gain on settlement of asset retirement obligation of $20,451 recognized in general and administrative expense in the statement of operations.

In the first quarter of 2021 and 2020, the Company updated the asset retirement obligation to reflect a plan for reclamation and closure of the mine at the end of its ~~life which resulted in an increase of estimated undiscounted costs of $198,365.~~life. The asset retirement asset and obligation increased by $6,833 and $125,363, respectively, as a result of a change in the estimated timing of costs and the impact of discounting the costs to present value.

The estimated reclamation costs were discounted using credit adjusted, risk-free interest rate of 10% from the time wethe Company incurred the obligation to the time we expect to pay the retirement obligation.

On March 29, 2018, the Company entered into a five-year Agency Agreement (the “Agency Agreement”) with H&H Metals Corp., a New York corporation (“H&H”). Under the terms of the Agency Agreement, H&H agreed to provide certain advisory services in regard to natural resources activities and to assist in securing purchasers for minerals produced from its mining properties.

On January 16, 2019, the Company negotiated a termination of the Agency Agreement (the “Termination Agreement”) with H&H. Under the terms of the Termination Agreement, the Company paid H&H $600,000 in cash and agreed to pay an additional $200,000 within 18 months. The Company also issued 250,000 shares of its common stock with a fair value of $100,000 to H&H. In addition, Phillip H. Holme, a principal of H&H, became a director of the Company. In April 2020, Mr. Holme passed away unexpectedly. No decision has been made at this time about a replacement to fill the vacancy on the Board of Director caused by Mr. Holme’s death.

The Company recognized a loss on settlement of consulting contract of $900,000 during the quarter ended March 31, 2019. The balance of $200,000 was due in July 2020 under the terms of the settlement agreement and has not yet been paid.

The Company is authorized to issue 100,000,000 shares of common stock. All shares have equal voting rights and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.

During the nine-month period ended September 30, 2021 the Company had no transactions relating to common stock. During the nine-month period ended September 30, 2020, the Company ~~had the following transaction relating to~~sold 200,000 shares of common ~~stock:~~

During the nine-month period ended September 30, 2019, the Company had the following transactions relating to common stock. All shares issued were valued at $0.40 per share based on the most recent sale of common stock for cash:

The ~~Company’s~~Company's Articles of Incorporation authorized 10,000,000 shares of $0.001 par value Preferred Stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.

In addition to transactions disclosed in Note ~~14 and 15,~~13, the Company had the following related party transactions.

The Company has a ~~month to month~~month-to-month lease agreement for its office space with RMH Overhead, LLC, a company owned by Rick Havenstrite, the Company’s President and a director. The Company recognized rent expense of $4,500 and ~~$12,500~~$4,500 for the three months ended September 30, 2021 and 2020. The Company recognized rent expense of $13,500 and $12,500 for the nine-month periods ended September 30, 2021 and 2020. ~~The Company also recognized rent expense of $3,000 and $9,000 for the three and nine-month periods ended~~At September 30, ~~2019 under this lease.~~2021 and December 31, 2020, amounts due to RMH Overhead, LLC for rent of $ Nil and $ Nil , respectively, are included in accounts payable and accrued expenses on the balance sheet.

AsOn February 1, 2021, RMH Overhead, LLC. (“RMH”) an entity owned by Rick Havenstrite, President of the Company, purchased a CAT 740B Articulated Haul Truck from Wheeler CAT. This truck had previously been owned by the Company with an associated note payable to Wheeler CAT. See Note 5. Beginning February 1, 2021, the Company began renting this truck from RMH at a rate of $10,000 per month on a month-to-month rental. At September 30, ~~2020~~2021 and December 31, ~~2019, accrued compensation~~2020, amounts of ~~$10,005~~$10,000 and ~~nil was~~$ Nil, respectively, are due to ~~officers. This entire~~RMH Overhead, LLC for rent of this equipment, and this amount is included in accounts payable and accrued expenses on the balance ~~was due to Rick Havenstrite, who serves as our President and as a director.~~sheet.

The Company compensates directors for their contributions to the management of the Company, with ~~the Chairman~~one director receiving fees of ~~the Board receiving~~ $6,000 per month and ~~other directors~~another director receiving $5,000 per quarter. At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, accrued compensation due to directors was $61,000 and $11,000 ~~and nil.~~, respectively.

~~NOTE 17 – REVENUE RECOGNITION~~At September 30, 2021 and December 30, 2020, the Company had a receivable balance from processing income of $59,675 and $ Nil. Processing sales are received for ore processed for another company.

Product sales for the ~~three~~three-month periods ended September 30, 2021 and September 30, 2020 are shown below:

Product sales for the nine-month periods ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020 are shown ~~below. At September 30, 2020 and December 31, 2019, the Company did not have a gold sales receivable balance. All revenue for~~below:

For the three and ~~nine-month periods~~nine months ended September 30, 2021 and 2020, ~~and 2019~~all revenue from concentrate sales was ~~from sales~~sold to Asahi ~~Refining USA, Inc.~~Refining. For the three and nine months ended September 30, 2021, all revenue from processing income was received from the outside company whose concentrate sales are to Asahi Refinery.

The Company has reserved 2,400,000 shares under its 2018 Stock Incentive Plan (the “Plan”). The Plan was adopted by the board of directors on March 28, 2018, retroactive to February 23, 2018, as a vehicle for the recruitment and retention of qualified employees, officers, directors, consultants, and other service providers. The Plan is administered by the Board of Directors. The Company may issue, to eligible persons, restricted common stock, incentive and non-statutory options, stock appreciation rights and restricted stock units. The terms and conditions of awards under the Plan will be determined by the Board of Directors.

~~Outstanding options at September 30, 2020 were 2,400,000, have a remaining life of 2.4 years, and had no intrinsic value. No options were granted, expired, or were exercised during 2020 or 2019.~~

In addition to commitments disclosed in Notes 34 and 7, the Company had the following commitments and contingencies.

Personal property tax for Tooele County, Utah, is billed and becomes due on November 30 of each year. At September 30, 2021 and December 31, 2020, the amount due to Tooele County for 2020 is $ Nil and $35,568, respectively.

