UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 20172022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-35770
CONTANGO ORE, INC.
(Exact name of registrant as specified in its charter)
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| 27-3431051 |
(State or other jurisdiction of incorporation or organization) |
| ( Identification No.) |
3700 BUFFALO SPEEDWAY, SUITE 925
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Houston, Texas | 77098 | |
| (Address of principal executive offices) | ||
| (Zip code) |
(713) 877-1311
(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 |
Common Stock, Par Value $0.01 per share | CTGO | NYSE American |
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 and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer” andfiler,” “smaller reporting company,” or “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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 ☒
The total number of shares of common stock, par value $0.01 per share, outstanding as of January 30, 2018February 6, 2023 was 5,975,048.7,217,368.
CONTANGO ORE, INC.
TABLE OF CONTENTS
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| Page | |
| PART I – FINANCIAL INFORMATION | ||
Item 1. | Financial Statements |
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| Condensed Consolidated Balance Sheets | 3 | |
| Condensed Consolidated Statements of Operations | 4 | |
| Condensed Consolidated Statements of Cash Flows | 5 | |
| Condensed Consolidated Statement of | 6 | |
| Notes to | 7 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
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Item 4. | Controls and Procedures |
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| PART II – OTHER INFORMATION |
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Item 1. | Legal Proceedings |
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Item 1A. | Risk Factors |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 4. | Mine Safety Disclosures |
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Item 5. | Other Information |
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Item 6. | Exhibits |
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All references in this Form 10-Q to the “Company”, “CORE”, “we”, “us” or “our” are to Contango ORE, Inc.
CONTANGO ORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Item 1 - Financial Statements
December 31, 2017 | June 30, 2017 | December 31, 2022 | June 30, 2022 | |||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||
Cash | $ | 15,821,738 | $ | 5,191,749 | $ | 8,765,154 | $ | 23,095,101 | ||||||||
| Restricted cash | 231,000 | 231,000 | ||||||||||||||
Prepaid expenses and other | 125,560 | 175,791 | 816,596 | 453,353 | ||||||||||||
Total current assets | 15,947,298 | 5,367,540 | 9,812,750 | 23,779,454 | ||||||||||||
OTHER ASSETS: | ||||||||||||||||
Investment in Peak Gold, LLC (Note 4) | — | — | ||||||||||||||
Total other assets | — | — | ||||||||||||||
| LONG-TERM ASSETS: | ||||||||||||||||
| Investment in Peak Gold (Note 5) | — | — | ||||||||||||||
| Property & equipment, net | 13,446,822 | 13,514,531 | ||||||||||||||
| Total long-term assets | 13,446,822 | 13,514,531 | ||||||||||||||
TOTAL ASSETS | $ | 15,947,298 | $ | 5,367,540 | $ | 23,259,572 | $ | 37,293,985 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT) | ||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||
Accounts payable | $ | 13,116 | $ | 50,858 | $ | 150,677 | $ | 633,856 | ||||||||
Accrued liabilities | 117,808 | 86,561 | 1,254,837 | 870,981 | ||||||||||||
Total current liabilities | 130,924 | 137,419 | 1,405,514 | 1,504,837 | ||||||||||||
COMMITMENTS AND CONTINGENCIES (NOTE 11) | ||||||||||||||||
SHAREHOLDERS’ EQUITY: | ||||||||||||||||
Common Stock, $0.01 par value, 30,000,000 shares authorized; 5,975,048 shares issued and outstanding at December 31, 2017; 4,930,231 shares issued and 4,921,163 outstanding at June 30, 2017 | 59,751 | 49,303 | ||||||||||||||
| NON-CURRENT LIABILITIES: | ||||||||||||||||
| Advance royalty reimbursement | 1,200,000 | 1,200,000 | ||||||||||||||
| Asset retirement obligations | 234,056 | 228,082 | ||||||||||||||
| Contingent consideration liability | 1,847,063 | 1,847,063 | ||||||||||||||
| Debt, net | 19,350,322 | 19,239,960 | ||||||||||||||
| Total non-current liabilities | 22,631,441 | 22,515,105 | ||||||||||||||
| TOTAL LIABILITIES | 24,036,955 | 24,019,942 | ||||||||||||||
COMMITMENTS AND CONTINGENCIES (NOTE 14) | ||||||||||||||||
STOCKHOLDERS’ EQUITY/(DEFICIT): | ||||||||||||||||
Common Stock, $0.01 par value, 45,000,000 shares authorized; 7,101,395 shares issued and outstanding at December 31, 2022; 6,860,420 shares issued and 6,769,923 shares outstanding at June 30, 2022) | 71,014 | 68,604 | ||||||||||||||
Additional paid-in capital | 52,345,624 | 40,500,239 | 79,086,142 | 74,057,859 | ||||||||||||
| Treasury shares at cost (0 shares at December 31, 2017 and 9,068 at June 30, 2017) | — | (207,400 | ) | |||||||||||||
| Treasury stock at cost (0 at December 31, 2022; and 90,497 shares at June 30, 2022) | — | (2,318,182 | ) | |||||||||||||
Accumulated deficit | (36,589,001 | ) | (35,112,021 | ) | (79,934,539 | ) | (58,534,238 | ) | ||||||||
SHAREHOLDERS’ EQUITY | 15,816,374 | 5,230,121 | ||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY/(DEFICIT) | (777,383 | ) | 13,274,043 | |||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 15,947,298 | $ | 5,367,540 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT) | $ | 23,259,572 | $ | 37,293,985 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONTANGO ORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended December 31, | Six Months Ended December 31, | Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
EXPENSES: | EXPENSES: | |||||||||||||||||||||||||||||||
| Claim rental expense | $ | (126,451 | ) | $ | (157,163 | ) | $ | (273,376 | ) | $ | (306,973 | ) | ||||||||||||||||||||
| Exploration expense | (2,219,913 | ) | (1,219,437 | ) | (6,616,483 | ) | (2,165,682 | ) | ||||||||||||||||||||||||
| Depreciation expense | (34,214 | ) | (8,933 | ) | (68,428 | ) | (13,715 | ) | ||||||||||||||||||||||||
| Accretion expense | (2,948 | ) | (3,560 | ) | (5,974 | ) | (3,560 | ) | ||||||||||||||||||||||||
General and administrative expense | $ | 808,344 | $ | 592,142 | $ | 1,476,980 | $ | 1,547,792 | (2,176,097 | ) | (2,796,664 | ) | (4,600,164 | ) | (4,766,933 | ) | ||||||||||||||||
Total expenses | 808,344 | 592,142 | 1,476,980 | 1,547,792 | (4,559,623 | ) | (4,185,757 | ) | (11,564,425 | ) | (7,256,863 | ) | ||||||||||||||||||||
OTHER EXPENSE | ||||||||||||||||||||||||||||||||
Loss from equity investment in Peak Gold, LLC (Note 4) | — | — | — | — | ||||||||||||||||||||||||||||
OTHER INCOME/(EXPENSE): | ||||||||||||||||||||||||||||||||
Interest income | 7,799 | 494 | 16,344 | 991 | ||||||||||||||||||||||||||||
| Interest expense | (446,707 | ) | 53,224 | (896,177 | ) | (3,380 | ) | |||||||||||||||||||||||||
Loss from equity investment in Peak Gold, LLC (Note 5) | (9,310,000 | ) | (743,000 | ) | (9,310,000 | ) | (2,188,000 | ) | ||||||||||||||||||||||||
| Insurance recoveries | — | — | 338,301 | — | ||||||||||||||||||||||||||||
| Other income | — | — | 15,656 | — | ||||||||||||||||||||||||||||
| Total other income/(expense) | (9,748,908 | ) | (689,282 | ) | (9,835,876 | ) | (2,190,389 | ) | ||||||||||||||||||||||||
LOSS BEFORE TAXES | (14,308,531 | ) | (4,875,039 | ) | (21,400,301 | ) | (9,447,252 | ) | ||||||||||||||||||||||||
| Income tax (expense)/benefit | — | — | — | — | ||||||||||||||||||||||||||||
NET LOSS | $ | (808,344 | ) | $ | (592,142 | ) | $ | (1,476,980 | ) | $ | (1,547,792 | ) | $ | (14,308,531 | ) | $ | (4,875,039 | ) | $ | (21,400,301 | ) | $ | (9,447,252 | ) | ||||||||
LOSS PER SHARE | LOSS PER SHARE | |||||||||||||||||||||||||||||||
Basic and diluted | $ | (0.14 | ) | $ | (0.13 | ) | $ | (0.28 | ) | $ | (0.36 | ) | $ | (2.10 | ) | $ | (0.72 | ) | $ | (3.15 | ) | $ | (1.41 | ) | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||||||||||
Basic and diluted | 5,650,321 | 4,640,034 | 5,289,934 | 4,315,444 | 6,807,317 | 6,751,581 | 6,787,864 | 6,716,076 | ||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONTANGO ORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended December 31, | ||||||||
2022 | 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (21,400,301 | ) | $ | (9,447,252 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Stock-based compensation | 1,598,421 | 2,278,160 | ||||||
| Depreciation expense | 68,428 | 13,715 | ||||||
| Accretion expense | 5,974 | 3,560 | ||||||
| Loss from equity investment in Peak Gold, LLC | 9,310,000 | 2,188,000 | ||||||
| Amortization of debt discount and debt issuance fees | 335,047 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Increase in prepaid expenses and other | (363,243 | ) | (721,162 | ) | ||||
Increase/(decrease) in accounts payable and accrued liabilities | (100,043 | ) | 337,558 | |||||
| Decrease in income tax receivable | — | (80,000 | ) | |||||
Net cash used in operating activities | (10,545,717 | ) | (5,427,421 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash invested in Peak Gold, LLC | (9,310,000 | ) | (2,188,000 | ) | ||||
| Acquisition of property, plant, and equipment | — | (13 | ) | |||||
| Cash paid for acquisition of Alaska Gold Torrent, LLC, net of cash received | — | (5,393,305 | ) | |||||
Net cash used by investing activities | (9,310,000 | ) | (7,581,318 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Cash paid for shares withheld from employees for payroll tax withholding | (86,932 | ) | (69,307 | ) | ||||
| Debt issuance costs | 14,202 | — | ||||||
| Cash proceeds from capital raise, net | 5,598,500 | (43,560 | ) | |||||
| Net cash provided by financing activities | 5,525,770 | (112,867 | ) | |||||
| NET DECREASE IN CASH | (14,239,947 | ) | (13,121,606 | ) | ||||
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD | 23,326,101 | 35,220,588 | ||||||
CASH AND RESTRICTED CASH, END OF PERIOD | $ | 8,996,154 | $ | 22,098,982 | ||||
Supplemental disclosure of cash flow information | ||||||||
| Cash paid for: | ||||||||
| Interest expense | $ | 716,687 | $ | — | ||||
| Income taxes | — | 80,000 | ||||||
| Non-cash investing and financing activities | ||||||||
| Interest expense paid with treasury stock | 238,886 | — | ||||||
| Note payable issued for acquisition of Alaska Gold Torrent, LLC | — | 6,250,000 | ||||||
| Direct transaction costs for acquisition of Alaska Gold Torrent, LLC financed in accounts payable | — | 719 | ||||||
| Asset retirement obligations | — | 218,927 | ||||||
| Contingent liability for acquisition of Alaska Gold Torrent, LLC | — | 1,847,063 | ||||||
| Total non-cash investing activities | $ | 238,886 | $ | 8,316,709 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONTANGO ORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended December 31, | ||||||||
2017 | 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (1,476,980 | ) | $ | (1,547,792 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Stock-based compensation | 998,117 | 959,650 | ||||||
Changes in operating assets and liabilities: | ||||||||
Decrease/(increase) in prepaid expenses and other | 50,231 | (61,917 | ) | |||||
Increase/(decrease) in accounts payable and accrued liabilities | (6,495 | ) | 71,681 | |||||
Net cash used in operating activities | (435,127 | ) | (578,378 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Cash paid for shares withheld from employees for payroll tax withholding | — | (171,158 | ) | |||||
| Cash from warrant exercises and capital raise, net | 11,065,116 | 5,287,500 | ||||||
Net cash provided by financing activities | 11,065,116 | 5,116,342 | ||||||
| NET (DECREASE) IN CASH AND CASH EQUIVALENTS | 10,629,989 | 4,537,964 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 5,191,749 | 1,254,489 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 15,821,738 | $ | 5,792,453 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONTANGO ORE, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERSSTOCKHOLDERS’ EQUITYEQUITY/(DEFICIT)
(Unaudited)
Common Stock | Additional Paid-In | Treasury | Accumulated | Total Shareholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Stock At Cost | Deficit | Equity | |||||||||||||||||||
Balance at June 30, 2017 | 4,930,231 | $ | 49,303 | $ | 40,500,239 | $ | (207,400 | ) | $ | (35,112,021 | ) | $ | 5,230,121 | |||||||||||
Stock-based compensation | — | — | 998,117 | — | — | 998,117 | ||||||||||||||||||
| Restricted shares activity | 155,000 | 1,550 | (1,550 | ) | — | — | — | |||||||||||||||||
| Treasury stock activity | (9,068 | ) | (91 | ) | (207,309 | ) | 207,400 | — | — | |||||||||||||||
| Issuance of common stock | 553,672 | 5,537 | 10,514,231 | — | — | 10,519,768 | ||||||||||||||||||
| Cost of common stock issuance | — | — | (642,143 | ) | — | — | (642,143 | ) | ||||||||||||||||
| Stock option exercises | 93,026 | 930 | (930 | ) | — | — | — | |||||||||||||||||
Stock warrant exercises | 252,187 | 2,522 | 1,184,969 | — | 1,187,491 | |||||||||||||||||||
Net loss for the period | — | — | — | — | (1,476,980 | ) | (1,476,980 | ) | ||||||||||||||||
Balance at December 31, 2017 | 5,975,048 | $ | 59,751 | $ | 52,345,624 | $ | — | $ | (36,589,001 | ) | $ | 15,816,374 | ||||||||||||
Common Stock | Additional Paid-In | Treasury | Accumulated | Total Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Stock | Deficit | Equity/(Deficit) | |||||||||||||||||||
Balance at June 30, 2022 | 6,860,420 | $ | 68,604 | $ | 74,057,859 | $ | (2,318,182 | ) | $ | (58,534,238 | ) | $ | 13,274,043 | |||||||||||
Stock-based compensation | — | — | 787,874 | — | — | 787,874 | ||||||||||||||||||
| Treasury shares issued for convertible note interest payment | — | — | — | 138,886 | — | 138,886 | ||||||||||||||||||
| Treasury shares withheld for employee taxes | — | — | — | (27,693 | ) | — | (27,693 | ) | ||||||||||||||||
| Net loss for the period | — | — | — | — | (7,091,770 | ) | (7,091,770 | ) | ||||||||||||||||
| Balance at September 30, 2022 | 6,860,420 | 68,604 | 74,845,733 | (2,206,989 | ) | (65,626,008 | ) | 7,081,340 | ||||||||||||||||
| Stock-based compensation | — | — | 810,547 | — | — | 810,547 | ||||||||||||||||||
| Issuance of common stock | 283,500 | 2,835 | 2,844,257 | — | — | 2,847,092 | ||||||||||||||||||
| Treasury shares issued in common stock issuance | (42,525 | ) | (425 | ) | 2,166,228 | — | 2,165,803 | |||||||||||||||||
| Warrants | — | — | 657,105 | — | — | 657,105 | ||||||||||||||||||
| Cost of common stock issuance | — | — | (71,500 | ) | — | — | (71,500 | ) | ||||||||||||||||
| Treasury shares issued for convertible note interest payment | — | — | — | 100,000 | — | 100,000 | ||||||||||||||||||
| Treasury shares withheld for employee taxes | — | — | — | (59,239 | ) | — | (59,239 | ) | ||||||||||||||||
| Net loss for the period | — | — | — | — | (14,308,531 | ) | (14,308,531 | ) | ||||||||||||||||
| Balance at December 31, 2022 | 7,101,395 | $ | 71,014 | $ | 79,086,142 | $ | — | $ | (79,934,539 | ) | $ | (777,383 | ) | |||||||||||
Common Stock | Additional Paid-In | Treasury | Accumulated | Total Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Stock | Deficit | Equity | |||||||||||||||||||
Balance at June 30, 2021 | 6,675,746 | $ | 66,757 | $ | 69,509,606 | $ | — | $ | (35,027,588 | ) | $ | 34,548,775 | ||||||||||||
Stock-based compensation | — | — | 1,021,851 | — | — | 1,021,851 | ||||||||||||||||||
| Cost of common stock issuance | — | — | (43,560 | ) | — | — | (43,560 | ) | ||||||||||||||||
Restricted shares activity | 10,000 | 100 | (100 | ) | — | — | — | |||||||||||||||||
| Net loss for the period | — | — | — | — | (4,572,213 | ) | (4,572,213 | ) | ||||||||||||||||
| Balance at September 30, 2021 | 6,685,746 | 66,857 | 70,487,797 | — | (39,599,801 | ) | 30,954,853 | |||||||||||||||||
| Stock-based compensation | — | — | 1,256,309 | — | — | 1,256,309 | ||||||||||||||||||
| Restricted stock activity | 123,500 | 1,235 | (1,235 | ) | — | — | — | |||||||||||||||||
| Treasury Shares withheld for employee taxes | — | — | — | (69,307 | ) | — | (69,307 | ) | ||||||||||||||||
| Net loss for the period | — | — | — | — | (4,875,039 | ) | (4,875,039 | ) | ||||||||||||||||
| Balance at December 31, 2021 | 6,809,246 | $ | 68,092 | $ | 71,742,871 | $ | (69,307 | ) | $ | (44,474,840 | ) | $ | 27,266,816 | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONTANGO ORE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
1. Organization and Business
Contango ORE, Inc. (“CORE” or the “Company”) is a Houston-based company that engages in the exploration in Alaska for gold and associated minerals through a joint venture company, Peak Gold, LLC (the "Joint Venture Company"). The Company was formed on September 1,2010 as a Delaware corporation for the purpose of engaging in the exploration in the State of Alaska for gold ore and associated minerals. The Company currently has two wholly owned subsidiaries, AU CORE, Inc. and CORE Alaska, LLC. AU CORE, Inc. historically owned unpatented mining claims. Those claims were transferred to the Joint Venture Company in January 2015. CORE participates in the Joint Venture Company through its wholly owned subsidiary, CORE Alaska, LLC.
On November29,2010, Contango Mining Company (“Contango Mining”), a wholly owned subsidiary of Contango Oil & Gas Company (“Contango”), assigned its properties and certain other assets and liabilities to Contango. Contango contributed the properties and $3.5 million of cash to the Company, in exchange for approximately 1.6 million shares of the Company’s common stock, which were distributed to Contango's shareholders of record. The above transactions occurred among companies under common control and were accounted for as transactions among entities under common control, in accordance with Accounting Standards Codification ("ASC") 805, "Business Combinations" whereby the acquired assets and liabilities were recognized in the financial statements at their carrying amounts.
The Company is still in an exploration stage. The Company’s fiscal year end is June 30.
The properties contributed by Contango included: (i) a 100% leasehold interest in an estimated 675,000 acres (the “Tetlin Lease”) from the Tetlin Village Council, the council formed by the governing body for the Native Village of Tetlin, an Alaska Native Tribe (the "Tetlin Village Council"); (ii) approximately 18,021 acres in unpatented mining claims from the state of Alaska for the exploration of gold ore and associated minerals. If any of the properties are placed into commercial production, the Joint Venture Company would be obligated to pay a 3.0% production royalty to Royal Gold, Inc. ("Royal Gold"). On September 29, 2014, Juneau Exploration L.P. (“JEX”) sold its 3.0% production royalty to Royal Gold. See Note 9 - Related Party Transactions.
In September 2012, the Company and JEX entered into an Advisory Agreement in which JEX assisted the Company in acquiring 474unpatented state of Alaska mining claims consisting of 71,896 acres for the exploration of gold ore and associated minerals in exchange for aAlaska. The Company conducts its operations through 2.0%three production royalty on properties acquired after July 1, 2012. If any such properties are placed into commercial production, the Joint Venture Company would be obligated to pay Royal Gold a 2.0% production royalty. On September 29, 2014, JEX sold its 2.0% production royalty to Royalprimary means:
● | a 30.0% membership interest in Peak Gold, LLC (the “Peak Gold JV”), which leases approximately 675,000 acres from the Tetlin Tribal Council and holds approximately 13,000 additional acres of State of Alaska mining claims (such combined acreage, the “Peak Gold JV Property”) for exploration and development, including in connection with the Peak Gold JV's plan to mine ore from the Peak and North Peak deposits within the Peak Gold JV Property (the “Manh Choh Project”); |
● | its wholly-owned subsidiary, Alaska Gold Torrent, LLC, an Alaska limited liability company (“AGT”), which leases the mineral rights to approximately 8,600 acres of State of Alaska and patented mining claims for exploration from Alaska Hard Rock, Inc., located in three former producing gold mines located on the patented claims in the Willow Mining District about 75 miles north of Anchorage, Alaska (the “Lucky Shot Property”) (See Note 10 - Acquisition of Lucky Shot Property); and |
● | its wholly-owned subsidiary, Contango Minerals Alaska, LLC (“Contango Minerals”), which separately owns the mineral rights to approximately 145,280 acres of State of Alaska mining claims for exploration, including (i) approximately 69,780 acres located immediately northwest of the Peak Gold JV Property (the “Eagle/Hona Property”), (ii) approximately 14,800 acres located northeast of the Peak Gold JV Property (the “Triple Z Property”), (iii) approximately 52,700 acres of new property in the Richardson district of Alaska (the “Shamrock Property”) and (iv) approximately 8,000 acres located to the north and east of the Lucky Shot Property (the “Willow Property” and, together with the Eagle/Hona Property, the Triple Z Property, and the Shamrock Property, collectively the “Minerals Property”). The Company relinquished approximately 69,000 acres located on the Eagle/Hona prospect in November 2022. |
The Lucky Shot Property and the Company terminated its Advisory Agreement with JEX. See Note 9 - Related Party TransactionsMinerals Property are collectively referred to in these Notes to Unaudited Condensed Consolidated Financial Statements as the “Contango Properties”.
On September29,2014, the Company entered into a Master Agreement (the “Master Agreement”) with Royal Gold, pursuant to which the parties agreed, subject to the satisfaction of various closing conditions, to form a joint venture to advance exploration and development of the Peak Gold Joint Venture Property, prospective for gold ore and associated minerals (the “Transactions”). The Transactions closed on January 8, 2015 (the "Closing").
In connection with the Closing, the Company contributed its Tetlin Lease and state of Alaska mining claims near Tok, Alaska (the "Peak Gold Joint Venture Property"), together with other property, to the Joint Venture Company, a newly formed limited liability company (the “Joint Venture Company”). The Joint Venture CompanyCompany’s Manh Choh Project is managed according to a Limited Liability Company Agreement (the "JV LLCA") between subsidiaries of Royal Gold and the Company. At the Closing, Royal Gold made an initial investment of $5 million to fund exploration activity. The initial $5 million did not give Royal Gold an equity stake in the Joint Venture Company. Royal Gold has the option to obtain up to 40% interestdevelopment stage. All other projects are in the joint venture by investing up to $30 million (inclusive of the initial $5 million investment) prior to October 2018. The proceeds of Royal Gold’s investment will be used by the Joint Venture Company for additional exploration of the Peak Gold Joint Venture Property. Royal Gold serves as the Manager of the Joint Venture Company and initially manages, directs, and controls operations of the Joint Venture Company. As of December 31, 2017, Royal Gold has contributed approximately $29.3 million to the Joint Venture Company and has earned an interest of 39.0%.stage.
The Company has completed eight years of exploration efforts onbeen involved, directly and through the Peak Gold Joint Venture Properties,JV, in exploration on the Manh Choh Project for twelve years, which has resulted in identifying two mineral deposits (Peak(Main and North Peak)Manh Choh) and several other gold, silver, and copper prospects. InThe Peak Gold JV plans to mine ore from the Main and North Manh Choh deposits and then process the ore at the existing Fort Knox mining and milling complex located approximately 2017,240 miles (three400 phaseskm) away. The use of exploration drilling were completed by the Joint Venture Company onFort Knox facilities is expected to accelerate the development of the Peak Gold Joint Venture Property. DuringJV Property and result in reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall execution risk for the quarter endedPeak Gold JV to advance the Main and North Manh Choh deposits to production. The Peak Gold JV will be charged a toll for using the Fort Knox facilities. A toll milling agreement is expected to be finalized during the current calendar year.
The Management Committee of the Peak Gold JV (the "Management Committee") approved a calendar year 2022 budget which covered the following areas of work: feasibility study, permitting, on-going environmental monitoring, community engagement, engineering, road and camp construction, and exploration. Kinross Gold Corporation (“Kinross”) released a combined feasibility study for the Fort Knox mill and the Peak Gold JV in July 2022. Also, in July 2022, Kinross announced that its board of directors (the “Kinross Board”) made a decision to proceed with development of the Manh Choh project. Effective December 31, 2017,2022, CORE Alaska, KG Mining and the Joint VenturePeak Gold JV executed the First Amendment to the Amended and Restated Limited Liability Company Agreement of the Peak Gold JV (the “A&R JV LLCA Amendment”). The A&R JV LLCA Amendment provides that, beginning in 2023, the budget of the Peak Gold JV shall be determined on a quarterly basis. The Management Committee has approved a budget of $13.6 million for the first calendar quarter of 2023, of which the Company's share is $2.7 million. To date the Company, has funded $1 million of the approved first calendar quarter budget. This budget primarily relates to access road construction and costs incurred for the refurbishment and expansion of the Manh Choh Camp. The Manh Choh camp facilities, located in Tok, Alaska, have now been completed and construction work on the road will continue through the winter months. The Mine Operating permit issued by the State of Alaska Department of Natural Resources has been submitted. Once issued mine site construction and mine development of the Manh Choh project site can be undertaken so that the project remains on schedule for first gold production in the second half of 2024.
At the Lucky Shot Property, the Company engaged Atkinson Construction and Major Drilling as contractors to execute the 2022 exploration/development program. The Company completed Phase III29 exploration drill holes on the property. Drilling began in late June 2022, and ended in November when activities ceased in preparation for the winter months. All 29 holes intersected the Lucky Shot vein structure. The Company has engaged a third-party structural geologist from Oriented Targeted Solutions Inc. to complete a structural analysis of the vein structure based on underground mapping and drill core logging. The Company will release all assay results once the results have been finalized and quality assurance and quality control has been completed. The Company anticipates completing an initial resource estimate, and then making plans for a follow up program to continue exploration of the Lucky Shot vein structure. Once a sufficient size and quality of mineralized material has been defined the Company expects to initiate a technical study to determine if commercial mining is viable.
On the Shamrock Property, the Company conducted soil and surface rock chip sampling during 20172021. drillingFollow up trenching and detailed geologic mapping is planned for the summer of 2023. At the Eagle/Hona Property, the Company carried out a detailed reconnaissance of the northern and eastern portions of the large claim block that had not previously been detail sampled. Due to the steep topography, a helicopter was used to execute the program which consistedsafely. Follow up geologic mapping and sampling is planned for the summer of exploration drilling2023.
The Company’s 30.0% membership interest in the West Peak West Peak Extension,Gold JV, its ownership of AGT and Contango Minerals, and cash on hand constitute substantially all of the Company’s assets.
The Company’s fiscal year end is 7June 30. O’clock, Forks, and North Peak areas.
On November 10, 2017, subsidiaries of Royal Gold and the Company entered into Amendment No.1 to the JV LLCA, which, among other things, amended the JV LLCA to add certain claims, previously purchased by the Joint Venture Company. The claims that were added consist of 541 unpatented state of Alaska mining claims over 84,840 acres for the exploration of gold ore and associated minerals (the “New Properties”). In return for locating the New Properties and incurring all related expenses, the Joint Venture Company granted to a subsidiary of Royal Gold a 3.0% production royalty on (i) the New Properties, (ii) prior to October 31, 2018, any additional properties contributed to the Joint Venture Company, and (iii) subsequent to October 31, 2018, any additional properties contributed to the Joint Venture Company if Royal Gold earns a 40% interest in the Joint Venture Company by October 31, 2018 (all such properties subject to the 3.0% production royalty, “Additional Properties”).
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by US GAAP for complete annual consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair statementpresentation of the consolidated financial statements have been included. All such adjustments are of a normal recurring nature. The consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes included in the Company’s Form 10-K for the fiscal year ended June 30,2022. The results of operations for the three and six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30,2023.
3. Liquidity
The Company’s cash needs going forward will primarily relate to capital calls from the Peak Gold JV, exploration of the Contango Properties, and general and administrative expenses of the Company. If a large budget is undertaken by the Peak Gold JV, and no additional financing is obtained, the Company may elect not to fund its portion of the approved budget and dilute its interest in the Peak Gold JV, in which case management believes the Company would maintain sufficient liquidity to meet its working capital requirements for the next twelve months from the date of this report. If the Company's interest in the Peak Gold JV is diluted, the Company may not be able to fully realize its investment in the Peak Gold JV. Also, if no additional financing is obtained, the Company may not be able to fully realize its investment in the Contango Properties.
4. Summary of Significant Accounting Policies
Please see the Company's Form 10-K for the fiscal year ended June 30, 2022 30,2017. The results of operations for the three and six months ended December 31, 2017 are not necessarily indicativea summary of the results that may be expected for the fiscal year ending June 30,2018.
3. Summary of Significant Accounting Policies
The Company’sCompany's significant accounting policies, are described below.
Management Estimates. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash Equivalents. Cash equivalents are considered to be highly liquid securities having an original maturity ofas there have been 90no days or less at the date of acquisition.
Stock-Based Compensation. The Company applies the fair value method of accounting for stock-based compensation. Under this method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the award vesting period. The Company classifies the benefits of tax deductions in excess of the compensation cost recognized for the options (excess tax benefit) as financing cash flows. The fair value of each option award is estimated as of the date of grant using the Black-Scholes option-pricing model. The fair value of each restricted stock award is equalchanges to the Company's stock price onsignificant accounting polices since the date the award is granted.
