Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jan. 30, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Desert Hawk Gold Corp. | |
Entity Central Index Key | 0001168081 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | No | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 26,631,603 | |
Entity Filer Number | 333-169701 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash | $ 2,585,843 | $ 8,716 |
Inventories (Note 5) | 1,340,662 | 1,193,341 |
Prepaid expenses and other current assets | 97,996 | 40,475 |
Total Current Assets | 4,024,501 | 1,242,532 |
PROPERTY AND EQUIPMENT, net (Note 6) | 4,404,706 | 3,415,707 |
MINERAL PROPERTIES AND INTERESTS, net (Note 7) | 3,941,441 | 879,001 |
RECLAMATION BONDS (Note 4) | 724,433 | 753,290 |
TOTAL ASSETS | 13,095,081 | 6,290,530 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 43,340 | 652,895 |
Accrued liabilities - officer and other wages (Notes 16 and 19) | 922,039 | |
Interest payable - related parties (Notes 8, 9 and 10) | 463,993 | |
Short-term notes payable - related parties (Note 8) | 249,000 | |
Convertible debt - related parties (Note 9) | 1,350,000 | |
Obligation under capital lease - related party (Note 10) | 69,562 | |
Notes payable - equipment (Note 11) | 427,745 | 324,111 |
Total Current Liabilities | 471,085 | 4,031,600 |
LONG-TERM LIABILITIES | ||
Asset retirement obligation (Note 13) | 789,291 | 792,747 |
Settlement of consulting contract payable (Note 14) | 200,000 | |
Forward sales gold contract liability (Note 3) | 10,600,000 | |
Total long-term liabilities | 11,589,291 | 792,747 |
TOTAL LIABILITIES | 12,060,376 | 4,824,347 |
COMMITMENTS AND CONTINGENCIES (Note 19) | ||
STOCKHOLDERS' EQUITY (Note 15) | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued outstanding | ||
Common stock, $0.001 par value, 100,000,000 shares authorized; 26,631,603 and 20,881,603 shares issued and outstanding | 26,633 | 20,753 |
Additional paid-in capital | 9,466,475 | 7,120,355 |
Accumulated deficit | (8,458,403) | (5,674,925) |
Total Stockholders' Equity | 1,034,705 | 1,466,183 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 13,095,081 | $ 6,290,530 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 26,631,603 | 20,881,603 |
Common stock, shares outstanding | 26,631,603 | 20,881,603 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
REVENUE: | ||||
Concentrate sales | ||||
EXPENSES: | ||||
General project costs | 525,796 | 796,345 | 773,537 | 961,975 |
Consulting | 117,617 | 437,617 | ||
Exploration expense | 71,154 | 71,154 | ||
Officers and directors fees | 85,077 | 63,000 | 156,845 | 126,000 |
Legal and professional | 59,600 | 55,442 | 152,121 | 84,142 |
General and administrative | 82,988 | 62,383 | 109,597 | 601,674 |
Loss on disposal of equipment | 51,950 | |||
Total Expenses | 942,232 | 977,170 | 1,752,821 | 1,773,791 |
OPERATING LOSS | (942,232) | (977,170) | (1,752,821) | (1,773,791) |
OTHER INCOME (EXPENSE) | ||||
Gain on extinguishment of DMRJ debt (Note 12) | 24,916,561 | |||
Interest and other income | 57 | 119 | ||
Interest expense | (7,359) | (17,684) | (7,488) | (27,454) |
Interest expense - related parties | (36,547) | (31,412) | (499,264) | |
Loss on settlement of consulting contract (Note 14) | (900,000) | |||
Loss on settlement of redeemable stock (Note 19) | (63,094) | |||
Financing expense | (28,663) | |||
Total Other Income (Expense) | (7,359) | (54,174) | (1,030,657) | 24,389,962 |
INCOME (LOSS) BEFORE INCOME TAXES | (949,591) | (1,031,344) | (2,783,478) | 22,616,171 |
INCOME TAXES | ||||
NET INCOME (LOSS) | (949,591) | (1,031,344) | (2,783,478) | 22,616,171 |
DEEMED CAPITAL CONTRIBUTION ON EXTINGUISHMENT OF PREFERRED STOCK (NOTE 12) | 4,068,720 | |||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (949,591) | $ (1,031,344) | $ (2,783,478) | $ 26,684,891 |
BASIC NET INCOME (LOSS) PER SHARE | $ (0.04) | $ (0.05) | $ (0.11) | $ 1.5 |
DILUTED NET INCOME (LOSS) PER SHARE | $ (0.04) | $ (0.05) | $ (0.11) | $ 1.27 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC | 26,631,603 | 20,276,658 | 24,534,918 | 17,737,680 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-DILUTED | 26,631,603 | 20,276,658 | 24,534,918 | 21,042,408 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 1,582 | $ 13,828 | $ 9,143,418 | $ (31,088,143) | $ (21,929,315) |
Balance, Shares at Dec. 31, 2017 | 1,582,563 | 13,956,603 | |||
Extinguishment of preferred stock (Note 12) | $ (1,582) | (4,067,138) | 4,068,720 | ||
Extinguishment of preferred stock (Note 12), shares | (1,582,563) | ||||
Stock options (Note 18) | 456,000 | 456,000 | |||
Common stock issued for cash at $.40 per share | $ 2,125 | 847,875 | 850,000 | ||
Common stock issued for cash at $.40 per share, shares | 2,125,000 | ||||
Common stock issued to convertible debtholders in connection with extinguishment of DMRJ debt (Note 12) | $ 4,500 | 620,500 | 625,000 | ||
Common stock issued to convertible debtholders in connection with extinguishment of DMRJ debt (Note 12), shares | 4,500,000 | ||||
Net income (loss) | 22,616,171 | 22,616,171 | |||
Balance at Jun. 30, 2018 | $ 20,453 | 7,000,655 | (4,403,252) | 2,617,856 | |
Balance, Shares at Jun. 30, 2018 | 20,581,603 | ||||
Balance at Mar. 31, 2018 | $ 19,578 | 6,651,530 | (3,371,908) | 3,299,200 | |
Balance, Shares at Mar. 31, 2018 | 19,706,603 | ||||
Common stock issued for cash at $.40 per share | $ 875 | 349,125 | 350,000 | ||
Common stock issued for cash at $.40 per share, shares | 875,000 | ||||
Net income (loss) | (1,031,344) | (1,031,344) | |||
Balance at Jun. 30, 2018 | $ 20,453 | 7,000,655 | (4,403,252) | 2,617,856 | |
Balance, Shares at Jun. 30, 2018 | 20,581,603 | ||||
Balance at Dec. 31, 2018 | $ 20,753 | 7,120,355 | (5,674,925) | 1,466,183 | |
Balance, Shares at Dec. 31, 2018 | 20,881,603 | ||||
Common stock issued in connection with acquiring mineral proprerties and interests (Note 7) | $ 5,500 | 2,194,500 | 2,200,000 | ||
Common stock issued in connection with acquiring mineral proprerties and interests (Note 7), shares | 5,500,000 | ||||
Common stock issued in connection with settlement of consulting contract (Note 14) | $ 250 | 99,750 | 100,000 | ||
Common stock issued in connection with settlement of consulting contract (Note 14), shares | 250,000 | ||||
Common stock released in settlement of redeemable stock (Note 19) | $ 130 | 51,870 | 52,000 | ||
Common stock released in settlement of redeemable stock (Note 19), shares | |||||
Net income (loss) | (2,783,478) | (2,783,478) | |||
Balance at Jun. 30, 2019 | $ 26,633 | 9,466,475 | (8,458,403) | 1,034,705 | |
Balance, Shares at Jun. 30, 2019 | 26,631,603 | ||||
Balance at Mar. 31, 2019 | $ 26,633 | 9,466,475 | (7,508,812) | 1,984,296 | |
Balance, Shares at Mar. 31, 2019 | 20,581,603 | ||||
Net income (loss) | (949,591) | (949,591) | |||
Balance at Jun. 30, 2019 | $ 26,633 | $ 9,466,475 | $ (8,458,403) | $ 1,034,705 | |
Balance, Shares at Jun. 30, 2019 | 26,631,603 |
Statements of Stockholders' E_2
Statements of Stockholders' Equity (Unaudited) (Parenthetical) | 6 Months Ended |
Jun. 30, 2018$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Common stock issued for cash per share | $ 0.40 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (2,783,478) | $ 22,616,171 |
Adjustments to reconcile net income (loss) to net cash used by operating activities: | ||
Depreciation and amortization | 184,782 | 205,591 |
Gain of extinguishment of DMRJ debt (Note 12) | (24,916,561) | |
Stock based compensation | 456,000 | |
Accretion of asset retirement obligation | 37,346 | 36,256 |
Gain on settlement of asset retirement obligation | (20,451) | |
Loss on disposal of equipment, net | 51,950 | |
Common stock issued for consulting contract settlement | 100,000 | |
Common stock issued for settlement of redeemable stock | 52,000 | |
Changes in operating assets and liabilities: | ||
Inventories | (147,321) | 332,973 |
Prepaid expenses and other current assets | (57,521) | 71,215 |
Accounts payable and accrued expenses | (609,555) | 2,949 |
Accrued liabilities - officer and other wages | (922,039) | 86,462 |
Interest payable - related parties | (463,993) | 71,260 |
Interest payable - DMRJ | 451,891 | |
Settlement of consulting contract payable | 200,000 | |
Net cash used by operating activities | (4,378,280) | (585,793) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property and equipment | (638,948) | (38,500) |
Additions to mineral properties and interests (Note 7) | (900,000) | |
Purchase of reclamation bonds | (13,945) | (119) |
Net cash used by investing activities | (1,552,893) | (38,619) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of common stock | 1,475,000 | |
Proceeds from note payable - related parties | 91,680 | 72,000 |
Proceeds from forward gold contract liability, net | 10,600,000 | |
Payment on note payable - DMRJ | (625,000) | |
Payment of obligation under capital lease - related party | (69,562) | (15,997) |
Payment of notes payable - equipment | (423,138) | (244,272) |
Payment of short term note payable - related parties | (340,680) | |
Payment of convertible debt - related parties | (1,350,000) | |
Net cash provided by financing activities | 8,508,300 | 661,731 |
NET INCREASE IN CASH | 2,577,127 | 37,319 |
CASH, BEGINNING OF PERIOD | 8,716 | 4,212 |
CASH, END OF PERIOD | 2,585,843 | 41,531 |
NON-CASH FINANCING AND INVESTING ACTIVITIES: | ||
Extinguishment of preferred stock | 4,068,720 | |
Common stock issued for mineral properties and interests | 2,200,000 | 141,631 |
Equipment acquired with notes payable - equipment | 526,772 | |
Accounts payable settled with notes payable - equipment | 131,436 | |