The Company has an employment agreement with Mr. Havenstrite as President of the Company, which is ongoing. The agreement, as amended, requires Mr. Havenstrite to meet certain time requirements and limits the number of other board member obligations in which he can participate. The agreement allows for a base annual salary of $144,000 plus certain performance compensation upon fulfillment of established goals. The agreement allows the board of directors to terminate Mr. ~~Havenstrite’s~~Havenstrite’ s employment at any time, providing for a severance payment upon termination without cause.

At September 30, ~~2020~~2021 and December 31, ~~2019~~2020 accrued compensation due to officers of the Company was ~~$10,005~~$56,159 and ~~nil,~~$37,697, respectively. ~~The entire balance~~Of the amounts accrued at September 30, 2021 and December 31, 2020, accrued compensation of ~~$10,005 was~~$37,697 and $26,620 is due to Rick ~~Havenstrite.~~Havenstrite and $18,462 and $11,077 is due to Marianne Havenstrite, Treasurer and Principal Financial Officer.

The Company compensates its directors for their service to the Company. At September 30, ~~2020~~2021 and December 31, ~~2019~~2020, accrued compensation due to directors was ~~$11,000~~$61,000 and ~~nil.~~$34,000.

On May 11, 2018, the Company entered into an agreement with Mount Royal Consultants (Mount Royal) to assist in finding prospective investors. Mount Royal would receive a finder’s fee of 7% for a connection with a company that resulted in a qualified investment consisting of equity securities or a fee of 3% for a connection with a company that resulted in a purchase of debt securities. On March 7, 2019, the Company closed a Purchase Agreement (Note 3) to a buyer for the purchase of gold produced from the Company’s mining property. This agreement was deemed to be subject to the finder’s fee and resulted in a payment to Mount Royal of $318,000, 3% of the $10,600,000 beneficially received by the Company in accordance with the terms of the Purchase Agreement. On November 1, 2019, an additional payment of 3% of the Tranche 2 payment received by the Company resulted in a payment of $48,000 to Mount Royal and a third payment of $42,000 was issued after receipt of the Tranche 3 payment on December 27, 2019.

Future amounts to be received from investors could also be subject to this agreement. During the three ~~and nine-month periods~~-month period ended September 30, ~~2020,~~2021, the Company recognized no consulting expense relating to this agreement. ~~Shares sold in July 2020 pursuant to the private placement offering were not subject to this agreement.~~

Annual claims fees are currently $155 per claim plus administrative and school trust land fees. Total paid for claims fees inpaid during the ~~three~~three- and nine-month periods ended September 30, 2021 and 2020, are $15,199 and ~~2019 were $14,794 each period.~~$11,025. Claims fees are due in August for the year beginning in September of that year.

~~At September 30, 2020,~~The Utah Division of Oil, Gas & Mining has granted conditional approval of an operating and reclamation permit for the Company’s mining properties pending calculation of the surety bond. The Company ~~was engaged~~expects this permit to be finalized in ~~talks with another mining company regarding processing a limited~~December and at that time must provide additional bonding in the amount of ~~their ore at~~about $550,000 in advance of the ~~Company’s Gold Hill site. A “pilot test”~~pit expansion work. An additional amount of ~~a small quantity of their ore is currently~~approximately $400,000 will be due when the heap leach expansion takes place. The Company expects to begin the pit expansion in ~~process.~~January 2022 with the heap leach expansion taking place later in 2022 or 2023.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and with the unaudited financial statements and related notes thereto presented in this Quarterly Report on Form 10-Q. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods.

The statements contained in this report that are not historical facts, including, but not limited to, statements found in the section entitled “Risk Factors,” are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, competitive position, potential growth opportunities, potential operating performance improvements, ability to retain and recruit personnel, ~~the effects of competition,~~ and the effects of ~~future legislation or regulations.~~competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “should,” “anticipates,” “expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.

Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed in this 10-Q. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to, the following:

Mining operations are subject to a variety of existing laws and regulations relating to exploration, permitting procedures, safety precautions, property reclamation, employee health and safety, air and water quality standards, pollution and other environmental protection controls, all of which are subject to change and are becoming more stringent, and costly to comply with. Should one or more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those expected. We disclaim any intention or obligation to update publicly or revise such statements whether as a result of new information, future events or otherwise.

These risk factors could cause our results to differ materially from those expressed in forward-looking statements.

We are a mineral exploration company located in the Gold Hill Mining District in Tooele County, Utah. We are currently focused on exploration and development of our Kiewit claims and operation of a heap leach processing facility.

We were originally incorporated in the State of Idaho on November 5, 1957. For several years we bought and sold mining leases and claims, but in 1995 we ceased all principal business operations. In 2008, we changed our corporate domicile from the State of Idaho to the State of Nevada. In May 2009, we raised funds to recommence mining activities. In July 2009, we entered into agreements to commence exploration activities on mining claims in the Gold Hill Mining District located in Tooele County, Utah. We hold leasehold interests within the Gold Hill Mining District consisting of 66 unpatented mining claims and 30 patented claims. From these claims we have centered our exploration activities on the Kiewit site.

During 2018 we settled our outstanding debt with DMRJ Group I, LLC and repurchased and retired all outstanding preferred shares issued to them under the 2010 Investment Agreement with them.

During 2019 we secured funding of $13,600,000 (net) from PDK Utah Holdings LP under the terms of the Pre-Paid Forward Gold Purchase Agreement dated March 7, 2019. We also renegotiated our lease with Clifton Mining and released all but the current unpatented and patented mining claims. We also reacquired the existing royalties from Clifton and its affiliates and issued a royalty to PDK equal to 4% of the net smelter returns from our mine. An additional 20 claims, known as the JJS Property, were also acquired.

