UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended November 30, 2023
or
For
the transition period from ________to _______
Commission
File Number: 001-41690
U.S.
GOLDMINING INC.
(Exact
name of registrant as specified in its charter)
1188 West Georgia Street, Suite 1830, Vancouver, BC, Canada V6E 4A2
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share USGO The Nasdaq Capital Market
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”,
“smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer ☐ Accelerated filer
☒ Non-accelerated filer ☒ Smaller reporting company
☒ Emerging growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on
May 31, 2023, based on a closing price per share of $14.90 was $32,936,644.
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 12,398,709
shares of common stock, par value $0.001 per share, outstanding as of February 21, 2024
TABLE
OF CONTENTS
PART I 6
Item 1. Business 6
Item 1B. Unresolved Staff Comments. 22
Item 1C. Cybersecurity 22
Item 2. Properties 22
Item 3. Legal Proceedings 31
Item 4. Mine Safety Disclosures 31
Item 6. [Reserved] 33
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41
Item 8. Financial Statements and Supplementary Data 41
Item 9A. Controls and Procedures 41
Item 9B. Other Information 41
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 41
PART III 42
Item 10. Directors, Executive Officers and Corporate Governance 42
Item 11. Executive Compensation 46
Item 14. Principal Accountant Fees and Services 61
Item 15. Exhibits, Financial Statement Schedules 62
BASIS OF PRESENTATION
Unless otherwise indicated, references in this Annual
Report on Form 10-K (the “Annual Report”) to “U.S. GoldMining”, the “Company”, “we”,
“us” and “our” refer to U.S. GoldMining Inc., a Nevada corporation.
We express all amounts in this Annual Report in U.S. dollars, except where otherwise indicated. References to “$”
and “US$” are to U.S. dollars and references to “C$” are to Canadian dollars.
We
have made rounding adjustments to some of the figures included in this Annual Report. Accordingly, numerical figures shown as totals
in some tables may not be an arithmetic aggregation of the figures that preceded them.
MARKET, INDUSTRY AND OTHER DATA
Unless otherwise indicated, information contained
in this Annual Report concerning our industry and the market in which we operate, including our market position, market opportunity and
market size, is based on information from various sources such as industry publications, on assumptions that we have made based on such
data and other similar sources and on our knowledge of the markets for our products. These data involve a number of assumptions and limitations.
We have not independently verified any third-party information.
In addition, projections, assumptions and estimates
of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty
and risk due to a variety of factors, including those described in the sections entitled “Item 1A. Risk Factors”, “-
Cautionary Note Regarding Forward-Looking Statements”, and elsewhere herein. These and other factors could cause results to differ
materially from those expressed in the estimates made by the independent parties and by us.
GLOSSARY OF ABBREVIATIONS AND TECHNICAL TERMS
In
this Annual Report, the following abbreviations are used to express elements:
Abbreviation Meaning Abbreviation Meaning
“Ag” silver “Cu” copper
“Au” gold
In this Annual Report, the following abbreviations
are used to express units of measurement:
Abbreviation Meaning Abbreviation Meaning
“g/t” grams per metric tonne “Moz” million troy ounces
“Mt” million metric tonnes
“km” kilometers “Mlbs” million pounds
“m” meters “μm” micrometer
“masl” meters above sea level “ppb” parts per billion
“mm” millimeters “ppm” parts per million
“km2” square kilometers
“wmt” wet metric tonnes “NSR” net smelter return
This Annual Report utilizes the following defined
terms:
The term “Indicated Mineral Resource”
or “Indicated Resource” means that part of a Mineral Resource for which quantity and quality, grade or quality, densities,
shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical
and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed
and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
The term “Induced Polarization”
or “IP” refers to a method of ground geophysical surveying employing an electrical current to determine indications
of mineralization.
The term “Inferred Mineral Resource”
or “Inferred Resource” is that part of a Mineral Resource for which quantity and grade or quality can be estimated
on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes.
The term “Measured Mineral Resource”
means, under NI 43-101, that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics
are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic
parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed
and reliable exploration, sampling and testing information gathered through appropriate techniques.
The term “Mineral Reserve” means
the economically mineable part of a Measured Mineral Resource or Indicated Resource demonstrated by at least a preliminary feasibility
study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate,
at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for
losses that may occur when the material is mined.