Funds sent by buyer directly to previous owner for purchase of royalty interest (Note 8) | $ 2,200,000 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Desert Hawk Gold Corp. (the "Company"), a Nevada Corporation, was incorporated on November 5, 1957. The Company commenced its current mining activities on May 1, 2009. During the year ended December 31, 2009, the Company entered into Joint Venture Agreements with the Clifton Mining Company ("Clifton"), the Woodman Mining Company and the Moeller Family Trust for the lease of certain of their property interests in the Gold Hill Mining District of Utah. In 2011, the Company entered into an agreement with DMRJ Group, (a Platinum Partners related entity), which allowed for long term funding of the Kiewit project and helped to provide cash flow for operations during the period from 2009 until 2014 while the permitting process was ongoing. The final permit needed to begin development of the Kiewit property was received in January 2014 and development began in February 2014. Construction at the site was substantially complete at September 30, 2014. Revenue from the heap leach operation began in October 2014 with the first sales of gold concentrate. Production commenced and revenues of approximately $7,200,000 from sales of gold and other metals concentrate have been received through June 30, 2019. On March 8, 2018, the Company successfully finalized an agreement with the trustees of DMRJ Group ("DMRJ") which eliminated the note and interest payable balance of $25,541,561 due to DMRJ in exchange for $625,000. In addition, all outstanding shares of preferred stock held by DMRJ were retired and cancelled. See Note 12. Prior to March 2019, ongoing undercapitalization continued to hamper the Company's ability to operate. Due to lack of funding, the Company was temporarily shut down since third quarter of 2017. On March 7, 2019, the Company successfully finalized a forward gold sales contract agreement (the Pre-Paid Forward Gold Purchase Agreement (the "Purchase Agreement")) that provided funding and enabled production to resume in later 2019. See Note 3. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In the opinion of management, the accompanying unaudited interim balance sheets and statements of operations, cash flows and stockholders' equity contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of the Company as of June 30, 2019, and the results of its operations and its cash flows for the three and six month periods ended June 30, 2019 and 2018. The operating and financial results for the Company for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. These unaudited interim financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America ("U.S. GAAP") and are presented in U.S. dollars. These unaudited interim financial statements do not include all note disclosures required by U.S. GAAP on an annual basis, and therefore should be read in conjunction with the annual audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on July 29, 2019. Accounting for Stock Options and Stock Awards Granted to Employees and Nonemployees All transactions in which goods or services are received for the issuance of shares of the Company's common stock or options to purchase shares of common stock are accounted for based on the fair value of the goods or services received or the fair value of the equity interest issued, whichever is more reliably measurable. For stock options, the Company estimates the fair value of stock-based compensation using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected life"), the estimated volatility of the Company's common stock price over the expected term ("volatility"), the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of the fair value of stock-based compensation. Inventories The recovery of gold from certain oxide ores is achieved through the heap leaching process. Under this method, mineralized material is placed on a leach pad where it is treated with a chemical solution, which dissolves the gold contained in the material. The resulting "pregnant" solution is further processed in a plant where gold is recovered. The Company records ore on leach pad, solution in carbon columns in process and gold doré, at average production cost per gold ounce, less provisions required to reduce inventory to net realizable value. Production costs include the cost of mineralized material processed; direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities; depreciation and amortization of property, equipment, and mineral properties; and mine administrative expenses. Revenue from the sale of silver is accounted for as by-product and is deducted from production costs. Costs are removed from ore on leach pads as ounces are recovered based on the average cost per recoverable ounce of gold on the leach pad. Estimates of recoverable gold on the leach pad are calculated from the quantities of material placed on the leach pad (measured tons added to the leach pad), the grade of material placed on the leach pad (based on assay data) and an estimated recovery percentage (based on ore type). The nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, actual gold ounces recovered are regularly monitored and estimates are refined based on actual results over time. As of June 30, 2019, the Company had a limited operating history and actual results only over that short period of time. Due to this, estimates of recoverable gold are based primarily on initial tests and only limited refinements. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from a leach pad will not be known until the leaching process is concluded. The quantification of material inventory on the leach pad is based on estimates of the quantities of gold at each balance sheet date that the Company expects to recover during the next 12-18 months. Revenue Recognition Sales of gold concentrate sold directly to customers are recorded as revenues and receivables upon completion of the performance obligations and transfer of control of the product to the customer. For concentrate sales, the performance obligation is met, the transaction price can be reasonably estimated, and revenue is recognized generally at the time of shipment at estimated forward prices for the anticipated month of settlement. Due to the time elapsed from shipment to the customer and the final settlement with the customer, prices at which sales of the Company's concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to the estimated settlement metals prices until final settlement by the customer. Sales and accounts receivable for concentrate shipments are recorded net of charges by the customer for treatment, refining, smelting losses, and other charges negotiated with the customers. Charges are estimated upon shipment of concentrates based on contractual terms, and actual charges typically do not vary materially from estimates. See Note 17. Earnings (loss) Per Share Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Net income (loss) $ (949,591 ) $ (1,031,344 ) $ (2,783,478 ) $ 22,616,171 Deemed capital contribution on extinguishment of preferred stock - - - 4,068,720 Net income (loss) available to common shareholders - basic (949,591 ) (1,031,344 ) (2,783,478 ) 26,684,891 Interest expense on convertible notes payable -related parties - 16,644 - 34,602 Net income (loss) available to common shareholders - diluted $ (949,591 ) $ (1,014,700 ) $ (2,783,478 ) $ 26,719,493 Weighted average shares outstanding - basic 26,631,603 20,276,658 24,534,918 17,737,680 Dilutive shares – convertible notes payable – related parties - - - 3,304,728 Weighted average shares outstanding - diluted 26,631,603 20,276,658 24,534,918 21,042,408 Basic income (loss) per share $ (0.04 ) $ (0.05 ) $ (0.11 ) $ 1.50 Diluted income (loss) per share $ (0.04 ) $ (0.05 ) $ (0.11 ) $ 1.27 Excluded in diluted income (loss) per share as inclusion would have an antidilutive effect: Convertible debt – related parties - 3,304,728 - 3,304,728 Stock options 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 5,704,728 2,400,000 5,704,728 Going Concern As shown in the accompanying financial statements, the Company had an accumulated deficit of $8,458,403 through June 30, 2019 and net loss of $2,783,478 for the six months ended June 30, 2019. Both raise doubt about the Company's ability to continue as a going concern. However, with the funding received under the forward gold sales agreement (Note 3) in March 2019 and resulting working capital of $3,553,416 at June 30, 2019, the Company believes it has the ability to meet its obligations for the next twelve months. New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Upon implementation of the new guidance, the Company will be required to recognize a liability and right-of-use asset for its operating leases. The Company has elected the transition option to apply the new guidance at the effective date without adjusting comparative periods presented. Adoption of the ASU on January 1, 2019 had no material impact to the Company's financial statements as the Company has no long term leases. In June 2018, the FASB issued ASU No. 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The update involves simplification of several aspects of accounting for nonemployee share-based payment transactions by expanding the scope of Topic 718 to include nonemployee awards. The update was effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Adoption of this update as of January 1, 2019 did not have a material impact on the Company's financial statements. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to certain disclosure requirements with respect to fair value measurements. The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of this update on fair value measurement disclosures. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Forward Gold Sales Contract Lia
Forward Gold Sales Contract Liability | 6 Months Ended |
Jun. 30, 2019 | |
Forward Gold Sales Contract Liability [Abstract] | |
FORWARD GOLD SALES CONTRACT LIABILITY | NOTE 3 – FORWARD GOLD SALES CONTRACT LIABILITY During the first quarter of 2019, the Company entered into and closed a Pre-Paid Forward Gold Purchase Agreement (the "Purchase Agreement") with PDK Utah Holdings L.P. ("PDK") for the sale and purchase by PDK of gold produced from the Company's mining property. Under the terms of the Purchase Agreement, PDK agreed to purchase a total of 73,910 ounces of gold from the Company at a reduced market price. Prepayment will be made in three tranches, with the initial tranche in the amount of $11,200,000 having been made upon execution of the Purchase Agreement on March 7, 2019 (the "Initial Funding"), $4,500,000 for Tranche 2 to occur at least six months following the Initial Funding date, and $5,500,000 for Tranche 3 to occur at least 10 months following the Initial Funding date, provided that all conditions precedent for funding Tranches 2 and 3 are met. From the Initial Funding, the Company paid an upfront fee of $600,000 to PDK for expenses incurred in connection with the transaction. Under the terms of the Purchase Agreement, the Company agreed to sell gold at a reduced market price in certain quantities during agreed periods following prepayment of each tranche. The first gold delivery of 655 ounces is due December 2020. The Purchase Agreement contains provisions requiring the Company to pay PDK a portion of the proceeds when gold is sold to a third party. In addition, PDK may reduce the required number of ounces to be sold in exchange for common shares of the Company. As security for the obligations of the Company under the Purchase Agreement, the Company has granted PDK a security interest in all of the assets of the Company and has issued and recorded a Leasehold Deed of Trust, Assignment of Leases, Rents, As Extracted Collateral and Contracts, Security Agreement and Fixture Filing. The Purchase Agreement contains representations and warranties, as well as affirmative and negative covenants customary to a transaction of this nature. The forward gold sales contract liability due under the terms of the Purchase Agreement at June 30, 2019 is $10,600,000 which is the $11,200,000 received from PDK in the initial tranche less the $600,000 upfront fee paid by the Company. On October 31, 2019, the Purchase Agreement was amended to reduce the number of gold ounces to be delivered and the amount of funding to be received in Tranches 2 and 3 (Note 20). |