During the third quarter of 2021 we crushed 66,600 tons of mineralized material and 111,550 tons of waste from the open-pit Kiewit Pit. Using the funds from the PDK transaction, in January 2020 we commenced a drilling program on the Kiewit and JJS mining claims to determine the definition of the mineralized body and resource classification of the resources in connection with the proposed completion of a technical report on the claims. Our drilling plan included drilling 30 holes for a total footage of 7,500 feet. Although drilling has commenced on the JJS property, permitting has not been completed and production has not yet begun. We intend to continue our drilling program during 2022 at a further cost of approximately $175,000. We also intend to continue extraction of mineralized material and to upgrade and expand the current facilities, as resource expansion dictates.

We suspended our mining operations in June 2016 because of depressed metal prices and lack of funds. We resumed operations in Spring 2018 and again suspended operations in October 2018 for lack of funding. Since securing funding in March 2019, we have recommenced mining operations. Revenues of approximately ~~$13,900,000~~$14,500,000 from sales of gold and other metals have been received through September 30, ~~2020.~~2021, bringing total revenue from metals sales from the inception of the processing in 2014 to $20,700,000.

Results of Operations for the ~~Three Months~~Nine months Ended September 30, ~~2020~~2021 and ~~2019.~~2020.

The operating loss of ~~$428,650~~$2,401,486 for the ~~three~~nine months ended September 30, ~~2020~~2021, as compared to the operating loss of $331,600 for the three months ended September 30, 2019 represents increased losses in the amount of $97,050. Increased losses are due to the commencement of ongoing operations in mid-2019 which has resulted in increased general production costs. During the quarters ended September 30, 2020 and 2019, we had net losses of $455,250 and $350,348, respectively. This represents an increase in net loss of $104,902 for the quarter ended September 30, 2020 over the quarter ended September 30, 2019.

~~Results of Operations for the Nine Months Ended September 30, 2020 and 2019.~~

~~The operating loss of $1,678,611~~$1,753,518 for the nine months ended September 30, 2020 ~~as compared to the operating loss of $2,084,421 for the nine months ended September 30, 2019 represent decreased~~represents increased losses in the amount of ~~$405,810. Decreased~~$647,968 Increased losses are primarily due to the ~~commencement~~loss on disposal of ~~ongoing operations~~equipment and increased metal sales in 2020, offset by the reduction in fees associated with finding a lender, including legal and accounting fees as well as consulting fees in association with the Purchase Agreement finalized on March 7, 2019. to forward gold contract expense.

During the ~~nine months~~quarters ended September 30, ~~2020~~2021 and ~~2019,~~2020, we had net losses of ~~$1,753,518~~$331,945 and ~~$3,133,826,~~$455,250, respectively. This represents a decrease in net loss of ~~$1,380,308~~$123,305 for the ~~nine months~~quarter ended September 30, ~~2020~~2021, over the ~~nine months~~quarter ended September 30, ~~2019.~~2020.

Net cash provided by operating activities was $1,577,284 during the nine-month period ended September 30, 2021, compared with cash used by operating activities ~~was~~of $1,647,372 during the nine-month period ended September 30, ~~2020, compared with cash used by operating activities of $5,634,221 during the nine-month period ended September 30, 2019.~~2020. This ~~$3,986,850 decrease~~$3,224,656 increase in the amount of cash ~~used~~provided by operating activities is primarily attributable to the ~~payment of accrued expenses and accounts payables in 2019 and to the ongoing increase~~decrease in inventories during the nine months ended September 30, ~~2020.~~2021, and changes in the forward gold contract liability and the amount due to PDK in lieu of cash balances.

Net cash used by investing activities was $374,444 during the nine-month period ended September 30, 2021 compared to $545,572 during the nine-month period ended September 30, ~~2020 compared to $1,758,849~~2020. This decrease of $171,128 during the nine-month period ended September 30, ~~2019. This decrease of $1,213,277 during the nine-month period ended September 30, 2020~~2021 was due the reduction in additions to property and equipment ~~and to~~offset by the ~~purchase of royalty interests as part of the Purchasing Agreement~~increase in ~~the nine-month period ended September 30, 2019.~~reclamation bonds.

Net cash ~~provided~~used by financing activities was ~~$163,693~~$904,284 during the nine-month period ended September 30, ~~2020,~~2021, compared with ~~$8,315,330~~$163,693 cash provided by financing activities during the nine-month period ended September 30, ~~2019.~~2020. The decrease of ~~$8,151,638~~$1,067,977 in cash ~~provided by~~from financing activities in the nine-month period ended September 30, ~~2020~~2021 was due primarily to ~~proceeds received~~the increase in ~~2019 from~~payments made on equipment notes payable. For the ~~Pre-Paid Forward Gold Purchase Agreement and offset partially by the proceeds from an SBA -PPP loan and the sale of stock during the nine months~~nine-months ended September 30, ~~2020.~~2020, the Company received $463,497 from proceeds of an SBA note and $200,000 from the issuance of its common stock.

As a result of the above, cash ~~decreased~~increased by ~~$2,029,251~~$298,556 during the nine-month period ended September 30, 2021 over the cash balance at December 31, 2020, leaving us with a cash balance of ~~$87,181~~$471,843 as of September 30, ~~2020.~~2021.

The selection and application of accounting policies is an important process that has developed as our business activities have evolved and as the accounting rules have changed. Accounting rules generally do not involve a selection among alternatives, but involve an implementation and interpretation of existing rules, and the use of judgment, to the specific set of circumstances existing in our business. Discussed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported. See Note 2, “Summary of Significant Accounting Policies,” in our attached unaudited financial statements for a discussion of those policies.

Sales of all metal products are recorded as revenues when title and risk of loss transfer to the purchaser. Sales to the purchaser are recorded at gross sales price less charges for treatment, refining, smelting and other sales charges. Processing income is recorded as revenues when the unrefined gold concentrate is shipped to the refinery where it is refined into gold and silver bullion.

We account for mineral exploration costs in accordance with ASC 932 Extractive Activities. All exploration expenditures are expensed as incurred, previously capitalized costs are expensed in the period the property is abandoned. Expenditures to explore new mines, to define further mineralization in existing bodies of mineralized material, and to expand the capacity of operating mines, are capitalized and amortized on a units-of-production basis over proven and probable reserves.