Income Taxes. The Company follows the liability methodtime of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when, based upon management’s estimates, it is more likely than notthat a portion of the deferred tax assets will not be realized in a future period. The Company recognized a full valuation allowance as of December 31, 2017 and June 30, 2017 and has not recognized any tax provision or benefit for any of the periods. The Company reviews its tax positions quarterly for tax uncertainties. The Company did not have any uncertain tax positions as of December 31, 2017 or June 30, 2017. The Tax Cuts and Jobs Act was signed into law on December 22, 2017, which enacts significant changes to U.S. income tax and related laws. Among other things, the Tax Cuts and Jobs Act reduces the top U.S. corporate income tax rate from 35.0% to 21.0%, and makes changes to certain other business-related exclusions, deductions and credits. The Company has assessed the impact of the tax bill on the financial statements as of December 31, 2017. Due to the Company's full valuation allowance, the changes to the income tax provision as a result of the bill, are not expected to have a consolidated financial statement impact.
Investment in the Joint Venture Company. The Company’s consolidated financial statements include the investment in the Joint Venture Company which is accounted for under the equity method. The Company has designated one of the three members of the Management Committee and on December 31, 2017 held a 61.0% ownership interest in Peak Gold. Royal Gold will initially serve as the Manager of the Joint Venture Company and will manage, direct, and control operations of the Joint Venture Company. The Company recorded its investment at the historical cost of the assets contributed. The cumulative losses of the Joint Venture Company exceed the historical cost of the assets contributed to the Joint Venture Company; therefore the Company's investment in the Joint Venture Company as of December 31, 2017 and June 30, 2017 is zero. The portion of the cumulative loss that exceeds the Company's investment will be suspended and recognized against earnings, if any, from the investment in the Joint Venture Company in future periods.
Recently Adopted Accounting Pronouncements. In August 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") No.2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Before this new standard, there was minimal guidance in U.S. GAAP specific to going concern. Under the new standard, disclosures are required when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. The new standard applies to all companies and is effective for the annual period ending after December 15, 2016, and all annual and interim periods thereafter. The Company has adopted this standard, and updated our going concern analysis and disclosures accordingly.
In March 2016, the FASB issued ASU No.2016-09: Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 is part of an initiative to reduce complexity in accounting standards. The areas of simplification in ASU 2016-09 involve several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years; early application is permitted. The Company adopted this ASU in a prior quarter. The adoption of the standard did not have a material impact on the consolidated financial statements.
Recently Issued Accounting Pronouncements. In August 2016, the FASB issued Accounting Standards Update ("ASU") No.2016-15: Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The main objective of this update is to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The eight cash flow updates relate to the following issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investees; 7) beneficial interest in securitization transactions; and 8) separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will continue to assess the impact this may have on its consolidated statement of cash flows.
filing.
The Company has evaluated all other recent accounting pronouncements and believes that none of them will have a significant effect on the Company's consolidated financial statements.
45. Investment in the Joint Venture CompanyPeak Gold JV
The Company initially recorded its investment at the historical book value of the assets contributed to the Joint Venture CompanyPeak Gold JV, which was approximately $1.4$1.4 million. As of December 31, 2017,2022, Royal Goldthe Company has contributed approximately $29.3$28.7 million to the Joint Venture Company, and earned a cumulative economic interestPeak Gold JV. KG Mining acquired 70% of approximately 39.0%. Of the $29.3 million, $2.1 million was contributed during the quarter ended Peak Gold JV on December 31, 2017.2020 in connection with the Kinross Transactions. Therefore, asAs of December 31, 2017, the Company holds a 61.0% economic interest in the Joint Venture Company. As of June 30, 2017,2022, the Company held a 70.5%3 economic0.0% membership interest in the Joint Venture Company.Peak Gold JV.
The following table is a roll-forward of ourthe Company's investment in the Joint Venture Company from January 8, 2015 (inception) toPeak Gold JV as of December 31, 2017:2022:
Investment | |||||
in Peak Gold, LLC | |||||
Investment balance at June 30, | $ | — | |||
Investment in Peak Gold, LLC | |||||
|
| ||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| Loss from equity investment in Peak Gold, LLC | (3,706,000 | ) | |||
Investment balance at June 30, 2022 | $ | — | |||
| Investment in Peak Gold, LLC | |||||
Loss from equity investment in Peak Gold, LLC | (9,310,000 | ) | |||
| Investment balance at December 31, | $ | — | |||
In conjunction with the CORE Transactions, and KG Mining assuming the role of manager of the Peak Gold JV, the Peak Gold JV converted its method of accounting from US GAAP to International Financial Reporting Standards (“IFRS”). The condensed unaudited financial statements presented below have been converted from IFRS to US GAAP for presentation purposes. The following table presents the condensed balance sheetunaudited results of operations for the Joint Venture Company as ofPeak Gold JV for the three and six month periods ended December 31, 20172022 and June 30, 2017:2021, and for the period from inception through December 31,2022 in accordance with US GAAP:
December 31, 2017 | June 30, 2017 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 92,640 | $ | 58,955 | ||||
Mineral properties | 1,433,886 | 1,433,886 | ||||||
TOTAL ASSETS | $ | 1,526,526 | $ | 1,492,841 | ||||
| LIABILITIES AND MEMBERS' EQUITY | ||||||||
Accounts payable and other liabilities | $ | 274,213 | $ | 1,754,009 | ||||
TOTAL LIABILITIES | 274,213 | 1,754,009 | ||||||
MEMBERS' (DEFICIT) EQUITY | 1,252,313 | (261,168 | ) | |||||
TOTAL LIABILITIES AND MEMBERS' EQUITY | $ | 1,526,526 | $ | 1,492,841 | ||||
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | Period from Inception January 8, 2015 to | ||||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | December 31, 2022 | ||||||||||||||||
EXPENSES: | ||||||||||||||||||||
Exploration expense | $ | 2,552,237 | $ | 2,293,331 | $ | 3,990,993 | $ | 5,349,435 | $ | 62,402,520 | ||||||||||
General and administrative | 31,843 | 387,100 | 108,892 | 692,157 | 12,389,912 | |||||||||||||||
Total expenses | 2,584,080 | 2,680,431 | 4,099,885 | 6,041,592 | 74,792,432 | |||||||||||||||
NET LOSS | $ | 2,584,080 | $ | 2,680,431 | $ | 4,099,885 | $ | 6,041,592 | $ | 74,792,432 | ||||||||||
The Company'sCompany’s share of the Joint Venture Company'sPeak Gold JV’s results of operations for the three and six months ended December 31, 20172022 was a loss of approximately $0.9$0.8 million and $3.0$1.2 million, respectively. The Company'sCompany’s share in the results of operations for the three and six months ended December 31 2016, 2021 was a loss of approximately $2.1$0.8 million and $5.0$1.8 million respectively. respectively. The Joint Venture CompanyPeak Gold JV loss does not include any provisions related to income taxes as the Joint Venture CompanyPeak Gold JV is treated as a partnership for income tax purposes. As of December 31, 20172022 and June 30, 2017,2022, the Company'sCompany’s share of the Joint Venture Company'sPeak Gold JV’s inception-to-date cumulative loss of approximately $24.2$43.2 million and $21.2$42.0 million, respectively, exceeded the historical book value of our investment in the Joint Venture Company,Peak Gold JV, of $1.4$28.7 million. Therefore, the investment in the Joint Venture CompanyPeak Gold JV had a balance of zero as of each December 31, 20172022 and June 30, 2017.2022. The Company is currentlynot obligated to make additional capital contributions to the Joint VenturePeak Gold JV in proportion to its percentage membership interest in the Peak Gold JV in order to maintain its ownership in the Peak Gold JV and not be diluted. Therefore, the Company and therefore only records losses up to the point of the initialits cumulative investment, which was approximately $28.7 million as of December $1.431, million.2022. The portion of the cumulative loss that exceeds the Company'sCompany’s investment will be suspended and recognized against earnings, if any, from the Company'sCompany’s investment in the Joint Venture CompanyPeak Gold JV in future periods. The suspended losses for the period from inception to December 31, 20172022 are approximately $22.8$14.5 million. The following table presents the condensed results of operations for Joint Venture Company for the three and six month periods ended December 31, 2017 and 2016:
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | Period from Inception January 8, 2015 to | ||||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | December 31, 2017 | ||||||||||||||||
EXPENSES: | ||||||||||||||||||||
Exploration expense | $ | 1,186,445 | $ | 2,203,430 | $ | 4,094,520 | $ | 5,233,030 | $ | 24,886,695 | ||||||||||
General and administrative | 236,723 | 395,852 | 691,999 | 818,945 | 4,594,878 | |||||||||||||||
Total expenses | 1,423,168 | 2,599,282 | 4,786,519 | 6,051,975 | 29,481,573 | |||||||||||||||
NET LOSS | $ | 1,423,168 | $ | 2,599,282 | $ | 4,786,519 | $ | 6,051,975 | $ | 29,481,573 | ||||||||||
5.6. Prepaid Expenses and other assets
The Company has prepaid expenses and other assets of $125,560$816,596 and $175,791$453,353 as of December 31, 2022, 2017 and June 30, 2017,2022, respectively. Prepaid expenses primarily relate to prepaid insurance and management fees.prepaid annual claim rentals.
6.7. Net Loss Per Share
A reconciliation of the components of basic and diluted net loss per share of common stockCommon Stock is presented below:
Three Months Ended December 31, | Three Months Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||
Loss | Weighted Average Shares | Loss Per Share | Loss | Weighted Average Shares | Loss Per | Net Loss | Weighted Average Shares | Loss Per Share | Net Loss | Weighted Average Shares | Loss Per | |||||||||||||||||||||||||||||||||||||
Basic Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic Net Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to common stock | $ | (808,344 | ) | 5,650,321 | $ | (0.14 | ) | $ | (592,142 | ) | 4,640,034 | $ | (0.13 | ) | $ | (14,308,531 | ) | 6,807,317 | $ | (2.10 | ) | $ | (4,875,039 | ) | 6,751,581 | $ | (0.72 | ) | ||||||||||||||||||||
Diluted Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Diluted Net Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to common stock | $ | (808,344 | ) | 5,650,321 | $ | (0.14 | ) | $ | (592,142 | ) | 4,640,034 | $ | (0.13 | ) | $ | (14,308,531 | ) | 6,807,317 | $ | (2.10 | ) | $ | (4,875,039 | ) | 6,751,581 | $ | (0.72 | ) | ||||||||||||||||||||
Six Months Ended December 31, | ||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Net Loss | Weighted Average Shares | Loss Per Share | Net Loss | Weighted Average Shares | Loss Per | |||||||||||||||||||
Basic Net Loss per Share: | ||||||||||||||||||||||||
Net loss attributable to common stock | $ | (21,400,301 | ) | 6,787,864 | $ | (3.15 | ) | $ | (9,447,252 | ) | 6,716,076 | $ | (1.41 | ) | ||||||||||
Diluted Net Loss per Share: | ||||||||||||||||||||||||
Net loss attributable to common stock | $ | (21,400,301 | ) | 6,787,864 | $ | (3.15 | ) | $ | (9,447,252 | ) | 6,716,076 | $ | (1.41 | ) | ||||||||||
Six Months Ended December 31, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
Loss | Weighted Average Shares | Loss Per Share | Loss | Weighted Average Shares | Loss Per | |||||||||||||||||||
Basic Loss per Share: | ||||||||||||||||||||||||
Net loss attributable to common stock | $ | (1,476,980 | ) | 5,289,934 | $ | (0.28 | ) | $ | (1,547,792 | ) | 4,315,444 | $ | (0.36 | ) | ||||||||||
Diluted Loss per Share: | ||||||||||||||||||||||||
Net loss attributable to common stock | $ | (1,476,980 | ) | 5,289,934 | $ | (0.28 | ) | $ | (1,547,792 | ) | 4,315,444 | $ | (0.36 | ) | ||||||||||
Options and warrants to purchase 271,000 and 845,999383,500 shares of common stockCommon Stock of the Company were outstanding as of December 31, 20172022, and options to purchase 100,000 shares of Common Stock were outstanding as of June 30, 2017,December 31, 2021. respectively. These options and warrants were not included in the computation of diluted earnings per share for each of the three and six month periods ended December 31, 20172022 and 20162021 because they are anti-dilutivedue to being anti-dilutive. There were no warrants outstanding as a result of the Company’s net loss for all periods presented.December 31, 2021.
7.8. ShareholdersStockholders’ Equity
The Company’s authorized capital stock consists of 30,000,000 has 45,000,000 shares of common stockCommon Stock authorized, and 15,000,000 authorized shares of preferred stock. As of December 31, 2017,2022, we had 5,975,0487,101,395 shares of common stockCommon Stock were outstanding, including 298,998348,210 shares of unvested restricted stock. The Company also has As of December 31, 2022, options and warrants to purchase 271,000383,500 shares of common stock outstanding asCommon Stock of December 31, 2017. the Company were outstanding. No shares of preferred stock have been issued. The remaining restricted stock outstanding will vest between August 2018January 2023 and January 2020.2025.
In September 2016,December 2022 the Company distributed a Private Placement Memorandum to its warrant holders to give them the opportunity to exercise their warrants at a reduced exercise price and receive shares of common stock, par value $0.01 per share of the Company by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price of $10.00 per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.00 per share. The offer expired on November 15, 2016. In conjunction with the offering a total of 587,500 warrants were exercised resulting in total cash to the Company of $5.3 million. Of the total warrants exercised, 83,334 were exercised by entities controlled by Mr. Brad Juneau, the Company's Chairman, President and Chief Executive Officer. Proceeds from the exercise of the warrants will be used for working capital purposes and for funding future obligations to the Joint Venture Company.
On October 13, 2017, the Company distributed a Private Placement Memorandum to its warrant holders to give them the opportunity to exercise their warrants at a reduced exercise price and receive shares of common stock, par value$0.01 per share of Contango ORE, Inc. by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price of $10.00 per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.50 per share. The offer expired on November 10, 2017. In conjunction with the offering a total of 124,999 warrants were exercised resulting in total cash to the Company of $1.2 million. Proceeds from the exercise of the warrants will be used for working capital purposes and for funding future obligations to the Joint Venture Company.
In connection with the exercise offer, the Company entered into a Registration Rights Agreement dated as of November 10, 2017, with each investor who exercised warrants in the offering. The Company agreed to file up to two demand registration statements with the SEC at any time after expiration of the offer but before three years after expiration of the offer in order to register the resale of shares of Common Stock, issued in the offer. In addition, the Registration Rights Agreement granted certain piggyback rights to the investors.
On OctoberDecember 23, 2017,2022 the Company completed the issuance and sale of an aggregate of 283,500 shares (the 553,672“December 2022 Shares”) of the Company’s Common Stock, for $20.00 per share, and warrants (the “December 2022 Warrants”) entitling each purchaser to purchase shares of common stock, par value $0.01Common Stock for $25.00 per share of(the “December 2022 Warrant Shares” and together with the Company at a purchase price of $19.00December 2022 per share of Common Stock,Shares and the December 2022 Warrants, the “December 2022 Securities”), in a private placement (the "Private Placement"“December 2022 Private Placement”) to certain purchasersaccredited investors (the "Purchasers"“December 2022 Investors”) pursuant to a Stock Purchase AgreementSubscription Agreements (the “December 2022 Subscription Agreements”), dated as of OctoberDecember 23, 2017 (2022 the "Purchase Agreement"), by and amongbetween the Company and each Purchaser.of the December 2022 Investors. TheDecember 2022 Subscription Agreements include customary representations, warranties, and covenants by the December 2022 Investors and the Company.
Pursuant to the December 2022 Warrants between the Company and each of the December 2022 Investors, the December 2022 Warrants will be exercisable, in full or in part, at any time until the second anniversary of their issuance, at an exercise price of $25.00 per share of Common Stock. The December 2022 Warrants will also provide for certain adjustments that may be made to the exercise price and the number of shares of Common Stock issuable upon exercise due to future corporate events or otherwise. The December 2022 Warrants were classified within equity and the proceeds from the capital raise were allocated to the warrants based on their relative fair value. The fair value of each of the December 2022 Warrants was estimated as of the date of grant using the Black-Scholes option-pricing model (Level 2 of the fair value hierarchy) with the following weighted average assumptions used: (i) risk-free interest rate of 4.66%; (ii) expected life of 1 year; (iii) expected volatility of 37.73%; and (iv) expected dividend yield of 0%.
Petrie Partners Securities, LLC (“Petrie”) assisted the Company with the December 2022 Private Placement resulted inand will be entitled to receive compensation equal to 3.25 percent for the December 2022 Investors solicited by Petrie. Net proceeds from the December 2022 Private Placement totaled approximately $10.5 million of gross proceeds and approximately $10.0 million of net proceeds.$5.6 million. The Company will use the netthese proceeds from the Private Placement for working capital purposesto fund its exploration and development program and for funding future obligations to the Joint Venture Company. Petrie Partnersgeneral corporate purposes. The December 2022 Securities LLC ("Petrie") acted as sole placement agent in connection with the Private Placement and received a placement agent fee equal to 6.50%, which was reduced to 3.25% for existing stockholders and other Purchasers referred by those existing stockholders, or a total of $0.5 million in placement agent fees. Juneau Exploration L.P., which is controlled by Brad Juneau, the Company’s President and Chief Executive Officer, purchased 13,200 shares of Common Stock, or $250,800, in the Private Placement on the same terms and conditions as all other Purchasers.
The shares sold in the Private Placement were issued in reliance on an exemption from registrationnot registered under the Securities Act of 1933, as amended pursuant to Section(the “Securities Act”), but the 4December (2) thereof. The bases for the availability of this exemption include the facts that the issuance was a private transaction which did not2022 involve a public offeringShares and the shares were offered and sold to a limited number of purchasers.
PursuantDecember 2022 Warrant Shares are subject to a Registration Rights Agreement dated as of October 23, 2017 (the "Registration Rights Agreement"), by and among the Company and the Purchasers, the Company agreed to file up to two demand registration statements with the Securities and Exchange Commission at any time after one year after the Private Placement but before three years after the Private Placement in order to register the resale ofallowing the shares of Common Stock. In addition,to be registered by the Registration Rights Agreement granted certain piggyback rights to the Purchasers.holders at a future date.
Rights PlanTermination and Rights Agreement
On December 19,September 23, 2020, 2012,the Company adopted a Rights Planlimited duration stockholder rights agreement (the “Rights Agreement”) to replace the Company’s prior stockholder rights plan, which was amended on March 21, 2013, September 29, 2014, December 18, 2014, and on November 11, 2015. Under the termsterminated upon adoption of the amended Rights Plan, eachAgreement.
Pursuant to the Rights Agreement, the Board declared a dividend of one preferred stock purchase right (a "Right"“Right”) will entitle the holder to purchase 1/100 of afor each share of Series A Junior Preferredthe Company’s Common Stock held of the Company (the “Preferred Stock”) at an exercise pricerecord as of $80October 5, 2020. per share. The Rights will trade with the Company’s Common Stock and no separate Rights certificates will be exercisableissued, unless and until the Rights become exercisable. In general, the Rights will trade separately from the shares of common stockbecome exercisable only if a person or group other than the Mr. Kenneth R. Peak Marital Trust and its affiliates, acquires beneficial ownership of 23%18.0% (or 20.0% for certain passive investors) or more of the Company's common stock. UnderCompany’s outstanding Common Stock or announces a tender or exchange offer that would result in beneficial ownership of 18.0% (or 20.0% for certain passive investors) or more of Common Stock. Each Right will entitle the termsholder to buy one one-thousandth (1/1000) of a share of a series of junior preferred stock at an exercise price of $100.00 per Right, subject to anti-dilution adjustments.
The Rights Agreement had an initial term of one year, expiring on September 22, 2021. On September 21, 2021, the Board of Directors of the Company approved an amendment to the Rights Agreement, extending the term of the Rights Plan,Agreement by an additional year to September 22, 2022. On August 31, 2022, the Board of Directors approved an amendment the Rights have been distributed as a dividend atAgreement, extending the rate of one Right for each share of common stock that was held asterm of the close of business onRights Agreement by an additional year to December September 22, 2023.20,2012. Stockholders will not receive certificates for the Rights, but the Rights will become part of each share of common stock. An additional Right will be issued along with each share of common stock that is issued or sold by the Company after December 20, 2012. The Rights are scheduled to expire on December19,2018.
8.9. Formation of Joint Venture CompanySales Transaction with KG Mining
On January 8, 2015,September 29, 2020, the Company, CORE Alaska, LLC and Royal Gold, through their wholly-owned subsidiaries, consummated the Transactions contemplated under the Master Agreement, including the formation of a joint venture to advance exploration and development of the Company’s Peak Gold Joint Venture Properties, for gold ore and associated minerals prospects.
In connection with the Closing of the Transactions, the Company formed the Joint Venture Company. The Company contributed to the Joint Venture Company its Peak Gold Joint Venture Properties near Tok, Alaska, together with other property (the “Contributed Assets”) with a historical book value of $1.4 million and an agreed fair value of $45.7 million (the “Contributed Assets Value”). At the Closing, the Company and Royal Gold, through their wholly-owned subsidiaries,KG Mining, entered into the JV LLCA.
Royal Gold serves as manager of the Joint Venture Company ("the Manager") and will initially manage, direct, and control the operations of the Joint Venture Company.
As a condition to the Closing, the Company and the Tetlin Village Council entered into a StabilityCORE Purchase Agreement dated October 2, 2014, pursuant to which the Company and the Tetlin Village Council, among other things, acknowledged the continued validity of the Tetlin Lease and all its terms notwithstanding any future change in the status of the Tetlin Village Council or the property subject to the Tetlin Lease.
At Closing, Royal Gold, as an initial contribution to the Joint Venture Company, contributed $5 million (the “Royal Gold Initial Contribution”). The Royal Gold Initial Contribution did not entitle Royal Gold toCORE Alaska sold a percentage30.0% membership interest in the Joint Venture Company. Therefore, at Closing,Peak Gold JV, to KG Mining. The CORE Transactions closed on September 30, 2020. In consideration for the CORE JV Interest, the Company received $32.4 million in cash and 809,744 shares of Common Stock. The 809,744 shares of Common Stock were acquired by KG Mining from Royal Gold,’s percentage interest in the Joint Venture Company equaled 0% and the Company’s percentage interest in the Joint Venture Company equaled 100%. In addition, as part of the Closing, Royal Gold paidTransactions and were subsequently canceled by the Company. Of the $32.4 million cash consideration, $1.2 million constituted a reimbursement prepayment to the Company $750,000 which was utilizedrelating to partially reimburseits proportionate share of silver royalty payments that the Company for costs and expenses incurred in the Transactions and is included as an expense reimbursement on our consolidated statements of operations.
ThePeak Gold JV LLCA providesmay be obligated to pay to Royal Gold, with the right, but notunderstanding that KG Mining will bear the obligation, to earnentire economic impact of those royalty payments due from the Peak Gold JV.
Concurrently with the Purchase Agreement, KG Mining, in a percentageseparate transaction, acquired from Royal Gold (i) 100% of the equity of Royal Alaska, LLC , which held a 40.0% membership interest in the Joint Venture Company (up to a maximumPeak Gold JV and (ii) 809,744 shares of 40%)Common Stock held by making additional contributions of capital toRoyal Gold. After the Joint Venture Company of up to $30 million (inclusiveconsummation of the RoyalKinross Transactions, CORE Alaska retains a 30.0% membership interest in the Peak Gold Initial ContributionJV. KG Mining now holds a 70.0% membership interest in the Peak Gold JV and serves as the manager and operator of $5 million) during the period beginning onPeak Gold JV. KG Mining and CORE Alaska entered into the ClosingAmended and endingRestated Limited Liability Company Agreement of Peak Gold JV (“A&R JV LLCA”) on October 31, 2018.1, 2020 If Royalto address the new ownership arrangements and to incorporate additional terms that will permit the Peak Gold fundsJV to further develop and produce from its full $30 million investment by October 31, 2018, it will receive a percentage interest of 40% in the Joint Venture Company, and the Company will retain a percentage interest of 60% in the Joint Venture Company. From inception through December 31, 2017, Royal Gold has contributed approximately $29.3 million (inclusive of the Royal Gold Initial Contribution of $5 million) to the Joint Venture Company and earned a percentage interest of 39.0%.properties.
The Company recorded the $32.4 million cash proceeds and the 809,744 shares of Royal Gold’s contributionsCommon Stock, received from the CORE Transactions, at fair value and recognized a gain on sale of $39.6 million. The Company valued the Common Stock consideration from the CORE Transactions consistent with the accounting guidance for non-monetary exchanges. The stock consideration was valued based on the implied fair value of the CORE Transactions in total less the cash proceeds. The total value of the CORE Transactions was equated to the Joint Venture Company (includingvalue of the Royal Gold Initial Contribution) have been used by the Joint Venture Company to fund further exploration activities onCompany's 30.0% ownership in the Peak Gold Joint Venture Properties. Any additional contributionsJV, post the 30.0% membership interest transferred to KG Mining. The Common Stock consideration received in the CORE Transactions is classified within Level 3 of the fair value hierarchy. As of the date of the CORE Transactions, the Company's investment in the Peak Gold JV had a zero balance, therefore the $39.6 million gain approximates the full fair value of the CORE JV Interest surrendered in the CORE Transactions.
The Company recorded a non-current liability totaling $1.2 million associated with the cash received for the reimbursement prepayment to the Joint Venture Company by Royal Gold to fund future drilling activities, or otherwise, will bring Royal Gold’s cumulative contributions closer to $30 million.
Both the Company and Royal Gold will have the right to transfer each of their respective percentage interests in the Joint Venture Company to a third party, subject to certain terms and conditions set forth in the JV LLCA. If either member intends to transfer all or part of its percentage interest to a bona fide third party purchaser, the other member will have the right to require the transferring member to include in the intended transfer the other member’s proportionate share of its percentage interests atcertain silver royalty payments that the same purchase price and terms and conditions. Once RoyalPeak Gold has earned aJV 40%may interest in the Joint Venture Company, it will have the additional right to require the Company to sell up to 20% of the Company’s interest in the Joint Venture Company in a sale of Royal Gold’s entire 40% interest to a bona fide third party purchaser. If Royal Gold exercises this right, the Company will be obligated to sellpay Royal Gold. The liability arises, because pursuant to Article IV of the relevantA&R JV LLCA, if the Peak Gold JV terminates, or the Company’s membership interest falls below 5% prior to when the prepaid royalty is paid out, the $1.2 million (less any portion of its percentage interestalready paid out) is refundable to a bona fide third party purchaser on the same terms and conditions as the interest being sold by Royal Gold.KG Mining.
After October 31, 2018, or such earlier time as RoyalPrior to the CORE Transactions, the Peak Gold has earned a 40% interest in the Joint Venture Company, the members will contribute funds to approved programs and budgets in proportion to their respective percentage interests in the Joint Venture Company. If a member elects not to contribute to an approved program and budget or elects to contribute less than its proportionate interest, its percentage interest will be recalculated by dividing (i) the sum of (a) the value of its initial contribution plus (b) the total of all of its capital contributions plus (c) the amount of the capital contribution it elects to fund, by (ii) the sum of (a), (b) and (c) above for both members multiplied by 100.
The Joint Venture Company isJV was a variable interest entity as defined by FASB ASU No.2015-02,Consolidation (Topic 810): Amendments to the Consolidation Analysis.Analysis. The Company iswas not the primary beneficiary since it doesdid not currently have the power to direct the activities of the Joint Venture Company.Peak Gold JV. The Company'sCompany’s ownership interest in the Joint VenturePeak Gold JV has therefore historically applied the equity method of accounting for its investment. After the Kinross Transactions, the Company is therefore accountedretained a 30.0% membership interest in the Peak Gold JV. The Company continues to have significant influence in the Peak Gold JV pursuant to its right to designate one of the three seats on the Management Committee. Therefore, the Company will continue to account for its investment in the Peak Gold JV under the equity method.
9.10. Acquisition of Lucky Shot Property
On August 24, 2021 the Company completed the purchase of all outstanding membership interests (the “Interests”) of AGT from CRH Funding II PTE. LTD, a Singapore private limited corporation (“CRH”) (the “Lucky Shot Transaction”). AGT holds rights to the Lucky Shot Property. The Company agreed to purchase the Interests for a total purchase price of up to $30 million. The purchase price included an initial payment at closing of $5 million in cash and a promissory note in the original principal amount of $6.25 million, payable by the Company to CRH (the “Promissory Note”), with a maturity date of February 28, 2022 (the “Maturity Date”). The Promissory Note was secured by the Interests. The Company had the option to pay the Promissory Note through the issuance to CRH of shares of the Company’s common stock if the Company completed an offering and obtained a listing of its shares on the NYSE American prior to the Maturity Date. In November 2021, the Company’s common stock commenced listing on the NYSE American. Since the Company did not complete the required offering, it paid the Promissory Note in cash on February 25, 2022.
The Company will be obligated to pay CRH additional consideration if production on the Lucky Shot Property meets two separate milestone payment thresholds. If the first threshold of (1) an aggregate “mineral resource” equal to 500,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 30,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $3.75 million in newly issued shares of CORE common stock. If the second threshold of (1) an aggregate “mineral resource” equal to 1,000,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 60,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $5 million in newly issued shares of CORE common stock. If payable, the additional share consideration will be issued based on the 30-day volume weighted average price for each of the thirty trading days immediately prior to the satisfaction of the relevant production goal. If the milestones are not met, no additional payments would be made to CRH.
The Company also agreed to make $10,000,000 in expenditures during the 36-month period following closing toward the existence, location, quantity, quality or commercial value of mineral deposits in, under and upon the Lucky Shot Property. As of December 31, 2022, the Company had exceeded the required $10,000,000 in expenditures.
The Company evaluated this acquisition under ASC 805, Business Combinations. ASC 805 requires that an acquirer determine whether it has acquired a business. If the criteria of ASC 805 are met, a transaction would be accounted for as a business combination and the purchase price is allocated to the respective net assets assumed based on their fair values and a determination is made whether any goodwill results from the transaction. In evaluating the criteria outlined by this standard, the Company concluded that the acquired set of assets did not meet the US GAAP definition of a business (the assembled workforce does not currently perform a substantive process). Therefore, the Company accounted for the purchase as an asset acquisition, and allocated the total consideration transferred on the date of the acquisition, approximately $13.5 million, to the assets acquired on a relative fair value basis. The total consideration transferred was comprised of $5.1 million in cash, a $6.25 million promissory note, $0.3 million in direct transactions costs, plus the fair value of the contingent liability (described above), net of cash received. The Company accounted for the share portion of the contingent liability in accordance with ASC 480 and measured at fair value at inception, approximately $1.85 million. The fair value of this liability was calculated using management’s projected timing of mining activities and mineral resources being defined and an estimate of the probability of achieving those targets. The share portion of the contingent consideration is classified within Level 3 of the fair value hierarchy. Changes in value in subsequent periods, based on management’s ongoing assessment of probability, will be recorded in earnings. There was no change in probability, and thus no change in value of the liability during the current period. The Company’s accounting policy is to recognize the contingent consideration associated with cash contingent payments related to the asset acquisitions when the contingency is resolved. Any amounts issued in excess of the contingent consideration initially recognized as a liability would be an additional cost of the asset acquisition allocated to increase the eligible assets on a relative fair value basis. Amounts issued that are less than the contingent consideration initially recognized as a liability would be a reduction of the cost of the asset(s) acquired and would reduce the eligible assets on a relative value basis.