Reclamation Bonds
Reclamation Bonds | 6 Months Ended |
Jun. 30, 2019 | |
Reclamation Bonds [Abstract] | |
RECLAMATION BONDS | NOTE 4 – RECLAMATION BONDS At June 30, 2019 and December 31, 2018, the Company has a surety bond of $674,000 in an escrow account with the bonding company for reclamation of its property. This escrowed amount is held at Bank of New York, Mellon for the Company's benefit. It may not be released to the Company without the prior consent of the surety bondholder. The escrowed amount does not earn interest. In March 2019, as part of the Amended Lease (Note 7), the Company returned the Cactus Mill property and the reclamation bond of $42,802 on that property to Clifton Mining Company. Total reclamation bonds posted at June 30, 2019 and December 31, 2018 are $724,433 and $753,290, respectively, which consists of the above escrowed amount along with certificate of deposits held with the state of Utah for the remaining bonds on the property, including exploration bonds. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 5 – INVENTORIES Inventories at June 30, 2019 and December 31, 2018 consists of ore on the leach pad all of which is expected to be processed over the next twelve months. Inventories at June 30, 2019 and December 31, 2018 were valued at net realizable value because inventory-related costs were greater than the amount the Company expects to receive on the sale of the estimated gold ounces contained in inventories at both period-end dates. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 6 – PROPERTY AND EQUIPMENT The following is a summary of property and equipment at June 30, 2019 and December 31, 2018: June 30, December 31, 2019 2018 Equipment $ 3,738,077 $ 3,093,690 Furniture and fixtures 6,981 6,981 Electronic and computer equipment 50,587 52,874 Vehicles 184,424 108,089 Land improvements 27,746 - Land 250,000 - 4,257,815 3,261,634 Less accumulated depreciation (1,902,872 ) (1,856,149 ) 2,354,943 1,405,485 Kiewit property facilities 2,497,436 2,497,436 Less accumulated amortization (447,673 ) (487,214 ) 2,049,763 2,010,222 Total $ 4,404,706 $ 3,415,707 For the Kiewit property facilities, amortization expense is based on units of production. Production in the three months ended June 30, 2019 was minimal and amortization based on total units of production in the second quarter of 2019, plus an adjustment in total expected ounces expected to be produced from the facilities, resulted in an amortization adjustment of $(39,541) for the three and six months ended June 30, 2019. There was no amortization in the three and six months ended June 30, 2018 due to the lack of production. On June 13, 2019, the Company entered into an agreement whereby the Company acquired 20 claims adjacent to the Kiewit property from Ben Julian, LLC for $250,000. |
Mineral Properties and Interest
Mineral Properties and Interests | 6 Months Ended |
Jun. 30, 2019 | |
Mineral Industries Disclosures [Abstract] | |
MINERAL PROPERTIES AND INTERESTS | NOTE 7 – MINERAL PROPERTIES AND INTERESTS Mineral properties and interests as of June 30, 2019 and December 31, 2018 are as follows: June 30, December 31, Kiewit and all other sites $ 3,700,000 $ 600,000 Less accumulated amortization (49,281 ) (36,948 ) 3,650,719 563,052 Asset retirement obligation Kiewit Site 452,193 452,193 Kiewit Exploration 11,126 11,126 Cactus Mill - 26,234 Total 463,319 489,553 Less accumulated amortization (172,597 ) (173,604 ) 290,722 315,949 Total $ 3,941,441 $ 879,001 In 2009, the Company entered into a Joint Venture Agreement with the Clifton Mining Company ("Clifton") and the Woodman Mining Company for the lease of their property interests in the Gold Hill Mining District of Utah. In March 2019, the Company and Clifton entered into a Second Amended and Restated Lease Agreement (the "Amended Lease"). Under the terms of this Amended Lease, the Company relinquished its leasehold interest in all but 10 of the patented mining claims, for which it retained only the surface rights, and 66 of the unpatented lode mining claims previously held by the Company. The Cactus Mill property was returned to Clifton Mining Company as part of this agreement. As consideration for entering into the Amended Lease, the Company issued 5,500,000 shares of its common stock with a fair value of $2,200,000 to Clifton which was added to the carrying value of the mineral properties and interests. In addition, the Company and Clifton entered into a Registration Rights Agreement to register for resale the shares issued to Clifton which requires the Company to register the shares within 18 months following the Initial Funding. In the event the Company does not register the shares within the 18-month period, the Company is obligated to pay Clifton a royalty equal to 2.5% of the net smelter returns from the minerals generated from the Company's mining claims. Under the terms of the initial Joint Venture Agreement, the Company was required to pay a 4% net smelter royalty ("NSR") on base metals in all other areas except for production from the Kiewit gold property and a NSR on gold and silver, except for production from the Kiewit gold property, based on a sliding scale of between 2% and 15% based on the price of gold or silver, as applicable. The Company was also required to pay Clifton a 6% NSR on any production from the Kiewit gold property. As part of the Purchase Agreement (Note 3) finalized in March 2019, these NSRs were bought out by the Company from Clifton and two other minority royalty holders at a cost of $900,000 which was added to the carrying value of the mineral properties and interests. The buyer in the Purchase Agreement (Note 3), PDK, acquired a 4% NSR, previously held by Clifton, on the Kiewit property for $2,200,000. A 4% NSR on any production from the Kiewit gold property is now due to PDK. Production in the three months ended June 30, 2019 was minimal and amortization based on total units of production in the second quarter of 2019, plus an adjustment in total expected ounces expected to be produced from the mineral properties and interests, resulted in an amortization of $13,878 for the three and six months ended June 30, 2019. There was no amortization in the three and six months ended June 30, 2018 due to the lack of production. |
Short-Term Notes Payable - Rela
Short-Term Notes Payable - Related Parties | 6 Months Ended |
Jun. 30, 2019 | |
Short Term Notes Payable Related Parties [Abstract] | |
SHORT-TERM NOTES PAYABLE - RELATED PARTIES | NOTE 8 – SHORT-TERM NOTES PAYABLE – RELATED PARTIES During 2018 and the first quarter of 2019, the Company entered into several short-term notes payable with the convertible debt holders (Note 9) and with the Company's president. Total borrowed was $91,680 during the first quarter 2019 and $249,000 during the year ended December 31, 2018. The notes bore interest at 10%, had a 2% loan initiation fee, and were due in full on March 31, 2019. Accrued interest payable to related parties on these notes at June 30, 2019 and December 31, 2018 was nil and $7,243. Interest expense recognized on these loans was nil and $5,820 for the three and six months ended June 30, 2019, respectively. No interest expense was recognized during the three and six months ended June 30, 2018. These short-term notes were repaid in full, including 10% interest and a 2% loan initiation fee, in March 2019 as part of the terms of the Purchase Agreement. |
Convertible Debt - Related Part
Convertible Debt - Related Parties | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBT - RELATED PARTIES | NOTE 9 – CONVERTIBLE DEBT – RELATED PARTIES 2009 Convertible Notes: On November 18, 2009, the Company issued convertible promissory notes to two of its minority shareholders, for a total of $600,000. The notes bore interest at 15% per annum. Interest-only was payable in equal monthly installments of $7,500. The notes were convertible at a rate of $0.70 per share. The Company failed to repay the notes in full on the November 30, 2012 through the 2017 maturity dates, so the Company was required to issue an additional 300,000 shares of common stock to these debt holders in each of those years. In 2014, 2015, 2016, and 2017, the annual issuance of shares of common stock was valued at an estimated $0.04 (total $12,000) each and was accounted for as financing expense. The Company failed to repay the notes on the November 2018 maturity date. During the year ended December 31, 2018, the Company issued shares of common stock valued at $0.40 per share based on the cash price of common stock sales during 2018 which was recognized as financing expense. The due date of the note was extended to May 31, 2019. Interest had not been paid since November 2014. Per the terms of the notes, interest on these notes is not convertible to common stock. On February 28, 2018, the notes were amended changing the interest rate from 15% to 10% effective March 1, 2018 and allowing for accrued interest to be payable in full on May 31, 2019. The amendment further waived the default provision in the notes for past due interest. In addition, as part of the agreement, the convertible feature of the notes was removed. 2016 Convertible Notes: On October 14, 2016, the Company issued additional convertible promissory notes to the convertible debt holders for a total of $250,000. The notes bore interest at 10% per annum and were due in full on September 30, 2018. The notes were convertible at a rate of $0.25 per share. These notes were amended in February 2018 to extend the due date of the notes and the accrued interest to May 31, 2019. Interest on these notes is convertible to common stock. 2017 Convertible Notes: On August 7, 2017, the convertible debt holders agreed to fund up to an additional aggregate of $500,000 under terms similar to existing convertible debt agreements. At December 31, 2017, $428,000 of these funds had been advanced. The remaining $72,000 was advanced in 2018 with the final advance on February 9, 2018. On February 28, 2018, these notes were amended to postpone the maturity date and interest payment date to May 31, 2019. Accrued interest payable to related parties on the above convertible notes payable was nil and $456,750 at June 30, 2019 and December 31, 2018, respectively. Interest expense recognized on these loans was nil and $33,658 for the three months ended June 30, 2019 and June 30, 2018, respectively and $24,412 and $71,260 for the six months ended June 30, 2019 and June 30, 2018, respectively. All of these notes were paid in full, including accrued interest, on March 7, 2019 with funds received under the Purchase Agreement. |