The term “Mineral Resource” means
a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base
and precious metals, coal, and industrial minerals in or on the earth’s crust in such form and quantity and of such a grade or quality
that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of
a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.
The term “Preliminary Economic Assessment”
or “PEA” means a preliminary economic assessment as defined under S-K 1300 and NI 43-101.
The term “Probable Mineral Reserve”
means the economically mineable part of an indicated and, in some cases, a Measured Mineral Resource.
The term “Proven Mineral Reserve”
means the economically mineable part of a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This preliminary
feasibility study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate,
at the time of reporting, that economic extraction can be justified.
The term “QA/QC” means quality assurance/quality control.
NOTICE REGARDING DISCLOSURE OF MINERAL PROPERTIES
The technical report summary for the gold-copper exploration
project located in the Yentna Mining District, approximately 170 km northwest of Anchorage, in Alaska (the “Whistler Project”),
included herewith, has been prepared in accordance with subpart 1300 of Regulation S-K - Disclosure by Registrants Engaged in Mining
Operations, (“S-K 1300”) as issued by the U.S. Securities and Exchange Commission (the “SEC”),
under the United States Securities Act of 1933, as amended, (the “Securities Act”), which governs disclosure for mining
registrants. Such technical report summary titled “S-K 1300 Technical Report Summary Initial Assessment for the Whistler Project,
South Central Alaska” with a date of issue of September 23, 2022, and revised date of issue of December 16, 2022 (the “S-K
1300 Report”), which was prepared by Sue Bird, P. Eng. Of Moose Mountain Technical Services, who is a qualified person under
S-K 1300 and is independent of us, is included as Exhibit 96.1 in this Annual Report.
Inferred Mineral Resources are subject to uncertainty
as to their existence and as to their economic and legal feasibility. The level of geological uncertainty associated with an Inferred
Mineral Resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction
in a manner useful for evaluation of economic viability.
For the meanings of certain technical terms used herein,
see “- Glossary of Abbreviations and Technical Terms”.
Our disclosure regarding our mineral property is prepared
in accordance with S-K 1300, and NI 43-101. Both of these reporting standards have similar goals in terms of conveying an appropriate
level of confidence in the disclosures being reported, but the standards embody slightly different approaches and definitions.
In our public filings in the United States and Canada,
we report Indicated Resources and Inferred Resources, each as defined in S-K 1300 and NI 43-101. As currently reported, there are no material
differences in our disclosed Measured Mineral Resource, Indicated Mineral Resources and Inferred Mineral Resources under each of S-K 1300
and NI 43-101. The estimation of Indicated Mineral Resources involves greater uncertainty as to their existence and economic feasibility
than the estimation of Proven and Probable Mineral Reserves, and therefore investors are cautioned not to assume that all or any part
of Indicated Mineral Resources will ever be converted into S-K 1300-compliant or NI 43-101-compliant Mineral Reserves. The estimation
of Inferred Mineral Resources involves greater uncertainty as to their existence and economic viability than the estimation of other categories
of Mineral Resources.
The scientific and technical information
concerning the Whistler Project in this Annual Report have been reviewed and approved by Tim Smith, P.Geo, our Chief Executive
Officer, a “qualified person” under S-K 1300 and NI 43-101.
Unless otherwise indicated, the scientific and
technical information contained in this Annual Report regarding the Whistler Project has been derived from the S-K 1300 Report,
which was included as Exhibit 96.1 to our registration statement on Form S-1 filed with the SEC and declared effective on April 19,
2023, and is included as Exhibit 96.1 to this Annual Report. Canadian readers should also refer to our NI 43-101 Technical Report
titled “NI 43-101 Mineral Resource Estimate for the Whistler Project” with an effective date of September 22, 2022 (the “NI 43-101 Report”), a
copy of which is available under our profile at www.sedarplus.ca.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Please see the note under “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” for a description of special factors potentially affecting
forward-looking statements included in this Annual Report.
PART
I
Item
1. Business
Business
Overview
We
are a United States domiciled exploration stage company and our sole project is currently the Whistler Project. The Whistler Project
is a gold-copper exploration project located in the Yentna Mining District, approximately 170 km northwest of Anchorage, in Alaska. See “Item 2. Properties” for further information.