Inventories consist of estimated gold on the heap leach pad and in the carbon process system and are valued at the lower of production cost or market value. Gold on the heap leach pad is estimated to be 80% complete for cost purposes and gold in the process system is estimated at 95% complete.

We account for mineral properties in accordance with ASC 930 Extractive Activities-Mining. Costs of acquiring mineral properties are capitalized by project area upon purchase of the associated claims. Mineral properties are periodically assessed for impairment of value and any diminution in value.

Remediation, reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties as well as remediation costs for inactive properties. We use assumptions about future costs, capital costs and reclamation costs. Such assumptions are based on our current mining plan and the best available information for making such estimates.

For non-operating properties, we accrue costs associated with environmental remediation obligations when it is probable that such costs will be incurred and that they are reasonably estimable. Such costs are based on management’s estimate of amounts expected to be incurred when the remediation work is performed.

The Company’s financial instruments include cash and cash equivalents as well as various notes payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity and interest rates of these financial instruments, approximates fair value at September 30, ~~2020~~2021 and ~~2019.~~2020.

As shown in the accompanying financial statements, the Company had an accumulated deficit of ~~$11,204,736~~$13,693,297 and negative working capital of $13,643,983 through September 30, ~~2020~~2021, which raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Although production restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. ~~Although management has procured funding through Purchase Agreement, they intend to continue~~Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. ~~However, with the funding received under the Purchase Agreement during first quarter~~The ability of ~~2019, and ongoing metals sales,~~ the Company ~~believes it has~~to continue as a going concern is dependent on the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations for the next twelve months. The Company is currently engaged in discussions with another mining company regarding processing a limited amount of their ore at the Company’s Gold Hill site as a means of increasing revenue. A “pilot test” of their ore is in process.and repay its liabilities arising from normal business operations when they are due.

If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity, capital expenditures or capital resources.

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

Our Chief Executive Officer, who serves as our principal executive officer; and our Treasurer, who serves as our principal financial officer, ~~after evaluating~~evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”),. The Chief Executive Officer and Treasurer have concluded that as of the Evaluation Date, due to the existence of material weaknesses, our disclosure controls and procedures were not effective to provide assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

~~The following risk factors represent material changes~~During the first quarter of 2019, the Company entered into and closed a Prepaid Forward Gold Purchase Agreement (the “Purchase Agreement”) with PDK Utah Holdings L.P. (“PDK”) for the sale and purchase by PDK of gold produced from ~~risk factors as previously disclosed in~~ the Company’s mining property. On October 31, 2019, ~~Form 10-K filed with~~ the ~~Commission~~Company and PDK amended the Purchase Agreement and entered into the Amended Prepaid Forward Agreement (the “Amended Agreement”) to reduce the total number of ounces of gold subject to the Purchase Agreement and to revise other provisions therein. The first gold delivery under the Amended Agreement was due on ~~March 30, 2020:~~

~~Insufficient cash~~December 24, 2020, and ~~liquidity considerations could adversely impact our business.~~

~~Sufficient liquidity is necessary for us~~recurring deliveries are due on the fourth business day prior to continue our operations. Delinquent accounts payable and other delinquencies on equipment payments, royalties and other obligations may jeopardize our ability to maintain equipment and supplies as needed to continue our operations and could cause us to default on our contractual obligations. Additionally, delinquent payables could cause us tothe last calendar day of each scheduled delivery month. On December 1, 2020, we notified PDK that we would not be able to ~~manage~~make our ~~business as effectively as possible~~December delivery and ~~our business and reputation with vendors and investors could be harmed.~~

~~A pandemic, epidemic or outbreak of an infectious disease in the markets in which we operate or that otherwise impacts our operations, facilities, or suppliers could adversely impact our business.~~

If a pandemic, epidemic, or outbreak of an infectious disease including the recent outbreak of respiratory illness caused by a novel coronavirus (COVID-19) first identified in Wuhan, Hubei Province, China, or other public health crisis wereelected to ~~affect our markets or facilities or those of our suppliers, our business could be adversely affected. Consequences~~use one of the ~~coronavirus outbreak are resulting in disruptions in or restrictions~~delivery postponement options under the Amended Agreement. This provision permits us to delay delivery by up to 30 days by delivering the amount of gold due on ~~our and others’ ability to travel. In particular,~~ the staff of government permitting agencies cannot easily perform their required site visits and office closures at government sites for staff charged with approving our permits have affected our ability to proceed timely with permitting work. Staffingprevious month’s due date, plus interest calculated at the ~~mine site has become more difficult~~default interest rate. At the end of this 30-day extension period we were unable to deliver the December payment. We have also failed to make the monthly gold deliveries beginning January through November of 2021 and ~~requires more of management’s time~~anticipate that we will be unable to ~~ensure that proper social distancing is maintained among~~make deliveries until at least the ~~employees while they are working. Due to the remote location~~beginning of the ~~mine, special accommodations are required~~next fiscal year. The failure to ~~obtain and retain employees who may not be able to find adequate housing due to~~make gold deliveries under the ~~results~~Amended Agreement provides PDK with certain remedies, including termination of the ~~virus. Special arrangements are necessary to ensure that employees are able to commute to work without violating the distancing standards. In addition, effects~~agreement, demand for early payment of the ~~virus have caused delays in shipping times for chemicals~~entire delivery obligations, and ~~supplies used~~enforcement of foreclosure rights against the assets pledged as security under the agreement. As of the filing date of this report, we are obligated to deliver to PDK 9,720 ounces of gold, plus default interest of approximately $65,792 (calculated at the ~~mine.~~

~~If such~~rate of LIBOR plus 2%), under the Amended Agreement. We are involved in ongoing discussions with representatives of PDK in an ~~infectious disease broke out at our office, facilities, or work sites, our operations may be affected significantly, our productivity may be affected, our ability~~attempt to ~~complete projects in accordance with our contractual obligations may be affected,~~resolve these late payments and ~~we may incur increased labor and materials costs. If~~to renegotiate the suppliers, ore processors, or others with which we contract are affected by an outbreak of infectious disease, service work may be delayed, and we may incur increased labor and materials costs. If our subcontractors with whom we work were affected by an outbreak of infectious disease, our labor supply may be affected, and we may incur increased labor costs. In addition, we may experience difficulties with certain suppliers or with vendors in their supply chains, and our business could be affected if we become unable to procure essential chemicals, equipment, supplies or services in adequate quantities and at acceptable prices. We could incur substantial delays in obtaining necessary permits to operate our business.gold delivery schedule.