Obligation Under Capital Lease
Obligation Under Capital Lease - Related Party | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
OBLIGATION UNDER CAPITAL LEASE - RELATED PARTY | NOTE 10 – OBLIGATION UNDER CAPITAL LEASE — RELATED PARTY A capital lease was entered into on June 20, 2016 with RMH Overhead, LLC for mining and crushing equipment valued at $185,618, some of which had been previously owned by the Company. RMH Overhead, LLC is an entity owned by the Company's president, Rick Havenstrite. The equipment is being amortized over the estimated useful life of the equipment. Accumulated amortization at December 31, 2018 was $66,292. Lease payments were paid in full, including accrued interest and late fees, in March 2019 with funds received under the Purchase Agreement. |
Notes Payable - Equipment
Notes Payable - Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Notes Payable - Equipment [Abstract] | |
NOTES PAYABLE - EQUIPMENT | NOTE 11 – NOTES PAYABLE – EQUIPMENT The following is a summary of the equipment notes payable: June 30, December 31, Note payable to Komatsu Financial, collateralized by a Komatsu Telehandler lift, due in 48 monthly installments of $2,441 including interest at 4.99%. $ - $ 27,192 Note payable to CAT Financial, collateralized by used mining equipment due in 36 monthly installments of varying amounts including interest at 4.68%. - 117,002 Note payable to Wheeler Machinery, collateralized by used crushing equipment, due in 9 monthly installments of $39,009. - 145,066 Note payable to Komatsu Financial, collateralized by a Komatsu D275 dozer, due in one monthly installment of $21,000 and 47 monthly installments of $11,674 including interest at 2.99%. - 34,851 Note payable to Wheeler Machinery, collateralized by a used Metso C3054 Jaw Crusher, due in 5 monthly installments of $45,000, beginning June 2019, including interest at 8%. 133,220 - Note payable to Wheeler Machinery, collateralized by a used CAT 740 Haul truck, due in 11 monthly installments of $14,475, beginning May 2019, including interest at 8%, with a balloon payment due in April 2020 of $168,873. 294,525 - 427,745 324,111 Current portion (427,745 ) (324,111 ) Long term portion $ - $ - Principal payments are as follows for the twelve months ended June 30, 2020 $ 427,745 All of the above notes with balances due at December 31, 2018 were paid in full in March 2019 with funds received under the Purchase Agreement. |
Note Payable - Dmrj
Note Payable - Dmrj | 6 Months Ended |
Jun. 30, 2019 | |
Note Payable - Related Party [Abstract] | |
NOTE PAYABLE - DMRJ | NOTE 12 – NOTE PAYABLE — DMRJ In July 2010, the Company entered into an Investment Agreement with DMRJ. The Agreement had been modified numerous times and operated under the Fourteenth In the third quarter of 2016, control of the management of DMRJ was given to court appointed trustees of the two major funds of Platinum Partners. On March 8, 2018, the Company finalized an agreement with the trustees to discharge all of the amounts owed by the Company to DMRJ and to extinguish all of DMRJ's shares of the Company's preferred stock in exchange for $625,000. On the date of the agreement, the principal balance of the note was $15,554,552 and accrued interest payable was $9,987,009 for a total balance due of $25,541,561. As a result of the transaction, in the quarter ended March 31, 2018, the Company recognized a gain on extinguishment of debt of $24,916,561. All of the preferred stock of the Company that had been issued to DMRJ in prior years was extinguished. The preferred stock was originally recorded for a total value $4,068,720. As a result of the extinguishment, the Company adjusted accumulated deficit for the value of the preferred stock. This amount is considered a capital contribution and has been added to net income attributable to common stockholders in the calculation of earnings per share for the six months ended June 30, 2018. After the above transactions, DMRJ is no longer a shareholder (beneficially or otherwise) of the Company as of March 8, 2018. During the quarter ended March 31, 2018, the existing convertible debt holders funded the $625,000 and modifications to their existing convertible note terms were made in exchange for 4,500,000 shares of the Company's common stock. See Notes 9 and 15. |
Asset Retirement Obligation
Asset Retirement Obligation | 6 Months Ended |
Jun. 30, 2019 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATION | NOTE 13 – ASSET RETIREMENT OBLIGATION Changes in the asset retirement obligation for the six-month periods ended June 30, 2019 and 2018 are as follows: June 30, June 30, Asset retirement obligation, beginning of period $ 792,747 $ 1,046,621 Reduction in liability due to transfer of Cactus Mill property (40,802 ) - Accretion expense 37,346 18,128 Asset retirement obligation, end of period $ 789,291 $ 1,064,749 During the six months ended June 30, 2019, the Cactus Mill property was returned to Clifton as part of the terms of the Amended Lease (Note 7). The net asset retirement cost of $20,351 and obligation of $40,802 relating to the Cactus Mill property were eliminated resulting in a gain on settlement of asset retirement obligation of $20,451 recognized in the statement of operations. |
Settlement of Consulting Contra
Settlement of Consulting Contract | 6 Months Ended |
Jun. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
SETTLEMENT OF CONSULTING CONTRACT | NOTE 14 – SETTLEMENT OF CONSULTING CONTRACT On March 29, 2018, the Company entered into a five-year Agency Agreement (the "Agency Agreement") with H&H Metals Corp., a New York corporation ("H&H"). Under the terms of the Agency Agreement, H&H agreed to provide certain advisory services in regard to natural resources activities and to assist in securing purchasers for minerals produced from its mining properties. On January 16, 2019, as a condition for entering into the Purchase Agreement (Note 3), the Company negotiated a termination of the Agency Agreement (the "Termination Agreement") with H&H. Under the terms of the Termination Agreement, the Company paid H&H $600,000 in cash and agreed to pay an additional $200,000 within 18 months. The Company also issued 250,000 shares of its common stock with a fair value of $100,000 to H&H. In addition, Phillip H. Holme, a principal of H&H, became a director of the Company. The Company recognized a loss on settlement of consulting contract of $900,000 during the quarter ended June 30, 2019. The balance of $200,000 is due under the settlement agreement at June 30, 2019. |
Capital Stock
Capital Stock | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
CAPITAL STOCK | NOTE 15 – CAPITAL STOCK Common Stock The Company is authorized to issue 100,000,000 shares of common stock. All shares have equal voting rights and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. 2019 Activity During the six month period ended June 30, 2019, the Company had the following transactions relating to common stock. All shares issued were valued at $0.40 per share based on the most recent sale of common stock for cash: ● Issued 5,500,000 shares of common stock to Clifton in connection with the Amended Lease (Note 7). The fair value of these shares was $2,200,000. ● Issued 250,000 shares of common stock to H&H in connection with settlement of a consulting contract (Note 14). The fair value of these shares was $100,000. ● In connection with the settlement of stock redeemable with gold proceeds issued in 2012, the Company allowed investors to retain 130,000 shares of common stock that had been issued in connection with a financing in 2012 (Note 19). The fair value of these shares was $52,000. 2018 Activity During the six month period ended June 30, 2018, the Company had the following transactions relating to common stock: ● Sold 4,500,000 shares of common stock to the convertible debt holders for $625,000 in cash and several concessions as to the convertibility, due dates and default provisions on their outstanding debt. See Note 9. ● Sold 2,125,000 shares of its common stock at $0.40 per share for cash proceeds of $850,000. Preferred Stock The Company's Articles of Incorporation authorized 10,000,000 shares of $0.001 par value Preferred Stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine. On March 8, 2018, the Company finalized an agreement with the trustees of DMRJ, who owned all of the Series A, A-2 and Series B outstanding preferred stock. This agreement discharged all of the debt owed by the Company to DMRJ and its related affiliates and returned all of the shares of preferred stock to the Company in exchange for $625,000. The Company then cancelled all of the preferred shares of stock. As a result, DMRJ relinquished all ownership in the Company. See Note 12. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 16 – RELATED PARTY TRANSACTIONS In addition to transactions disclosed in Notes 8, 9, 10 and 19, the Company had the following related party transaction. The Company has a month to month lease agreement for its office space with RMH Overhead, LLC, a company owned by Rick Havenstrite, the Company's President and a director. The Company recognized rent expense of $3,000 for the three months ended June 30, 2019 and 2018, respectively, under this lease. The Company recognized rent expense of $6,000 for the six months ended June 30, 2019 and 2018, respectively, under this lease. At June 30, 2019 and December 31, 2018, amounts due to RMH Overhead, LLC of nil and $18,750, respectively, are included in in accounts payable and accrued expenses on the balance sheet. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE RECOGNITION | NOTE 17 – REVENUE RECOGNITION The Company's product consists of an unrefined gold concentrate, which is then refined offsite to become doré. For the three and six month periods ended June 30, 2019 and June 30, 2018 the Company had no sales of concentrate. Revenue is recognized upon the completion of the performance obligations and transfer of control of the product to the customer, and when the transaction price can be determined or reasonably estimated. Sales and accounts receivable for sales are recorded net of charges for treatment and other charges which represent components of the transaction price. Charges are estimated by management upon transfer of risk based on contractual terms, and actual charges typically do not vary materially from management's estimates. Revenue from the sale of metals may be subject to adjustment upon final settlement of estimated metal prices, weights and assays, and are recorded as adjustments to revenue in the period of final settlement of prices, weights and assays; such adjustments are typically not material in relation to the initial invoice amounts. Costs charged by the refiner include fixed treatment, refining and costs per ton of concentrate and may include penalty charges for other metal content above a negotiated baseline as well as excessive moisture. Management has determined the performance obligation is met and title is transferred when the Company delivers the concentrate to the customer because, at that time, (i) legal title is transferred to the customer, (ii) the customer has accepted the concentrate lot and obtained the ability to realize all of the benefits from the product, (iii) the concentrate content specifications are known, have been communicated to the customer, and the customer has the significant risks and rewards of ownership to it, and (iv) the Company has the right to payment for the concentrate. The performance obligation is met, the transaction price is known, and revenue is recognized at the time of transfer of control of the agreed-upon metal quantities to the customer. There were no sales of products for the three and six month periods ended June 30, 2019 and 2018. At June 30, 2019 and December 31, 2018, the Company did not have a gold sales receivable balance. |