11. Property & Equipment
The table below sets forth the book value by type of fixed asset as well as the estimated useful life:
| Asset Type | Estimated Useful Life | December 31, 2022 | June 30, 2022 | |||||||
| Mineral properties | N/A - Units of Production | $ | 11,700,726 | $ | 11,700,007 | |||||
Land | Not Depreciated |
| 87,737 |
| 87,737 | |||||
Buildings and improvements | 20-39 years | 1,455,546 | 1,455,546 | |||||||
Machinery and equipment | 3 - 10 years | 287,635 | 287,635 | |||||||
Vehicles | 5 years | 135,862 | 135,862 | |||||||
| Computer and office equipment | 5 years | 16,239 | 16,239 | |||||||
| Furniture & fixtures | 5 years | 2,270 | 2,270 | |||||||
| Less: Accumulated depreciation and amortization | (124,168 | ) | (55,740 | ) | ||||||
Less: Accumulated impairment | (115,025 | ) | (115,025 | ) | ||||||
| Property & Equipment, net | $ | 13,446,822 | $ | 13,514,531 | ||||||
12. Related Party Transactions
Mr. Brad Juneau,On January 1, 2022, our non-executive directors realized a vesting of 160,000 restricted shares of Common Stock, which resulted in federal and state income tax obligations. Consistent with the Company's Chairman, President and Chief Executive Officer, is also the sole managerCompany’s treatment of JEX, a private company involvedemployees who experience similar tax obligations in the exploration and productionconnection with their vesting of oil and natural gas. JEX was responsible for securing and negotiating the Tetlin Lease and assisting in obtaining other properties and initially engaged Avalon Development Corporation ("Avalon") to conduct mineral exploration activities on the Tetlin Lease. In agreeing to transfer its interests in such properties to Contango Mining, a predecessor ofrestricted shares, the Company JEX retainedpurchased a 3.0% overriding royalty interest in the properties transferred.
In September 2012, the Company and JEX entered into an Advisory Agreement in which JEX provided assistance in acquiring additional properties in Alaska in exchange for an overriding royaltytotal of 2.0% on properties acquired after July 1, 2012.
On September 29, 2014, pursuant to a Royalty Purchase Agreement between JEX and Royal Gold (the “Royalty Purchase Agreement”), JEX sold its entire overriding royalty interest in the Peak Gold Joint Venture Property to Royal Gold. On the same date, the Company terminated its Advisory Agreement with JEX.
In September 2016, the Company and JEX entered into a Management Services Agreement effective October1,2016. Under the Management Services Agreement, JEX will manage the business and affairs of the Company and its interest in the Joint Venture Company, subject to the direction of the Board, including corporate finance, accounting, budget, SEC reporting, risk management, operations and stockholder relation functions of the Company for an initial term of one year for a monthly fee of $32,000 which includes an allocation of approximately $6,900 for office space and equipment. No part of the fee will be allocated for compensation of Brad Juneau who will be compensated separately as determined by the independent Directors of the Company. JEX will also be reimbursed for its reasonable and necessary costs and expenses of third parties incurred for the Company. In addition, executives of JEX may be granted restricted stock, stock options or other forms of compensation by the independent Directors of the Company. The Company has adopted this management and compensation program because employees of JEX have historically spent significant time and effort in managing and administering the affairs of the Company. While the Company remains a small exploratory stage entity whose shares are publicly traded, the successful drilling program of the Joint Venture Company has required a significant additional allocation of time and effort to the business and affairs of the Company by the three part time executives, two of whom are officers of the Company. The amount of time and expertise required to effectively manage and administer the business and affairs of the Company will continue to be monitored by the Board for necessary adjustments or modifications depending upon the amount of time required to be spent on the business and affairs of the Company by the executives and the progress of the Joint Venture Company in its exploratory programs in Alaska.
On October 23, 2017, the Company completed the issuance and sale of an aggregate of 553,67260,100 shares of common stock, par valueCommon Stock from the non-executive directors on $0.01January 5, 2022, at a price of $25.60 per share of the Company at a purchase(the applicable closing price of $19.00 per share of Common Stock,Stock for vesting on January 1, 2022), resulting in a private placement (the "Private Placement")aggregate payments of $1.5 million that will be used by the non-executive directors to certain purchasers (the "Purchasers") pursuant to a Stock Purchase Agreement dated as of October 23, 2017 (the "Purchase Agreement"), by and among the Company and each Purchaser. The Private Placement resulted in approximately $10.5 million of gross proceeds and approximately $10.0 million of net proceeds. The Company will use the net proceeds from the Private Placement for working capital purposes and for funding futurepay their tax obligations to the Joint Venture Company. Petrie Partners Securities, LLC ("Petrie") acted as sole placement agent in connection with the Private Placement and received a placement agent fee equal to 6.50%, which was reduced to 3.25% for existing stockholders and other Purchasers referred by those existing stockholders, or a total of $0.5 million in placement agent fees. JEX, which is controlled by Brad Juneau, the Company’s President and Chief Executive Officer, purchased 13,200 shares of Common Stock, or $250,800, in the Private Placement on the same terms and conditions as all other Purchasers. vested shares.
10.13. Stock-Based Compensation
On September 15, 2010, the Company’s Board of Directors (the “Board”) adopted the Contango ORE, Inc. Equity Compensation Plan (the “2010 Plan”). On November 14, 2017,10, 2022, the Stockholdersstockholders of the Company approved and adopted the Second Amendment (the “Second Amendment”) to the Contango ORE, Inc. Amended and Restated 2010 Equity Compensation Plan (the(as amended, the “Amended Equity Plan”). The amendments to the 2010 Plan included (a) increasing which increased the number of shares of Common Stock that the Company may issue under the planAmended Equity Plan by 500,000 shares; (b) extending the term of the plan until September 15, 2017; and (c) allowing the Company to withhold shares to satisfy the Company’s tax withholding obligations with respect to grants paid in Company Stock. 600,000 shares. Under the Amended Equity Plan, the Board may issue up to 1,500,0002,600,000 shares of common stockCommon Stock and options to officers, directors, employees or consultants of the Company. Awards made under the Amended Equity Plan are subject to such restrictions, terms and conditions, including forfeitures, if any, as may be determined by the Board.
As of December 31, 2017,2022, there were 298,998348,210 shares of unvested restricted common stockCommon Stock outstanding and 100,000 options to purchase 75,000shares of common stockCommon Stock outstanding issued under the Amended Equity Plan. Stock-based compensation expense for the three and six months ended December 31, 20172022 was $580,379$810,547 and $998,117,$1,598,421, respectively.Stock-based compensation expense for the three and six months ended December 31, 20162021 was $331,306$1,256,309 and $959,650,$2,278,160, respectively. The amount of compensation expense recognized does not reflect cash compensation actually received by the individuals during the current period, but rather represents the amount of expense recognized by the Company in accordance with US GAAP. All restricted stock grants are expensed over the applicable vesting period based on the fair value at the date the stock is granted. The grant date fair value may differ from the fair value on the date the individual'sindividual’s restricted stock actually vests.
Restricted Stock. In
On November 2010,December 1, 2020, the Company granted 70,429 restrictedan aggregate 20,000 shares of common stockCommon Stock to its executives and directors and an additional 23,477two restricted shares to a former technical consultant. All of the restricted stock from this grant is fully vested.
In December 2013, the Company's directors, executives, and a former technical consultant were granted an aggregate of 95,000 shares of restricted stock.new employees. The restricted stock was setgranted to vestsuch employees vests in equal installments over twothree years beginning with one-third vesting on the dateanniversary of grant. Allthe grant date. As of theDecember 31, 2022, 6,668 shares of restricted stock granted in December 20132020 is fully vested.remained unvested.
InOn November 2014,August 16, 2021, the Company granted 27,000 restricted10,000 shares of common stockCommon Stock to its executives.a new employee. The restricted stock was originally setgranted to vestthe employee vests in equal installments over twothree years beginning with one-third vesting on the date of grant. In September 2016, the restricted stock agreements were modified. The final one-thirdanniversary of the grant will now vest in January 2019. date. As of December 31, 2022, , 2017, there were 9,0006,667 shares of such restricted stock that remained unvested.
In January 2015, the Company granted an aggregate of 30,000 restricted shares of common stock to two of its non-executive directors, of which 10,000 shares vested immediately and the remaining two-thirds vested equally over two years. In addition, the Company granted 10,000 restricted shares of common stock to a former technical consultant which vested immediately. The Compensation Committee also elected to immediately vest all of the stock options and restricted stock previously issued to the former technical consultant. All of the restricted stock granted in January 2015August 2021 is fully vested.remain unvested.
InOn September 2015,November 11, 2021, the Company granted 85,000123,500 restricted shares of common stockCommon Stock to its executives. The restricted stock was originally set to vest over two years, beginning with one-third vesting on the date of grant. In September 2016, the restricted stock agreements for twoexecutives were modified such that the final one-third of their restricted stock grant will vest in January 2019. As of December 31, 2017, there were 13,332 shares of such restricted stock that remained unvested.
In December 2015, the Company granted 40,000 restricted shares of common stock to two of its non-executive directors. The restricted stock vests over two years, beginning with one-third vesting on the date of grant. As of December 31, 2017, all of the restricted stock from this grant was fully vested.
In August 2016, the Company granted 100,000 restricted shares of common stock to its executives. A portion of the restricted stock granted vests over two years, beginning one-third on the date of grant. The remainder of the restricted stock granted vests in January 2019. As of December 31, 2017, there were 46,666 shares of such restricted stock that remained unvested.
In November 2016, the Company granted 75,000 restricted shares of common stock to itsand non-executive directors. The restricted stock granted to the executives and non-executive directors vests inbetween January 2019.2023 and January 2024. As of December 31, 2017,2022, there were 75,000all 113,500 shares of such restricted stock thatgranted remained unvested.
InOn November 2017,February 2, 2022 the Company also granted to 155,000four employees a total of 12,000 shares of restricted stock. These restricted shares will vest between January 2023 and January 2025. As of December 31, 2022, all 12,000 shares of such restricted stock granted remained unvested.
In December 2022, the Company cancelled 167,500 shares of unvested restricted stock held by executives and the non-executive directors that were set to vest in January 2023. The Company also granted 209,375 restricted shares of common stock to its executives and non-executive directors. The restricted shares cancellation and the subsequent new grants were accounted for as modification to the original restricted stock grants. The incremental fair value will be recognized over the vesting period. The impact of the modification to the current quarter was immaterial. All of the restricted stock granted vestsin December 2022 vest in January 2020.2025. As of December 31, 2017,2022, there were 155,000209,375 shares of such restricted stock that remained unvested.
As of December 31, 2022,2017, the total compensation cost related to unvested awards not yet recognized was $4,241,890.$2,487,376. The remaining costs will be recognized over the remaining vesting period of the awards. Brad Juneau, the Company's Chairman, President and Chief Executive Officer, nor any of the Company's non-executive directors have ever been paid a salary or cash compensation.
Stock Options.options. TheThere were no stock option awards listed in the table below have been granted to directors, executives and consultants of the Company:
Option Awards | |||||||
Period Granted |
| Options Granted |
| Weighted Average Exercise Price |
| Vesting Period (7) | Expiration Date |
September 2011 (1) |
| 50,000 |
| $13.13 |
| Vested over two years, beginning with one-third on the grant date. | September 2016 |
July 2012 (2) |
| 100,000 |
| $10.25 |
| Vested over two years, beginning with one-third on the grant date. | July 2017 |
December 2012 (3) |
| 250,000 |
| $10.20 |
| Vested over two years, beginning with one-third on the grant date. | December 2017 |
June 2013 (4) |
| 37,500 |
| $10.00 |
| Vested Immediately | June 2018 |
July 2013 (5) |
| 5,000 |
| $10.00 |
| Vested Immediately | July 2018 |
September 2013 (6) |
| 37,500 |
| $10.01 |
| Vested Immediately | September 2018 |
September 2013 (6) |
| 15,000 |
| $10.01 |
| Vests over two years, beginning with one-third on the grant date. | September 2018 |
(1)The Company granted 40,000 stock options to its directors and executives and an additional 10,000 stock options to a former technical consultant, for services performed during fiscal year 2011. Of the total options granted 15,000 were later forfeited.
(2)The Company granted 75,000 stock options to its directors and executives and an additional 25,000 stock options to a former technical consultant for services performed during fiscal year 2012. Of the total options granted as a part of this grant, 25,000 were later forfeited.
(3)The Company granted 175,000 stock options to its directors and executives and an additional 75,000 stock options to a former technical consultant for services performed during fiscal year 2013. Of the total options granted as a part of this grant, 50,000 were later forfeited.
(4)The Company granted 37,500 stock options to its executives for services performed during fiscal year 2013.
(5)The Company granted 5,000 stock options to an employee of Avalon for services performed during fiscal year 2013.
(6)The Company granted 52,500 stock options to its executives for services performedexercises during the firstthree quarter of fiscal yearand 2014.
(7) If at any time there occurs a change of control, as defined in the Amended Equity Plan, any options that are unvested at that time will immediately vest. The Company's Compensation Committee has determined that the Transactions do notsix constitute a change of control under the Amended Equity Plan.
During the quartermonths ended December 31, 2017, 2022. There were also no stock option exercises during the Company's current executives, directors,three and consultants cashless exercised 190,000 stock options resulting in the issuance of 93,026 shares of common stock to the exercising parties and no proceeds to the Company. During the yearsix months ended 2017,December 31, 2021. the Company's current and former executives, directors, and consultants cashless exercised 140,000 stock options resulting in the issuance of 71,454 shares of common stock to the exercising parties and no proceeds to the Company. The Company applies the fair value method to account for stock option expense. Under this method, cash flows from the exercise of stock options resulting from tax benefits in excess of recognized cumulative compensation cost (excess tax benefits) are classified as financing cash flows. See Note 3– Summary of Significant Accounting Policies. All employee stock option grants are expensed over the stock option’s vesting period based on the fair value at the date the options are granted. The fair value of each option is estimated as of the date of grant using the Black-Scholes options-pricing model. model (Level 2 of the fair value hierarchy). As of December 31, 2017,2022, the stock options had a weighted-average remaining life of approximately 0.62.02 years. The totalAll of the compensation cost related to these stock options hashad been fully recognized as all of the options are fully vested.December 31, 2022.
A summary of the status of stock options granted under the Amended Equity Plan as of December 31, 20172022 and changes during the six months then ended, is presented in the table below:
Six Months Ended | Six Months Ended | |||||||||||||
Shares Under Options | Weighted Average Exercise Price | December 31, 2022 | ||||||||||||
Outstanding, June 30, 2017 | 265,000 | $ | 10.00 | |||||||||||
| Shares Under Options | Weighted Average Exercise Price | |||||||||||||
| Outstanding as of June 30, 2022 | 100,000 | $ | 14.50 | |||||||||||
Granted | — | — | — | |||||||||||
Exercised | 190,000 | $ | — | — | ||||||||||
Forfeited | — | — | — | |||||||||||
Outstanding, December 31, 2017 | 75,000 | $ | 10.01 | |||||||||||
| Outstanding at the end of the period | 100,000 | $ | 14.50 | |||||||||||
Aggregate intrinsic value | $ | 687,300 | $ | 1,052,000 | ||||||||||
Exercisable, end of period | 75,000 | $ | 10.01 | |||||||||||
| Exercisable, end of the period | 100,000 | |||||||||||||
Aggregate intrinsic value | $ | 687,300 | $ | 1,052,000 | ||||||||||
Available for grant, end of period | 384,094 | 558,552 | ||||||||||||
| Weighted average fair value per share of options granted during the period | $ | — | ||||||||||||
11.14. Commitments and Contingencies
Tetlin Lease. The Tetlin Lease had an initial ten yearten-year term beginning July 2008 which was extended for an additional ten years to July 15, 2028, and for so long thereafter as the Joint Venture CompanyPeak Gold JV initiates and continues to conduct mining operations on the Tetlin Lease.
Pursuant to the terms of the Tetlin Lease, the Joint Venture Company isPeak Gold JV was required to spend $350,000$350,000 per year until July 15, 2018 in exploration costs. However, the Company'sThe Company’s exploration expenditures through the 2011 exploration program have satisfied this requirement because exploration funds spent in any year in excess of $350,000 are credited toward future years’ exploration cost requirements. Additionally, should the Joint Venture CompanyPeak Gold JV derive revenues from the properties covered under the Tetlin Lease, the Joint Venture CompanyPeak Gold JV is required to pay the Tetlin Tribal Council a production royalty ranging from 32.0%.0% to 5.0%, depending on the type of metal produced and the year of production. As of December 31, 2017, theThe Company hadpreviously paid the Tetlin Tribal Council $225,000$225,000 in exchange for reducing the production royalty payable to them by 0.75%. These payments lowered the production royalty to a range of 21.25%.25% to 4.25%. On or before July 15, 2020, the The Tetlin Tribal Council hashad the option to increase their production royalty by (i) 0.25% by payment to the Joint Venture CompanyPeak Gold JV of $150,000,$150,000, (ii) 0.50% by payment to the Joint Venture CompanyPeak Gold JV of $300,000, or (iii) 0.75% by payment to the Peak Gold JV of $300,000,450,000. or (iii)The Tetlin Tribal Council exercised the option to increase its production royalty by 0.75% by payment to the Joint Venture CompanyPeak Gold JV of $450,000 on December 30, 2020. In lieu of a cash payment, the $450,000.450,000 will be credited against future production royalty and advance minimum royalty payments due by the Peak Gold JV to the Tetlin Tribal Council under the lease once production begins. The exercise of this option by the tribe did not have an accounting impact to the Company. Until such time as production royalties begin, the Joint Venture CompanyPeak Gold JV must pay the Tetlin Tribal Council an advance minimum royalty of $50,000$50,000 per year. On July 15, 2012, the advance minimum royalty increased to $75,000$75,000 per year, and subsequent years are escalated by an inflation adjustment.
Gold Exploration. The Joint Venture Company’s Triple Z, Tok/Tetlin, Eagle, Bush, West Fork,Eagle/Hona, Shamrock, Willow, and NoahLucky Shot claims are all located on stateState of Alaska lands. The Company released its Bush and West Fork claims in November 2020. The annual claim rentals on these projects vary based on the age of the claims, and are due and payable in full by November 30 of each year. Annual claims rentals for the 20172022-20182023 assessment year totaled $355,805. The Company paid the current year claim rentals in November $155,505.2022. The Joint Venture Company hasassociated rental expense is amortized over the rental claim period, September 1 - August 31 of each year. As of December 31, 2022, the Peak Gold JV had met the annual labor requirements for the stateState of Alaska acreage for the next four years, which is the maximum timeperiod allowable by Alaska law. The Company obtained 100% ownership of these claims in conjunction with the Separation Agreement.
Lucky Shot Acquisition. With regard to the Lucky Shot Acquisition, in addition to the cash at closing and the Promissory Note, the Company will be obligated to pay CRH additional consideration if production on the Lucky Shot Property meets two separate milestone payment thresholds. If the first threshold of (1) an aggregate “mineral resource” equal to 500,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 30,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $3.75 million in newly issued shares of CORE common stock. If the second threshold of (1) an aggregate “mineral resource” equal to 1,000,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 60,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $5 million in newly issued shares of CORE common stock. If payable, the additional share consideration will be issued based on the 30-day volume weighted average price for each of the thirty trading days immediately prior to the satisfaction of the relevant production goal.
Royal Gold Royalties. The Joint Venture Company isInitially, the Peak Gold JV was obligated to pay Royal Gold (i) an overriding royalty of 3.0% should the Joint Venture CompanyPeak Gold JV derive revenues from the Tetlin Lease, the Additional Properties and certain other properties and (ii) an overriding royalty of 2.0% should the Joint Venture CompanyPeak Gold JV derive revenues from certain other properties. In conjunction with the Separation Agreement (described in Note 9), the Peak Gold JV granted a new 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease and transferred an additional 1.0% net smelter returns royalty on the state mining claims to Royal Gold. Therefore, Royal Gold currently holds a 3.0% overriding royalty on the Tetlin Lease and the state mining claims that were transferred to the Company in conjunction with the Separation Agreement.
Retention Agreements. In February 2019, the Company entered into Retention Agreements with its then Chief Executive Officer, Brad Juneau, its Chief Financial Officer, Leah Gaines, and one other employee providing for payments in an aggregate amount of $1,500,000 upon the occurrence of certain conditions. The Retention Agreements are triggered upon a change of control (as defined in the applicable Retention Agreement), provided that the recipient is employed by the Company when the change of control occurs. On February 6, 2020, the Company entered into amendments to the Retention Agreements to extend the term of the change of control period from August 6, 2020 until August 6, 2025. Mr. Juneau and Ms. Gaines will receive a payment of $1,000,000 and $250,000, respectively, upon a change of control that takes place prior to August 6, 2025. On June 10, 2020, the Company entered into a Retention Payment Agreement with Rick Van Nieuwenhuyse, the Company’s President and Chief Executive Officer, providing for a payment in an amount of $350,000 upon the occurrence of certain conditions. The Retention Payment Agreement is triggered upon a change of control (as defined in the Retention Payment Agreement) which occurs on or prior to August 6, 2025, provided that Mr. Van Nieuwenhuyse is employed by the Company when the change of control occurs.
Short Term Incentive Plan. The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) adopted a Short-Term Incentive Plan (the “STIP”) effective as of June 10, 2020, for the benefit of Mr. Van Nieuwenhuyse. Pursuant to the terms of the STIP, the Compensation Committee will establish performance goals each year and evaluate the extent to which, if any, Mr. Van Nieuwenhuyse meets such goals. The STIP provides for a payout equal to 25.0% of Mr. Van Nieuwenhuyse’s annual base salary if the minimum performance target established by the Compensation Committee is met, 100.0% of his annual base salary if all performance goals are met, and up to 200.0% of his annual base salary if the maximum performance target is met. Amounts due under the STIP will be payable 50.0% in cash and 50.0% in the form of restricted stock granted under the Equity Plan, vesting in two equal annual installments on the first and second anniversaries of the grant date, and subject to the terms of the Equity Plan. In addition, in the event of a Change of Control (as defined in the Equity Plan) during the term of the STIP, the Compensation Committee, in its sole and absolute discretion, may make a payment to Mr. Van Nieuwenhuyse in an amount up to 200.0% of his annual base salary, payable in cash, shares of Common Stock of the Company under the Equity Plan or a combination of both, as determined by the Compensation Committee, not later than 30 days following such Change of Control. In conjunction with STIP plan, in December 2020, Mr. Van Nieuwenhuyse received a $350,000 cash bonus and 23,333 restricted shares of Common Stock, which vested on January 1, 2022. In conjunction with the STIP plan, in January 2022, Mr. Van Nieuwenhuyse received a $300,000 cash bonus and 15,000 restricted shares of Common Stock, which will vest on January 15, 2023. These 15,000 restricted shares were cancelled in December 2022, and 18,750 shares were issued to Mr. Van Nieuwenhuyse under the STIP plan which will vest in January 2025.
Roc GlobalFinancing Fees. The Company has engaged ROC Global, LLC (“ROC Global”) as a financial advisor and investment banker. The current term of the engagement is through March 31, 2023. If the Company completes or enters into a definitive agreement to complete a debt financing with a party introduced to the Company by ROC Global during the term of the agreement or within the eighteen months following the term of the agreement, the Company will pay ROC Global 3.25% of the gross proceeds received by the Company, before any expenses and fees of the loan transaction and/or the securities of the Company being offered and sold in such a debt financing.
15. Income Taxes
The Company recognized a full valuation allowance on its deferred tax asset as of December 31, 2022 and June 30, 2022 and has recognized zero income tax expense for the three and six months ended December 31, 2022. The Company recognized zero income tax expense for the three and six months ended December 31, 2021. The effective tax rate was 0% for the three and six months ending December 31, 2022 and 2021. The Company has historically had a full valuation allowance, which resulted in no net deferred tax asset or liability appearing on its statement of financial position. The Company recorded this valuation allowance after an evaluation of all available evidence (including the Company's history of net operating losses) that led to a conclusion that, based upon the more-likely-than-not standard of the accounting literature, these deferred tax assets were unrecoverable. The Company is forecasting a book and taxable net loss for its fiscal year end, June 30, 2023. The Company reviews its tax positions quarterly for tax uncertainties. The Company did not have any uncertain tax positions as of December 31, 2022 or June 30, 2022.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES” Act) was enacted which is aimed at providing emergency assistance due to the impact of the COVID-19 pandemic. The CARES Act includes provisions related to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax deprecation methods for qualified improvement property. The Company does not expect to be materially impacted by the CARES Act and does not anticipate the CARES Act to have a material effect on its ability to realize deferred tax assets with the exception of the relief from the 80% limitation on some of its net operating losses that were fully utilized for the tax year ended June 30, 2021.
16.Debt
On April 26, 2022, the Company closed on a $20,000,000 unsecured convertible debenture to Queen’s Road Capital Investment, Ltd. (“QRC”). The Company will use the proceeds from the sale of the debenture to fund commitments to the Peak Gold JV, the exploration and development at its Lucky Shot properties, and for general corporate purposes.
The debenture bears interest at 8% per annum, payable quarterly, with 6% paid in cash and 2% paid in shares of Common Stock issued at the market price at the time of payment based on a 20-day volumetric weighted average price (“VWAP”). The debenture is unsecured, with a maturity of four years after issuance. The holder may convert the debenture into Common Stock at any time at a conversion price of $30.50 per share (equivalent to 655,738 shares), subject to adjustment. The Company may redeem the debenture after the third anniversary of issuance at 105% of par, provided that the market price (based on a 20-day VWAP) of the Company's Common Stock is at least 130% of the conversion price. The Company may also redeem the debenture, and the holder will have rights to put the debenture to the Company, upon a change of control of the Company, with the redemption or put price being 130% of par for the firstthree years following issuance and 115% of par thereafter and accrued interest at the time of redemption or put being paid in the same form as other interest payments. Upon the completion of a secured financing the holder has the right to require the Company to redeem the debenture. Additionally, upon announcement of a change of control, the Company has the right to require the holder to convert some or the whole principal amount of the debenture into shares at the conversion price, subject to certain conditions.
In connection with the issuance of the debenture, the Company agreed to pay an establishment fee of 3% of the debenture face amount. In accordance with the investment agreement, QRC elected to receive the establishment fee in shares of Common Stock valued at $24.82 per share, for a total of 24,174 shares. The establishment fee shares were issued to QRC pursuant to an exemption from registration under Regulation S. QRC entered into an investor rights agreement with the Company in connection with the issuance of the debenture. The investor rights agreement contains provisions that require QRC and its affiliates, while they own 5% or more of our outstanding Common Stock, to standstill, not to participate in any unsolicited or hostile takeover of the Company, not to tender its shares of Common Stock unless the Company’s board recommends such tender, to vote its shares of Common Stock in the manner recommended by the Company’s board to its stockholders, and not to transfer its shares of Common Stock representing more than 0.5% of outstanding shares without notifying the Company in advance, whereupon the Company will have a right to purchase those shares.
The debt carried an original issue discount of $0.6 million and debt issuance costs of approximately $0.2 million. As of December 31, 2022 and June 30, 2022, the unamortized discount and issuance costs were $0.5 million and $0.1 million, respectively. The carrying amount of the debt at December 31, 2022 and June 30, 2022, net of the unamortized discount and issuance costs, was $19.4 million and $19.2 million, respectively. The fair value of the note (Level 2) as of December 31, 2022 and June 30, 2022 was $20.0 million. The company recognized interest expense totaling $0.4 million related to this debt for the quarter ended December 31, 2022 (inclusive of approximately $400,000 of contractual interest, and approximately $47,000 related to the amortization of the discount and issuance fees). The company recognized interest expense totaling $0.9 million related to this debt for the six months ended December 31, 2022 (inclusive of approximately $800,000 of contractual interest, and approximately $96,000 related to the amortization of the discount and issuance fees). The interest paid in stock during the three and six months ended December 31, 2022 was issued from shares held in the Company's Treasury account. The effective interest rate of the note is the same as the stated interest rate, 8.0%. The effective interest rate for the amortization of the discount and issuance costs as of June 30, 2022 was 1.0%. The Company reviewed the provisions of the debt agreement to determine if the agreement included any embedded features. The Company concluded that the change of control provisions within the debt agreement met the characteristics of a derivative and required bifurcation and separate accounting. The fair value of the identified derivative was determined to be de minimus at April 26, 2022, June 30, 2022, and December 31, 2022 as the probability of a change of control was negligible as of those dates. For each subsequent reporting period, the Company will evaluate each potential derivative feature to conclude whether or not they qualify for derivative accounting. Any derivatives identified will be recorded at the applicable fair value as of the end of each reporting period.
17. Subsequent Events
On January 19, 2023, the Company completed the issuance and sale of an aggregate of 117,500 shares (the “January 2023 Shares”) of the Company’s Common Stock, for $20.00 per share, and warrants (the “January 2023 Warrants”) entitling each purchaser to purchase shares of Common Stock for $25.00 per share (the “January 2023 Warrant Shares” and together with the January 2023 Common Stock and the January 2023 Warrants, the “January 2023 Securities”), in a private placement (the “January 2023 Private Placement”) to certain accredited investors (the “January 2023 Investors”) pursuant to Subscription Agreements (the “January 2023 Subscription Agreements”), dated as of January 19, 2023 between the Company and each of the January 2023 Investors. The January 2023 Subscription Agreements include customary representations, warranties, and covenants by the January 2023 Investors and the Company.
Pursuant to the January 2023 Warrants between the Company and each of the January 2023 Investors, the January 2023 Warrants will be exercisable, in full or in part, at any time until the second anniversary of their issuance, at an exercise price of $25.00 per share of Common Stock. The January 2023 Warrants will also provide for certain adjustments that may be made to the exercise price and the number of shares of Common Stock issuable upon exercise due to future corporate events or actions.