Further, infectious outbreak may cause disruption to the U.S. economy, or the local or foreign economies of the markets in which we operate, cause shortages of materials, increase costs associated with obtaining materials, affect job growth and consumer confidence, adversely affect the value of the gold or other minerals extracted at the mine, or cause economic changes that we cannot anticipate. Overall, the potential impact of a pandemic, epidemic or outbreak of an infectious disease with respect to our market or our facilities is difficult to predict and could adversely impact our business.

In response to the COVID-19 situation, federal, state and local governments (or other governments or bodies) are considering placing, or have placed, restrictions on travel and conducting or operating business activities. At this time those restrictions are very fluid and evolving. We have been and will continue to be impacted by those restrictions. Given that the type, degree and length of such restrictions are not known at this time, we cannot predict the overall impact of such restrictions on us, our customers, our subcontractors and supply chain, others that we work with or the overall economic or governmental environment. As such, the impact these restrictions may have on our financial position, operating results and liquidity cannot be reasonably estimated at this time, but the impact likely would be material. In addition, due to the speed with which the COVID-19 situation is developing and evolving, there is uncertainty around its ultimate impact on public health, business operations and the overall economy. Therefore, the negative impact on our financial position, operating results and liquidity cannot be reasonably estimated at this time, but the impact may be material.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95 to this quarterly report.

In accordance with Rule 402 of Regulation S-T, the XBRL information included in Exhibit 101 to this Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
REVENUE
Sales (NOTE 12)	$	2,129,790		$	1,499,729		$	5,877,566		$	4,205,776

OPERATING EXPENSES
General production and project costs	$	1,155,365		$	1,154,944		$	4,115,107		$	3,487,428
Processing costs		56,345			-			199,489			-
Depreciation and amortization		287,662			321,075			781,892			911,901
Other operating costs		128,412			181,374			263,573			481,024
Consulting expense		-			65,055			-			65,055
Exploration expense		4,086			-			9,083			342,350
Legal and professional		36,679			14,204			150,115			103,586
Officers and directors fees		89,761			87,615			257,426			259,087
General and administrative		81,502			104,112			277,047			233,794
Loss on disposal of equipment		5,487			-			239,651			162
Forward gold contract expense (NOTE 7)		576,444			-			1,857,994			-
TOTAL OPERATING EXPENSES		2,421,743			1,928,379			8,151,377			5,884,387
LOSS FROM OPERATIONS		(291,953	)		(428,650	)		(2,273,811	)		(1,678,611	)
OTHER INCOME (EXPENSE)
Interest and other income		10,033			5,442			10,073			5,817
Interest expense – equipment financing		(18,994	)		(28,685	)		(71,872	)		(76,514	)
Interest expense - other		(31,031	)		(3,357	)		(65,876	)		(4,210	)
TOTAL OTHER INCOME (EXPENSE)		(39,992	)		(26,600	)		(127,675	)		(74,907	)
NET LOSS BEFORE INCOME TAX		(331,945	)		(455,250	)		(2,401,486	)		(1,753,518	)
Provision (benefit) for income tax		-			-			-			-
NET LOSS	$	(331,945	)	$	(455,250	)	$	(2,401,486	)	$	(1,753,518	)
Basic and diluted loss per share	$	(0.01	)	$	(0.02	)	$	(0.09	)	$	(0.07	)
Basic and diluted weighted average number shares outstanding		26,831,603			26,798,994			26,831,603			26,687,807

		Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
		2020			2019			2020			2019
REVENUE
Sales of product		$	1,499,729		$	98,388		$	4,205,776		$	98,388

EXPENSES
General production and project costs			1,154,944			(162,877	)		3,487,428			228,257
Depreciation and amortization			321,075			421,072			911,901			605,854
Other operating costs			181,374			-			481,024			197,621
Exploration expense			-			3,140			342,350			74,294
Legal and professional			14,204			18,199			103,586			170,320
Officers and directors fees			87,615			84,096			259,087			240,941
Consulting expense	��		65,055			-			65,055			437,617
General and administrative			104,112			66,358			233,794			175,955
(Gain) loss on disposition of equipment			-			-			162			51,950
			1,928,379			429,988			5,884,387			2,182,809

OPERATING LOSS			(428,650	)		(331,600	)		(1,678,611	)		(2,084,421	)

OTHER INCOME (EXPENSE)
Interest and other income			5,442			1,827			5,817			1,827
Interest expense - equipment financing			(28,685	)		(20,575	)		(76,514	)		(28,063	)
Interest expense - related parties			-			-			-			(31,412	)
Interest expense - other			(3,357	)		-			(4,210	)		-
Loss on settlement of consulting contract (Note 14)			-			-			-			(900,000	)
Loss on settlement of redeemable stock			-			-			-			(63,094	)
Financing expense			-			-			-			(28,663	)
			(26,600	)		(18,748	)		(74,907	)		(1,049,405	)

LOSS BEFORE INCOME TAXES			(455,250	)		(350,348	)		(1,753,518	)		(3,133,826	)
INCOME TAXES			-			-			-			-
NET LOSS		$	(455,250	)	$	(350,348	)	$	(1,753,518	)	$	(3,133,826	)

BASIC AND DILUTED NET LOSS PER SHARE		$	(0.02	)	$	(0.01	)	$	(0.07	)	$	(0.12	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			26,798,994			26,631,603			26,687,807			25,241,493

	Common Stock									Total
	Shares Issued		Par Value $.001 per share		Additional Paid in Capital		Accumulated Deficit			Stockholders’ Equity (Deficit)