Stock Options
Stock Options | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTIONS | NOTE 18 – STOCK OPTIONS The Company has reserved 2,400,000 shares under its 2018 Stock Incentive Plan (the "Plan"). The Plan was adopted by the board of directors on March 28, 2018, retroactive to February 23, 2018, as a vehicle for the recruitment and retention of qualified employees, officers, directors, consultants, and other service providers. The Plan is administered by the Board of Directors. The Company may issue, to eligible persons, restricted common stock, incentive and non-statutory options, stock appreciation rights and restricted stock units. The terms and conditions of awards under the Plan will be determined by the Board of Directors. On February 23, 2018, the Board approved the grant of an aggregate of 2,400,000 non-statutory options under the 2018 Plan exercisable at $0.40 per share which expire February 23, 2023 in the amounts and to the following: ● Rick Havenstrite, President and CEO – 1,000,000 options ● Howard Crosby, Director – 1,000,000 options ● John Ryan, Director – 200,000 options ● Linde Havenstrite, Project Engineer – 200,000 options The options were fully vested on the date of grant. The fair value of the options, calculated using the Black Scholes model, of $456,000 was recognized as stock based compensation cost for the six month period ended June 30, 2018, which was included in general and administrative expenses. Outstanding options at June 30, 2019 are 2,400,000, have a remaining life of 3.6 years, and had no intrinsic value. No options were granted, expired, or were exercised during the three-month period ended June 30, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 19 – COMMITMENTS AND CONTINGENCIES In addition to commitments disclosed in Notes 3 and 7, the Company had the following commitments and contingencies. Personal property tax and other accrued liabilities Personal property tax for Tooele County, Utah, is billed and becomes due on November 30 of each year. At June 30, 2019, the amount due to Tooele County is nil. At December 31, 2018, the balance due for these taxes was $134,687 which included delinquent taxes from prior years. The balance was paid in full in March 2019 with funds received under the Purchase Agreement. Employment Agreements The Company has an employment agreement with Mr. Havenstrite as President of the Company, which is ongoing. The agreement, as amended, requires Mr. Havenstrite to meet certain time requirements and limits the number of other board member obligations in which he can participate. The agreement allows for a base annual salary of $144,000 plus certain performance compensation upon fulfillment of established goals. The agreement allows the board of directors to terminate Mr. Havenstrite's employment at any time, providing for a severance payment upon termination without cause. Beginning in 2019, the Company's board of directors agreed to compensate directors for their contributions to the management of the Company, with one director receiving $6,000 per month and the other two directors receiving $5,000 per quarter. At June 30, 2019 and December 31, 2018, accrued compensation of nil and $828,039, were due to officers of the Company. Of the amounts accrued at June 30, 2019 and December 31, 2018, accrued compensation of nil and $593,232 is due to Rick Havenstrite and nil and $234,807 is due to Marianne Havenstrite, Treasurer and Principal Financial Officer. In addition, nil and $94,000 was due to directors at June 30, 2019 and December 31, 2018, respectively. The amounts due at December 31, 2018 were paid in full in March 2019 with funds received under the Purchase Agreement. Finder's Agreement On May 11, 2018, the Company entered into an agreement with Mount Royal Consultants (Mount Royal) to assist in finding prospective investors. Mount Royal would receive a finder's fee of 7% for a connection with a company that resulted in a qualified investment consisting of equity securities or a fee of 3% for a connection with a company that resulted in a purchase of debt securities. On March 7, 2019, the Company closed a Purchase Agreement (Note 3) to a buyer for the purchase of gold produced from the Company's mining property. This agreement was deemed to be subject to the finder's fee and resulted in a payment to Mount Royal of $318,000, 3% of the $10,600,000 beneficially received by the Company in accordance with the terms of the Purchase Agreement. On November 1, 2019, an additional payment of 3% of the Tranche 2 payment received by the Company resulted in a payment of $48,000 to Mount Royal and a third payment of $42,000 was issued after receipt of the Tranche 3 payment on December 27, 2019. Future amounts to be received from investors could also be subject to this agreement. During the three and six month periods ended June 30, 2019, the Company recognized nil and $318,000, respectively, as consulting expense relating to this agreement. Stock Redeemable with Gold Proceeds In 2012, the Company sold 130,000 shares of its common stock. Under the terms of this offering, the shares could be redeemed for cash generated from the sale of gold. Each investor received the right to convert a minimum of one-half and up to all of his shares (on a pro rata basis) into the value of the number of ounces represented by the total investment, determined using a base price of $1,000 per ounce. Due to the redemption feature of these shares, the shares were recorded as a liability and not as equity. All investors opted to convert their shares for cash from 5% of the gold sales. At December 31, 2018, the Company had a payable of $151,405 to investors for their portion of gold sales included in accounts payable. This balance was paid to the investors in March 2019 fully satisfying the terms of the original offering. Upon full satisfaction of the redemption provisions, the shares of common stock should have been returned to the Company. However, the Company allowed the investors to keep the shares. The Company recognized an expense of $63,094, which includes $52,000 for the fair value of the shares of common stock, as loss on settlement of redeemable stock during the quarter ended March 31, 2019. Mining Leases Annual claims fees are currently $155 per claim plus administrative fees. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20 – SUBSEQUENT EVENTS Amendment of Forward Gold Sales Contract (Purchase Agreement) On October 31, 2019, the Company and PDK amended the Purchase Agreement and entered into the Amended Pre-Paid Forward Agreement (the "Amended Agreement") to adjust the second and third tranches paid to the Company, to reduce the total number of ounces of gold subject to the Purchase Agreement, and to revise other provisions therein. The second tranche was reduced from $4,500,000 to $1,600,000, and the third tranche was reduced from $5,500,000 to $1,400,000. The second tranche was received on October 31, 2019 upon execution of the Amended Agreement and the third tranche was received on December 27, 2019, with funds to be dedicated in accordance with the revised budget furnished with the Amended Agreement. The amendment also reduced the total number of ounces of gold prepaid under the agreement from 73,910 to 47,045. Under the terms of the Amended Agreement, the Company is obligated to deliver gold in the following quantities following prepayment of each tranche: ● Beginning the 21 st ● Beginning the 14 th ● Beginning the 13 th The Amended Agreement also alters the total amount that PDK may reduce the number of ounces of gold to be delivered under the Amended Agreement in exchange for common shares of the Company. Under the Amended Agreement, PDK may reduce the required number of ounces by up to 8,000 ounces in exchange for common shares of the Company. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Accounting for Stock Options and Stock Awards Granted to Employees and Nonemployees | Accounting for Stock Options and Stock Awards Granted to Employees and Nonemployees All transactions in which goods or services are received for the issuance of shares of the Company's common stock or options to purchase shares of common stock are accounted for based on the fair value of the goods or services received or the fair value of the equity interest issued, whichever is more reliably measurable. For stock options, the Company estimates the fair value of stock-based compensation using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected life"), the estimated volatility of the Company's common stock price over the expected term ("volatility"), the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of the fair value of stock-based compensation. |