We
were incorporated on June 30, 2015, in Alaska as “BRI Alaska Corp.” and on August 5, 2015, pursuant to an asset purchase
agreement dated July 20, 2015, by and among us, GoldMining Inc. (“GoldMining”), Kiska Metals Corporation
(“Kiska”) and Geoinformatics Alaska Exploration, Inc. (“Geoinformatics”), we acquired a 100%
interest in the Whistler Project and certain related assets. On September 8, 2022, we redomiciled to Nevada and changed our name to
“U.S. GoldMining Inc.”.
Our
sole subsidiary is US GoldMining Canada Inc., a company incorporated under the laws of British Columbia, Canada and which is wholly-owned
by us.
We
are a subsidiary of GoldMining, a Toronto Stock Exchange and NYSE American listed precious metals exploration and development
company that was incorporated in 2009 and whose disclosed strategy is to expand its property portfolio through accretive
transactions of resource stage gold projects and to advance its properties towards development. As of the date hereof, GoldMining owns 9,878,261 shares
of common stock, par value $0.001 per share (the “Common Stock”), representing approximately 79.7% of our outstanding Common Stock, and warrants
(the “Warrants”) to purchase 122,490 shares of Common Stock.
Our principal executive offices are located at 1188 West Georgia Street,
Suite 1830, Vancouver, British Columbia, Canada V6E 4A2 and our head operating offices are located at 301 Calista Court, Suite 200,
Office 203, Anchorage, Alaska, 99518. Our website address is www.us.goldmining.com. The information contained on, or that can be accessed through, our website is not a part of this Annual Report.
Our
shares of Common Stock and warrants to purchase shares of Common Stock are listed on the Nasdaq Capital Market under the symbols “USGO”
and “USGOW”, respectively.
General Development of Business
In
April 2023, we completed our initial public offering (the “IPO”), pursuant to which we issued 2,000,000 units (the
“ Units”) at an initial offering price of $10.00 per Unit for gross proceeds of $20,000,000. Each Unit was
comprised of one share of Common Stock and one Warrant, with each Warrant entitling the holder thereof to acquire one share of
Common Stock at an exercise price of $13.00. Each Warrant was immediately exercisable for a three-year period after the date of
issuance.
Prior to our IPO, we were a wholly-owned subsidiary of GoldMining and acquired the Whistler Project in 2015 from Kiska. Prior
to the IPO, we had not completed any material exploration of the Whistler Project. For a description of exploration activities of past
operators please see “Item 2. Properties”.
After
completion of our IPO, on May 30, 2023, we announced that we had mobilized a field team to execute our initial 2023 confirmatory exploration program at the
Whistler Project. On August 21, 2023, we announced commencement of our 2023 Phase 1 Drilling Project at the Whistler Project. The program was designed as part of a multi-phase program with the goal of expanding and increasing
confidence in existing deposits and potentially test prospective exploration targets in proximity to areas with known Mineral Resource
estimates. Phase I is proposed to include 5,000m of drilling. On January 16, 2024, we announced results from four initial confirmatory
drill holes covering 2,234m at the Whistler Project. Drilling was paused thereafter for the winter break. See “Item 2. Properties”
for further information.
Our
Strategy
Our
strategy is to enhance and grow the value of our asset base, with a focus on exploring and advancing the Whistler Project in Alaska.
Our longer-term strategy may include seeking out compelling acquisition opportunities that enhance the value of our assets and demonstrate
potential for significant growth through exploration and development.
Our
management team and board of directors have extensive combined mining sector related experience, including exploration, development,
operating and capital markets experience. We intend to capitalize on this significant experience as we seek to advance the Whistler Project
and otherwise grow our business, following best practices with a dedication to safety, the environment and sustainable development for
local communities.
As
part of our strategy, we expect to utilize a cost-efficient business model by operating with an efficient, highly experienced team and
calling upon third-party resources to supplement our skill set as opportunities and needs may arise. This strategy should enable us to
maintain a high degree of flexibility in our cost structure. We believe it will also help to ensure that our business model is scalable
and allows us to seek new growth opportunities in a cost effective and value enhancing manner.