BALANCE, December 31, 2019		26,631,603	$	26,633	$	9,466,475	$	(9,451,218	)	$	41,890
Net loss		-		-		-		(1,090,190	)		(1,090,190	)
BALANCE, March 31, 2020		26,631,603		26,633		9,466,475		(10,541,408	)		(1,048,300	)
Net loss		-		-		-		(208,078	)		(208,078	)
BALANCE, June 30, 2020		26,631,603		26,633		9,466,475		(10,749,486	)		(1,256,378	)
Common stock issued for cash at $1.00 per share		200,000		200		199,800		-			200,000
Net loss		-		-		-		(455,250	)		(455,250	)
BALANCE, September 30, 2020		26,831,603	$	26,833	$	9,666,275	$	(11,204,736	)	$	(1,511,628	)

BALANCE, December 31, 2020		26,831,603	$	26,833	$	9,666,275	$	(11,291,811	)	$	(1,598,703	)
Net loss		-		-		-		(1,544,464	)		(1,544,464	)
BALANCE, March 31, 2021		26,831,603		26,833		9,666,275		(12,836,275	)		(3,143,167	)
Net loss		-		-		-		(525,077	)		(525,077	)
BALANCE, June 30, 2021		26,831,603		26,833		9,666,275		(13,361,352	)		(3,668,244	)
Net loss		-		-		-		(331,945	)		(331,945	)
BALANCE, September 30, 2021		26,831,603	$	26,833	$	9,666,275	$	(13,693,297	)	$	(4,000,189	)

	Nine Months Ended
	September 30,			September 30,
	2020			2019

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,753,518	)	$	(3,133,826	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		911,901			605,854
Accretion of asset retirement obligation		69,601			56,019
Gain on settlement of asset retirement obligation		-			(20,451	)
Loss on disposal of equipment, net		162			51,950
Common stock issued for consulting contract settlement		-			100,000
Common stock issued for settlement of redeemable stock		-			52,000
Changes in operating assets and liabilities:
Inventories		(2,073,902	)		(1,658,396	)
Prepaid expenses and other current assets		144,226			(58,910	)
Accounts payable and accrued expenses		1,033,153			(442,429	)
Accrued liabilities - officer salary and director fees		21,005			(922,039	)
Interest payable - related parties		-			(463,993	)
Settlement of consulting contract payable		-			200,000
Net cash used by operating activities		(1,647,372	)		(5,634,221	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(545,197	)		(844,904	)
Additions to mineral properties and interests		-			(900,000	)
Increase in reclamation bonds		(375	)		(13,945	)
Net cash used by investing activities		(545,572	)		(1,758,849	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable - SBA		463,497			-
Proceeds from note payable - related parties		-			91,680
Proceeds from forward gold contract liability, net		-			10,600,000
Proceeds from issuance of common stock		200,000			-
Payment of obligation under capital lease - related party		-			(69,562	)
Payment of notes payable - equipment		(499,804	)		(616,108	)
Payment of short term note payable - related parties		-			(340,680	)
Payment of convertible debt - related parties		-			(1,350,000	)
Net cash provided by financing activities		163,693			8,315,330

NET INCREASE (DECREASE) IN CASH		(2,029,251	)		922,260
CASH, BEGINNING OF PERIOD		2,116,432			8,716

CASH, END OF PERIOD	$	87,181		$	930,976

NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued for mineral properties and interests		-		$	2,200,000
Equipment acquired with notes payable	$	447,650		$	1,189,810

	For the nine months ended
	September 30, 2021			September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,401,486	)	$	(1,753,518	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities
Depreciation and amortization		781,892			911,901
Accretion of asset retirement obligation		91,461			69,601
Write down of inventory to net realizable value		1,265,018			-
Loss on disposal of equipment		239,651			162
Changes in operating assets and liabilities:
Accounts receivable		(59,675	)		-
Inventories		(154,122	)		(2,073,902	)
Prepaid expenses and other current assets		(13,441	)		144,226
Accounts payable and accrued expenses		(995,363	)		1,033,153
Royalties and upside participation payable (NOTE 7)		919,893			-
Accrued liabilities – officer and other wages		45,462			21,005
Due to PDK in lieu of gold deliveries (NOTE 7)		4,404,500			-
Prepaid forward gold contract liability (NOTE 7)		(2,546,506	)		-
Net cash provided (used) by operating activities		1,577,284			(1,647,372	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(191,371	)		(545,197	)
Payments for collateral on reclamation bonds		(189,073	)		(375	)
Proceeds from sales of property and equipment		6,000			-
Net cash used by investing activities		(374,444	)		(545,572	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable – SBA		-			463,497
Proceeds from issuance of common stock		-			200,000
Payment of notes payable - equipment		(904,284	)		(499,804	)
Net cash provided (used) by financing activities		(904,284	)		163,693
Net increase (decrease) in cash and cash equivalents		298,556			(2,029,251	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		173,287			2,116,432
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	471,843		$	87,181

NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment acquired with notes payable – equipment	$	579,909		$	447,650
Accrued rent satisfied with equipment trade-in	$	158,000		$	-

	September 30,			December 31,
	2020			2019
ASSETS

CURRENT ASSETS
Cash	$	87,181		$	2,116,432
Inventories (Note 5)		5,710,282			4,333,682
Prepaid expenses and other current assets		36,804			181,030
Total Current Assets		5,834,267			6,631,144

INVENTORY, non-current portion (Note 5)		697,302			-
PROPERTY AND EQUIPMENT, net (Note 6)		5,542,207			5,287,515
MINERAL PROPERTIES AND INTERESTS, net (Note 7)		3,681,092			3,729,637
RECLAMATION BONDS (Note 4)		759,726			759,351

TOTAL ASSETS	$	16,514,594		$	16,407,647

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,470,034		$	436,881
Accrued officer salary and director fees		21,005			-
Notes payable - equipment, current portion (Note 12)		982,917			1,302,239
Pre-Paid forward gold contract liability, current portion (Note 3)		2,546,549			189,351
Settlement of consulting contract payable (Note 14)		200,000			200,000
Total Current Liabilities		5,220,505			2,128,471