Inventories | Inventories The recovery of gold from certain oxide ores is achieved through the heap leaching process. Under this method, mineralized material is placed on a leach pad where it is treated with a chemical solution, which dissolves the gold contained in the material. The resulting "pregnant" solution is further processed in a plant where gold is recovered. The Company records ore on leach pad, solution in carbon columns in process and gold doré, at average production cost per gold ounce, less provisions required to reduce inventory to net realizable value. Production costs include the cost of mineralized material processed; direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities; depreciation and amortization of property, equipment, and mineral properties; and mine administrative expenses. Revenue from the sale of silver is accounted for as by-product and is deducted from production costs. Costs are removed from ore on leach pads as ounces are recovered based on the average cost per recoverable ounce of gold on the leach pad. Estimates of recoverable gold on the leach pad are calculated from the quantities of material placed on the leach pad (measured tons added to the leach pad), the grade of material placed on the leach pad (based on assay data) and an estimated recovery percentage (based on ore type). The nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, actual gold ounces recovered are regularly monitored and estimates are refined based on actual results over time. As of June 30, 2019, the Company had a limited operating history and actual results only over that short period of time. Due to this, estimates of recoverable gold are based primarily on initial tests and only limited refinements. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from a leach pad will not be known until the leaching process is concluded. The quantification of material inventory on the leach pad is based on estimates of the quantities of gold at each balance sheet date that the Company expects to recover during the next 12-18 months. |
Revenue Recognition | Revenue Recognition Sales of gold concentrate sold directly to customers are recorded as revenues and receivables upon completion of the performance obligations and transfer of control of the product to the customer. For concentrate sales, the performance obligation is met, the transaction price can be reasonably estimated, and revenue is recognized generally at the time of shipment at estimated forward prices for the anticipated month of settlement. Due to the time elapsed from shipment to the customer and the final settlement with the customer, prices at which sales of the Company's concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to the estimated settlement metals prices until final settlement by the customer. Sales and accounts receivable for concentrate shipments are recorded net of charges by the customer for treatment, refining, smelting losses, and other charges negotiated with the customers. Charges are estimated upon shipment of concentrates based on contractual terms, and actual charges typically do not vary materially from estimates. See Note 17. |
Earnings (loss) Per Share | Earnings (loss) Per Share Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Net income (loss) $ (949,591 ) $ (1,031,344 ) $ (2,783,478 ) $ 22,616,171 Deemed capital contribution on extinguishment of preferred stock - - - 4,068,720 Net income (loss) available to common shareholders - basic (949,591 ) (1,031,344 ) (2,783,478 ) 26,684,891 Interest expense on convertible notes payable -related parties - 16,644 - 34,602 Net income (loss) available to common shareholders - diluted $ (949,591 ) $ (1,014,700 ) $ (2,783,478 ) $ 26,719,493 Weighted average shares outstanding - basic 26,631,603 20,276,658 24,534,918 17,737,680 Dilutive shares – convertible notes payable – related parties - - - 3,304,728 Weighted average shares outstanding - diluted 26,631,603 20,276,658 24,534,918 21,042,408 Basic income (loss) per share $ (0.04 ) $ (0.05 ) $ (0.11 ) $ 1.50 Diluted income (loss) per share $ (0.04 ) $ (0.05 ) $ (0.11 ) $ 1.27 Excluded in diluted income (loss) per share as inclusion would have an antidilutive effect: Convertible debt – related parties - 3,304,728 - 3,304,728 Stock options 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 5,704,728 2,400,000 5,704,728 |
Going Concern | Going Concern As shown in the accompanying financial statements, the Company had an accumulated deficit of $8,458,403 through June 30, 2019 and net loss of $2,783,478 for the six months ended June 30, 2019. Both raise doubt about the Company's ability to continue as a going concern. However, with the funding received under the forward gold sales agreement (Note 3) in March 2019 and resulting working capital of $3,553,416 at June 30, 2019, the Company believes it has the ability to meet its obligations for the next twelve months. |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Upon implementation of the new guidance, the Company will be required to recognize a liability and right-of-use asset for its operating leases. The Company has elected the transition option to apply the new guidance at the effective date without adjusting comparative periods presented. Adoption of the ASU on January 1, 2019 had no material impact to the Company's financial statements as the Company has no long term leases. In June 2018, the FASB issued ASU No. 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The update involves simplification of several aspects of accounting for nonemployee share-based payment transactions by expanding the scope of Topic 718 to include nonemployee awards. The update was effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Adoption of this update as of January 1, 2019 did not have a material impact on the Company's financial statements. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to certain disclosure requirements with respect to fair value measurements. The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of this update on fair value measurement disclosures. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of net income (loss) available to common shareholders | Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Net income (loss) $ (949,591 ) $ (1,031,344 ) $ (2,783,478 ) $ 22,616,171 Deemed capital contribution on extinguishment of preferred stock - - - 4,068,720 Net income (loss) available to common shareholders - basic (949,591 ) (1,031,344 ) (2,783,478 ) 26,684,891 Interest expense on convertible notes payable -related parties - 16,644 - 34,602 Net income (loss) available to common shareholders - diluted $ (949,591 ) $ (1,014,700 ) $ (2,783,478 ) $ 26,719,493 Weighted average shares outstanding - basic 26,631,603 20,276,658 24,534,918 17,737,680 Dilutive shares – convertible notes payable – related parties - - - 3,304,728 Weighted average shares outstanding - diluted 26,631,603 20,276,658 24,534,918 21,042,408 Basic income (loss) per share $ (0.04 ) $ (0.05 ) $ (0.11 ) $ 1.50 Diluted income (loss) per share $ (0.04 ) $ (0.05 ) $ (0.11 ) $ 1.27 Excluded in diluted income (loss) per share as inclusion would have an antidilutive effect: Convertible debt – related parties - 3,304,728 - 3,304,728 Stock options 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 5,704,728 2,400,000 5,704,728 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Summary of property, equipment, and accumulated depreciation | June 30, December 31, 2019 2018 Equipment $ 3,738,077 $ 3,093,690 Furniture and fixtures 6,981 6,981 Electronic and computer equipment 50,587 52,874 Vehicles 184,424 108,089 Land improvements 27,746 - Land 250,000 - 4,257,815 3,261,634 Less accumulated depreciation (1,902,872 ) (1,856,149 ) 2,354,943 1,405,485 Kiewit property facilities 2,497,436 2,497,436 Less accumulated amortization (447,673 ) (487,214 ) 2,049,763 2,010,222 Total $ 4,404,706 $ 3,415,707 |
Mineral Properties and Intere_2
Mineral Properties and Interests (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Mineral Industries Disclosures [Abstract] | |
Schedule of mineral properties and interests | June 30, December 31, Kiewit and all other sites $ 3,700,000 $ 600,000 Less accumulated amortization (49,281 ) (36,948 ) 3,650,719 563,052 Asset retirement obligation Kiewit Site 452,193 452,193 Kiewit Exploration 11,126 11,126 Cactus Mill - 26,234 Total 463,319 489,553 Less accumulated amortization (172,597 ) (173,604 ) 290,722 315,949 Total $ 3,941,441 $ 879,001 |
Notes Payable - Equipment (Tabl
Notes Payable - Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Payable - Equipment [Abstract] | |
Schedule of the equipment notes payable | June 30, December 31, Note payable to Komatsu Financial, collateralized by a Komatsu Telehandler lift, due in 48 monthly installments of $2,441 including interest at 4.99%. $ - $ 27,192 Note payable to CAT Financial, collateralized by used mining equipment due in 36 monthly installments of varying amounts including interest at 4.68%. - 117,002 Note payable to Wheeler Machinery, collateralized by used crushing equipment, due in 9 monthly installments of $39,009. - 145,066 Note payable to Komatsu Financial, collateralized by a Komatsu D275 dozer, due in one monthly installment of $21,000 and 47 monthly installments of $11,674 including interest at 2.99%. - 34,851 Note payable to Wheeler Machinery, collateralized by a used Metso C3054 Jaw Crusher, due in 5 monthly installments of $45,000, beginning June 2019, including interest at 8%. 133,220 - Note payable to Wheeler Machinery, collateralized by a used CAT 740 Haul truck, due in 11 monthly installments of $14,475, beginning May 2019, including interest at 8%, with a balloon payment due in April 2020 of $168,873. 294,525 - 427,745 324,111 Current portion (427,745 ) (324,111 ) Long term portion $ - $ - Principal payments are as follows for the twelve months ended June 30, 2020 $ 427,745 |
Asset Retirement Obligation (Ta
Asset Retirement Obligation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of asset retirement obligations | June 30, June 30, Asset retirement obligation, beginning of period $ 792,747 $ 1,046,621 Reduction in liability due to transfer of Cactus Mill property (40,802 ) - Accretion expense 37,346 18,128 Asset retirement obligation, end of period $ 789,291 $ 1,064,749 |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Mar. 08, 2018 | |
Organization and Description of Business (Textual) | ||
Note and interest payable | $ 25,541,561 | |
Revenues from sales of gold concentrate, description | Production commenced and revenues of approximately $7,200,000 from sales of gold and other metals concentrate have been received through June 30, 2019. | |
Due to DMRJ | $ 625,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Net income (loss) | $ (949,591) | $ (1,031,344) | $ (2,783,478) | $ 22,616,171 |
Deemed capital contribution on extinguishment of preferred stock | 4,068,720 | |||
Net income (loss) available to common shareholders - basic | (949,591) | (1,031,344) | (2,783,478) | 26,684,891 |
Interest expense on convertible notes payable - related parties | 16,644 | 34,602 | ||
Net income (loss) available to common shareholders - diluted | $ (949,591) | $ (1,031,344) | $ (2,783,478) | $ 26,684,891 |
Weighted average shares outstanding - basic | 26,631,603 | 20,276,658 | 24,534,918 | 17,737,680 |
Dilutive shares - convertible notes payable - related parties | 3,304,728 | |||
Weighted average shares outstanding - diluted | 26,631,603 | 20,276,658 | 24,534,918 | 21,042,408 |
Basic income (loss) per share | $ (0.04) | $ (0.05) | $ (0.11) | $ 1.5 |
Diluted income (loss) per share | $ (0.04) | $ (0.05) | $ (0.11) | $ 1.27 |
Excluded in diluted income (loss) per share as inclusion would have an antidilutive effect: | ||||
Convertible debt - related parties | 3,304,728 | 3,304,728 | ||