Petrie assisted the Company with the January 2023 Private Placement and will be entitled to receive compensation equal to 3.25 percent for the January 2023 Investors solicited by Petrie. Net proceeds from the January 2023 Private Placement totaled approximately $2.3 million. The Company will use these proceeds to fund its exploration and development program and for general corporate purposes. The January 2023 Securities sold were not registered under the Securities Act, but the January 2023 Shares and the January 2023 Warrant Shares are subject to a Registration Rights Agreement allowing the shares to be registered by the holders at a future date.
Available Information
General information about the Company can be found on the Company'sCompany’s website at www.contangoore.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after we filethe Company files or furnishfurnishes them to the Securities and Exchange Commission (“SEC”).SEC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the accompanying notes and other information included elsewhere in this Form 10-Q and in our Form 10-K for the fiscal year ended June 30, 2017,2022, previously filed with the SEC.
Cautionary Statement about Forward-Looking Statements
Some of the statements made in this report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act, of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”). The words and phrases “should be”, “will be”, “believe”, “expect”, “anticipate”, “estimate”, “forecast”, “goal” and similar expressions identify forward-looking statements and express our expectations about future events. Any statement that is not historical fact is a forward -looking statement. These include such matters as:
The Company's financial position
Business strategy, including outsourcing
Meeting Company forecasts and budgets
Anticipated capital expenditures
Prices of gold and associated minerals
Timing and amount of future discoveries (if any) and production of natural resources on our Peak Gold Joint Venture Property
Operating costs and other expenses
Cash flow and anticipated liquidity
Prospect development
New governmental laws and regulations
• | The Company’s financial position; |
• | Business strategy, including outsourcing; |
• | Meeting Company forecasts and budgets; |
• | Anticipated capital expenditures and availability of future financings; |
• | Prices of gold and associated minerals; |
• | Timing and amount of future discoveries (if any) and production of natural resources on the Contango Properties and the Peak Gold JV Property; |
• | Operating costs and other expenses; |
• | Cash flow and anticipated liquidity; |
| • | The Company’s ability to fund its business with current cash reserves based on currently planned activities; | |
• | Prospect development; |
| • | Operating and legal risks; and | |
• | New governmental laws and regulations. |
Although the Company believes the expectations reflected in such forward-looking statements are reasonable, such expectations may not occur. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, that may cause our actual results, performance or achievements to be materially different from future results expressed or implied by the forward-looking statements. TheseIn addition to the risk factors described in Part I, Item 2. Risk Factors, of this report and Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended June 30, 2022, these factors include among others:
Ability to raise capital to fund capital expenditures
Operational constraints and delays
The risks associated with exploring in the mining industry
The timing and successful discovery of natural resources
Availability of capital and the ability to repay indebtedness when due
Declines and variations in the price of gold and associated minerals
Price volatility for natural resources
Availability of operating equipment
Operating hazards attendant to the mining industry
Weather
The ability to find and retain skilled personnel
Restrictions on mining activities
Legislation that may regulate mining activities
Impact of new and potential legislative and regulatory changes on mining operating and safety standards
Uncertainties of any estimates and projections relating to any future production, costs and expenses.
Timely and full receipt of sale proceeds from the sale of any of our mined products (if any)
Stock price and interest rate volatility
Federal and state regulatory developments and approvals
Availability and cost of material and equipment
Actions or inactions of third-parties
Potential mechanical failure or under-performance of facilities and equipment
Environmental risks
Strength and financial resources of competitors
Worldwide economic conditions
Expanded rigorous monitoring and testing requirements
Ability to obtain insurance coverage on commercially reasonable terms
• | Ability to raise capital to fund capital expenditures; |
| • | Ability to retain or maintain our relative ownership interest in the Peak Gold JV; | |
| • | Ability to influence management of the Peak Gold JV; | |
| • | Ability to realize the anticipated benefits of the Kinross Transactions, including ability to process ore mined from the Peak Gold JV Property at the existing Fort Knox mining and milling complex; | |
| • | Disruption from the Kinross Transactions and transition of the Peak Gold JV’s management to Kinross, including as it relates to maintenance of business and operational relationships potential delays or changes in plans with respect to exploration or development projects or capital expenditures; | |
• | Operational constraints and delays; |
• | The risks associated with exploring in the mining industry; |
• | The timing and successful discovery of natural resources; |
• | Availability of capital and the ability to repay indebtedness when due; |
• | Declines and variations in the price of gold and associated minerals; |
• | Price volatility for natural resources; |
• | Availability of operating equipment; |
• | Operating hazards attendant to the mining industry; |
• | Weather; |
• | The ability to find and retain skilled personnel; |
• | Restrictions on mining activities; |
• | Legislation that may regulate mining activities; |
| • | Changes in applicable tax rates and other regulatory changes; | |
• | Impact of new and potential legislative and regulatory changes (including commitments to international agreements) on mining operating and safety standards.; |
• | Uncertainties of any estimates and projections relating to any future production, costs and expenses (including changes in the cost of fuel, power, materials, and supplies); |
• | Timely and full receipt of sale proceeds from the sale of any of our mined products (if any); |
• | Stock price and interest rate volatility; |
• | Federal and state regulatory developments and approvals; |
• | Availability and cost of material and equipment; |
• | Actions or inactions of third-parties; |
• | Potential mechanical failure or under-performance of facilities and equipment; |
• | Environmental and regulatory, health and safety risks; |
• | Strength and financial resources of competitors; |
• | Worldwide economic conditions; |
| • | Impact of pandemics, such as the worldwide COVID-19 outbreak, which could impact the Company's or the Peak Gold JV’s exploration schedule; | |
• | Expanded rigorous monitoring and testing requirements; |
• | Ability to obtain insurance coverage on commercially reasonable terms; |
• | Competition generally and the increasing competitive nature of | |
| • | Risks related to title to | |
| • | Ability to consummate strategic transactions. |
You should not unduly rely on these forward-looking statements in this report, as they speak only as of the date of this report. Except as required by law, we undertakethe Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events.
See All forward-looking statements included herein are expressly qualified in their entirety by the information under the heading “Risk Factors”cautionary statements contained or referred to in this Form 10-Q for some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in forward-looking statements.section.
Overview
The Company is a Houston-based company, whose primary business is the participationengages in a joint venture to explore in the State of Alaskaexploration for gold ore and associated minerals. On January 8, 2015,minerals in Alaska. The Company conducts its operations through three primary means:
● | a 30.0% membership interest in Peak Gold, LLC (the “Peak Gold JV”), which leases approximately 675,000 acres from the Tetlin Tribal Council and holds approximately 13,000 additional acres of State of Alaska mining claims (such combined acreage, the “Peak Gold JV Property”) for exploration and development, including in connection with the Peak Gold JV's plan to mine ore from the Peak and North Peak deposits within the Peak Gold JV Property (the “Manh Choh Project”); |
● | its wholly-owned subsidiary, Alaska Gold Torrent, LLC, an Alaska limited liability company (“AGT”), which leases the mineral rights to approximately 8,600 acres of State of Alaska and patented mining claims for exploration from Alaska Hard Rock, Inc., located in three former producing gold mines located on the patented claims in the Willow Mining District about 75 miles north of Anchorage, Alaska (the “Lucky Shot Property”) (See Note 10 - Acquisition of Lucky Shot Property); and |
● | its wholly-owned subsidiary, Contango Minerals Alaska, LLC (“Contango Minerals”), which separately owns the mineral rights to approximately 145,280 acres of State of Alaska mining claims for exploration, including (i) approximately 69,780 acres located immediately northwest of the Peak Gold JV Property (the “Eagle/Hona Property”), (ii) approximately 14,800 acres located northeast of the Peak Gold JV Property (the “Triple Z Property”), (iii) approximately 52,700 acres of new property in the Richardson district of Alaska (the “Shamrock Property”) and (iv) approximately 8,000 acres located to the north and east of the Lucky Shot Property (the “Willow Property” and, together with the Eagle/Hona Property, the Triple Z Property, and the Shamrock Property, collectively the “Minerals Property”). The Company relinquished approximately 69,000 acres located on the Eagle/Hona prospect in November 2022. The Company retained essentially all of the acreage where drilling work was performed in 2019 and 2021, and used sampling data to determine which acreage should be released. |
The Lucky Shot Property and the Minerals Property are collectively referred to in this Quarterly Report on Form 10-Q as the “Contango Properties”.
The Company’s Manh Choh Project is in the development stage. All other projects are in the exploration stage.
The Company has been involved, directly and Royalthrough the Peak Gold Inc. (“Royal Gold”), through their wholly-owned subsidiaries, consummatedJV, in exploration on the transactions (the “Transactions”) contemplated underManh Choh Project for twelve years, which has resulted in identifying two mineral deposits (Main and North Manh Choh) and several other gold, silver, and copper prospects. The Peak Gold JV plans to mine ore from the Master Agreement, dated as of September 29, 2014 (the “Master Agreement”), includingMain and North Manh Choh deposits and then process the formationore at the existing Fort Knox mining and milling complex located approximately 240 miles (400 km) away. The use of the Joint Venture Company,Fort Knox facilities is expected to advance explorationaccelerate the development of the Peak Gold Joint VentureJV Property (as defined below),and result in reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall execution risk for the Peak Gold JV to advance the Main and North Manh Choh deposits to production. The Peak Gold JV will be charged a toll for using the Fort Knox facilities. A toll milling agreement is expected to be finalized during the current calendar year.
The Management Committee of the Peak Gold JV (the "Management Committee") approved a calendar year 2022 budget which is prospectivecovered the following areas of work: feasibility study, permitting, on-going environmental monitoring, community engagement, engineering, road and camp construction, and exploration. Kinross Gold Corporation (“Kinross”) released a combined feasibility study for goldthe Fort Knox mill and associated minerals. Asthe Peak Gold JV in July 2022. Also, in July 2022, Kinross announced that its board of directors (the “Kinross Board”) made a decision to proceed with development of the Manh Choh project. Effective December 31, 2017,2022, CORE Alaska, KG Mining and the Joint VenturePeak Gold JV executed the First Amendment to the Amended and Restated Limited Liability Company leased or controlled over an estimated 849,900 acresAgreement of the Peak Gold JV (the “A&R JV LLCA Amendment”). The A&R JV LLCA Amendment provides that, beginning in 2023, the budget of the Peak Gold JV shall be determined on a quarterly basis. The Management Committee has approved a budget of $13.6 million for the explorationfirst calendar quarter of gold ore2023, of which the Company's share is $2.7 million. To date the Company, has funded $1 million of the approved first calendar quarter budget. This budget primarily relates to access road construction and associated minerals.
Background
Contango Mining Company (“Contango Mining”), a wholly owned subsidiary of Contango Oil & Gas Company (“Contango”), was formedcosts incurred for the purposerefurbishment and expansion of mineral explorationthe Manh Choh Camp. The Manh Choh camp facilities, located in Tok, Alaska, have now been completed and construction work on the road will continue through the winter months. The Mine Operating permit issued by the State of Alaska.Alaska Department of Natural Resources has been submitted. Once issued mine site construction and mine development of the Manh Choh project site can be undertaken so that the project remains on schedule for first gold production in the second half of 2024.
At the Lucky Shot Property, the Company engaged Atkinson Construction and Major Drilling as contractors to execute the 2022 exploration/development program. The Company was formedcompleted 29 exploration drill holes on September 1, 2010 asthe property. Drilling began in late June 2022, and ended in November when activities ceased in preparation for the winter months. All 29 holes intersected the Lucky Shot vein structure. The Company has engaged a Delaware corporationthird-party structural geologist from Oriented Targeted Solutions Inc. to complete a structural analysis of the vein structure based on underground mapping and on November 29, 2010, Contango Mining assigneddrill core logging. The Company will release all its propertiesassay results once the results have been finalized and certain other assetsquality assurance and liabilitiesquality control has been completed. The Company anticipates completing an initial resource estimate, and then making plans for a follow up program to Contango. Contango contributedcontinue exploration of the propertiesLucky Shot vein structure. Once a sufficient size and $3.5 millionquality of cashmineralized material has been defined the Company expects to initiate a technical study to determine if commercial mining is viable.
On the Shamrock Property, the Company conducted soil and surface rock chip sampling during 2021. Follow up trenching and detailed geologic mapping is planned for the summer of 2023. At the Eagle/Hona Property, the Company carried out a detailed reconnaissance of the northern and eastern portions of the large claim block that had not previously been detail sampled. Due to the steep topography, a helicopter was used to execute the program safely. Follow up geologic mapping and sampling is planned for the summer of 2023.
The Company’s 30.0% membership interest in the Peak Gold JV, its ownership of AGT and Contango Minerals, and cash on hand constitute substantially all of the Company’s assets.
Kinross Transaction
On September 29, 2020, the Company, CORE Alaska, LLC and KG Mining (Alaska), Inc. (“KG Mining”), an indirect wholly-owned subsidiary of Kinross Gold Corporation, a corporation formed under the laws of Ontario, Canada (“Kinross”), entered into a Purchase Agreement (the “CORE Purchase Agreement”), pursuant to which CORE Alaska sold a 30.0% membership interest (the “CORE JV Interest”) in the terms of a Contribution AgreementPeak Gold JV, to KG Mining (the “Contribution Agreement”“CORE Transactions”),. The CORE Transactions closed on December 31, 2020. In consideration for the CORE JV Interest, the Company received $32.4 million in exchange for approximately 1.6 millioncash and 809,744 shares of the Company’s common stock.stock, par value $0.01 per share (the “Common Stock”). The transactions occurred between companies under common control. Contango then distributed all809,744 shares of Common Stock were acquired by KG Mining from Royal Gold, as part of the Company’s common stockRoyal Gold Transactions (described below) and were subsequently canceled by the Company. Of the $32.4 million cash consideration, $1.2 million constituted a reimbursement prepayment to Contango’s stockholdersthe Company by KG Mining of record as of October 15, 2010, promptly after the effective date of the Company’s Registration Statement Form 10 on the basis of oneamounts relating to CORE Alaska’s proportionate share of common stock for each ten (10) shares of Contango’s common stock then outstanding.
Contango Mining acquired an interest in properties from Juneau Exploration, L.P., (“JEX”) in exchange for $1 million and a 3.0% overridingcertain silver royalty interest in the properties granted to JEX. JEX assisted the Company in acquiring additional properties in Alaska pursuant to an Advisory Agreement dated September 6, 2012, and the Company granted to JEX a 2% overriding royalty interest in the additional properties acquired. On September 29, 2014, pursuant to a Royalty Purchase Agreement between JEX and Royal Gold (the “Royalty Purchase Agreement”), JEX sold its entire overriding royalty interest in the properties to Royal Gold. On the same date, the Company terminated the Advisory Agreement with JEX. In connection with the closing of the Transactions with Royal Gold (the “Closing”), the Company formed the Joint Venture Company and contributed to the Joint Venture Companypayments that the Peak Gold Joint Venture Property near Tok, Alaska, together with other personal property (the “Contributed Assets”) with a historical cost of $1.4 million and an agreed value of $45.7 million (the “Contributed Assets Value”). At the Closing, the Company and Royal Gold, through their wholly-owned subsidiaries, entered into the JV LLCA.
Upon Closing, Royal Gold initially contributed $5 million to fund exploration activity of the Joint Venture Company. The initial $5 million did not give Royal Gold an equity stake in the Joint Venture Company. In connection with the initial contribution, Royal Gold received an option to earn up to a 40% interest in the Joint Venture Company by investing up to $30 million (inclusive of the initial $5 million investment) prior to October 2018. As of December 31, 2017, Royal Gold has contributed $29.3 million (including its initial $5 million investment) to the Joint Venture Company and earned a 39.0% interest in the Joint Venture Company. The proceeds of Royal Gold’s investment have been and will be used by the Joint Venture Company for additional exploration of the property it controls.
Properties
Since 2009, the Company's primary focus has been the exploration of a mineral lease with the Native Village of Tetlin whose governmental entity is the Tetlin Tribal Council (“Tetlin Tribal Council”) for the exploration of minerals near Tok, Alaska on a currently estimated 675,000 acres (the “Tetlin Lease”) and almost all of the Company's resources have been directed to that end. All significant work presently conducted by the Company has been directed at exploration of the Tetlin Lease and increasing understanding of the characteristics of, and economics of, any mineralization. There are no known quantifiable mineral reserves on the Tetlin Lease or any of the Company's other properties as defined by the Securities and Exchange Commission ("SEC") Industry Guide 7.
The Tetlin Lease originally had a ten year term beginning July 2008 which was extended for an additional ten years to July 15, 2028. If the properties under the Tetlin Lease are placed into commercial production, the Tetlin Lease will be held throughout production and the Company wouldmay be obligated to pay to Royal Gold, with the understanding that as a productionresult of such reimbursements, KG Mining would bear the entire economic impact of those silver royalty topayments due from the Tetlin Tribal Council,Peak Gold JV. Concurrently with the CORE Purchase Agreement, KG Mining, in a separate transaction, acquired from Royal Gold (i) 100% of the equity of Royal Alaska, LLC (“Royal Alaska”), which varies from 2.0% to 5.0%, depending onheld a 40.0% membership interest in the typePeak Gold JV (the “Royal Gold Transactions” and, together with the CORE Transactions, the “Kinross Transactions”). Therefore, as of metal produced and the year of production. In June 2011,December 31, 2022, the Company paidholds a 30.0% membership interest in the Tetlin Tribal Council $75,000Peak Gold JV, and KG Mining holds a 70.0% membership interest in exchange for reducing the production royalty payablePeak Gold JV and serves as the manager and operator of the Peak Gold JV. KG Mining and CORE Alaska entered into the Amended and Restated Limited Liability Company Agreement of the Peak Gold JV (the “A&R JV LLCA”) on October 1, 2020 to them by 0.25%. In July 2011,address the Company paidnew ownership arrangements and to incorporate additional terms that will permit the Tetlin Tribal Council an additional $150,000 in exchange forPeak Gold JV to further reducing the production royalty by 0.50%. These payments lowered the production royalty to a range of 1.25% to 4.25%, depending on the type of metal produceddevelop and the year of production. On or before July 15, 2020, the Tetlin Tribal Council has the option to increaseproduce from its production royalty by (i) 0.25% by payment to the Joint Venture Company of $150,000, (ii) 0.50% by payment to the Joint Venture Company of $300,000, or (iii) 0.75% by payment to the Joint Venture Company of $450,000.properties.
The Joint Venture CompanyPeak Gold JV had also holdshistorically held certain State of Alaska unpatented mining claims for the exploration of gold ore and associated minerals. The Company believes thatPrior to the Joint Venture Company holds good title to its properties, in accordance with standards generally accepted inKinross Transactions, the mineral industry. As is customary inPeak Gold JV, Contango Minerals Alaska, LLC, an Alaska limited liability company formed by the mineral industry,Peak Gold JV (“Contango Minerals”), the Company, conducted onlyCORE Alaska, Royal Gold and Royal Alaska entered into a preliminary title examination at the time it acquired the Tetlin Lease. The Joint Venture Company conducted a title examination priorSeparation and Distribution Agreement, dated as of September 29, 2020 (the “Separation Agreement”). Pursuant to the assignmentSeparation Agreement, the Peak Gold JV formed Contango Minerals, contributed approximately 167,000 acres of Alaska State mining claims to it, subject to the Option Agreement (described below), and retained an additional 1.0% net smelter returns royalty interest on certain of the Tetlin LeaseAlaska state mining claims that were contributed. After the formation and contribution to Contango Minerals, the Joint Venture CompanyPeak Gold JV made simultaneous distributions to Royal Alaska and performed certain curative title work. Before the Joint Venture Company begins any mine development work, however, the Joint Venture Company is expected to again conductCORE Alaska by (i) granting a full title review and perform curative worknew 28.0% net smelter returns silver royalty on any defects that it deems significant. A significant amount of additional work is likely required in the exploration of the properties before any determination as to the economic feasibility ofall silver produced from a mining venture can be made.
The following table summarizesdefined area within the Tetlin Lease and unpatentedtransferring the additional 1.0% net smelter returns royalty described above to Royal Gold and (ii) assigning 100.0% of the membership interests in Contango Minerals to CORE Alaska, which were in turn distributed to the Company, resulting in Contango Minerals becoming a wholly-owned subsidiary of the Company. The Separation Agreement contains customary representations, warranties and covenants.
In connection with the Separation Agreement, the Peak Gold JV and Contango Minerals entered into an Option Agreement, dated as of September 29, 2020 (the “Option Agreement”). Under the Option Agreement, Contango Minerals granted the Peak Gold JV an option, subject to certain conditions contained in the Option Agreement, to purchase approximately 13,000 acres of the Alaska state mining claims (the "Peak Gold Joint Venture Property")which were contributed to Contango Minerals pursuant to the Separation Agreement, together with all extralateral rights, water and water rights, and easements and rights of way in connection therewith, that are held by Contango Minerals. Subject to the Joint Ventureconditions in the Option Agreement, the Peak Gold JV had the right to exercise the option to purchase the Alaska state mining claims, in whole or in part, at an exercise price of $50,000. The Peak Gold JV exercised this option in whole in June 2021 and paid the Company $50,000.
Effective December 31, 2022, CORE Alaska, KG Mining and the Peak Gold JV executed the First Amendment to the A&R JV LLCA (the “A&R JV LLCA Amendment”). The A&R JV LLCA Amendment provides that, beginning in 2023, the budget of the Peak Gold JV shall be determined on a quarterly basis.
Kinross is a large gold producer with a diverse global portfolio and extensive operating experience in Alaska. The Peak Gold JV plans to mine ore from the Peak and North Peak deposits and then process ore at the existing Fort Knox mining and milling complex located approximately 250 miles away. The use of the Fort Knox mill is expected to accelerate the development of the Peak Gold JV Property and result in reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall risk for Peak Gold JV Property.
Acquisition of Lucky Shot Property
On August 24, 2021 the Company completed the purchase of all outstanding membership interests (the “Interests”) of AGT from CRH Funding II PTE. LTD, a Singapore private limited corporation (“CRH”) (the “Lucky Shot Transaction”). AGT holds rights to the Lucky Shot Property. The Company agreed to purchase the Interests for a total purchase price of up to $30 million. The purchase price included an initial payment at closing of $5 million in cash and a promissory note in the original principal amount of $6.25 million, payable by the Company to CRH (the “Promissory Note”), with a maturity date of February 28, 2022 (the “Maturity Date”). The Promissory Note was secured by the Interests. The Company had the option to pay the Promissory Note through the issuance to CRH of shares of the Company’s common stock if the Company completed an offering and obtained a listing of its shares on the NYSE American prior to the Maturity Date. In November 2021, the Company’s common stock commenced listing on the NYSE American. Since the Company did not complete the required offering, it paid the Promissory Note in cash on February 25, 2022.
In addition to the cash at closing and the Promissory Note, the Company will be obligated to pay CRH additional consideration if production on the Lucky Shot Property meets two separate milestone payment thresholds. If the first threshold of (1) an aggregate “mineral resource” equal to 500,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 30,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $3.75 million in newly issued shares of CORE common stock. If the second threshold of (1) an aggregate “mineral resource” equal to 1,000,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 60,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $5 million in newly issued shares of CORE common stock. If payable, the additional share consideration will be issued based on the 30-day volume weighted average price for each of the thirty trading days immediately prior to the satisfaction of the relevant production goal.
The Company also agreed to make $10,000,000 in expenditures during the 36-month period following closing toward the existence, location, quantity, quality or commercial value of mineral deposits in, under and upon the Lucky Shot Property. On August 16, 2021, the Company hired Chris Kennedy, who has prior experience in underground mine operations management, to serve as the Company's Mine General Manager. In his role, Mr. Kennedy will manage the Company's underground exploration and development program on the Lucky Shot Property. As of December 31, 2017:2022, the Company had exceeded the $10.0 million in required expenditures.
Property |
| Location |
| Commodities |
| Claims |
| Estimated Acres |
| Type | |
Tetlin-Tok |
| Eastern Interior |
| Gold, Copper, Silver |
| 131 |
| 10,900 |
| State Mining Claims | |
Eagle |
| Eastern Interior |
| Gold, Copper, Silver |
| 428 |
| 65,900 |
| State Mining Claims | |
Bush |
| Eastern Interior |
| Gold, Copper, Silver |
| 48 |
| 7,700 |
| State Mining Claims | |
West Fork |
| Eastern Interior |
| Gold, Copper, Silver |
| 48 |
| 7,700 |
| State Mining Claims | |
Triple Z |
| Eastern Interior |
| Gold, Copper, Silver |
| 45 |
| 7,200 |
| State Mining Claims | |
| Noah | Eastern Interior | Gold, Copper, Silver | 482 | 75,400 | State Mining Claims | ||||||
Tetlin-Village |
| Eastern Interior |
| Gold, Copper, Silver |
| - |
| 675,000 |
| Lease | |
|
| TOTALS: |
|
|
| 1,182 |
| 849,800 |
|
| |
ap
Strategy
Retaining Proven Executive Leadership. Effective as of January 6, 2020, Rick Van Nieuwenhuyse was appointed to serve as President and Chief Executive Officer of the Company. Mr. Van Nieuwenhuyse will perform the functions of the Company’s principal executive officer. Also effective on January 6, 2020, the size of the Board was increased from four to five directors with Mr. Van Nieuwenhuyse appointed to the Board to fill the vacancy created by the increase. Mr. Van Nieuwenhuyse, 65, previously served as President and Chief Executive Officer of Trilogy Metals Inc. from January 2012 until December 2019. Between May 1999 and January of 2012, he served as the President and Chief Executive Officer of NOVAGOLD Resources, Inc.
Partnering with strategic industry participants to expand future exploration work.In connection As of October 1, 2020, in conjunction with an evaluationthe Kinross Transactions and the signing of the Company’s strategic options conducted by the Board of Directors and its financial advisor, the Company determined to continue its exploration activities on the Peak Gold Joint Venture Property through a joint venture with an experienced industry participant. As a result, the Company formed the Joint Venture Company pursuant to theA&R JV LLCA, with Royal Gold. Under the JV LLCA, Royal Gold is appointed asKG Mining became the manager of the Joint Venture CompanyPeak Gold JV (the “Manager”), initially, with overall management responsibility for operations of the Joint Venture Company through October 31, 2018, and, thereafter, provided Royal Gold earns at least a forty percent (40%) percentage interest by October 31, 2018. Royal Gold. KG Mining may resign as Manager and can be removed as Manager for a material breach of the A&R JV LLCA, a material failure to perform its obligations as the Manager, a failure to conduct the Joint Venture CompanyPeak Gold JV operations in accordance with industry standards and applicable laws, and other limited circumstances. The Manager will manage, and direct the operation of the Joint Venture Company, and will discharge its duties, in accordance with approved programs and budgets. The Manager will implement the decisions of the Management Committee of the Joint Venture Company (the “Management Committee”) and will carry out the day-to-day operations of the Joint Venture Company. Except as expressly delegated to the Manager, the A&R JV LLCA provides that the Management Committee has exclusive authority to determine all management matters related to the Company. Initially, theThe Management Committee currently consists of one appointee designated by the Company and two appointees designated by Royal Gold. Each designate onKG Mining. The Representatives designated by each member of the Management Committee is entitled to one vote. Except for the list of specific actions set forthPeak Gold JV vote as a group, and in accordance with their respective membership interests in the JV LLCA Agreement,Peak Gold JV. Except in the case of certain actions that require approval by unanimous vote of the Representatives, the affirmative vote byof a majority of designates is required for action.the membership interests in the Peak Gold JV constitutes the action of the Management Committee.
Structuring Incentives to Drive Behavior. The Company believes that equity ownership aligns the interests of the Company'sCompany’s executives and directors with those of its stockholders. As of December 31, 2017,2022, the Company'sCompany’s directors and executives beneficially own approximately 14.9%22.3% of the Company's common stock. An additional 13.2% of the Company's common stock is beneficially owned by the Marital Trust of Mr. Kenneth R. Peak, the Company's former Chairman, who passed away on April 19, 2013.
Stock Options. As of the date of this report, the option awards listed in the table below have been granted to directors, officers, employees and consultants of the Company:
Option Awards | |||||||
Period Granted |
| Options Granted |
| Weighted Average Exercise Price |
| Vesting Period (7) | Expiration Date |
September 2011 (1) |
| 50,000 |
| $13.13 |
| Vests over two years, beginning with one-third on the grant date. | September 2016 |
July 2012 (2) |
| 100,000 |
| $10.25 |
| Vests over two years, beginning with one-third on the grant date. | July 2017 |
December 2012 (3) |
| 250,000 |
| $10.20 |
| Vests over two years, beginning with one-third on the grant date. | December 2017 |
June 2013 (4) |
| 37,500 |
| $10.00 |
| Vested Immediately | June 2018 |
July 2013 (5) |
| 5,000 |
| $10.00 |
| Vested Immediately | July 2018 |
September 2013 (6) |
| 37,500 |
| $10.01 |
| Vested Immediately | September 2018 |
September 2013 (6) |
| 15,000 |
| $10.01 |
| Vests over two years, beginning with one-third on the grant date. | September 2018 |
(1)The Company granted 40,000 stock options to its directors and executives and an additional 10,000 stock options to its technical consultant, the owner of Avalon, for services performed during fiscal year 2011. Of the total options granted 15,000 were later forfeited.
(2) The Company granted 75,000 stock options to its directors and executives and an additional 25,000 stock options to its technical consultant for services performed during fiscal year 2012. Of the total options granted as a part of this grant, 25,000 were later forfeited.
(3) The Company granted 175,000 stock options to its directors and executives and an additional 75,000 stock options to its technical consultant for services performed during fiscal year 2013. Of the total options granted as a part of this grant, 50,000 were later forfeited.
(4) The Company granted 37,500 stock options to its executives for services performed during fiscal year 2013.
(5) The Company granted 5,000 stock options to an employee of Avalon for services performed during fiscal year 2013.
(6) The Company granted 52,500 stock options to its executives for services performed during the first quarter of fiscal year 2014.
(7) If at any time there occurs a change of control, as defined in the Amended Equity Plan, any options that are unvested at that time will immediately vest. The Company's Compensation Committee has determined that the Transactions do not constitute a change in control under the Amended Equity Plan.