LONG-TERM LIABILITIES
Note payable - SBA (Note 11)		463,497			-
Notes payable - equipment (Note 12)		267,168			-
Asset retirement obligation (Note 13)		1,021,601			826,637
Pre-Paid forward gold contract liability (Note 3)		11,053,451			13,410,649
		12,805,717			14,237,286
TOTAL LIABILITIES		18,026,222			16,365,757

COMMITMENTS AND CONTINGENCIES (Note 19)

STOCKHOLDERS’ EQUITY (DEFICIT) (Note 15)
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued or outstanding		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized; 26,831,603 and 26,631,603 shares issued and outstanding		26,833			26,633
Additional paid-in capital		9,666,275			9,466,475
Accumulated deficit		(11,204,736	)		(9,451,218	)
Total Stockholders’ Equity (Deficit)		(1,511,628	)		41,890

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	16,514,594		$	16,407,647

					Additional					Total Stockholders’
	Common Stock				Paid-in		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)

Balance, June 30, 2019		26,631,603	$	26,633	$	9,466,475	$	(8,458,403	)	$	1,034,705

Net loss		-		-		-		(350,348	)		(350,348	)

Balance, September 30, 2019		26,631,603	$	26,633	$	9,466,475	$	(8,808,751	)	$	684,357

Balance, June 30, 2020		26,631,603	$	26,633	$	9,466,475	$	(10,749,486	)	$	(1,256,378	)

Common stock issued for cash at $1.00 per share		200,000		200		199,800		-			200,000

Net loss		-		-		-		(455,250	)		(455,250	)

Balance, September 30, 2020		26,831,603	$	26,833	$	9,666,275	$	(11,204,736	)	$	(1,511,628	)

					Additional					Total Stockholders’
	Common Stock				Paid-in		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance, December 31, 2018		20,881,603	$	20,753	$	7,120,355	$	(5,674,925	)	$	1,466,183

Common stock issued in connection with acquiring mineral proprerties and interests (Note 7)		5,500,000		5,500		2,194,500		-			2,200,000

Common stock issued in connection with settlement of consulting contract (Note 14)		250,000		250		99,750		-			100,000

Common stock released in settlement of redeemable stock		-		130		51,870		-			52,000

Net income (loss)		-		-		-		(3,133,826	)		(3,133,826	)

Balance, September 30, 2019		26,631,603	$	26,633	$	9,466,475	$	(8,808,751	)	$	684,357

Balance, December 31, 2019		26,631,603	$	26,633	$	9,466,475	$	(9,451,218	)	$	41,890

Common stock issued for cash at $1.00 per share		200,000		200		199,800		-			200,000

Net loss								(1,753,518	)		(1,753,518	)

Balance, September 30, 2020		26,831,603	$	26,833	$	9,666,275	$	(11,204,736	)	$	(1,511,628	)

Months	Gold Ounces per Month		Total Gold Ounces

December 2020		655		655
January 2021 to March 2021		896		2,688
April 2021 to March 2022		911		10,932
April 2022 to March 2023		1,396		16,752
April 2023 to December 2023		1,753		15,777
January 2024		241		241
				47,045

	September 30, 2020		December 31, 2019
Ore on leach pad	$	5,849,230	$	3,903,297
Carbon column in process		165,092		235,762
Finished goods		393,262		194,623
Total	$	6,407,584	$	4,333,682

	September 30, 2020			December 31, 2019

Kiewit and all other sites	$	3,700,000		$	3,700,000
JJS property		250,000			250,000
		3,950,000			3,950,000
Less accumulated amortization		(632,149	)		(475,401	)
		3,317,851			3,474,599
Asset retirement obligation
Kiewit Site		529,289			452,193
Kiewit Exploration		28,377			11,126
JJS property		31,016			-
Total		588,682			463,319
Less accumulated amortization		(225,441	)		(208,281	)
		363,241			255,038

Total	$	3,681,092		$	3,729,637

Months	Gold Ounces per Month		Total Gold Ounces
December 2020		655		655
January 2021 to March 2021		896		2,688
April 2021 to March 2022		911		10,932
April 2022 to March 2023		1,396		16,752
April 2023 to December 2023		1,753		15,777
January 2024		241		241
				47,045

Total ounces to be delivered through September 30, 2021		8,809
Contractual payment per ounce in lieu of delivery	$	500
Amount due to PDK at September 30, 2021	$	4,404,500
Forward gold contract balance associated with 8,809 ounces		(2,546,506	)
Forward gold contract expense for the nine months ended September 30, 2021	$	1,857,994

Prepaid forward gold contract liability balance at December 31, 2020	$	13,600,000
Forward gold contract balance associated with 8,809 ounces		(2,546,506	)
Prepaid forward gold contract liability balance at September 30, 2021	$	11,053,494

	September 30, 2020			December 31, 2019
Note payable to Wheeler Machinery, collateralized by a used 374D L Excavator, due in 12 monthly installments of $19,575, beginning June 2020, including interest at 8%, with a balloon payment due in June 2021 of $150,164. At September 30, 2020, the Company was 1 payment delinquent in its obligation.	$	310,144		$	-

Note payable to ICM Solutions, LLC, collateralized by 3 grasshopper leg systems, due in 12 monthly installments of $4,365, beginning April 2020, including interest at 9%, with a balloon payment of $41,696 due in April 2021. At September 30, 2020, the Company was 1 payment delinquent in its obligation on this note payable.		69,230			-

Note payable to Epiroc, collateralized by a used Epiroc drill, due in 6 monthly installments of $22,235, beginning October 2019, the balloon amount of $488,317 was refinanced in April 2020, with a new loan in that amount, due in 36 monthly payments of $14,679 including interest at 5.2%. Payments on this note payable are current.		424,950			563,368

Note payable to Wheeler Machinery, collateralized by a used CAT 740 Haul truck, originally due in 11 monthly installments of $14,475, beginning May 2019, including interest at 9%, with a balloon payment due in April 2020 of $168,873. This agreement has been extended, with original terms while the Company seeks alternative financing. At September 30, 2020, the Company was 2 payments delinquent in its obligation on this note payable. The entire principal balance is classified as a current year obligation.		114,146			206,682