Stock options | 2,400,000 | 2,400,000 | 2,400,000 | 2,400,000 |
Total | 2,400,000 | 5,704,728 | 2,400,000 | 5,704,728 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies (Textual) | |||||
Accumulated deficit | $ (8,458,403) | $ (8,458,403) | $ (5,674,925) | ||
Working capital | 3,553,416 | 3,553,416 | |||
Net loss | $ (949,591) | $ (1,031,344) | $ (2,783,478) | $ 22,616,171 |
Forward Gold Sales Contract L_2
Forward Gold Sales Contract Liability (Details) | 6 Months Ended |
Jun. 30, 2019 | |
PDK [Member] | |
Forward Gold Sales Contract Liability (Textual) | |
Purchase Agreement, description | The Company entered into and closed a Pre-Paid Forward Gold Purchase Agreement (the "Purchase Agreement") with PDK Utah Holdings L.P. ("PDK") for the sale and purchase by PDK of gold produced from the Company's mining property. Under the terms of the Purchase Agreement, PDK agreed to purchase a total of 73,910 ounces of gold from the Company at a reduced market price. Prepayment will be made in three tranches, with the initial tranche in the amount of $11,200,000 having been made upon execution of the Purchase Agreement on March 7, 2019 (the "Initial Funding"), $4,500,000 for Tranche 2 to occur at least six months following the Initial Funding date, and $5,500,000 for Tranche 3 to occur at least 10 months following the Initial Funding date, provided that all conditions precedent for funding Tranches 2 and 3 are met. From the Initial Funding, the Company paid an upfront fee of $600,000 to PDK for expenses incurred in connection with the transaction. Under the terms of the Purchase Agreement, the Company agreed to sell gold at a reduced market price in certain quantities during agreed periods following prepayment of each tranche. The first gold delivery of 655 ounces is due December 2020. |
Tranches [Member] | |
Forward Gold Sales Contract Liability (Textual) | |
Purchase Agreement, description | The forward gold sales contract liability due under the terms of the Purchase Agreement at June 30, 2019 is $10,600,000 which is the $11,200,000 received from PDK in the initial tranche less the $600,000 upfront fee paid by the Company. On October 31, 2019, the Purchase Agreement was amended to reduce the number of gold ounces to be delivered and the amount of funding to be received in Tranches 2 and 3 (Note 20). |
Reclamation Bonds (Details)
Reclamation Bonds (Details) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Reclamation Bonds (Textual) | |||
Surety bond in escrow account | $ 674,000 | $ 674,000 | |
Reclamation bonds | $ 724,433 | $ 753,290 | |
Return property and the reclamation bond | $ 42,802 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Total | $ 4,404,706 | $ 3,415,707 |
Property, Plant and Equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 4,257,815 | 3,261,634 |
Less accumulated depreciation | (1,902,872) | (1,856,149) |
Property and equipment, Total | 2,354,943 | 1,405,485 |
Property, Plant and Equipment [Member] | Equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 3,738,077 | 3,093,690 |
Property, Plant and Equipment [Member] | Furniture and fixtures [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 6,981 | 6,981 |
Property, Plant and Equipment [Member] | Electronic and computer equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 50,587 | 52,874 |
Property, Plant and Equipment [Member] | Vehicles [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 184,424 | 108,089 |
Property, Plant and Equipment [Member] | Land Improvements [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 27,746 | |
Property, Plant and Equipment [Member] | Land [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 250,000 | |
Finite-Lived Intangible Assets [Member] | Kiewit property facilities [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 2,497,436 | 2,497,436 |
Less accumulated depreciation | (447,673) | (487,214) |
Property and equipment, Total | $ 2,049,763 | $ 2,010,222 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | Jun. 13, 2019 | Jun. 30, 2019 | Jun. 30, 2019 |
Property and Equipment (Details Textual) | |||
Amortization adjustment | $ (39,541) | $ (39,541) | |
Business acquisition, description | The Company entered into an agreement whereby the Company acquired 20 claims adjacent to the Kiewit property from Ben Julian, LLC for $250,000. |
Mineral Properties and Intere_3
Mineral Properties and Interests (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Initial lease fee | ||
Kiewit and all other sites | $ 3,700,000 | $ 600,000 |
Less accumulated amortization | (49,281) | (36,948) |
Total | 3,650,719 | 563,052 |
Asset retirement costs | ||
Kiewit Site | 452,193 | 452,193 |
Kiewit Exploration | 11,126 | 11,126 |
Cactus Mill | 26,234 | |
Total | 463,319 | 489,553 |
Less accumulated amortization | (172,597) | (173,604) |
Mineral properties after accumulated depletion | 290,722 | 315,949 |
Total | $ 3,941,441 | $ 879,001 |
Mineral Properties and Intere_4
Mineral Properties and Interests (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Mineral Properties and Interests; Reclamation Bonds (Textual) | ||
Common stock issued | 5,500,000 | |
Fair value of common stock | $ 2,200,000 | |
Percentage of royalty | 2.50% | |
Mineral properties and amortization | $ 13,878 | $ 13,878 |
Agreement, description | In addition, the Company and Clifton entered into a Registration Rights Agreement to register for resale the shares issued to Clifton which requires the Company to register the shares within 18 months following the Initial Funding. In the event the Company does not register the shares within the 18-month period. | |
Corporate Joint Venture [Member] | ||
Mineral Properties and Interests; Reclamation Bonds (Textual) | ||
Joint venture agreement, description | Under the terms of the initial Joint Venture Agreement, the Company was required to pay a 4% net smelter royalty ("NSR") on base metals in all other areas except for production from the Kiewit gold property and a NSR on gold and silver, except for production from the Kiewit gold property, based on a sliding scale of between 2% and 15% based on the price of gold or silver, as applicable. The Company was also required to pay Clifton a 6% NSR on any production from the Kiewit gold property. | |
NSR [Member] | ||
Mineral Properties and Interests; Reclamation Bonds (Textual) | ||
Royalty expense | $ 900,000 | |
Purchase Agreement, description | The buyer in the Purchase Agreement, PDK, acquired a 4% NSR, previously held by Clifton, on the Kiewit property for $2,200,000. A 4% NSR on any production from the Kiewit gold property is now due to PDK |
Short-Term Notes Payable - Re_2
Short-Term Notes Payable - Related Parties (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | Dec. 31, 2018 | |
Short-Term Notes Payable - Related Parties (Textual) | ||||||
Total Borrowings | $ 91,680 | $ 249,000 | ||||
Short-term debt, percentage bearing interest rate | 10.00% | |||||
Loan initiation fee, percentage | 2.00% | |||||
Interest expense | $ 0 | $ 0 | $ 5,820 | $ 0 | ||
Accrued interest payable | $ 7,243 | |||||
Purchase agreement, description | These short-term notes were repaid in full, including 10% interest and a 2% loan initiation fee, in March 2019 as part of the terms of the Purchase Agreement. |
Convertible debt - Related Pa_2
Convertible debt - Related Parties (Details) - USD ($) | Oct. 14, 2016 | Nov. 18, 2009 | Feb. 28, 2018 | Aug. 07, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible Notes - Related Parties (Textual) | ||||||||||
Convertible debt | $ 600,000 | $ 1,350,000 | ||||||||
Interest payable | 15.00% | |||||||||
Periodic payment of interest | $ 7,500 | |||||||||
Conversion price | $ 0.70 | |||||||||
Share price per share | $ 0.40 | |||||||||
Loan maturity date | May 31, 2019 | |||||||||
Interest expense | 7,359 | $ 17,684 | 7,488 | $ 27,454 | ||||||
Minimum [Member] | ||||||||||
Convertible Notes - Related Parties (Textual) | ||||||||||
Interest payable | 10.00% | |||||||||
Maximum [Member] | ||||||||||
Convertible Notes - Related Parties (Textual) | ||||||||||
Interest payable | 15.00% | |||||||||
Convertible Debt [Member] | ||||||||||
Convertible Notes - Related Parties (Textual) | ||||||||||
Convertible debt | $ 250,000 | $ 500,000 | $ 428,000 | |||||||
Interest payable | 10.00% | |||||||||
Conversion price | $ 0.25 | |||||||||
Accrued interest payable | $ 456,750 | |||||||||
Common stock and principal and interest were initially due date | Sep. 30, 2018 | May 31, 2019 | ||||||||
Loan maturity date | May 31, 2019 | |||||||||
Convertible debt, description | The remaining $72,000 was advanced in 2018 with the final advance on February 9, 2018. | The Company failed to repay the notes in full on the November 30, 2012 through the 2017 maturity dates, so the Company was required to issue an additional 300,000 shares of common stock to these debt holders in each of those years. In 2014, 2015, 2016, and 2017, the annual issuance of shares of common stock was valued at an estimated $0.04 (total $12,000) each and was accounted for as financing expense. | ||||||||
Interest expense | $ 33,658 | $ 24,412 | $ 71,260 |
Obligation under Capital Leas_2
Obligation under Capital Lease - Related Party (Details) - RMH Overhead LLC [Member] - USD ($) | 1 Months Ended | 12 Months Ended |
Jun. 20, 2016 | Dec. 31, 2018 | |
Obligation Under Capital Lease - Related Party (Textual) | ||
Equipment includes assets under capital lease amount | $ 185,618 | |
Accumulated amortization | $ 66,292 |
Notes Payable - Equipment (Deta
Notes Payable - Equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Jun. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Note payable | $ 427,745 | $ 324,111 | |
Current portion | (427,745) | (324,111) | |
Principal amount | $ 427,745 | ||
Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | 27,192 | ||
Notes Payable One [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | 117,002 | ||
Notes Payable Two [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | 145,066 | ||
Notes Payable Three [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | 34,851 | ||
Notes Payable Four [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | 133,220 | ||
Notes Payable Five [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | $ 294,525 |
Notes Payable - Equipment (De_2
Notes Payable - Equipment (Details Textual) | 6 Months Ended |
Jun. 30, 2019USD ($)Installments | |
Notes Payable [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 48 |
Installments amount | $ | $ 2,441 |
Interest rate percentage | 4.99% |
Notes Payable One [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 36 |
Interest rate percentage | 4.68% |
Notes Payable Two [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 9 |
Installments amount | $ | $ 39,009 |
Notes Payable Three [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 47 |