During the quarter ended December 31, 2017, the Company's current executives, directors, and consultants cashless exercised 190,000 stock options resultingAcquiring exploration properties. The Company anticipates from time to time acquiring additional properties in the issuance of 93,026 shares of common stockAlaska for exploration, subject to the exercising parties and no proceeds to the Company. During fiscal year 2017, the Company's current and former executives, directors, and consultants cashless exercised 140,000 stock options resulting in the issuanceavailability of 71,454 shares of common stock to the exercising parties and no proceeds to the Company.
Exploration and Mining Property
Exploration and miningfunds. The acquisitions may include leases or similar rights infrom Alaska Native corporations or may be acquired in the following manner: public lands, private fee lands, unpatentedinclude filing Federal or State of Alaska mining claims patented miningby staking claims for exploration. Acquiring additional properties will likely result in additional expense to the Company for minimum royalties, minimum rents and tribal lands.annual exploratory work requirements. The primary sources for acquisition of these lands are the United States government, through the Bureau of Land ManagementCompany is open to strategic partnerships or alliances with other companies as a means to enhance its ability to fund new and the United States Forest Service, the Alaskan state government, tribal governments,existing exploration and individuals or entities who currently hold title to or lease government and private lands.development opportunities.
Tribal lands are those lands that are under control by sovereign Native American tribes, such as land constituting the Tetlin Lease or Alaska Native corporations established by the Alaska Native Claims Settlement Act of 1971 (ANSCA). Areas that show promise for exploration and mining can be leased or joint ventured with the tribe controlling the land, including land constituting the Tetlin Lease.
The State of Alaska government owns public lands. Mineral resource exploration, development and production are administered primarily by the State Department of Natural Resources. Ownership of the subsurface mineral estate, including alluvial and lode mineral rights, can be acquired by staking a 40 acre or 160 acre mining claim, which right is granted under Alaska Statute Sec. 38.05.185 to 38.05.275, as amended (the “Alaska Mining Law”). The State of Alaska government continues to own the surface estate, subject to certain rights of ingress and egress owned by the claimant, even though the subsurface can be controlled by a claimant with a right to extract through claim staking. A mining claim is subject to annual assessment work requirements, the payment of annual rental fees and royalties due to the State of Alaska after commencement of commercial production. Both private fee-land and unpatented mining claims and related rights, including rights to use the surface, are subject to permitting requirements of federal, state, tribal and local governments.
Gold Exploration
The Joint Venture Company controls an estimated 849,800 acres consisting of the Tetlin Lease and State of Alaska mining claims for the exploration of gold and associated minerals. To date, our gold exploration has concentrated on the Tetlin Lease, with only a limited amount of work performed on the Tok, Eagle, Bush, West Fork, Triple Z, and Noah claims.
The Joint Venture Company initiated a summer of 2015 exploration program on the Tetlin Lease. The work program anticipated spending $5 million with a possible expansion of the work program in early fall if drilling results warranted further work. The drilling program included exploration targets that were helicopter-supported at the Tors, Saddle, North Saddle and Saddle Skarn targets and road-supported work at the Peak Zone area. Most of the initial work program (Phase I) was completed by early August with assay results received by early September. On August 31, 2015, the Joint Venture Company approved a budget of up to approximately $4 million for additional exploration work to be completed before the drilling season ended in October 2015 and incurred aggregate cost of approximately $6.8 million for the calendar 2015 exploration program.
The Joint Venture Company initiated a calendar 2016 Phase I exploration program consisting of drilling the North Peak target area which began in February 2016 on the Tetlin Lease with an approved budget of $4.4 million. An additional budget was approved for spending up to an additional $6.8 million during the remainder of calendar 2016. The Joint Venture Company initiated a 2016 Phase II exploration drilling program in May, which was completed in September. A Phase III exploration drilling program was initiated in October and completed in November. The project incurred an aggregate cost in calendar 2016 of approximately $10.6 million.
The Joint Venture Company initiated a calendar 2017 Phase I exploration program consisting of drilling the North Peak target area and testing the True Blue Moon target area which began in February 2017 on the Tetlin Lease with an approved budget of $5.3 million. The 2017 Phase I program was completed in April. The Joint Venture Company initiated a 2017 Phase II exploration drilling and reconnaissance program in May, which was completed in July 2017. The Joint Venture Company initiated Phase III of the 2017 drilling program, which consisted of exploration drilling in the West Peak, West Peak Extension, 7 O’clock, Forks, and North Peak areas in September 2017. Phase III was completed in October 2017. The calendar 2017 Phase I, Phase II, and Phase III programs and associated technical work incurred an aggregate cost through December 31, 2017 of approximately $12.2 million.
From inception to December 31, 2017, the Joint Venture Company has incurred $29.5 million in exploration program expenditures. As of December 31, 2017, Royal Gold had funded a total of $29.3 million (including the initial investment of $5 million) and earned a 39.0% interest in the Joint Venture Company.
The exploration effort on the Tetlin Lease has resulted in identifying two mineral deposits (Peak and North Peak) and several other gold and copper prospects following drilling programs starting in 2011. Surface, bedrock, and stream sediment data on the Tetlin Lease as well as on the Eagle, Noah and Tok state of Alaska claims adjacent to the Tetlin Lease have been gathered during the summer exploration programs. There was no exploration program in 2014. None of the exploration targets are known to host quantifiable commercial mineral reserves and none are near or adjacent to other known significant gold or copper deposits. There has been no recorded past placer or lode mining on Peak Gold joint venture project, and the Company and the Joint Venture Company are the only entities known to have conducted drilling operations on the Peak Gold joint venture project.
Chief Danny Prospect Area
The Chief Danny Prospect Area currently is the most advanced exploration target on the Tetlin Lease and is comprised of several distinct mineralized areas: Main Peak Zone, Discovery Zone, West Peak Zone, North Peak Zone, Saddle Zone and the 7 O’clock area. The Chief Danny prospect was discovered during rock, stream sediment and pan concentrate sampling in 2009 and since then has been explored using top of bedrock soil auger sampling, trenching, ground induced polarization (IP) geophysics, airborne magnetic and resistivity surveys and core drilling. Results from this work indicate the presence of a zoned metal-bearing system consisting of a gold-copper-iron enriched core covering six square miles at Chief Danny South (includes Main Peak, Discovery, West Peak, and North Peak) and a fault-offset arsenic-gold enriched zone to the north covering three square miles at the Saddle Zone. The Company has conducted extensive drilling on the Main Peak, North Peak, and West Peak Zones. The Company has also conducted some environmental base line studies on the areas surrounding the Chief Danny prospect, as well as airborne magnetic and resistivity programs. From 2009 through 2017, the Company conducted field-related exploration work at the Chief Danny Prospect, including collecting the following samples:
Year |
| Program |
| Core Samples |
| Rock Samples |
| Soil Samples |
| Pan Con Samples |
| Stream Silt Samples |
| Core (feet) |
| IP/Geophysics (kilometers) |
| Trenching (feet) | ||||||||
2009 |
| Chief Danny |
| — |
| 958 |
| 33 |
| 94 |
| 11 |
| — |
| — |
| 2,330 | ||||||||
2010 |
| Chief Danny |
| — |
| 613 |
| 760 |
| 668 |
| 795 |
| — |
| 14 |
| — | ||||||||
2011 |
| Chief Danny |
| 1,267 |
| 20 |
| 688 |
| — |
| — |
| 8,057 |
| 3,957 |
| — | ||||||||
2012 |
| Chief Danny |
| 5,223 |
| 82 |
| 1,029 |
| — |
| — |
| 36,006 |
| — |
| — | ||||||||
2013 |
| Chief Danny |
| 8,970 |
| 14 |
| 1,406 |
| 85 |
| 278 |
| 47,081 |
| 2,414 |
| — | ||||||||
2014 |
| Chief Danny |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||
2015 |
| Chief Danny |
| 8,352 |
| 133 |
| — |
| — |
| — |
| 46,128 |
| — |
| — | ||||||||
2016 |
| Chief Danny |
| 10,450 |
| 21 |
| 694 |
| — |
| — |
| 67,336 |
| 24 |
| — | ||||||||
| 2017 | Chief Danny | 11,864 | 112 | 975 | 408 | 408 | 59,347 | 48 | — | |||||||||||||||||
|
| Total |
| 46,126 |
| 1,953 |
| 5,585 |
| 1,255 |
| 1,492 |
| 263,955 |
| 6,457 |
| 2,330 | ||||||||
The map below depicts the grade times thickness in the Main Peak, North Peak, and West Peak zones:
2017 Exploration Program - Phase III. The Phase III exploration drilling completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaled 2,966 meters (9,731 feet) in 16 holes. The Joint Venture Company spent an estimated $4.7 million, during the September and December quarter combined, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Phase III drilling consisted of exploration drilling West Peak and West Peak Extension (1,707 meters), 7 O’clock (203 meters), Forks (729 meters), and North Peak (327). The 2017 Phase III program was completed October 18, 2017, and statistics represent the full Phase III program.
A total of 363 pan concentrate, 364 stream sediment and 5 grab rock samples were collected over the Noah and southern Eagle claims in July and early August. Results from these efforts were received in the third quarter and revealed three large areas where anomalous gold, arsenic, and copper were concentrated. Gold, arsenic and copper in steams sediment samples range up to 377 ppb, 161 ppm and 412 ppm, respectively. Gold, arsenic and copper in pan cons range up to 9,929 ppb, 803 ppm and 206 ppm, respectively.
The map below depicts the location of the core holes drilled during the 2017 Phase III program:
Significant Drill Intercepts from the 2017 Phase III Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase II of the 2017 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au_gpt | Au_opt | Ag_gpt | Cu % |
| TET17408 | West Peak Ext | 78.05 | 82.01 | 3.96 | 1.35 | 0.039 | 0.1 | 0.006 |
| and | West Peak Ext | 88.33 | 93.75 | 5.42 | 1.33 | 0.039 | 0.3 | 0.013 |
| TET17408 | West Peak Ext | 150.08 | 151.93 | 1.85 | 2.50 | 0.073 | 1.9 | 0.021 |
| TET17409 | West Peak Ext | 113.07 | 117.54 | 4.47 | 0.86 | 0.025 | 1.3 | 0.010 |
| TET17411 | West Peak Ext | 161.17 | 162.78 | 1.61 | 4.55 | 0.133 | 10.0 | 0.116 |
| TET17412 | West Peak Ext | 140.19 | 141.22 | 1.03 | 4.79 | 0.140 | 2.1 | 0.018 |
| and | West Peak Ext | 148.44 | 151.19 | 2.75 | 0.76 | 0.022 | 0.9 | 0.005 |
| TET17412 | West Peak Ext | 156.50 | 157.44 | 0.94 | 1.61 | 0.047 | 0.0 | 0.010 |
| TET17413 | West Peak Ext | 140.50 | 142.57 | 2.07 | 1.68 | 0.049 | 2.97 | 0.082 |
| TET17415 | West Peak Ext | 201.73 | 202.98 | 1.25 | 2.95 | 0.086 | 12.3 | 0.004 |
2017 Exploration Program - Phase II. The Phase II exploration drilling completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaled 9,761 meters (32,038 feet) in 44 holes. The Joint Venture Company spent an estimated $4.7 million, during the June quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling, through the end of July, consisted of exploration drilling West Peak (461 meters), West Peak Extension (2,603 meters) Discovery (1,034 meters), 7 O’clock (1,443 meters), New Moon (1,398 meters), Waterpump (1,161 meters), Main Peak (570 meters) and North Peak (1,095). Soils auger sampling and IP geophysical surveys were conducted in the Chief Danny area. Stream sediment and pan concentrate samples were collected across the Noah group of claims. The 2017 Phase II program was completed July 31, 2017, and statistics represent the full Phase II program.
The map below depicts the location of the core holes drilled during the 2017 Phase II program:
Significant Drill Intercepts from the 2017 Phase II Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase II of the 2017 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au_gpt | Au_opt | Ag_gpt | Cu % |
TET17351 | Main Peak | 16.30 | 18.55 | 2.25 | 1.88 | 0.055 | 1.0 | 0.025 |
TET17353 | True Blue Moon | 91.97 | 93.73 | 1.76 | 9.15 | 0.267 | 2.0 | 0.375 |
Including | True Blue Moon | 91.97 | 92.14 | 0.17 | 81.60 | 2.380 | 2.4 | 0.249 |
TET17357 | True Blue Moon | 56.43 | 61.77 | 5.34 | 0.87 | 0.025 | 1.5 | 0.249 |
| TET17360 | North Peak | 24.27 | 26.67 | 2.40 | 0.63 | 0.044 | 2.4 | 0.137 |
TET17362 | New Moon | 66.01 | 68.58 | 2.57 | 1.03 | 0.030 | 2.6 | 0.084 |
TET17363 | New Moon | 39.48 | 41.76 | 2.28 | 1.78 | 0.052 | 0.0 | 0.016 |
and | New Moon | 213.59 | 215.31 | 1.72 | 0.95 | 0.028 | 1.1 | 0.017 |
TET17367 | Discovery | 44.65 | 45.11 | 0.46 | 4.33 | 0.126 | 6.1 | 0.069 |
and | Discovery | 182.06 | 183.80 | 1.74 | 1.11 | 0.032 | 1.9 | 0.102 |
and | Discovery | 253.68 | 257.10 | 3.42 | 1.28 | 0.037 | 1.0 | 0.052 |
and | Discovery | 313.34 | 315.15 | 1.81 | 1.44 | 0.042 | 1.6 | 0.121 |
TET17368 | West Peak Ext | 117.15 | 118.00 | 0.85 | 2.70 | 0.079 | 17.7 | 0.063 |
and | West Peak Ext | 123.75 | 126.70 | 2.95 | 0.70 | 0.020 | 2.9 | 0.073 |
and | West Peak Ext | 142.35 | 147.22 | 4.87 | 0.76 | 0.022 | 1.2 | 0.021 |
and | West Peak Ext | 175.41 | 178.11 | 2.70 | 1.14 | 0.033 | 0.7 | 0.020 |
TET17369 | West Peak Ext | 172.82 | 186.91 | 14.09 | 2.75 | 0.080 | 3.1 | 0.101 |
Including | West Peak Ext | 172.82 | 173.79 | 0.97 | 9.57 | 0.279 | 4.7 | 0.022 |
and | West Peak Ext | 174.94 | 176.17 | 1.23 | 9.51 | 0.277 | 5.1 | 0.206 |
TET17370 | Discovery | 100.30 | 103.03 | 2.73 | 0.66 | 0.019 | 2.4 | 0.058 |
and | Discovery | 166.73 | 167.73 | 1.00 | 6.30 | 0.184 | 1.3 | 0.041 |
and | Discovery | 221.36 | 223.04 | 1.68 | 0.93 | 0.027 | 0.0 | 0.002 |
TET17371 | West Peak Ext | 196.94 | 199.75 | 2.81 | 0.74 | 0.022 | 3.2 | 0.075 |
TET17372 | Discovery | 292.78 | 298.19 | 5.41 | 0.58 | 0.017 | 1.7 | 0.047 |
and | Discovery | 304.01 | 305.65 | 1.64 | 1.87 | 0.055 | 1.8 | 0.077 |
TET17375 | Seven o'clock | 218.14 | 219.54 | 1.40 | 13.20 | 0.385 | 24.7 | 0.594 |
TET17377 | Seven o'clock | 246.66 | 249.10 | 2.44 | 4.25 | 0.124 | 59.6 | 0.540 |
TET17379 | West Peak Ext | 103.24 | 111.40 | 8.16 | 5.22 | 0.152 | 0.7 | 0.010 |
Including | West Peak Ext | 108.36 | 109.14 | 0.78 | 18.20 | 0.531 | 1.5 | 0.025 |
and | West Peak Ext | 116.60 | 145.70 | 29.10 | 2.53 | 0.074 | 0.6 | 0.030 |
Including | West Peak Ext | 143.16 | 143.86 | 0.70 | 8.93 | 0.260 | 2.4 | 0.091 |
TET17381 | West Peak Ext | 135.90 | 138.17 | 2.27 | 1.27 | 0.037 | 1.7 | 0.012 |
TET17385 | West Peak Ext | 154.53 | 160.07 | 5.54 | 2.06 | 0.060 | 80.5 | 0.278 |
TET17388 | West Peak Ext | 6.71 | 12.48 | 5.77 | 0.67 | 0.020 | 0.8 | 0.162 |
and | West Peak Ext | 20.47 | 22.08 | 1.61 | 2.59 | 0.076 | 0.0 | 0.080 |
and | West Peak Ext | 127.56 | 133.50 | 5.94 | 0.55 | 0.016 | 0.4 | 0.013 |
and | West Peak Ext | 151.66 | 166.73 | 15.07 | 1.66 | 0.048 | 1.3 | 0.027 |
TET17389 | West Peak Ext | 162.60 | 166.12 | 3.52 | 0.66 | 0.019 | 2.1 | 0.042 |
TET17390 | West Peak Ext | 57.15 | 60.33 | 3.18 | 1.92 | 0.056 | 1.6 | 0.258 |
and | West Peak Ext | 206.96 | 213.17 | 6.21 | 1.31 | 0.038 | 0.8 | 0.031 |
and | West Peak Ext | 264.99 | 266.49 | 1.50 | 6.31 | 0.184 | 0.0 | 0.004 |
TET17393 | Main Peak | 2.13 | 20.51 | 18.38 | 3.22 | 0.094 | 2.0 | 0.082 |
Including | Main Peak | 3.96 | 5.18 | 1.22 | 10.60 | 0.309 | 2.1 | 0.073 |
and | Main Peak | 19.04 | 19.51 | 0.47 | 15.10 | 0.440 | 8.6 | 0.205 |
TET17393 | Main Peak | 27.98 | 71.82 | 43.84 | 6.93 | 0.202 | 1.9 | 0.057 |
Including | Main Peak | 39.06 | 40.08 | 1.02 | 92.70 | 2.704 | 33.9 | 0.127 |
and | Main Peak | 50.06 | 52.00 | 1.94 | 19.70 | 0.575 | 2.2 | 0.088 |
TET17393 | Main Peak | 78.33 | 102.72 | 24.39 | 2.29 | 0.067 | 1.1 | 0.010 |
Including | Main Peak | 82.75 | 83.54 | 0.79 | 8.75 | 0.255 | 1.5 | 0.019 |
and | Main Peak | 93.57 | 94.38 | 0.81 | 11.40 | 0.333 | 6.5 | 0.014 |
TET17393 | Main Peak | 111.86 | 134.99 | 23.13 | 12.56 | 0.366 | 9.0 | 0.086 |
Including | Main Peak | 127.91 | 128.83 | 0.92 | 48.70 | 1.420 | 25.7 | 0.131 |
and | Main Peak | 133.20 | 134.99 | 1.79 | 71.20 | 2.077 | 15.9 | 0.157 |
TET17395 | Main Peak | 34.11 | 36.15 | 2.04 | 4.55 | 0.133 | 0.0 | 0.031 |
and | Main Peak | 51.80 | 55.13 | 3.33 | 0.90 | 0.026 | 3.6 | 0.141 |
and | Main Peak | 62.55 | 73.59 | 11.04 | 4.72 | 0.138 | 5.7 | 0.147 |
TET17395 | Main Peak | 78.51 | 219.37 | 140.86 | 13.27 | 0.387 | 42.6 | 0.609 |
Including | Main Peak | 116.62 | 118.70 | 2.08 | 49.20 | 1.435 | 94.7 | 0.997 |
and | Main Peak | 118.70 | 120.25 | 1.55 | 93.40 | 2.724 | 175.0 | 1.830 |
and | Main Peak | 155.39 | 158.37 | 2.98 | 44.30 | 1.292 | 78.0 | 1.180 |
TET17396 | Waterpump | 33.77 | 35.55 | 1.78 | 1.07 | 0.031 | 2.3 | 0.264 |
TET17397 | Main Peak | 23.47 | 47.89 | 24.42 | 12.42 | 0.362 | 7.8 | 0.236 |
Including | Main Peak | 24.89 | 25.62 | 0.73 | 71.60 | 2.088 | 14.8 | 0.137 |
and | Main Peak | 30.14 | 32.29 | 2.15 | 49.50 | 1.444 | 8.0 | 0.283 |
and | Main Peak | 32.29 | 32.65 | 0.36 | 40.80 | 1.190 | 24.4 | 0.907 |
TET17397 | Main Peak | 56.87 | 94.03 | 37.16 | 1.70 | 0.050 | 4.2 | 0.093 |
Including | Main Peak | 61.80 | 63.55 | 1.75 | 7.02 | 0.205 | 20.3 | 0.148 |
and | Main Peak | 66.14 | 67.24 | 1.10 | 10.20 | 0.298 | 8.6 | 0.280 |
TET17397 | Main Peak | 99.44 | 165.21 | 65.77 | 20.14 | 0.587 | 8.8 | 0.260 |
Including | Main Peak | 124.66 | 124.94 | 0.28 | 162.70 | 4.745 | 23.8 | 0.613 |
and | Main Peak | 124.94 | 125.75 | 0.81 | 68.00 | 1.983 | 11.4 | 0.237 |
and | Main Peak | 148.44 | 149.12 | 0.68 | 57.00 | 1.663 | 31.0 | 1.000 |
2017 Exploration Program - Phase I. During the quarter ending March 31, 2017, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 5,236 meters (17,179 feet) in 47 holes. The Joint Venture Company spent an estimated $2.8 million, during the quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling consisted of infilling and expanding the mineralized zone in North Peak totaling 3,703 meters, target testing in West Peak totaling 282 meters and target testing of True Blue Moon totaling 1,251 meters.
The map below depicts the location of the core holes drilled during the 2017 Phase I program:
2017 PHASE I CORE HOLES DRILLED
Significant Drill Intercepts from the 2017 Phase I Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase I of the 2017 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au_gpt | Au_opt | Ag_gpt | Cu % |
TET17312 | North Peak | 4.27 | 33.39 | 29.12 | 7.12 | 0.208 | 69.4 | 0.121 |
Including | North Peak | 16.46 | 18.92 | 2.46 | 24.10 | 0.703 | 368.0 | 0.044 |
and | North Peak | 22.95 | 24.08 | 1.13 | 57.40 | 1.674 | 72.9 | 0.237 |
TET17312 | North Peak | 36.79 | 37.59 | 0.80 | 4.93 | 0.144 | 37.6 | 0.190 |
TET17313 | North Peak | 3.66 | 31.70 | 28.04 | 8.80 | 0.257 | 83.8 | 0.147 |
Including | North Peak | 18.29 | 20.27 | 1.98 | 55.25 | 1.611 | 443.3 | 0.072 |
TET17313 | North Peak | 37.62 | 39.92 | 2.30 | 4.67 | 0.136 | 27.5 | 0.110 |
TET17313 | North Peak | 79.07 | 84.43 | 5.36 | 3.20 | 0.093 | 39.0 | 0.231 |
TET17313 | North Peak | 85.34 | 85.65 | 0.31 | 18.95 | 0.553 | 588.0 | 1.055 |
TET17313 | North Peak | 85.95 | 86.87 | 0.92 | 9.03 | 0.263 | 266.0 | 1.140 |
TET17314 | North Peak | 137.02 | 139.90 | 2.88 | 1.23 | 0.036 | 217.1 | 0.102 |
TET17315 | North Peak | 81.95 | 83.06 | 1.11 | 2.43 | 0.071 | 17.4 | 0.084 |
TET17316 | North Peak | 20.49 | 26.44 | 5.95 | 2.56 | 0.075 | 23.5 | 0.296 |
TET17316 | North Peak | 87.03 | 87.97 | 0.94 | 2.79 | 0.081 | 13.4 | 0.178 |
TET17316 | North Peak | 100.18 | 105.16 | 4.98 | 1.00 | 0.029 | 21.3 | 0.243 |
TET17317 | North Peak | 38.95 | 46.57 | 7.62 | 8.72 | 0.254 | 4.1 | 0.086 |
Including | North Peak | 44.48 | 46.57 | 2.09 | 27.80 | 0.811 | 11.2 | 0.149 |
TET17318 | North Peak | 116.91 | 117.16 | 0.25 | 64.20 | 1.873 | 14.5 | 0.008 |
TET17320 | North Peak | 2.44 | 6.46 | 4.02 | 2.59 | 0.076 | 26.0 | 0.054 |
TET17320 | North Peak | 50.90 | 57.52 | 6.62 | 7.81 | 0.228 | 170.0 | 0.323 |
TET17321 | North Peak | 49.99 | 52.20 | 2.21 | 2.28 | 0.067 | 258.0 | 0.430 |
TET17322 | North Peak | 29.01 | 32.46 | 3.45 | 0.88 | 0.026 | 39.3 | 0.193 |
TET17323 | North Peak | 1.27 | 7.32 | 6.05 | 2.34 | 0.068 | 40.3 | 0.016 |
TET17325 | North Peak | 5.49 | 6.20 | 0.71 | 22.00 | 0.642 | 9.5 | 0.128 |
TET17325 | North Peak | 10.04 | 14.83 | 4.79 | 3.63 | 0.106 | 2.0 | 0.036 |
Including | North Peak | 12.68 | 13.22 | 0.54 | 21.50 | 0.627 | 7.7 | 0.162 |
TET17325 | North Peak | 19.11 | 20.32 | 1.21 | 41.10 | 1.199 | 17.4 | 0.145 |
TET17325 | North Peak | 24.88 | 25.60 | 0.72 | 5.40 | 0.158 | 56.0 | 0.308 |
TET17326 | North Peak | 3.73 | 9.99 | 6.26 | 11.98 | 0.349 | 172.7 | 0.038 |
Including | North Peak | 7.40 | 7.67 | 0.27 | 84.50 | 2.465 | 656.0 | 0.115 |
TET17328 | North Peak | 17.68 | 19.20 | 1.52 | 2.25 | 0.066 | 1.6 | 0.008 |
TET17331 | North Peak | 2.13 | 18.98 | 16.85 | 8.68 | 0.253 | 5.1 | 0.023 |
Including | North Peak | 8.53 | 9.79 | 1.26 | 22.40 | 0.653 | 7.0 | 0.048 |
and | North Peak | 17.84 | 18.98 | 1.14 | 28.80 | 0.840 | 8.8 | 0.029 |
TET17331 | North Peak | 23.77 | 33.45 | 9.68 | 2.58 | 0.075 | 2.0 | 0.045 |
TET17331 | North Peak | 44.74 | 46.20 | 1.46 | 5.43 | 0.158 | 2.2 | 0.056 |
TET17333 | North Peak | 4.54 | 7.64 | 3.10 | 0.58 | 0.017 | 1.6 | 0.004 |
TET17335 | North Peak | 50.32 | 75.83 | 25.51 | 4.87 | 0.142 | 2.6 | 0.137 |
Including | North Peak | 53.64 | 55.70 | 2.06 | 12.25 | 0.357 | 2.8 | 0.112 |
and | North Peak | 60.19 | 61.32 | 1.13 | 18.80 | 0.548 | 4.3 | 0.202 |
and | North Peak | 63.06 | 63.81 | 0.75 | 11.30 | 0.330 | 6.3 | 0.297 |
TET17335 | North Peak | 81.06 | 93.37 | 12.31 | 14.04 | 0.410 | 3.0 | 0.158 |
Including | North Peak | 87.88 | 89.61 | 1.73 | 56.30 | 1.642 | 5.6 | 0.192 |
TET17336 | North Peak | 20.42 | 22.46 | 2.04 | 0.75 | 0.022 | 4.2 | 0.095 |
TET17336 | North Peak | 106.91 | 119.89 | 12.98 | 1.33 | 0.039 | 3.3 | 0.122 |
Including | North Peak | 111.25 | 112.31 | 1.06 | 8.46 | 0.247 | 13.7 | 0.403 |
TET17339 | North Peak | 73.28 | 75.56 | 2.28 | 4.66 | 0.136 | 38.1 | 0.105 |
Including | North Peak | 73.28 | 73.92 | 0.64 | 12.40 | 0.362 | 74.1 | 0.216 |
TET17340 | North Peak | 82.87 | 84.04 | 1.17 | 8.33 | 0.243 | 18.7 | 0.080 |
TET17342 | North Peak | 9.42 | 17.37 | 7.95 | 0.50 | 0.015 | 1.0 | 0.055 |
TET17342 | North Peak | 20.94 | 21.37 | 0.43 | 4.36 | 0.127 | 4.4 | 0.034 |
TET17343 | North Peak | 52.88 | 57.32 | 4.44 | 0.60 | 0.018 | 39.5 | 0.524 |
TET17344 | North Peak | 10.82 | 33.38 | 22.56 | 3.64 | 0.106 | 79.3 | 0.206 |
Including | North Peak | 15.70 | 16.38 | 0.68 | 10.90 | 0.318 | 103.0 | 1.330 |
and | North Peak | 31.09 | 32.00 | 0.91 | 19.35 | 0.564 | 152.0 | 0.024 |
TET17345 | North Peak | 4.71 | 22.86 | 18.15 | 2.99 | 0.087 | 31.4 | 0.330 |
Including | North Peak | 14.87 | 16.53 | 1.66 | 12.75 | 0.372 | 73.3 | 0.983 |
TET17345 | North Peak | 28.04 | 31.70 | 3.66 | 9.07 | 0.265 | 118.6 | 0.056 |
Including | North Peak | 31.09 | 31.70 | 0.61 | 23.50 | 0.685 | 56.9 | 0.049 |
TET17346 | North Peak | 4.57 | 7.45 | 2.88 | 6.37 | 0.186 | 58.8 | 0.080 |
TET17348 | North Peak | 11.28 | 12.53 | 1.25 | 21.10 | 0.615 | 62.2 | 0.431 |
TET17348 | North Peak | 16.30 | 17.21 | 0.91 | 5.09 | 0.148 | 79.1 | 0.182 |
2016 Exploration Program - Phase III. During the quarter ending December 31, 2016, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 3,883 meters (12,739 feet) in 37 holes. The Joint Venture Company spent an estimated $2.6 million, during the quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling was all completed in the North Peak area with the objective of infilling the mineralized area to support a resource estimation.