Note payable to Wheeler Machinery, collateralized by a used D8T dozer, due in 11 monthly payments of $19,125, beginning August 2019, including interest at 10%, with a balloon payment due in July 2020 of $350,281. This agreement has been extended, with original terms, while the Company seeks alternative financing. At September 30, 2020, the Company was 1 payment delinquent in its obligation on this note payable. The entire principal balance is classified as a current year obligation.		314,791			441,989

Note payable to Komatsu Equipment, collateralized by a used PC490 Excavator, due in 11 monthly payments of $10,320, beginning July 2019, including interest at 9%, with a balloon payment due in March 2020 of $71,372. This was refinanced by Komatsu in May 2020 with 1 payment of $28,823 and 12 monthly payments of $1,903 including interest at 4.6%. Payments on this note payable are current.		16,824			90,200
		1,250,085			1,302,239

Current portion		(982,917	)		(1,302,239	)
Long term portion	$	267,168		$	-

Principal payments due are as follows for the twelve months ended:
September 30, 2021	$	982,917
September 30, 2022		166,178
September 30, 2023		100,990
	$	1,250,085

	September 30, 2020		September 30, 2019
Asset retirement obligation, beginning of period	$	826,637	$	792,747
Reduction in liability due to transfer of Cactus Mill property		-		(40,802	)
Obligation incurred:
Kiewit properties		94,347		-
JJS property		31,016		-
Accretion expense		69,601		56,019
Asset retirement obligation, end of period	$	1,021,601	$	807,964

	September 30,			December 31,
	2020			2019
Equipment	$	6,253,319		$	5,336,011
Furniture and fixtures		6,981			6,981
Electronic and computer equipment		50,587			50,587
Vehicles		315,905			256,815
Land improvements		44,840			44,840
		6,671,632			5,695,234
Less accumulated depreciation		(2,893,393	)		(2,254,961	)
		3,778,239			3,440,273

Kiewit property facilities		2,497,436			2,497,436
Less accumulated amortization		(733,468	)		(650,194	)
		1,763,968			1,847,242

Total	$	5,542,207		$	5,287,515

	September 30,			December 31,
	2021			2020
Equipment	$	6,443,815		$	6,361,808
Furniture and fixtures		6,981			6,981
Electronic and computer equipment		50,587			50,587
Vehicles		322,045			315,905
Land improvements		44,840			44,840
		6,868,268			6,780,121
Less accumulated depreciation		(3,594,707	)		(3,129,046	)
		3,273,561			3,651,075

Kiewit property facilities		2,497,435			2,497,436
Less accumulated amortization		(797,021	)		(758,851	)
		1,700,414			1,738,585

Total	$	4,973,976		$	5,389,660

	Three Months ended September 30, 2021			Three Months ended September 30, 2020
Concentrate sales:
Gold	$	1,784,936		$	1,979,156
Silver		23,246			20,420
		1,808,182			1,999,576
Less: Royalties		(76,134	)		(84,189	)
Upside participation payments		(266,175	)		(332,035	)
Outside processing charges		(89,838	)		(83,623	)
		(432,147	)		(499,847	)
Net concentrate sales		1,376,035			1,499,729

Processing sales, net of charges		753,755			-

Total revenue	$	2,129,790		$	1,499,729

	Nine Months ended September 30, 2021			Nine Months ended September 30, 2020
Concentrate sales:
Gold	$	4,768,124		$	5,307,976
Silver		69,753			52,305
		4,837,877			5,360,281
Less: Royalties		(203,700	)		(201,197	)
Upside participation payments		(717,714	)		(742,957	)
Outside processing charges		(229,147	)		(210,351	)
		(1,150,561	)		(1,154,505	)
Net concentrate sales		3,687,316			4,205,776

Processing sales, net of charges		2,190,250			-

Total revenue	$	5,877,566		$	4,205,776

	Three Months ended September 30, 2020			Three Months ended September 30, 2019			Nine Months ended September 30, 2020			Nine Months ended September 30, 2019
Gold	$	1,979,156		$	119,200		$	5,307,976		$	119,200
Silver		20,420			970			52,305			970
		1,999,576			120,170			5,360,281			120,170
Less: Royalties		(84,189	)		(4,807	)		(201,197	)		(4,807	)
Upside participation payments		(332,035	)		(10,276	)		(742,957	)		(10,276	)
Outside processing charges		(83,623	)		(6,699	)		(210,351	)		(6,699	)
		(499,847	)		(21,782	)		(1,154,505	)		(21,782	)

Total sales of product	$	1,499,729		$	98,388		$	4,205,776		$	98,388

	●	need for additional funding to continue operations;

	●	global economic and political conditions;

	●	changes in existing mining laws or regulations;

	●	changes in product costing;

	●	competitive technology positions and operating interruptions (including, but not limited to, labor disputes, leaks, fires, flooding, landslides, power outages, explosions, unscheduled downtime, transportation interruptions, war and terrorist activities); and

	●	disruptions due to global pandemics, supply chain delays, or civil unrest.

Exhibit No.		Description
31.1		Rule 15d-14(a) Certification by Principal Executive Officer
31.2		Rule 15d-14(a) Certification by Principal Financial Officer
32.1		Section 1350 Certification of Principal Executive Officer
32.2		Section 1350 Certification of Principal Financial Officer
95		Mine Safety Disclosure
101.INS		Inline XBRL Instance ~~Document~~Document.
101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document~~Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase ~~Document~~Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	Desert Hawk Gold Corp.

Date: November 16, 2021	By:	/s/ Rick Havenstrite
~~Date: November 16, 2020~~		~~Rick Havenstrite, Chief Executive Officer~~
		Rick Havenstrite, Chief Executive Officer
		(Principal Executive Officer)

Date: November 16, ~~2020~~2021	By:	/s/ Marianne Havenstrite
		Marianne Havenstrite, Treasurer
		(Principal Accounting and Financial Officer)