Installments amount | $ | $ 11,674 |
Interest rate percentage | 2.99% |
Notes Payable Three [Member] | Komatsu D275 dozer [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 1 |
Installments amount | $ | $ 21,000 |
Notes Payable Four [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 5 |
Installments amount | $ | $ 45,000 |
Interest rate percentage | 8.00% |
Notes Payable Five [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 11 |
Installments amount | $ | $ 14,475 |
Interest rate percentage | 800.00% |
maturity date | Apr. 30, 2020 |
Balloon payment | $ | $ 168,873 |
Note Payable - DMRJ (Details)
Note Payable - DMRJ (Details) - USD ($) | Mar. 08, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
Note Payable Dmrj (Textual) | ||||||||
Convertible debt holders | $ 463,993 | |||||||
Preferred stock issued | $ 4,068,720 | |||||||
Preferred stock issued | $ (4,068,720) | |||||||
Dmrj [Member] | ||||||||
Note Payable Dmrj (Textual) | ||||||||
Ownership percentage of stock on a fully-diluted basis | 77.00% | |||||||
Convertible shares of common stock | 4,500,000 | 47,211,002 | ||||||
Convertible debt holders | $ 625,000 | |||||||
Preferred stock issued | $ 625,000 | |||||||
Debt instrument, description | On the date of the agreement, the principal balance of the note was $15,554,552 and accrued interest payable was $9,987,009 for a total balance due of $25,541,561. As a result of the transaction, in the quarter ended March 31, 2018, the Company recognized a gain on extinguishment of debt of $24,916,561. | |||||||
Preferred stock issued | $ 4,068,720 |
Asset Retirement Obligation (De
Asset Retirement Obligation (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Asset retirement obligation, beginning of period | $ 792,747 | $ 1,046,621 |
Reduction in liability due to transfer of Cactus Mill property | (40,802) | |
Accretion expense | 37,346 | 18,128 |
Asset retirement obligation, end of period | $ 789,291 | $ 1,064,749 |
Asset Retirement Obligation (_2
Asset Retirement Obligation (Details Textual) | 6 Months Ended |
Jun. 30, 2019 | |
Asset Retirement Obligation (Textual) | |
Retirement Obligation, description | The Cactus Mill property was returned to Clifton as part of the terms of the Amended Lease (Note 7). The net asset retirement cost of $20,351 and obligation of $40,802 relating to the Cactus Mill property were eliminated resulting in a gain on settlement of asset retirement obligation of $20,451 recognized in the statement of operations. |
Settlement of Consulting Cont_2
Settlement of Consulting Contract (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Jan. 16, 2019 | Jun. 30, 2019 | |
Settlement of Consulting Contract (Textual) | ||
Termination Agreement, description | The Company negotiated a termination of the Agency Agreement (the "Termination Agreement") with H&H. Under the terms of the Termination Agreement, the Company paid H&H $600,000 in cash and agreed to pay an additional $200,000 within 18 months. The Company also issued 250,000 shares of its common stock with a fair value of $100,000 to H&H. In addition, Phillip H. Holme, a principal of H&H, became a director of the Company. | |
Settlement of consulting contract | $ 900,000 | |
Settlement agreement | $ 200,000 |
Capital Stock (Details)
Capital Stock (Details) - USD ($) | Mar. 08, 2018 | Jun. 30, 2019 | Dec. 31, 2012 | Dec. 31, 2018 |
Capital Stock (Textual) | ||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | ||
Voting rights, description | Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. | |||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Common stock per share | $ 0.40 | |||
Common stock issue | 5,500,000 | |||
Fair value of common stock | $ 2,200,000 | |||
2019 Activity [Member] | ||||
Capital Stock (Textual) | ||||
Common stock issue | 250,000 | 130,000 | ||
Fair value of common stock | $ 100,000 | $ 52,000 | ||
2018 Activity [Member] | ||||
Capital Stock (Textual) | ||||
Shares of common stock sold | 2,125,000 | |||
Cash proceeds | $ 850,000 | |||
Common stock per share | $ 0.40 | |||
Agreement for debt owed related, description | This agreement discharged all of the debt owed by the Company to DMRJ and its related affiliates and returned all of the shares of preferred stock to the Company in exchange for $625,000. | |||
2018 Activity [Member] | Convertible debt holders [Member] | ||||
Capital Stock (Textual) | ||||
Shares of common stock sold | 4,500,000 | |||
Cash proceeds | $ 625,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Related Party Transactions (Textual) | |||||
Rent expense | $ 3,000 | $ 3,000 | $ 6,000 | $ 6,000 | |
Accounts payable and accrued expenses | 43,340 | 43,340 | $ 652,895 | ||
RMH Overhead, LLC [Member] | |||||
Related Party Transactions (Textual) | |||||
Accounts payable and accrued expenses | $ 18,750 |
Stock Options (Details)
Stock Options (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Feb. 23, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Stock options (Textual) | ||||
Reserved shares under stock incentive plan | 2,400,000 | |||
Number of Options, Granted | 2,400,000 | |||
Weighted-Average Exercise Price, Granted | $ 0.40 | |||
Stock based compensation cost | $ 456,000 | |||
Share based compensation expiration date | Feb. 23, 2023 | |||
Outstanding options | $ 2,400,000 | |||
Remaining life of Options | 3 years 7 months 6 days | |||
Rick Havenstrite [Member] | ||||
Stock options (Textual) | ||||
Number of Options, Granted | 1,000,000 | |||
Howard Crosby [Member] | ||||
Stock options (Textual) | ||||
Number of Options, Granted | 1,000,000 | |||
John Ryan [Member] | ||||
Stock options (Textual) | ||||
Number of Options, Granted | 200,000 | |||
Linde Havenstrite [Member] | ||||
Stock options (Textual) | ||||
Number of Options, Granted | 200,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | May 11, 2018 | Dec. 31, 2012 | Jun. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies (Textual) | ||||
Base annual salary | $ 144,000 | |||
Accrued compensation | $ 828,039 | |||
Personal property tax due | $ 134,687 | |||
Proceeds from the sale of stock | $ 130,000 | |||
Finder’s agreement, description | The Company entered into an agreement with Mount Royal Consultants (Mount Royal) to assist in finding prospective investors. Mount Royal would receive a finder's fee of 7% for a connection with a company that resulted in a qualified investment consisting of equity securities or a fee of 3% for a connection with a company that resulted in a purchase of debt securities. On March 7, 2019, the Company closed a Purchase Agreement (Note 3) to a buyer for the purchase of gold produced from the Company's mining property. This agreement was deemed to be subject to the finder's fee and resulted in a payment to Mount Royal of $318,000, 3% of the $10,600,000 beneficially received by the Company in accordance with the terms of the Purchase Agreement. On November 1, 2019, an additional payment of 3% of the Tranche 2 payment received by the Company resulted in a payment of $48,000 to Mount Royal and a third payment of $42,000 was issued after receipt of the Tranche 3 payment on December 27, 2019. Future amounts to be received from investors could also be subject to this agreement. During the three and six month periods ended June 30, 2019, the Company recognized nil and $318,000, respectively, as consulting expense relating to this agreement. | All investors opted to convert their shares for cash from 5% of the gold sales. At December 31, 2018, the Company had a payable of $151,405 to investors for their portion of gold sales included in accounts payable. This balance was paid to the investors in March 2019 fully satisfying the terms of the original offering. Upon full satisfaction of the redemption provisions, the shares of common stock should have been returned to the Company. However, the Company allowed the investors to keep the shares. The Company recognized an expense of $63,094, which includes $52,000 for the fair value of the shares of common stock, as loss on settlement of redeemable stock during the quarter ended March 31, 2019. | ||
Employment agreements, description | Beginning in 2019, the Company's board of directors agreed to compensate directors for their contributions to the management of the Company, with one director receiving $6,000 per month and the other two directors receiving $5,000 per quarter. | |||
Investment, determining price | $ 1,000 | |||
Annual claims fees | $ 155 | |||
Rick Havenstrite [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Accrued compensation | 593,232 | |||
Director [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Accrued compensation | 94,000 | |||
Marianne Havenstrite [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Accrued compensation | $ 234,807 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Oct. 31, 2019 | |
Purchase Agreement [Member] | ||
Subsequent Events (Textual) | ||
Purchase agreement, description | Under the terms of the Amended Agreement, the Company is obligated to deliver gold in the following quantities following prepayment of each tranche: ● Beginning the 21st calendar month following the Initial Funding, 655 ounces of gold per month for each of the four calendar months thereafter, 670 ounces for each the 12 calendar months thereafter, 1,155 ounces for each of the 12 calendar months thereafter, and 1,512 ounces of gold for each of the 9 calendar months thereafter. ● Beginning the 14th Calendar month following the Tranche 2 funding, 129 ounces of gold per month for each of the 37 calendar months thereafter. ● Beginning the 13th Calendar month following the Tranche 3 funding, 112 ounces of gold per month for each of the 37 calendar months thereafter. The Amended Agreement also alters the total amount that PDK may reduce the number of ounces of gold to be delivered under the Amended Agreement in exchange for common shares of the Company. Under the Amended Agreement, PDK may reduce the required number of ounces by up to 8,000 ounces in exchange for common shares of the Company. | |
Forecast [Member] | Maximum [Member] | ||
Subsequent Events (Textual) | ||
Total number of ounces gold prepaid | 73,910 | |
Forecast [Member] | Minimum [Member] | ||
Subsequent Events (Textual) | ||
Total number of ounces gold prepaid | 47,045 | |
Forecast [Member] | Second Tranche [Member] | Maximum [Member] | ||
Subsequent Events (Textual) | ||
Amended adjusted expenses paid | $ 4,500,000 | |
Forecast [Member] | Second Tranche [Member] | Minimum [Member] | ||
Subsequent Events (Textual) | ||
Amended adjusted expenses paid | 1,600,000 | |
Forecast [Member] | Third Tranche [Member] | Maximum [Member] | ||
Subsequent Events (Textual) | ||
Amended adjusted expenses paid | 5,500,000 | |
Forecast [Member] | Third Tranche [Member] | Minimum [Member] | ||
Subsequent Events (Textual) | ||
Amended adjusted expenses paid | $ 1,400,000 |