The map below depicts the location of the core holes drilled during the 2016 Phase III program:
2016 PHASE III CORE HOLES DRILLED
Significant Drill Intercepts from the 2016 Phase III Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase III of the 2016 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16274 | North Peak | 10.65 | 18.67 | 8.02 | 5.56 | 0.162 | 73.5 | 0.297 |
Including | North Peak | 17.37 | 18.67 | 1.30 | 23.90 | 0.697 | 82.5 | 0.146 |
TET16274 | North Peak | 32.62 | 39.09 | 6.47 | 0.99 | 0.029 | 42.9 | 0.241 |
TET16274 | North Peak | 46.40 | 46.78 | 0.38 | 4.56 | 0.133 | 65.4 | 0.475 |
TET16275 | North Peak | 33.07 | 36.88 | 3.81 | 0.90 | 0.026 | 19.1 | 0.321 |
TET16275 | North Peak | 70.76 | 71.84 | 1.08 | 2.04 | 0.060 | 9.4 | 0.226 |
TET16276 | North Peak | 30.30 | 34.80 | 4.50 | 1.21 | 0.035 | 13.3 | 0.048 |
TET16276 | North Peak | 38.99 | 55.00 | 16.01 | 3.23 | 0.094 | 51.1 | 0.046 |
Including | North Peak | 45.57 | 46.10 | 0.53 | 12.35 | 0.360 | 39.5 | 0.066 |
and | North Peak | 52.58 | 55.00 | 2.42 | 11.75 | 0.343 | 237.0 | 0.020 |
TET16276 | North Peak | 71.68 | 78.24 | 6.56 | 1.67 | 0.049 | 47.5 | 0.150 |
TET16276 | North Peak | 82.90 | 86.36 | 3.46 | 1.53 | 0.045 | 50.1 | 0.166 |
TET16276 | North Peak | 90.68 | 94.66 | 3.98 | 0.70 | 0.020 | 8.2 | 0.141 |
TET16276 | North Peak | 99.30 | 104.88 | 5.58 | 1.19 | 0.035 | 4.1 | 0.119 |
TET16277 | North Peak | 7.45 | 9.75 | 2.30 | 1.66 | 0.048 | 37.2 | 0.160 |
TET16277 | North Peak | 16.90 | 18.14 | 1.24 | 1.84 | 0.054 | 55.0 | 0.163 |
TET16277 | North Peak | 41.15 | 42.95 | 1.80 | 1.49 | 0.043 | 45.4 | 0.018 |
TET16277 | North Peak | 65.02 | 67.13 | 2.11 | 1.02 | 0.030 | 21.1 | 0.124 |
TET16277 | North Peak | 83.27 | 95.79 | 12.52 | 2.56 | 0.075 | 128.1 | 0.091 |
Including | North Peak | 93.88 | 95.79 | 1.91 | 9.51 | 0.277 | 479.0 | 0.200 |
TET16277 | North Peak | 121.47 | 123.70 | 2.23 | 1.91 | 0.056 | 11.8 | 0.129 |
TET16277 | North Peak | 129.97 | 134.00 | 4.03 | 1.45 | 0.042 | 17.7 | 0.042 |
TET16278 | North Peak | 31.81 | 45.86 | 14.05 | 10.58 | 0.309 | 16.5 | 0.137 |
Including | North Peak | 31.81 | 32.99 | 1.18 | 26.00 | 0.758 | 10.7 | 0.292 |
and | North Peak | 38.73 | 39.88 | 1.15 | 30.60 | 0.893 | 42.6 | 0.239 |
and | North Peak | 42.38 | 43.11 | 0.73 | 31.50 | 0.919 | 29.8 | 0.175 |
and | North Peak | 44.42 | 45.86 | 1.44 | 30.00 | 0.875 | 38.4 | 0.163 |
TET16278 | North Peak | 55.81 | 59.03 | 3.22 | 1.56 | 0.046 | 11.3 | 0.076 |
TET16278 | North Peak | 73.02 | 83.97 | 10.95 | 3.08 | 0.090 | 26.5 | 0.025 |
TET16278 | North Peak | 104.62 | 105.77 | 1.15 | 1.46 | 0.042 | 66.5 | 0.982 |
TET16278 | North Peak | 119.33 | 120.33 | 1.00 | 1.90 | 0.055 | 57.7 | 0.880 |
TET16278 | North Peak | 142.97 | 148.53 | 5.56 | 2.78 | 0.081 | 19.1 | 0.060 |
TET16278 | North Peak | 156.32 | 157.87 | 1.55 | 2.14 | 0.062 | 43.7 | 0.136 |
TET16279 | North Peak | 129.88 | 134.47 | 4.59 | 1.75 | 0.051 | 5.6 | 0.022 |
TET16279 | North Peak | 160.22 | 163.75 | 3.53 | 1.52 | 0.044 | 2.9 | 0.014 |
TET16279 | North Peak | 169.94 | 173.50 | 3.56 | 5.06 | 0.148 | 17.6 | 0.027 |
Including | North Peak | 172.88 | 173.50 | 0.62 | 17.60 | 0.513 | 93.8 | 0.138 |
TET16279 | North Peak | 176.61 | 178.79 | 2.18 | 5.40 | 0.158 | 28.3 | 0.025 |
TET16280 | North Peak | 141.16 | 143.23 | 2.07 | 1.07 | 0.031 | 10.8 | 0.017 |
TET16280 | North Peak | 165.74 | 167.70 | 1.96 | 1.15 | 0.034 | 94.0 | 0.220 |
TET16280 | North Peak | 198.15 | 200.08 | 1.93 | 1.96 | 0.057 | 5.9 | 0.032 |
TET16280 | North Peak | 205.20 | 205.70 | 0.50 | 5.95 | 0.174 | 3.1 | 0.004 |
TET16280 | North Peak | 210.98 | 212.89 | 1.91 | 0.91 | 0.027 | 3.6 | 0.010 |
TET16281 | North Peak | 14.33 | 22.86 | 8.53 | 22.01 | 0.642 | 63.0 | 0.060 |
Including | North Peak | 17.37 | 19.51 | 2.14 | 43.90 | 1.280 | 96.5 | 0.055 |
and | North Peak | 22.37 | 22.86 | 0.49 | 57.40 | 1.674 | 227.0 | 0.017 |
TET16285 | North Peak | 7.32 | 21.63 | 14.31 | 11.59 | 0.338 | 6.2 | 0.096 |
Including | North Peak | 11.58 | 16.15 | 4.57 | 26.63 | 0.777 | 8.2 | 0.116 |
TET16286 | North Peak | 37.80 | 56.58 | 18.78 | 5.02 | 0.146 | 6.2 | 0.044 |
Including | North Peak | 48.07 | 52.75 | 4.68 | 14.44 | 0.421 | 12.1 | 0.083 |
TET16287 | North Peak | 75.60 | 81.72 | 6.12 | 7.35 | 0.214 | 1.9 | 0.069 |
Including | North Peak | 81.17 | 81.72 | 0.55 | 20.00 | 0.583 | 4.0 | 0.211 |
TET16288 | North Peak | 96.32 | 105.77 | 9.45 | 1.11 | 0.032 | 27.3 | 0.029 |
Including | North Peak | 101.29 | 102.72 | 1.43 | 3.28 | 0.096 | 3.9 | 0.050 |
TET16289 | North Peak | 10.52 | 36.00 | 25.48 | 18.73 | 0.546 | 8.3 | 0.071 |
TET16289 | North Peak | 39.12 | 55.70 | 16.58 | 13.52 | 0.394 | 7.4 | 0.044 |
TET16291 | North Peak | 0.60 | 4.63 | 4.03 | 6.39 | 0.186 | 10.3 | 0.028 |
TET16291 | North Peak | 11.28 | 33.21 | 21.93 | 4.69 | 0.137 | 10.9 | 0.064 |
Including | North Peak | 22.85 | 25.33 | 2.48 | 18.03 | 0.526 | 31.7 | 0.245 |
and | North Peak | 26.52 | 26.92 | 0.40 | 28.40 | 0.828 | 28.9 | 0.178 |
TET16291 | North Peak | 42.30 | 44.98 | 2.68 | 2.05 | 0.060 | 3.5 | 0.016 |
Including | North Peak | 44.33 | 44.98 | 0.65 | 7.00 | 0.204 | 8.8 | 0.044 |
TET16291 | North Peak | 50.90 | 53.27 | 2.37 | 5.48 | 0.160 | 11.7 | 0.056 |
TET16292 | North Peak | 5.79 | 21.18 | 15.39 | 1.58 | 0.046 | 22.3 | 0.108 |
Including | North Peak | 8.53 | 10.97 | 2.44 | 5.55 | 0.162 | 55.3 | 0.215 |
TET16292 | North Peak | 24.63 | 28.80 | 4.17 | 0.83 | 0.024 | 22.9 | 0.034 |
TET16293 | North Peak | 7.11 | 11.89 | 4.78 | 1.26 | 0.037 | 50.5 | 0.133 |
Including | North Peak | 11.48 | 11.89 | 0.41 | 5.15 | 0.150 | 66.6 | 0.073 |
TET16294 | North Peak | 9.10 | 16.71 | 7.61 | 6.56 | 0.191 | 86.2 | 0.233 |
Including | North Peak | 12.03 | 12.60 | 0.57 | 17.05 | 0.497 | 141.0 | 0.051 |
TET16295 | North Peak | 5.66 | 20.65 | 14.99 | 11.67 | 0.340 | 11.5 | 0.111 |
Including | North Peak | 7.94 | 10.35 | 2.41 | 32.40 | 0.945 | 14.1 | 0.317 |
TET16296 | North Peak | 6.13 | 9.80 | 3.67 | 1.78 | 0.052 | 40.7 | 0.267 |
TET16296 | North Peak | 24.13 | 26.28 | 2.15 | 0.87 | 0.025 | 45.3 | 0.059 |
TET16297 | North Peak | 6.91 | 30.09 | 23.18 | 3.72 | 0.109 | 10.9 | 0.196 |
Including | North Peak | 16.06 | 17.78 | 1.72 | 9.51 | 0.277 | 10.3 | 0.139 |
and | North Peak | 24.85 | 26.91 | 2.06 | 12.80 | 0.373 | 21.9 | 0.419 |
TET16297 | North Peak | 39.91 | 41.44 | 1.53 | 11.50 | 0.335 | 505.0 | 0.131 |
TET16298 | North Peak | 6.75 | 14.30 | 7.55 | 4.37 | 0.127 | 17.0 | 0.106 |
Including | North Peak | 8.91 | 10.79 | 1.88 | 13.60 | 0.397 | 20.2 | 0.218 |
TET16298 | North Peak | 24.82 | 31.57 | 6.75 | 15.53 | 0.453 | 33.2 | 0.383 |
Including | North Peak | 31.27 | 31.57 | 0.30 | 108.00 | 3.150 | 33.8 | 0.282 |
TET16298 | North Peak | 34.90 | 37.94 | 3.04 | 1.40 | 0.041 | 35.8 | 0.295 |
TET16298 | North Peak | 44.18 | 59.02 | 14.84 | 3.08 | 0.090 | 25.6 | 0.302 |
Including | North Peak | 52.00 | 53.19 | 1.19 | 8.78 | 0.256 | 12.6 | 0.267 |
TET16299 | North Peak | 24.77 | 39.32 | 14.55 | 5.46 | 0.159 | 66.0 | 0.348 |
Including | North Peak | 31.39 | 33.68 | 2.29 | 17.05 | 0.497 | 93.2 | 0.476 |
and | North Peak | 39.05 | 39.32 | 0.27 | 60.00 | 1.750 | 428.0 | 0.964 |
TET16299 | North Peak | 47.85 | 50.90 | 3.05 | 9.83 | 0.287 | 156.0 | 0.062 |
TET16299 | North Peak | 53.95 | 54.71 | 0.76 | 9.49 | 0.277 | 120.0 | 0.093 |
TET16299 | North Peak | 59.74 | 65.46 | 5.72 | 2.14 | 0.062 | 59.1 | 0.159 |
Including | North Peak | 64.95 | 65.46 | 0.51 | 13.95 | 0.407 | 301.0 | 0.741 |
TET16299 | North Peak | 81.38 | 84.43 | 3.05 | 7.82 | 0.228 | 53.0 | 0.095 |
TET16300 | North Peak | 0.00 | 1.52 | 1.52 | 1.08 | 0.032 | 10.4 | 0.073 |
TET16300 | North Peak | 16.63 | 21.41 | 4.78 | 0.90 | 0.026 | 16.8 | 0.289 |
TET16300 | North Peak | 24.73 | 39.78 | 15.05 | 5.15 | 0.150 | 62.7 | 0.299 |
Including | North Peak | 36.27 | 38.79 | 2.52 | 22.10 | 0.645 | 175.0 | 0.060 |
TET16300 | North Peak | 44.81 | 47.70 | 2.89 | 2.90 | 0.085 | 64.5 | 0.030 |
TET16300 | North Peak | 51.00 | 67.00 | 16.00 | 3.43 | 0.100 | 64.8 | 0.141 |
Including | North Peak | 51.51 | 53.96 | 2.45 | 10.57 | 0.308 | 61.1 | 0.032 |
and | North Peak | 57.91 | 58.52 | 0.61 | 10.20 | 0.298 | 180.0 | 0.070 |
TET16300 | North Peak | 70.10 | 71.78 | 1.68 | 2.19 | 0.064 | 41.3 | 0.366 |
TET16301 | North Peak | 147.29 | 151.66 | 4.37 | 1.37 | 0.040 | 7.6 | 0.084 |
TET16302 | North Peak | 7.14 | 9.14 | 2.00 | 10.98 | 0.320 | 7.2 | 0.041 |
TET16302 | North Peak | 14.31 | 37.05 | 22.74 | 26.61 | 0.776 | 5.2 | 0.035 |
Including | North Peak | 19.31 | 21.95 | 2.64 | 103.50 | 3.019 | 12.5 | 0.069 |
and | North Peak | 27.09 | 29.20 | 2.11 | 58.70 | 1.712 | 9.2 | 0.075 |
TET16302 | North Peak | 44.36 | 48.44 | 4.08 | 7.78 | 0.227 | 3.4 | 0.065 |
Including | North Peak | 45.67 | 46.36 | 0.69 | 22.90 | 0.668 | 6.3 | 0.070 |
TET16302 | North Peak | 52.54 | 57.60 | 5.06 | 1.05 | 0.031 | 6.2 | 0.049 |
Including | North Peak | 52.54 | 53.64 | 1.10 | 3.40 | 0.099 | 19.7 | 0.143 |
TET16303 | North Peak | 59.45 | 60.96 | 1.51 | 1.64 | 0.048 | 28.5 | 0.041 |
TET16303 | North Peak | 91.95 | 97.70 | 5.75 | 1.03 | 0.030 | 0.2 | 0.009 |
Including | North Peak | 91.95 | 92.27 | 0.32 | 3.92 | 0.114 | 0.9 | 0.012 |
TET16304 | North Peak | 16.31 | 37.51 | 21.20 | 11.86 | 0.346 | 3.9 | 0.044 |
Including | North Peak | 24.26 | 26.12 | 1.86 | 35.40 | 1.033 | 8.1 | 0.123 |
and | North Peak | 28.31 | 30.94 | 2.63 | 27.62 | 0.806 | 5.8 | 0.050 |
TET16304 | North Peak | 46.97 | 69.52 | 22.55 | 5.49 | 0.160 | 12.5 | 0.051 |
Including | North Peak | 48.01 | 48.62 | 0.61 | 21.50 | 0.627 | 3.2 | 0.105 |
and | North Peak | 64.31 | 65.42 | 1.11 | 19.05 | 0.556 | 3.8 | 0.078 |
and | North Peak | 67.42 | 67.72 | 0.30 | 22.40 | 0.653 | 8.7 | 0.169 |
TET16304 | North Peak | 75.52 | 77.70 | 2.18 | 2.78 | 0.081 | 1.5 | 0.064 |
TET16304 | North Peak | 80.93 | 82.79 | 1.86 | 5.88 | 0.172 | 4.1 | 0.343 |
TET16304 | North Peak | 87.01 | 87.30 | 0.29 | 28.80 | 0.840 | 13.6 | 0.133 |
TET16305 | North Peak | 11.13 | 13.41 | 2.28 | 4.43 | 0.129 | 4.3 | 0.051 |
TET16305 | North Peak | 17.70 | 47.24 | 29.54 | 7.17 | 0.209 | 1.6 | 0.032 |
Including | North Peak | 18.14 | 19.66 | 1.52 | 24.93 | 0.727 | 3.0 | 0.085 |
and | North Peak | 21.34 | 22.86 | 1.52 | 36.76 | 1.072 | 5.9 | 0.061 |
and | North Peak | 30.18 | 30.48 | 0.30 | 21.80 | 0.636 | 4.0 | 0.075 |
TET16306 | North Peak | 58.83 | 60.50 | 1.67 | 1.31 | 0.038 | 39.8 | 0.035 |
TET16306 | North Peak | 65.65 | 68.19 | 2.54 | 3.13 | 0.091 | 94.8 | 0.143 |
Including | North Peak | 67.67 | 68.19 | 0.52 | 9.15 | 0.267 | 174.0 | 0.087 |
TET16306 | North Peak | 93.94 | 94.63 | 0.69 | 6.79 | 0.198 | 18.9 | 0.090 |
TET16306 | North Peak | 113.00 | 122.53 | 9.53 | 3.79 | 0.111 | 117.1 | 0.147 |
Including | North Peak | 121.96 | 122.53 | 0.57 | 17.80 | 0.519 | 92.2 | 0.099 |
TET16307 | North Peak | 58.03 | 68.88 | 10.85 | 3.29 | 0.096 | 41.2 | 0.187 |
Including | North Peak | 60.07 | 61.12 | 1.05 | 9.32 | 0.272 | 79.6 | 0.442 |
and | North Peak | 64.58 | 65.32 | 0.74 | 9.00 | 0.263 | 82.3 | 0.091 |
TET16307 | North Peak | 139.64 | 141.31 | 1.67 | 1.23 | 0.036 | 60.6 | 0.237 |
TET16308 | North Peak | 41.68 | 51.36 | 9.68 | 1.79 | 0.052 | 20.3 | 0.055 |
TET16310 | North Peak | 38.56 | 43.40 | 4.84 | 1.88 | 0.055 | 0.4 | 0.013 |
Including | North Peak | 38.56 | 39.10 | 0.54 | 13.80 | 0.403 | 3.7 | 0.055 |
2016 Exploration Program - Phase II. During the quarter ending December 31, 2016, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 6,498 meters (22,795 feet) in 30 holes, a continuation of the 2016 Phase II program, started in the prior quarter. The Phase II program, which was initiated in the quarter ended June 30, 2016, has completed 12,601 meters (41,342 ft) of exploration drilling in 63 holes. The Joint Venture Company spent an estimated $3.9 million, during the quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling targeted three areas, North Peak, West Peak, and Connector Zones to better define the areas with known mineralization. During the full program, high grade-gold mineralization was drilled in the area that joins North Peak to the Connector Zone mineralization identified in the 2016 Phase I program. Several holes drilled revealed significant grade-thickness intervals of gold such as drill hole 16235 which intercepted 38.88 meters grading 51.62 gpt gold starting at 14.50 meters, drill hole 16237 which intercepted 14.19 meters grading 45.33 gpt gold starting at 9.75 meters, drill hole16271 which intercepted 17.12 meters grading 51.89 gpt gold starting at 24.08 meters, and drill hole 16256 which intercepted 13.20 meters grading 48.59 gpt gold starting at 7.92 meters.
The map below depicts the location of 63 core holes drilled during the 2016 Phase II program:
2016 PHASE II CORE HOLES DRILLED
Significant Drill Intercepts from the 2016 Phase II Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase II of the 2016 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16211 | Connector | 16.11 | 26.42 | 10.31 | 3.500 | 0.102 | 34.4 | 0.299 |
Including | Connector | 20.57 | 21.00 | 0.43 | 13.650 | 0.398 | 45.6 | 0.199 |
TET16211 | Connector | 29.87 | 42.82 | 12.95 | 3.090 | 0.090 | 58.9 | 0.295 |
Including | Connector | 41.61 | 42.82 | 1.21 | 14.350 | 0.419 | 251.0 | 0.681 |
TET16211 | Connector | 50.04 | 54.25 | 4.21 | 2.700 | 0.079 | 18.0 | 0.147 |
TET16211 | Connector | 114.76 | 121.05 | 6.29 | 1.440 | 0.042 | 66.3 | 0.09 |
TET16212 | North Peak | 52.88 | 55.85 | 2.97 | 0.900 | 0.026 | 2.5 | 0.151 |
TET16212 | North Peak | 142.22 | 144.57 | 2.35 | 1.560 | 0.046 | — | 0.028 |
TET16213 | North Peak | 115.98 | 127.84 | 11.86 | 0.610 | 0.018 | 1.0 | 0.042 |
TET16214 | North Peak | 54.67 | 56.49 | 1.82 | 1.400 | 0.041 | 5.6 | 0.025 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16214 | North Peak | 140.47 | 143.77 | 3.30 | 1.270 | 0.037 | 20.5 | 0.730 |
Including | North Peak | 140.47 | 141.10 | 0.63 | 4.890 | 0.143 | 83.1 | 2.970 |
TET16215 | North Peak | 50.58 | 66.20 | 15.62 | 2.400 | 0.070 | 42.0 | 0.520 |
TET16215 | North Peak | 86.10 | 89.68 | 3.58 | 0.930 | 0.027 | 7.5 | 0.012 |
TET16216 | North Peak | 17.28 | 32.99 | 15.71 | 1.840 | 0.054 | 19.4 | 0.107 |
Including | North Peak | 17.28 | 18.17 | 0.89 | 9.720 | 0.284 | 74.5 | 0.317 |
TET16216 | North Peak | 55.85 | 69.79 | 13.94 | 0.900 | 0.026 | 48.8 | 0.384 |
TET16216 | North Peak | 110.33 | 112.00 | 1.67 | 0.940 | 0.027 | 22.3 | 0.044 |
TET16217 | West Peak | 50.02 | 52.64 | 2.62 | 0.780 | 0.023 | — | 0.007 |
TET16217 | West Peak | 88.30 | 89.40 | 1.10 | 1.470 | 0.043 | 2.9 | 0.093 |
TET16218 | West Peak | 49.53 | 55.42 | 5.89 | 1.980 | 0.058 | — | 0.005 |
TET16218 | West Peak | 60.76 | 63.82 | 3.06 | 1.760 | 0.051 | — | 0.009 |
TET16218 | West Peak | 77.11 | 85.80 | 8.69 | 2.250 | 0.066 | 0.7 | 0.008 |
TET16218 | West Peak | 191.47 | 206.48 | 15.01 | 7.100 | 0.207 | 8.9 | 0.325 |
Including | West Peak | 194.18 | 194.91 | 0.73 | 73.500 | 2.144 | 37.0 | 1.550 |
TET16218 | West Peak | 215.60 | 216.96 | 1.36 | 1.280 | 0.037 | 0.6 | 0.018 |
TET16219 | West Peak | 37.65 | 47.55 | 9.90 | 1.370 | 0.040 | 0.2 | 0.019 |
TET16219 | West Peak | 195.24 | 199.32 | 4.08 | 0.640 | 0.019 | 9.0 | 0.025 |
TET16219 | West Peak | 207.11 | 210.16 | 3.05 | 0.910 | 0.027 | 0.8 | 0.025 |
TET16220 | North Peak | 23.27 | 56.23 | 32.96 | 4.870 | 0.142 | 2.4 | 0.045 |
Including | North Peak | 27.70 | 29.41 | 1.71 | 12.300 | 0.359 | 7.3 | 0.124 |
and | North Peak | 32.96 | 33.99 | 1.03 | 15.150 | 0.442 | 4.5 | 0.138 |
and | North Peak | 33.99 | 34.98 | 0.99 | 14.950 | 0.436 | 5.7 | 0.108 |
and | North Peak | 42.72 | 44.37 | 1.65 | 12.900 | 0.376 | 5.3 | 0.040 |
and | North Peak | 51.89 | 53.24 | 1.35 | 11.900 | 0.347 | 5.9 | 0.110 |
TET16220 | North Peak | 64.16 | 66.14 | 1.98 | 6.810 | 0.199 | 6.0 | 0.111 |
TET16220 | North Peak | 71.72 | 73.75 | 2.03 | 1.340 | 0.039 | 2.3 | 0.064 |
TET16221 | North Peak | 21.61 | 39.53 | 17.92 | 8.230 | 0.240 | 3.0 | 0.035 |
Including | North Peak | 30.82 | 32.90 | 2.08 | 18.300 | 0.534 | 3.1 | 0.067 |
and | North Peak | 37.50 | 39.53 | 2.03 | 17.150 | 0.500 | 5.0 | 0.063 |
TET16221 | North Peak | 74.07 | 92.63 | 18.56 | 2.910 | 0.085 | 3.3 | 0.023 |
Including | North Peak | 74.07 | 77.27 | 3.20 | 9.730 | 0.284 | 2.8 | 0.019 |
TET16221 | North Peak | 97.82 | 99.86 | 2.04 | 3.060 | 0.089 | 11.7 | 0.127 |
TET16221 | North Peak | 105.71 | 117.65 | 11.94 | 2.740 | 0.080 | 10.3 | 0.035 |
TET16221 | North Peak | 125.10 | 129.54 | 4.44 | 4.430 | 0.129 | 3.3 | 0.051 |
TET16223 | North Peak | 56.44 | 57.63 | 1.19 | 2.670 | .078 | 20.4 | 0.070 |
TET16223 | North Peak | 74.36 | 85.80 | 11.44 | 1.070 | 0.031 | 30.6 | 0.184 |
TET16223 | North Peak | 93.42 | 95.48 | 2.06 | 3.390 | 0.099 | 42.0 | 0.476 |
TET16223 | North Peak | 103.10 | 109.08 | 5.98 | 2.920 | 0.085 | 4.3 | 0.093 |
TET16224 | North Peak | 109.07 | 115.61 | 6.54 | 2.500 | 0.073 | 8.8 | 0.168 |
TET16225 | North Peak | 55.60 | 64.90 | 9.30 | 11.770 | 0.343 | 51.1 | 0.041 |
Including | North Peak | 63.09 | 64.90 | 1.81 | 36.200 | 1.056 | 171.0 | 0.093 |
TET16225 | North Peak | 87.64 | 105.14 | 17.50 | 2.950 | 0.086 | 33.7 | 0.187 |
Including | North Peak | 102.41 | 105.14 | 2.73 | 8.630 | 0.252 | 19.7 | 0.103 |
TET16226 | North Peak | 11.58 | 13.46 | 1.88 | 0.960 | 0.028 | 88.4 | 0.016 |
TET16226 | North Peak | 18.75 | 26.09 | 7.34 | 16.970 | 0.495 | 6.7 | 0.040 |
Including | North Peak | 18.75 | 20.20 | 1.45 | 71.300 | 2.080 | 18.2 | 0.045 |
TET16226 | North Peak | 35.51 | 36.88 | 1.37 | 1.430 | 0.042 | 8.3 | 0.028 |
TET16226 | North Peak | 54.08 | 57.81 | 3.73 | 1.430 | 0.042 | 5.8 | 0.035 |
TET16227 | North Peak | 21.56 | 32.31 | 10.75 | 18.620 | 0.543 | 10.2 | 0.083 |
Including | North Peak | 24.00 | 25.20 | 1.20 | 81.900 | 2.389 | 19.3 | 0.116 |
and | North Peak | 25.20 | 26.14 | 0.94 | 43.400 | 1.266 | 15.0 | 0.140 |
TET16227 | North Peak | 88.11 | 90.22 | 2.11 | 1.320 | 0.039 | 0.6 | 0.002 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16228 | North Peak | 25.42 | 40.23 | 14.81 | 4.640 | 0.135 | 21.7 | 0.257 |
Including | North Peak | 33.81 | 35.95 | 2.14 | 17.900 | 0.522 | 41.9 | 0.602 |
TET16228 | North Peak | 43.89 | 51.47 | 7.58 | 3.540 | 0.103 | 12.3 | 0.255 |
TET16228 | North Peak | 56.86 | 59.74 | 2.88 | 3.140 | 0.092 | 1.3 | 0.022 |
TET16228 | North Peak | 62.94 | 75.23 | 12.29 | 1.090 | 0.032 | 26.6 | 0.234 |
TET16230 | North Peak | 42.95 | 50.22 | 7.27 | 4.170 | 0.122 | 24.0 | 0.303 |
| TET16231 | North Peak | 18.61 | 23.52 | 4.91 | 0.990 | 0.029 | 5.3 | 0.062 |
TET16231 | North Peak | 53.89 | 57.32 | 3.43 | 0.730 | 0.021 | 7.0 | 0.053 |
TET16231 | North Peak | 68.17 | 70.83 | 2.66 | 7.730 | 0.225 | 26.1 | 0.118 |
TET16231 | North Peak | 75.61 | 81.16 | 5.55 | 3.090 | 0.090 | 21.1 | 0.235 |
TET16231 | North Peak | 88.19 | 90.34 | 2.15 | 1.110 | 0.032 | 4.3 | 0.031 |
TET16231 | North Peak | 101.08 | 102.64 | 1.56 | 3.810 | 0.111 | 5.5 | 0.054 |
TET16231 | North Peak | 128.15 | 132.89 | 4.74 | 2.000 | 0.058 | 9.3 | 0.139 |
Including | North Peak | 131.41 | 131.97 | 0.56 | 6.930 | 0.202 | 6.7 | 0.125 |
TET16232 | North Peak | 43.28 | 50.90 | 7.62 | 1.180 | 0.034 | 55.4 | 0.054 |
TET16232 | North Peak | 117.35 | 121.62 | 4.27 | 0.710 | 0.021 | 64.0 | 0.355 |
TET16232 | North Peak | 138.53 | 152.21 | 13.68 | 5.520 | 0.161 | 12.4 | 0.067 |
Including | North Peak | 139.47 | 139.75 | 0.28 | 32.400 | 0.945 | 52.7 | 0.117 |
and | North Peak | 142.29 | 143.89 | 1.60 | 18.400 | 0.537 | 12.8 | 0.260 |
and | North Peak | 146.94 | 147.36 | 0.42 | 28.100 | 0.820 | 93.8 | 0.095 |
TET16233 | North Peak | 23.11 | 24.14 | 1.03 | 7.890 | 0.230 | 13.3 | 0.032 |
TET16233 | North Peak | 38.23 | 42.98 | 4.75 | 2.060 | 0.060 | 16.4 | 0.070 |
TET16233 | North Peak | 56.10 | 70.69 | 14.59 | 5.760 | 0.168 | 35.2 | 0.389 |
TET16234 | North Peak | 16.00 | 17.75 | 1.75 | 8.280 | 0.242 | 27.2 | 0.016 |
TET16234 | North Peak | 23.90 | 35.63 | 11.73 | 8.760 | 0.256 | 14.8 | 0.034 |
TET16234 | North Peak | 58.67 | 65.60 | 6.93 | 5.530 | 0.161 | 15.8 | 0.015 |
TET16235 | North Peak | 14.50 | 53.38 | 38.88 | 51.620 | 1.506 | 216.0 | 0.020 |
Including | North Peak | 17.68 | 20.73 | 3.05 | 320.000 | 9.333 | 589.0 | 0.025 |
and | North Peak | 23.93 | 24.47 | 0.54 | 371.000 | 10.821 | 3,210.0 | 0.006 |
and | North Peak | 24.47 | 25.76 | 1.29 | 109.000 | 3.179 | 265.0 | 0.016 |
and | North Peak | 28.85 | 29.34 | 0.49 | 116.000 | 3.383 | 151.0 | 0.003 |
and | North Peak | 52.98 | 53.38 | 0.40 | 125.000 | 3.646 | 143.0 | 0.014 |
TET16235 | North Peak | 59.50 | 65.92 | 6.42 | 8.730 | 0.255 | 43.4 | 0.053 |
TET16235 | North Peak | 70.05 | 73.00 | 2.95 | 4.970 | 0.145 | 13.1 | 0.019 |
TET16236 | North Peak | 4.67 | 7.23 | 2.56 | 0.830 | 0.024 | 2.1 | 0.007 |
TET16236 | North Peak | 60.45 | 63.09 | 2.64 | 2.930 | 0.085 | 51.4 | 0.012 |
TET16237 | North Peak | 9.75 | 23.94 | 14.19 | 45.330 | 1.322 | 9.3 | 0.078 |
Including | North Peak | 11.58 | 13.56 | 1.98 | 97.000 | 2.829 | 19.6 | 0.248 |
and | North Peak | 13.56 | 14.80 | 1.24 | 166.000 | 4.842 | 14.3 | 0.019 |
TET16237 | North Peak | 28.81 | 33.23 | 4.42 | 2.170 | 0.063 | 4.7 | 0.014 |
TET16237 | North Peak | 41.15 | 42.95 | 1.80 | 6.720 | 0.196 | 1.9 | 0.021 |
TET16237 | North Peak | 50.90 | 53.82 | 2.92 | 1.550 | 0.045 | — | 0.003 |
TET16237 | North Peak | 57.38 | 61.18 | 3.80 | 1.660 | 0.048 | 0.9 | 0.014 |
TET16238 | North Peak | 68.42 | 74.68 | 6.26 | 4.980 | 0.145 | 34.3 | 0.099 |
TET16238 | North Peak | 77.90 | 93.57 | 15.67 | 3.170 | 0.092 | 3.1 | 0.023 |
Including | North Peak | 79.92 | 81.35 | 1.43 | 18.200 | 0.531 | 3.1 | 0.034 |
TET16239 | North Peak | 35.66 | 38.45 | 2.79 | 1.230 | 0.036 | 5.1 | 0.005 |
TET16239 | North Peak | 50.79 | 54.72 | 3.93 | 7.760 | 0.226 | 23.3 | 0.023 |
Including | North Peak | 50.79 | 51.27 | 0.48 | 26.800 | 0.782 | 104.0 | 0.129 |
TET16239 | North Peak | 109.41 | 116.13 | 6.72 | 1.420 | 0.041 | 9.6 | 0.071 |
TET16240 | North Peak | 119.33 | 132.85 | 13.52 | 1.590 | 0.046 | 1.7 | 0.020 |
TET16241 | North Peak | 56.43 | 56.79 | 0.36 | 11.450 | 0.334 | 172.0 | 0.066 |
TET16242 | North Peak | 19.38 | 25.45 | 6.07 | 2.720 | 0.079 | 70.5 | 0.236 |
TET16242 | North Peak | 31.04 | 34.41 | 3.37 | 5.720 | 0.167 | 64.4 | 0.541 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16242 | North Peak | 37.58 | 63.93 | 26.35 | 5.550 | 0.162 | 39.3 | 0.134 |
Including | North Peak | 50.44 | 53.15 | 2.71 | 18.300 | 0.534 | 75.5 | 0.097 |
and | North Peak | 58.18 | 63.09 | 4.91 | 12.050 | 0.351 | 38.8 | 0.149 |
TET16242 | North Peak | 151.88 | 152.58 | 0.70 | 3.860 | 0.113 | 56.7 | 0.070 |
TET16242 | North Peak | 156.00 | 157.25 | 1.25 | 3.170 | 0.092 | 66.5 | 0.376 |
TET16243 | North Peak | 10.93 | 12.30 | 1.37 | 14.950 | 0.436 | 28.8 | 0.105 |
TET16243 | North Peak | 15.85 | 21.55 | 5.70 | 4.300 | 0.125 | 47.6 | 0.247 |
TET16243 | North Peak | 25.82 | 34.29 | 8.47 | 3.990 | 0.116 | 49.6 | 0.391 |
TET16243 | North Peak | 39.68 | 57.19 | 17.51 | 4.970 | 0.145 | 61.2 | 0.116 |
TET16243 | North Peak | 99.42 | 104.70 | 5.28 | 2.600 | 0.076 | 18.7 | 0.210 |
TET16244 | North Peak | 35.08 | 51.00 | 15.92 | 11.740 | 0.342 | 51.1 | 0.183 |
TET16244 | North Peak | 62.14 | 67.55 | 5.41 | 2.050 | 0.060 | 34.6 | 0.152 |
TET16244 | North Peak | 76.60 | 87.06 | 10.46 | 2.580 | 0.075 | 4.9 | 0.035 |
TET16245 | North Peak | 43.11 | 46.02 | 2.91 | 0.630 | 0.018 | 2.5 | 0.022 |
TET16245 | North Peak | 50.36 | 52.65 | 2.29 | 1.210 | 0.035 | 12.0 | 0.047 |
TET16245 | North Peak | 63.55 | 71.74 | 8.19 | 2.160 | 0.063 | 30.0 | 0.161 |
TET16245 | North Peak | 83.27 | 86.11 | 2.84 | 2.600 | 0.076 | 26.5 | 0.030 |
TET16246 | North Peak | 90.80 | 92.49 | 1.69 | 2.180 | 0.064 | 26.1 | 0.113 |
TET16246 | North Peak | 126.39 | 128.51 | 2.12 | 0.900 | 0.026 | 2.2 | 0.010 |
TET16247 | North Peak | 14.31 | 16.56 | 2.25 | 1.560 | 0.046 | 88.5 | 0.064 |
TET16247 | North Peak | 61.30 | 66.74 | 5.44 | 3.970 | 0.116 | 12.6 | 0.104 |
TET16247 | North Peak | 71.78 | 74.18 | 2.40 | 0.670 | 0.020 | 18.1 | 0.094 |
TET16247 | North Peak | 77.39 | 83.97 | 6.58 | 1.220 | 0.036 | 23.2 | 0.127 |
TET16247 | North Peak | 107.49 | 108.58 | 1.09 | 3.180 | 0.093 | 38.1 | 0.080 |
TET16247 | North Peak | 137.78 | 145.02 | 7.24 | 1.970 | 0.057 | 0.5 | 0.003 |
TET16248 | North Peak | 9.38 | 10.75 | 1.37 | 9.290 | 0.271 | 25.2 | 0.063 |
TET16248 | North Peak | 13.83 | 22.89 | 9.06 | 5.020 | 0.146 | 6.1 | 0.035 |
Including | North Peak | 18.36 | 19.35 | 0.99 | 13.400 | 0.391 | 5.8 | 0.054 |
TET16248 | North Peak | 30.78 | 36.56 | 5.78 | 1.790 | 0.052 | 4.4 | 0.081 |
TET16248 | North Peak | 43.22 | 45.96 | 2.74 | 10.620 | 0.310 | 3.8 | 0.052 |
TET16248 | North Peak | 52.75 | 57.73 | 4.98 | 5.530 | 0.161 | 5.7 | 0.037 |
Including | North Peak | 52.75 | 53.95 | 1.20 | 17.100 | 0.499 | 5.9 | 0.045 |
TET16248 | North Peak | 61.23 | 72.02 | 10.79 | 4.050 | 0.118 | 13.0 | 0.042 |
Including | North Peak | 67.80 | 70.55 | 2.75 | 10.400 | 0.303 | 32.5 | 0.042 |
and | North Peak | 71.48 | 72.02 | 0.54 | 11.350 | 0.331 | 10.7 | 0.087 |
TET16251 | North Peak | 118.21 | 120.82 | 2.61 | 0.800 | 0.023 | 0.8 | 0.025 |
TET16252 | North Peak | 49.43 | 51.94 | 2.51 | 2.220 | 0.065 | 1.7 | 0.010 |
TET16253 | North Peak | 105.65 | 107.96 | 2.31 | 0.860 | 0.025 | 0.8 | 0.033 |
TET16255 | North Peak | 35.30 | 44.72 | 9.42 | 5.530 | 0.161 | 56.2 | 0.230 |
Including | North Peak | 36.90 | 37.43 | 0.53 | 16.700 | 0.487 | 113.0 | 1.165 |
and | North Peak | 43.35 | 44.72 | 1.37 | 19.200 | 0.560 | 80.6 | 0.071 |
TET16256 | North Peak | 7.92 | 21.12 | 13.20 | 48.590 | 1.417 | 112.2 | 0.053 |
Including | North Peak | 8.55 | 10.66 | 2.11 | 222.000 | 6.475 | 316.0 | 0.021 |
TET16257 | North Peak | 73.82 | 74.33 | 0.51 | 3.300 | 0.096 | 526.0 | 0.080 |
TET16261 | East Peak | 215.78 | 216.57 | 0.79 | 3.940 | 0.115 | 11.7 | 0.004 |
TET16262 | West Peak | 35.05 | 35.72 | 0.67 | 4.040 | 0.118 | 35.8 | 0.084 |
TET16262 | West Peak | 60.22 | 63.09 | 2.87 | 1.730 | 0.050 | 0.6 | 0.029 |
TET16262 | West Peak | 151.08 | 159.61 | 8.53 | 5.750 | 0.168 | 37.6 | 0.136 |
Including | West Peak | 151.65 | 152.57 | 0.92 | 16.500 | 0.481 | 55.4 | 0.260 |
and | West Peak | 152.57 | 153.73 | 1.16 | 13.850 | 0.404 | 92.9 | 0.191 |
TET16262 | West Peak | 195.76 | 198.19 | 2.43 | 1.720 | 0.050 | 5.7 | 0.111 |
TET16262 | West Peak | 210.69 | 216.02 | 5.33 | 4.560 | 0.133 | 5.7 | 0.199 |
TET16262 | West Peak | 221.50 | 222.90 | 1.40 | 1.510 | 0.044 | 96.2 | 0.151 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16263 | West Peak | 52.20 | 54.07 | 1.87 | 5.540 | 0.162 | 0.8 | 0.036 |
TET16263 | West Peak | 180.50 | 182.03 | 1.53 | 10.650 | 0.311 | 12.7 | 0.099 |
TET16263 | West Peak | 197.21 | 199.77 | 2.56 | 2.040 | 0.060 | 1.0 | 0.027 |
TET16263 | West Peak | 204.00 | 216.64 | 12.64 | 1.280 | 0.037 | 0.3 | 0.010 |
TET16264 | West Peak | 237.78 | 244.53 | 6.75 | 0.630 | 0.018 | 2.2 | 0.100 |
TET16265 | West Peak | 77.02 | 78.04 | 1.02 | 4.200 | 0.123 | 2.2 | 0.421 |
TET16265 | West Peak | 84.42 | 86.45 | 2.03 | 0.990 | 0.029 | 1.5 | 0.446 |
TET16265 | West Peak | 245.97 | 247.01 | 1.04 | 1.720 | 0.050 | 7.9 | 0.271 |
TET16265 | West Peak | 255.43 | 257.19 | 1.76 | 1.440 | 0.042 | 22.5 | 0.395 |
TET16265 | West Peak | 270.23 | 279.30 | 9.07 | 1.590 | 0.046 | 1.1 | 0.028 |
TET16266 | North Peak | 115.58 | 118.77 | 3.19 | 0.660 | 0.019 | 6.7 | 0.035 |
TET16266 | North Peak | 143.21 | 147.31 | 4.10 | 0.530 | 0.015 | 7.1 | 0.193 |
TET16266 | North Peak | 155.94 | 158.81 | 2.87 | 10.010 | 0.292 | 11.5 | 0.091 |
TET16266 | North Peak | 166.76 | 184.16 | 17.40 | 1.060 | 0.031 | 22.1 | 0.061 |
Including | North Peak | 166.76 | 167.22 | 0.46 | 6.760 | 0.197 | 2.3 | 0.008 |
TET16267 | Main Peak | 110.39 | 161.24 | 50.85 | 12.050 | 0.351 | 11.5 | 0.184 |
Including | Main Peak | 110.39 | 113.38 | 2.99 | 148.500 | 4.331 | 39.6 | 0.474 |
and | Main Peak | 136.02 | 136.25 | 0.23 | 32.400 | 0.945 | 17.7 | 0.232 |
and | Main Peak | 154.32 | 154.59 | 0.27 | 31.400 | 0.916 | 179.0 | 3.320 |
TET16267 | Main Peak | 165.04 | 170.93 | 5.89 | 14.740 | 0.430 | 14.1 | 0.392 |
Including | Main Peak | 165.04 | 165.28 | 0.24 | 70.200 | 2.048 | 99.1 | 2.360 |
TET16268 | Main Peak | 16.61 | 19.05 | 2.44 | 0.660 | 0.019 | 47.0 | 0.258 |
TET16268 | Main Peak | 49.37 | 49.92 | 0.55 | 4.350 | 0.127 | 3.4 | 0.102 |
TET16268 | Main Peak | 90.31 | 93.66 | 3.35 | 11.860 | 0.346 | 4.3 | 0.157 |
Including | Main Peak | 91.88 | 92.53 | 0.65 | 37.500 | 1.094 | 12.5 | 0.497 |
TET16268 | Main Peak | 105.39 | 173.28 | 67.89 | 8.700 | 0.254 | 3.8 | 0.146 |
Including | Main Peak | 118.97 | 127.41 | 8.44 | 22.520 | 0.657 | 5.5 | 0.246 |
and | Main Peak | 134.53 | 137.55 | 3.02 | 20.540 | 0.599 | 4.9 | 0.192 |
TET16269 | North Peak | 25.30 | 42.93 | 17.63 | 2.270 | 0.066 | 1.3 | 0.026 |
Including | North Peak | 27.43 | 30.18 | 2.75 | 8.020 | 0.234 | 2.7 | 0.072 |
TET16269 | North Peak | 47.93 | 56.47 | 8.54 | 2.000 | 0.058 | 1.6 | 0.032 |
Including | North Peak | 50.42 | 52.17 | 1.75 | 6.670 | 0.195 | 2.8 | 0.058 |
TET16269 | North Peak | 60.66 | 74.56 | 13.90 | 13.970 | 0.407 | 2.6 | 0.048 |
Including | North Peak | 69.39 | 71.27 | 1.88 | 61.320 | 1.789 | 7.9 | 0.144 |
TET16269 | North Peak | 91.90 | 94.92 | 3.02 | 8.840 | 0.258 | 2.3 | 0.095 |
TET16269 | North Peak | 108.27 | 125.65 | 17.38 | 9.700 | 0.283 | 2.2 | 0.127 |
Including | North Peak | 118.39 | 120.24 | 1.85 | 36.000 | 1.050 | 2.6 | 0.107 |
TET16270 | North Peak | 78.03 | 93.60 | 15.57 | 8.560 | 0.250 | 2.3 | 0.097 |
Including | North Peak | 88.68 | 91.09 | 2.41 | 21.500 | 0.627 | 3.1 | 0.085 |
TET16270 | North Peak | 105.30 | 111.06 | 5.76 | 11.240 | 0.328 | 2.4 | 0.071 |
TET16270 | North Peak | 119.09 | 122.73 | 3.64 | 1.430 | 0.042 | 3.9 | 0.078 |
TET16271 | North Peak | 24.08 | 41.20 | 17.12 | 51.890 | 1.513 | 23.7 | 0.088 |
Including | North Peak | 31.50 | 34.31 | 2.81 | 181.920 | 5.306 | 49.8 | 0.133 |
TET16271 | North Peak | 44.73 | 53.92 | 9.19 | 41.020 | 1.196 | 18.1 | 0.043 |
Including | North Peak | 51.51 | 53.15 | 1.64 | 151.500 | 4.419 | 37.5 | 0.070 |
TET16271 | North Peak | 57.25 | 71.20 | 13.95 | 24.280 | 0.708 | 20.5 | 0.058 |
Including | North Peak | 67.43 | 69.62 | 2.19 | 62.900 | 1.835 | 49.4 | 0.146 |
TET16271 | North Peak | 82.32 | 85.63 | 3.31 | 4.470 | 0.130 | 1.9 | 0.041 |
TET16272 | North Peak | 1.83 | 4.88 | 3.05 | 0.840 | 0.025 | 0.9 | 0.004 |
TET16272 | North Peak | 14.33 | 16.76 | 2.43 | 7.040 | 0.205 | 11.7 | 0.008 |
Including | North Peak | 16.16 | 16.76 | 0.60 | 19.150 | 0.559 | 33.8 | 0.006 |
TET16272 | North Peak | 23.13 | 32.96 | 9.83 | 49.010 | 1.429 | 146.7 | 0.015 |
Including | North Peak | 29.99 | 30.38 | 0.39 | 345.000 | 10.063 | 735.0 | 0.006 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16272 | North Peak | 37.39 | 38.98 | 1.59 | 1.760 | 0.051 | 2.7 | 0.004 |
TET16272 | North Peak | 43.09 | 51.05 | 7.96 | 15.990 | 0.466 | 49.0 | 0.035 |
Including | North Peak | 45.50 | 47.10 | 1.60 | 39.700 | 1.158 | 160.0 | 0.136 |
TET16272 | North Peak | 55.92 | 59.31 | 3.39 | 1.550 | 0.045 | 25.9 | 0.129 |
TET16272 | North Peak | 84.90 | 87.84 | 2.94 | 1.530 | 0.045 | 2.2 | 0.030 |
TET16273 | West Peak | 163.78 | 166.98 | 3.20 | 0.740 | 0.022 | 6.1 | 0.024 |
TET16273 | West Peak | 176.67 | 178.70 | 2.03 | 2.960 | 0.086 | 14.0 | 0.168 |
TET16273 | West Peak | 188.36 | 191.00 | 2.64 | 1.030 | 0.030 | 3.2 | 0.045 |
2016 Exploration Program - Phase I. During the first three months of calendar year 2016, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 4,040 meters (13,255 feet) in 19 holes, referred to as the 2016 Phase I program. The Joint Venture Company spent an estimated $1.9 million to complete the program including drilling, geochemical analyses, landholding fees and other related expenses. Drilling targeted two areas, North Peak and West Peak, with the objective of enhancing the understanding of mineralization geometry and geochemical variability. During the program, an area located between the Peak Zone and North Peak was tested, producing significant gold and copper assay intervals in a Connector Zone.
The map below depicts the location of 16 of the 19 core holes drilled during the 2016 Phase I program:
2016 PHASE I CORE HOLES DRILLED
Significant Drill Intercepts from the 2016 Phase I Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained to date for Phase I of the 2016 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16192 | North Peak | 31.34 | 38.29 | 6.95 | 0.784 | 0.023 | 2.5 | 0.023 |
TET16192 | North Peak | 42.00 | 43.42 | 1.42 | 1.803 | 0.053 | 1.5 | 0.021 |
TET16192 | North Peak | 78.51 | 91.78 | 13.27 | 49.194 | 1.435 | 4.5 | 0.035 |
including | North Peak | 80.96 | 81.59 | 0.63 | 416.000 | 12.133 | 26.7 | 0.066 |
TET16192 | North Peak | 102.84 | 105.46 | 2.62 | 2.536 | 0.074 | 4.5 | 0.151 |
TET16192 | North Peak | 122.07 | 123.79 | 1.72 | 3.850 | 0.112 | 1.1 | 0.067 |
TET16192 | North Peak | 139.90 | 143.78 | 3.88 | 3.992 | 0.116 | 3.1 | 0.119 |
TET16193 | North Peak | 85.91 | 90.62 | 4.71 | 12.452 | 0.363 | 3.6 | 0.065 |
including | North Peak | 88.09 | 89.71 | 1.62 | 27.974 | 0.816 | 5.9 | 0.041 |
TET16195 | North Peak | 66.50 | 68.34 | 1.84 | 6.718 | 0.196 | 3.7 | 0.069 |
TET16196 | North Peak | 65.78 | 69.12 | 3.34 | 0.712 | 0.021 | 14.1 | 0.096 |
TET16199 | West Peak | 21.09 | 23.13 | 2.04 | 3.462 | 0.101 | 6.9 | 0.037 |
TET16199 | West Peak | 50.19 | 52.08 | 1.89 | 1.375 | 0.040 | 0.7 | 0.022 |
TET16199 | West Peak | 55.62 | 57.79 | 2.17 | 1.805 | 0.053 | — | 0.005 |
TET16199 | West Peak | 80.44 | 82.76 | 2.32 | 1.529 | 0.045 | 1.9 | 0.054 |
TET16199 | West Peak | 95.08 | 96.63 | 1.55 | 2.690 | 0.078 | 0.9 | 0.006 |
TET16199 | West Peak | 139.46 | 145.31 | 5.85 | 0.699 | 0.020 | 1.1 | 0.03 |
TET16204 | North Peak | 50.41 | 53.34 | 2.93 | 1.100 | 0.032 | 5.2 | 0.189 |
TET16204 | North Peak | 63.06 | 65.42 | 2.36 | 2.050 | 0.060 | 1.1 | 0.044 |
TET16204 | North Peak | 194.11 | 195.93 | 1.82 | 16.338 | 0.477 | 328.4 | 0.157 |
TET16205 | North Peak | 65.07 | 70.61 | 5.54 | 0.954 | 0.028 | 2.8 | 0.165 |
TET16205 | North Peak | 82.91 | 83.67 | 0.76 | 6.715 | 0.196 | 11.2 | 0.005 |
TET16205 | North Peak | 150.74 | 151.73 | 0.99 | 3.360 | 0.098 | 4.2 | 0.314 |
TET16206 | North Peak | 60.95 | 104.38 | 43.43 | 3.611 | 0.105 | 2.1 | 0.108 |
including | North Peak | 98.34 | 100.04 | 1.70 | 30.700 | 0.895 | 2.3 | 0.108 |
TET16207 | North Peak | 92.88 | 95.92 | 3.04 | 2.590 | 0.076 | 1.4 | 0.057 |
TET16208 | West Peak | 55.02 | 58.20 | 3.18 | 2.543 | 0.074 | 0.5 | 0.005 |
TET16208 | West Peak | 88.66 | 108.65 | 19.99 | 2.822 | 0.082 | 0.1 | 0.006 |
including | West Peak | 95.55 | 97.45 | 1.90 | 12.050 | 0.351 | 0.5 | 0.011 |
and | West Peak | 98.93 | 100.02 | 1.09 | 14.200 | 0.414 | 0.7 | 0.013 |
TET16209 | West Peak | 46.33 | 48.95 | 2.62 | 2.222 | 0.065 | 0.8 | 0.007 |
TET16209 | West Peak | 52.73 | 58.98 | 6.25 | 4.863 | 0.142 | 0.5 | 0.014 |
including | West Peak | 55.78 | 57.54 | 1.76 | 12.788 | 0.373 | 1.1 | 0.037 |
TET16210 | Connector | 16.95 | 60.91 | 43.96 | 3.275 | 0.096 | 30.6 | 0.402 |
including | Connector | 18.12 | 22.29 | 4.17 | 9.006 | 0.263 | 51.5 | 0.291 |
and | Connector | 51.90 | 53.26 | 1.36 | 10.150 | 0.296 | 19.6 | 0.583 |
and | Connector | 56.57 | 57.15 | 0.58 | 10.550 | 0.308 | 50.4 | 2.28 |
TET16210 | Connector | 131.83 | 135.60 | 3.77 | 2.614 | 0.076 | 52.5 | 0.14 |
Consulting Services provided by Avalon Development Corporation
Until January 8, 2015, the Company was a party to a Professional Services Agreement (“PSA”) with Avalon to provide certain geological consulting services and exploration activities with respect to the Peak Gold Joint Venture Property. Pursuant to the PSA, Avalon provided geological consulting services and exploration activities, including all field work at the Tetlin Lease. In connection with the Transactions, the Company terminated the PSA with Avalon, and Avalon is now providing services to the Joint Venture Company.
Avalon is a Fairbanks, Alaska based mineral exploration consulting firm, which has conducted mineral exploration in Alaska since 1985. The President of Avalon is Curtis J. Freeman who graduated from the College of Wooster, Ohio, with a B.A. degree in Geology (1978) and graduated from the University of Alaska with an M.S. degree in Economic Geology (1980). From 1980 to the present Mr. Freeman has been actively employed in various capacities in the mining industry in numerous locations in North America, Central America, South America, New Zealand and Africa. Avalon's team of engineers and geoscientists combined with its geographic information systems (GIS) database allows Avalon to synthesize existing geological, geochemical and geophysical data and identify specific target areas for ground evaluation and/or acquisition. Avalon’s exploration team has identified or conducted discovery drilling on several gold deposits in Alaska and has completed digital GIS compilations of the Tintina Gold Belt, a regional-scale mineral province stretching from southwest Alaska to the southern Yukon Territory. Avalon also has experience exploring for copper, nickel and platinum group elements (“Cu-Ni-PGE”) deposits and also created a comprehensive GIS compilation of Cu-Ni-PGE prospects in Alaska, an internally-owned database that contains data on over 200 PGE occurrences in Alaska.
Services Provided by Tetlin Village Members
Since the start of the term of our Tetlin Lease, the Company has worked closely with the Tetlin Tribal Council to train and employ Tetlin residents during Peak Gold Joint Venture project exploration programs. During the Company's exploration programs, there were 10 to 15 Tetlin residents working on the Peak Gold Joint Venture project employed on a seasonal basis through Avalon. Their duties included reconnaissance soil, stream sediment and pan concentrate sampling, diamond drill core processing, drill pad construction and related tasks, expediting services, food services, database management, vehicle transportation and maintenance services, reclamation activities, and project management tasks.
Community Affairs
In April 2015, the Joint Venture Company entered into a Community Support Agreement with the Tetlin Village for a one year period, which has been extended for an additional two year period under the same terms. Under the extended agreement the Joint Venture Company provides payments to the village four times during the year for an aggregate amount of $110,000 through January 1, 2017 and an additional $100,000 through January 1, 2018. The agreement was extended a second time for an additional two year period under the same terms. Under the second extension, the Joint Venture Company provides payments to the village four times during the year for an aggregate amount of $100,000 through January 1, 2019 and an additional $100,000 through January 1, 2020. The agreement defines agreed uses for the funds and auditing rights regarding use of funds. In addition, the Joint Venture Company supports the Tetlin Village in maintenance of the village access road, which is used by the Joint Venture Company.
Adverse Climate Conditions
Weather conditions affect the Joint Venture Company's ability to conduct exploration activities and mine any ore from the Peak Gold Joint Venture Property in Alaska. While the Company believes exploration, development work and any subsequent mining may be conducted year-round, the arctic climate limits many exploration and mining activities during certain seasons.
Competition
The Company currently faces strong competition for the acquisition of any new exploration-stage properties as well as extraction of any minerals in Alaska. Numerous larger mining companies actively seek out and bid for mining prospects as well as for the services of third party providers and supplies, such as mining equipment and transportation equipment. The Company's competitors in the exploration, development, acquisition and mining business will include major integrated mining companies as well as numerous smaller mining companies, almost all of which have significantly greater financial resources and in-house technical expertise. In addition, the Company will compete with others in efforts to obtain financing to explore our mineral properties.
Off-Balance Sheet Arrangements
None.
Contractual Obligations
The Tetlin Lease had an initial ten year term beginning July 2008 which was extended for an additional ten years to July 15, 2028, or so long as the Joint Venture CompanyPeak Gold JV initiates and continues to conduct mining operations on the Tetlin Lease. The Joint Venture Company isPeak Gold JV was required to spend $350,000 per year annually until July 15, 2018 in exploration costs pursuant to the Tetlin Lease. However, explorationExploration expenditures to date under the leaseTetlin Lease have already satisfied this work commitment requirement for the full lease term, through 2028, because exploration funds spent in any year in excess of $350,000 are credited toward future years’ exploration cost requirements. The Tetlin Lease also provides that the Joint Venture CompanyPeak Gold JV will pay the Tetlin Tribal Council a production royalty ranging from 2.0%3.0% to 5.0% should the Joint Venture CompanyPeak Gold JV deliver to a purchaser on a commercial basis precious or non-precious metals derived from the properties under the Tetlin Lease. As of December 31, 2017, theThe Company had previously paid the Tetlin Tribal Council $225,000 in exchange for reducing the production royalty payable to them by 0.75%. These payments lowered the production royalty to a range of 1.25%2.25% to 4.25%. On or before July 15,December 30, 2020, the Tetlin Tribal Council hashad the option to increase its production royalty by (i) 0.25% by payment to the Joint Venture CompanyPeak Gold JV of $150,000, (ii) 0.50% by payment to the Joint Venture CompanyPeak Gold JV of $300,000, or (iii) 0.75% by payment to the Joint Venture CompanyPeak Gold JV of $450,000. The Tetlin Tribal Council exercised the option to increase its production royalty by 0.75% by payment to the Peak Gold JV of $450,000 on December 30, 2020. In lieu of a cash payment, the $450,000 will be credited against future production royalty and advance minimum royalty payments due by the Peak Gold JV to the Tetlin Tribal Council under the lease once production begins.
On January 8, 2015, the Company assigned the Tetlin Lease to the Joint Venture CompanyPeak Gold JV in connection with the Transactions.formation of the Peak Gold JV.
Until such time as production royalties begin, the Joint Venture CompanyPeak Gold JV will pay the Tetlin Tribal Council an advance minimum royalty of approximately $75,000 per year, plus an inflation adjustment. Additionally, the Joint Venture CompanyPeak Gold JV will pay Royal Gold an overriding royalty of 3.0% should it deliver to a purchaser on a commercial basis gold or associated minerals derived from the Tetlin Lease, Additional Properties and certain other properties, anda 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease. The Company will pay Royal Gold an overriding royalty of 2.0%3.0% on certain State of Alaska mining claims should it deliver to a purchaser on a commercial basis precious metals, non-precious metals or hydrocarbons derived from other properties.hydrocarbons. The Joint Venture Company pays claim rentals on stateState of Alaska mining claims which vary based on the ages of the claims. For the 2017-20182022–2023 assessment year, claims rentals totaled $155,505.$355,805. Also, if the minimum work requirement is not performed on the property, additional minimum labor payments are due on certain state of Alaska acreage.
ApplicationIn February 2019, the Company entered into Retention Agreements with its then-Chief Executive Officer, Brad Juneau, its Chief Financial Officer, Leah Gaines, and one other employee providing for payments in an aggregate amount of $1,500,000 upon the occurrence of certain conditions. The Retention Agreements, as amended, are triggered upon a change of control (as defined in the applicable Retention Agreement), that takes place prior to August 6, 2025, provided that the recipient is employed by the Company when the change of control occurs. Mr. Juneau and Ms. Gaines will receive a payment of $1,000,000 and $250,000, respectively, upon a change of control.
On June 10, 2020, the Company entered into a Retention Payment Agreement with Rick Van Nieuwenhuyse, the Company’s President and Chief Executive Officer, providing for a payment in an amount of $350,000 upon the occurrence of certain conditions. The Retention Payment Agreement is triggered upon a change of control (as defined in the Retention Payment Agreement) which occurs on or prior to August 6, 2025, provided that Mr. Van Nieuwenhuyse is employed by the Company when the change of control occurs.
The Company received $32.4 million in cash consideration in conjunction with the Kinross Transactions. Of the $32.4 million, $1.2 million constituted a reimbursement prepayment to the Company relating to its proportionate share of certain silver royalty payments that the Peak Gold JV may be obligated to pay to Royal Gold, with the understanding that KG Mining will bear the entire economic impact of those royalty payments due from the Peak Gold JV. Pursuant to Article IV of the A&R JV LLCA, if the Peak Gold JV terminates, or the Company’s membership interest falls below 5% prior to when the prepaid royalty is paid out, the $1.2 million (less any portion already paid out) is refundable to KG Mining.
With regard to the Lucky Shot Acquisition, in addition to the cash at closing and the Promissory Note, the Company will be obligated to pay CRH additional consideration if production on the Lucky Shot Property meets two separate milestone payment thresholds. If the first threshold of (1) an aggregate “mineral resource” equal to 500,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 30,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $3.75 million in newly issued shares of CORE common stock. If the second threshold of (1) an aggregate “mineral resource” equal to 1,000,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 60,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $5 million in newly issued shares of CORE common stock. If payable, the additional share consideration will be issued based on the 30-day volume weighted average price for each of the thirty trading days immediately prior to the satisfaction of the relevant production goal. The Company also agreed to make $10,000,000 in expenditures during the 36-month period following closing toward the existence, location, quantity, quality or commercial value of mineral deposits in, under and upon the Lucky Shot Property. The Company has exceeded the required $10,000,000 in expenditures as of December 31, 2022.
Critical Accounting Policies and Management’s Estimates
The discussion and analysis of the Company’s financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We haveThe Company has identified below the policies that are of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management. The Company analyzes its estimates, including those related to its mineral reserve estimates, on a periodic basis and bases its estimates on historical experience, independent third party engineers and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements:
Stock-Based Compensation. The Company applies the fair value method of accounting for stock-based compensation. Under this method, the Company measures and recognizes compensation expense for all stock-based payments at fair value at the date of grant and amortize the amount over the employee’s service period. Management is required to make assumptions including stock price volatility and employee turnover that are utilized to measure compensation expense.
Investment in the Joint Venture Company.Peak Gold JV. The Company’s consolidated financial statements include the investment in the Joint Venture CompanyPeak Gold JV, which is accounted for under the equity method. The Company has designated one of the three members of the Management Committee and on December 31, 20172022 held a 61.0%30.0% ownership interest in the Joint Venture Company. RoyalPeak Gold will initially serveJV. KG Mining serves as the Managermanager of the Joint Venture CompanyPeak Gold JV and will manage, direct,manages, directs, and controlcontrols operations of the Joint Venture Company.Peak Gold JV. The Company recorded its investment at the historical cost of the assets contributed. The cumulative losses of the Joint Venture CompanyPeak Gold JV exceed the historical cost of the assets contributed to the Joint Venture Company;Peak Gold JV; therefore, the Company'sCompany’s investment in the Joint Venture CompanyPeak Gold JV as of December 31, 20172022 is zero. The portion of the cumulative loss that exceeds the Company'sCompany’s investment will be suspended and recognized against earnings, if any, from the investment in the Joint Venture CompanyPeak Gold JV in future periods.
Business Combinations. In determining whether an acquisition should be accounted for as a business combination or asset acquisition, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this is the case, the single identifiable asset or the group of similar assets is not deemed to be a business, and is instead deemed to be an asset. If this is not the case, the Company then further evaluates whether the single identifiable asset or group of similar identifiable assets and activities includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If so, the Company concludes that the single identifiable asset or group of similar identifiable assets and activities is a business. The Company accounts for business combinations using the acquisition method of accounting. Application of this method of accounting requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill, which is not amortized for accounting purposes but is subject to testing for impairment at least annually. The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs. Goodwill is not recognized in asset acquisitions. Contingent consideration in asset acquisitions payable in the form of cash is recognized when payment becomes probable and reasonably estimable, unless the contingent consideration meets the definition of a derivative, in which case the amount becomes part of the asset acquisition cost when acquired. Contingent consideration payable in the form of a fixed number of the Company’s own shares is measured at fair value as of the acquisition date and recognized when the issuance of the shares becomes probable. Upon recognition of the contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets.
Convertible Debenture. The Company accounts for its convertible debenture in accordance with ASC 470-20, Debt with Conversion and Other Options ("ASC 470-20"), which requires the liability and equity components of convertible debt to be separately accounted for in a manner that reflects the issuer's nonconvertible debt borrowing rate. Debt discount created by the bifurcation of embedded features in the convertible debenture are reflected as a reduction to the related debt liability. The discount is amortized to interest expense over the term of the debt using the effective-interest method.
Derivative Asset/Liability for Embedded Conversion Features. The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are evaluated and accounted for separately. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as either an asset or a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. The fair value of the embedded conversion features are estimated using several probability weighted binomial lattice models. The Company estimated the fair value of the convertible notes conversion feature at the time of issuance and subsequent remeasurement dates, utilizing the with-and without method, where the value of the derivative feature is the difference in values between a note simulated with the embedded conversion feature and the value of the same note simulated without the embedded conversion feature. Estimating fair values of embedded conversion features requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.
Results of Operations
Neither the Company nor the Joint Venture CompanyPeak Gold JV has commenced mining or producing commercially marketable minerals. To date, neither the Company nor the Joint Venture CompanyPeak Gold JV has not generated any revenue from mineral sales or operations. Neither the Company nor the Joint Venture CompanyPeak Gold JV has any recurring source of revenue and other than Royal contributions by the Company and KG Mining to the Peak Gold’s contributions JV, and, in connection withaddition to the consideration received in the Kinross Transactions, the Company’s ability to continue as a going concern is dependent on ourthe Company’s ability to raise capital to fund ourits future exploration and working capital requirements. In the future, the Joint Venture CompanyPeak Gold JV may generate revenue from a combination of mineral sales and other payments resulting from any commercially recoverable minerals from the Peak Gold Joint Venture Properties. We doJV Property. The Company does not expect the Joint Venture CompanyPeak Gold JV to generate revenue from mineral sales inuntil at least the foreseeable future.second half of 2024 based on KG Mining's current schedule. If the Peak Gold Joint Venture Properties failJV Property fails to contain any proven reserves, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected. Other potential sources of cash, or relief of demand for cash, include external debt, the sale of shares of our stock, joint ventures, or alternative methods such as mergers or sale of our assets. No assurances can be given, however, that wethe Company will be able to obtain any of these potential sources of cash. WeThe Company will need to generate significant revenues to achieve profitability and weit may never do so.
Three Months Ended December 31,, 2017 2022 Compared to Three Months Ended December 31, 20162021
Claim Rentals Expense. Claim rental expense primarily consists of State of Alaska rental payments and annual labor payments. We recognized claim rental expense of $126,451 compared to $157,163 for the three months ended December 31, 2021. The Company relinquished approximately 69,000 acres located on the Eagle/Hona prospect in November 2022.
Exploration Expense. Exploration expense for the three months ended December 31, 2022 was $2.2 million compared to $1.2 million for the three months ended December 31, 2021. Current year exploration expense relates primarily to exploration work performed on our Lucky Shot Property. Lucky Shot was acquired in August 2021, and the development and exploration program did not begin until late 2021.
General and Administrative Expense. General and administrative expense for the three months ended December 31, 20172022 and 20162021 were $808,344$2.2 million and $592,142,$2.8 million, respectively. CurrentThe Company’s general and administrative expense primarily relates to legal fees, management fees, payroll and stock-based compensation expense. The current year decrease in general and administrative expenses primarily relaterelates to audit fees, legal fees, management fees, andthe reduction in stock-based compensation expense. We recognized $580,379 ofThe stock-based compensation expense for the quarter ended December 31, 2022 was approximately $0.8 million, compared to $1.3 million for the quarter ended December 31, 2021.
Loss from Equity Investment in the Peak Gold JV. The loss from the Company’s equity investment in the Peak Gold JV for the three months ended December 31, 2017, related to restricted stock granted to our officers2022 and directors in November 2017, November 2016, August 2016, December 2015, September 20152021 was $9.3 million and November 2014, all pursuant$0.7 million, respectively. Pursuant to the Company’s 2010 Equity Compensation Plan. We recognized $331,306 of stock-based compensation expense for the three months ended December 31, 2016, related to restricted stock granted to our officers and directors in November 2016, August 2016, December 2015, September 2015, January 2015, and November 2014.
Six Months Ended December 31, 2017 Compared to Six Months Ended December 31, 2016
General and Administrative Expense. General and administrative expense for the six months ended December 31, 2017 and 2016 were $1,476,980 and $1,547,792 respectively. Current year general and administrative expenses primarily relate to audit fees, legal fees, management fees, and stock-based compensation expense. We recognized $998,117 of stock-based compensation expense for the six months ended December 31, 2017, related to restricted stock granted to our officers and directors in November 2017, November 2016, August 2016, December 2015, September 2015, January 2015, and November 2014 all pursuant to the Company’s 2010 Equity Compensation Plan. We recognized $959,650 of stock-based compensation expense for the six months ended December 31, 2016, related to restricted stock granted to our officers and directors in November 2016, August 2016, December 2015, September 2015, January 2015, and November 2014.
Liquidity
Prior to the Closing, the Company's primary cash requirements were for exploration-related expenses. Since the Closing, the Company's primary cash requirements have been for general and administrative expenses. The Company's sources of cash have been from common stock offerings. The Peak Gold Joint Venture Property is still in the initial stages of exploration, and the longer term liquidityterms of the Company will be impaired to the extent the Joint Venture Company’s exploration efforts are not successful in generating commercially viable mineral deposits on the Peak Gold Joint Venture Property. In September 2016, the Company distributed a Private Placement Memorandum to its warrant holders to give them the opportunity to exercise their warrants at a reduced exercise price and receive shares of common stock, par value $0.01 per share of Contango ORE, Inc. by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price of $10.00 per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.00 per share. The offer expired on November 15, 2016. In conjunction with the offering a total of 587,500 warrants were exercised resulting in total cash to the Company of $5.3 million. On October 13, 2017, the Company distributed a Private Placement Memorandum to its warrant holders to give them the opportunity to exercise their warrants at a reduced exercise price and receive shares of common stock, par value $0.01 per share of Contango ORE, Inc. by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price of $10.00 per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.50 per share. The offer expired on November 10, 2017. In conjunction with the offering a total of 124,999 warrants were exercised resulting in total cash to the Company of $1.2 million. Proceeds from the exercise of the warrants will be used for working capital purposes and for funding future obligations to the Joint Venture Company.
As of December 31, 2017, the Company has approximately $15.8 million of cash, cash equivalents, and short term investments. In September 2017, a capital budget of $1.5 million was approved for the 2017 Phase III Drilling Exploration Program. Phase III was completed in October 2017. On October 23, 2017, the Company completed the issuance and sale of an aggregate of 553,672 shares of common stock, par value $0.01 per share, of the Company at a purchase price of $19.00 per share of Common Stock, in a private placement to certain purchasers pursuant to a Stock Purchase Agreement dated as of October 23, 2017, by and amongA&R JV LLCA, the Company and each Purchaser. Brad Juneau, the Company's President and Chief Executive Officer, purchased 13,200 shares of Common Stock, at an aggregate purchase price of $250,800, in the Private Placement on the same terms and conditions as all other Purchasers. The Private Placement resulted in approximately $10.5 million of gross proceeds and approximately $10.0 million of net proceeds. The Company will use the net proceeds from the Private Placement to fund its exploration and development program and for general corporate purposes. Petrie acted as sole placement agent in connection with the Private Placement and received a placement agent fee equal to 6.50%, which was reduced to 3.25% for existing stockholders and other Purchasers referred by those existing stockholders, or a total of $0.5 million in placement agent fees. The Company believes that its current cash balances will be sufficient to meet its working capital requirements for the next twelve months.
On January 8, 2015, Royal Gold invested $5 million to fund exploration activity, and will have the option to earn up to a 40% interest in the Joint Venture Company by investing up to $30 million (inclusive of the initial $5 million investment) prior to October 31, 2018. As of December 31, 2017, Royal Gold had funded approximately $29.3 million (including the initial investment of $5 million) and earned a 39.0% interest in the Joint Venture Company. The proceeds of Royal Gold’s investment have been used by the Joint Venture Company for additional exploration of the Peak Gold Joint Venture Property. For additional information regarding the Joint Venture Company’s capital budget and expenditures, see the “Gold Exploration” section above.
Any additional contributions to the Joint Venture Company by Royal Gold to fund future drilling programs, or otherwise, will bring Royal Gold’s cumulative contributions closer to $30 million. Once Royal Gold contributes a total of $30 million, it will receive a percentage interest of 40% in the Joint Venture Company. Pursuant to the JV LLCA, upon the earlier of the investment by Royal Gold of $30 million into the Joint Venture Company or October 31, 2018, the Company and Royal GoldKG Mining are required to jointly fund the joint venture operations in proportion to their membership interests in the Joint VenturePeak Gold JV to avoid dilution. The Company invested $9.3 million in the Peak Gold JV during the current quarter. The Company invested $0.7 million in the Peak Gold JV during the three months ended December 31, 2021. The current quarter cash needs of the Peak Gold JV were higher compared to prior year, because the Peak Gold JV moved into the development phase in early 2022, and has been incurring costs related to Manh Choh camp and access roads in preparation for first production in 2024. The portion of the cumulative loss that exceeds the Company’s cumulative investment will be suspended and recognized against earnings, if any, from the Company’s investment in the Peak Gold JV in future periods. The suspended losses for the period from inception to December 31, 2022 are $14.5 million.
Interest Expense. On April 26, 2022, the Company closed on a $20,000,000 unsecured convertible debenture to QRC. The debenture bears interest at 8% per annum, payable quarterly, with 6% paid in cash and 2% paid in shares of Common Stock (See Note 16 to our Consolidated Financial Statements). The Company acquired AGT in August 2021 for an initial payment at closing of $5 million (plus a working capital adjustment of $0.1 million) in cash and a Promissory Note (see Note 10 to our Consolidated Financial Statements). Interest expense for the quarter ended December 31, 2022 of $0.4 million includes the interest related to the convertible debenture. Interest expense for the quarter ended December 31, 2021 of relates to accrued interest related to the Promissory Note. The Promissory Note was paid in full with cash on February 25, 2022.
Loss from Equity Investment in the Peak Gold JV. The loss from the Company’s equity investment in the Peak Gold JV for the three months ended December 31, 2022 and 2021 was $9.3 million and $2.2 million, respectively. Pursuant to the terms of the A&R JV LLCA, the Company and KG Mining are required to jointly fund the joint venture operations in proportion to their membership interests in the Peak Gold JV to avoid dilution. The Company invested $9.3 million in the Peak Gold JV during the six months ended December 31, 2022. The Company invested $2.2 million in the Peak Gold JV during the six months ended December 31, 2021. The current quarter cash needs of the Peak Gold JV were higher compared to prior year, because the Peak Gold JV moved into the development phase in early 2022, and has been incurring costs related to Manh Choh camp and access roads in preparation for first production in 2024. The portion of the cumulative loss that exceeds the Company’s cumulative investment will be suspended and recognized against earnings, if any, from the Company’s investment in the Peak Gold JV in future periods. The suspended losses for the period from inception to December 31, 2022 are $14.5 million.
Interest Expense. On April 26, 2022, the Company closed on a $20,000,000 unsecured convertible debenture to QRC. The debenture bears interest at 8% per annum, payable quarterly, with 6% paid in cash and 2% paid in shares of Common Stock (See Note 16 to our Consolidated Financial Statements). The Company acquired AGT in August 2021 for an initial payment at closing of $5 million (plus a working capital adjustment of $0.1 million) in cash and a Promissory Note (see Note 10 to our Consolidated Financial Statements). Interest expense for the six months ended December 31, 2022 of $0.9 million includes the interest related to the convertible debenture. Interest expense for the six months ended December 31, 2021 of relates to accrued interest related to the Promissory Note. The Promissory Note was paid in full with cash on February 25, 2022.
Insurance Recoveries. In mid-February 2022 an avalanche occurred at the Lucky Shot Property. The avalanche destroyed various vehicles and equipment at the site. During the quarter ended December 31, 2022, the Company received insurance recoveries totaling $0.3 million related to the avalanche. There were no such recoveries during the quarter ended December 31, 2021.
Liquidity and Capital Resources
The Company’s primary cash requirements have been for general and administrative expenses, capital calls from the Peak Gold JV for the Manh Choh Property, and exploration expenditures on the Lucky Shot Property. Besides the Kinross Transactions, the Company’s sources of cash have been from Common Stock offerings and the issuance of the $20 million unsecured convertible debenture to Queens Road Capital Investment, Ltd. (“QRC”). In conjunction with the Kinross Transactions, the Company received $32.4 million and 809,744 shares of the Company’s Common Stock. The 809,744 shares of Common Stock were acquired by KG Mining from Royal Gold, as part of the Royal Gold Transactions and were subsequently canceled by the Company. After such point,Of the $32.4 million cash consideration, $1.2 million constituted a reimbursement prepayment to the Company of its proportionate share of certain silver royalty payments that the Peak Gold JV may be obligated to pay to Royal Gold, with the understanding that KG Mining will bear the entire impact of those royalty payments due from the Peak Gold JV.
As of December 31, 2022, the Company had approximately $9.0 million of cash. The Management Committee has approved a budget of $13.6 million for the first calendar quarter of 2023, of which the Company's share is $2.7 million. To date the Company, has funded $1 million of the approved first calendar quarter budget. This budget primarily relates to access road construction and refurbishment and expansion of the Manh Choh camp. On December 23, 2022 the Company completed the issuance and sale of an aggregate of 283,500 shares of the Company’s Common Stock, for $20.00 per share, and warrants entitling each purchaser to purchase shares of Common Stock for $25.00 per share in a private placement to certain accredited investors. Net proceeds from the December 2022 Private Placement totaled approximately $5.6 million. (See Note 8 - Stockholder's Equity for further discussion). On January 19, 2023, the Company completed the issuance and sale of an aggregate of 117,500 shares, for $20.00 per share, and warrants entitling each purchaser to purchase shares of Common Stock for $25.00 per share in a private placement to certain accredited investors. Net proceeds from the January 2023 Private Placement totaled approximately $2.3 million. The Company will use the proceeds from the December 2022 and January 2023 private placements to fund its exploration and development program and for general corporate purposes.
On April 26, 2022, the Company closed on a $20,000,000 unsecured convertible debenture to QRC. The debenture was purchased at par. The Company’s cash needs going forward will primarily relate to capital calls from the Peak Gold JV, exploration of the Contango Properties, and general and administrative expenses of the Company. If a large budget is undertaken, and no additional financing is obtained, the Company can elect not to fund its portion of the approved budget, in which case the Company would maintain sufficient liquidity to meet its working capital requirements for the next twelve months; however, its membership interest in the Peak Gold JV would be diluted. If the Company's interest in the Peak Gold JV is diluted, the Company may not be able to fully realize its investment in the Peak Gold JV. Also, if no additional financing is obtained, the Company may not be able to fully realize its investment in the Contango Properties.
KG Mining became the Manager of the Peak Gold JV in conjunction with the Kinross Transactions and the signing of the A&R JV LLCA. Pursuant to the terms of the A&R JV LLCA, the Company and KG Mining are required to jointly fund the joint venture operations in proportion to their membership interests in the Peak Gold JV. If a member elects not to contribute to an approved program and budget or elects to contributecontributes less than its proportionate membership interest, its percentage membership interest will be reduced. The capital costs of developing a large gold mining facility could exceed $1 billion. The Company’s ability to contribute funds sufficient to retain its membership interests in the Joint Venture CompanyPeak Gold JV may be limited. To date, neither the Company nor the Joint Venture CompanyPeak Gold JV has generated any revenue from mineral sales or operations. In the future, the Joint Venture CompanyPeak Gold JV may generate revenue from a combination of mineral sales and other payments resulting from any commercially recoverable minerals from the Peak Gold Joint VentureJV Property. The Company currently does not expect the Joint Venture Company to generate revenue from mineral sales in the foreseeable future. Further, neither the Company nor the Joint Venture Company hashave any recurring source of revenue. The Peak Gold JV currently does not have any recurring source of revenue, other than Royal Gold’sand its only source of cash inflows are contributions in connection withreceived from KG Mining and the Transactions.Company. As a result, the Company’s ability to contribute funds to the Joint Venture CompanyPeak Gold JV and retain its membership interest will depend on its ability to raise capital. The Company has limited financial resources and the ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, the exploration results achieved at the Peak Gold Joint VentureJV Property, as well as the market price of metals. The Company cannot be certain that financing will be available to the Company on acceptable terms, if at all. If the Company were unable to fund its contributions to the approved programs and budgets for the Joint Venture Company,Peak Gold JV, its membership interest in the Joint Venture CompanyPeak Gold JV would be diluted. In addition, once Royal Gold has earned a percentage interest of 40% in the Joint Venture Company, it has the option to require the Company to sell an additional 20% of the Company’s interest in the Joint Venture Company in a sale by Royal Gold of its entire percentage interest of 40% to a bona fide third party purchaser.
Further financing by the Company may include issuances of equity, instruments convertible into equity (such as warrants) or various forms of debt. The Company believes that it is more likely than not that it will raise capital through the issuance of additional equity and or debt securities in the next six months for purposes of funding its proportionate share of future Peak Gold JV exploration and for the Company’s operating costs. The Company has issued common stockCommon Stock and other instruments convertible into equity in the past and cannot predictpredict the size or price of any future issuances of common stockCommon Stock or other instruments convertible into equity, and the effect, if any, that such future issuances and sales will have on the market price of the Company’s securities. Any additional issuances of common stockCommon Stock or securities convertible into, or exercisable or exchangeable for, common stockCommon Stock may ultimately result in dilution to the holders of common stock,Common Stock, dilution in any future earnings per share of the Company and may have a material adverse effect upon the market price of the common stockCommon Stock of the Company.
Risk Factors
In addition to the risk factors set forth below and the other information set forth elsewhere in this Form 10-Q, you should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended June 30, 2017, under the headings “Item 1. Business — Adverse Climate Conditions,” “—Competition,” “— Government Regulation” and “— Environmental Regulation,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” which risks could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended June 30, 2017 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, other than updating the risk factors below. The risks described in our Annual Report on Form 10-K for the year ended June 30, 2017 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. An investment in the Company is subject to risks inherent in our business and involves a high degree of risk. The trading price of the shares of the Company is affected by the performance of our business relative to, among other things, competition, market conditions and general economic and industry conditions. The value of an investment in the Company may decrease, resulting in a loss. The updated risk factors are as follows:
There can be no assurance that Royal Gold will continue to fund the Joint Venture Company to continue exploration work.
The JV LLCA contains earn-in periods where Royal Gold has the option to fund up to $25 million on or before October 31, 2018 after its initial $5 million investment at the Closing of the Master Agreement. As of December 31, 2017, Royal Gold has funded approximately $29.3 million (including the initial investment of $5 million) and earned a 39.0% interest in the Joint Venture Company. There is no requirement that Royal Gold contribute any future amounts to the Joint Venture Company to continue exploration work, and the Company will have limited funds to continue exploration of its Peak Gold Joint Venture Property, if Royal Gold fails to contribute additional amounts to the Joint Venture Company.
The Joint Venture Company has no assurance of title to its properties.
The Joint Venture Company holds approximately 175,000 acres in the form of State of Alaska unpatented mining claims, for gold ore exploration. Unpatented mining claims are unique property interests, in that they are subject to the paramount title of, the State of Alaska and rights of third parties to uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 - 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 - 86.600. The validity of all State of Alaska unpatented mining claims is dependent upon inherent uncertainties and conditions.
With respect to the Tetlin Lease, the Company retained title lawyers to conduct a preliminary examination of title to the mineral interest prior to executing the Tetlin Lease. The Joint Venture Company conducted a title examination prior to the assignment of the Tetlin Lease to the Joint Venture Company and performed certain curative title work. In addition, in connection with the assignment of the Tetlin Lease from the Company to the Joint Venture Company, the Company and the Native Village of Tetlin entered into an Estoppel and Agreement and a Stability Agreement (the "Agreements") that were approved by the Tetlin Village Council and the Native Village of Tetlin members. The Agreements approved the assignment of the Tetlin Lease to the Joint Venture Company and, among other things, confirmed the validity and effectiveness of the Tetlin Lease. Nevertheless, a deficiency in title or claims by a third party may not be curable. It does happen, from time to time, that the title to a property is defective, having been obtained in error from a person who is not the rightful owner of the mineral interest desired. In these circumstances, the Joint Venture Company might not be able to proceed with exploration of the lease site or might incur costs to remedy a defect. It might also happen, from time to time, that the Joint Venture Company might elect to proceed with mining work despite any such deficiency or claim.
The Company's common stock is thinly traded.
As of December 31, 2017, there were approximately 6.0 million shares of the Company's common stock outstanding, with directors and officers beneficially owning approximately 14.9% of the common stock and the Marital Trust of Mr. Kenneth R. Peak, the Company's former Chairman, beneficially owning approximately 13.2% of our common stock. Since the Company's common stock is thinly traded, the purchase or sale of relatively small common stock positions may result in disproportionately large increases or decreases in the price of the Company's common stock.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are the Company is not required to provide this information.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) of the Exchange Act, we havethe Company has evaluated, under the supervision and with the participation of ourits management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we filethe Company files or submitsubmits under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 20172022 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we arethe Company is party to litigation or other legal and administrative proceedings that we considerit considers to be a part of the ordinary course of business. As of the date of this Form 10-Q, we arethe Company is not a party to any material legal proceedings and we arethe Company is not aware of any material proceedings contemplated against us, that could individually or in the aggregate, reasonably be expected to have a material adverse effect on ourthe Company's financial condition, cash flows or results of operations.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not requiredIn addition to provideinformation set forth in this information. See Part I, Item 2, “Management’sForm 10-Q, you should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended June 30, 2022, under the headings “Item 1. Business — Adverse Climate Conditions,” “—Competition,” “— Government Regulation” and “Item 2. Properties— Environmental Regulation and Permitting,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,”Operations” which identifies and discloses certainrisks could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended June 30, 2022. The risks described in our Annual Report on Form 10-K for the year ended June 30, 2022 are not the only risks the Company faces. Additional risks and uncertainties including, without limitation, certain “Risk Factors."not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. An investment in the Company is subject to risks inherent in our business and involves a high degree of risk. The trading price of the shares of the Company is affected by the performance of our business relative to, among other things, competition, market conditions and general economic and industry conditions. The value of an investment in the Company may decrease, resulting in a loss.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6.Exhibits
(a) | Exhibits: |
The following is a list of exhibits filed as part of this Form 10-Q. Where so indicated, by a footnote, exhibits, which were previously filed, are incorporated herein by reference.
Exhibit Number |
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3.1 |
| Certificate of Incorporation of Contango ORE, Inc. |
| 3.2 | Certificate of Amendment to Certificate of Incorporation of Contango ORE, Inc. (Filed as Exhibit 3.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on December 17, 2020). | |
3.3 | Bylaws of Contango ORE, Inc. (Filed as Exhibit 3.2 to Amendment No. 2 to the Company’s Registration Statement on Form 10, as filed with the Securities and Exchange Commission on November 26, 2010). | |
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| (Filed as Exhibit 3.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on October 21, 2021). | |
4.1 | (Filed as Exhibit 4.1 to the Company’s quarterly report on Form 10-Q for the three months ended December 31, 2013, as filed with the Securities and Exchange Commission on November 14, 2013). | |
4.2 | Certificate of Designation of Series A Junior Preferred Stock of Contango ORE, Inc. | |
| 4.3 | Certificate of Elimination of Series A Junior Preferred Stock of Contango ORE, Inc. (Filed as Exhibit 3.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on September 24, 2020). | |
| 4.4 | Certificate of Designations of Series A-1 Junior Participating Preferred Stock of Contango ORE, Inc. (Filed as Exhibit 3.2 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on September 24, 2020). | |
| 4.5 | Registration Rights Agreement dated as of June 17, 2021, by and between Contango ORE, Inc. and the Purchaser named therein (Filed as Exhibit 4.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on June 21, 2021). | |
| 4.6 | Registration Rights Agreement dated as of August 24, 2021, by and between the Company and CRH Funding II Pte. Ltd. (Filed as Exhibit 4.1 to the Company's current report on Form 8-K, as filed with the Securities and Exchange Commission on August 25, 2021). | |
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| 4.10 | Form of Registration Rights Agreement dated | |
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| Exchange Commission on January 19, 2023). | |
| 10.2 | Form of Warrant dated as of December 23, 2022(Filed as Exhibit 10.2 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on December 23, 2022). | |
| 10.3 | Form of Subscription Agreement dated as of January 19, 2023(Filed as Exhibit 10.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on January 19, 2023). | |
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31.1 |
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| Filed herewith. |
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SIGNATURES
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, thereto duly authorized.
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| CONTANGO ORE, INC. | |||||
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(Principal Executive Officer) | |||
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| /s/ LEAH GAINES | |||
Leah Gaines | |||||||||
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(Principal Financial and Accounting Officer) | |||
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