Competition
The
mining industry in general is extremely competitive in all of its phases, and we compete with many companies possessing greater
financial and technical resources. Competition in the precious metals mining industry is primarily for: mineral rich properties that
can be developed and produced economically; technical expertise to find, develop, and operate such properties; labor to operate the
properties; and capital for the purpose of funding such properties. Many competitors not only explore for and mine precious metals,
but also conduct refining and marketing operations on a global basis. Such factors may result in us being unable to acquire desired
properties, to recruit or retain qualified employees or to acquire the capital necessary to fund our operations and develop mining
properties. Existing or future competition in the mining industry could materially adversely affect our Company’s prospects
for mineral exploration and success in the future. See “Item 1A. Risk Factors”.
Environmental, Social, and Governance
We are committed to the sustainable development of our projects by embedding environmental, social and governance
(“ESG”) criteria in our decision-making framework from the earliest stages of project exploration and development.
We are actively building partnerships with stakeholders around the Whistler project, through meeting with business, regulatory and community
partners to identify opportunities to generate economic and social benefits. We aim to reduce our environmental impacts and put safety
first, as well as employ responsible mineral exploration practices aligned to global best practices. We expect that our Sustainability
Committee and board of directors will review and adopt various ESG and safety policies in due course. Key considerations that will influence
our decision making include, but are not limited to, using clean and renewable energy in our future mining operations, optimizing and
minimizing our water resource utilization, minimizing our environmental footprint, ensuring workforce diversity and hiring from local
communities, health, safety and environmental performance as well as cultural heritage and biodiversity protection.
Government
Regulation
Our exploration and development activities are subject to various national, state, and local laws and regulations in the United States, which govern
prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the
environment, mine safety, hazardous substances, disclosure requirements and other matters. We have obtained or have pending applications
for those licenses, permits or other authorizations currently required to
conduct our exploration and development programs. We believe that we are in compliance in all material respects with
applicable mining, health, safety and environmental statutes and regulations in the United States. There are no current orders or directions
relating to us with respect to the foregoing laws and regulations. For a more detailed discussion of the various government laws and regulations
applicable to our operations and potential negative effects of these laws and regulations, see also “Item 1A. Risk Factors”.
The exploration and development of a mining prospect
is subject to regulation by a number of federal and state government authorities. These include the U.S. Environmental Protection Agency
(the “EPA”) and the United States Bureau of Land Management (“BLM”) as well as the various state
environmental protection agencies. The regulations address many environmental issues relating to air, soil and water contamination and
apply to many mining related activities including exploration, mine construction, mineral extraction, ore milling, water use, waste disposal
and use of toxic substances. In addition, we are subject to regulations relating to labor standards, occupational health and safety, mine
safety, general land use, export of minerals and taxation. Many of the regulations require permits or licenses to be obtained and the
filing of Notices of Intent and Plans of Operations, the absence of which or inability to obtain will adversely affect the ability for
us to conduct our exploration, development and operation activities. The failure to comply with the regulations and terms of permits and
licenses may result in fines or other penalties or in revocation of a permit or license or loss of a prospect.
In order to conduct drilling and other exploration
activities under the laws of Alaska, we are required to submit an Application for Permit to Mine in Alaska (“APMA”)
in Alaska. We submitted an APMA to Alaska’s Department of Natural Resources (“ADNR”) on June 30, 2022, and on
September 22, 2022, the ADNR approved Multi-Year 2022-2026 Exploration and Reclamation Permit Number 2778 for Hardrock Exploration –
Skwentna River – Yentna Mining District, and in addition also approved Reclamation Plan Approval Number 2778. On July 7, 2023, we received approval for amendments to the APMA which incorporate additional activities.
Federal
On lands owned by the United States, mining rights
are governed by the General Mining Law of 1872, as amended, which allows the location of mining claims on certain federal lands upon the
discovery of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties and development
and operation of mines is governed by both federal and state laws. Federal laws that govern mining claim location and maintenance and
mining operations on federal lands are generally administered by the BLM. Additional federal laws, governing mine safety and health, also
apply. State laws also require various permits and approvals before exploration, development or production operations can begin. Among
other things, a reclamation plan must typically be prepared and approved, with bonding in the amount of projected reclamation costs. The
bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. Local jurisdictions may
also impose permitting requirements (such as conditional use permits or zoning approvals).
Alaska
In Alaska, low impact, initial stage surface exploration
such as stream sediment, soil and rock chip sampling do not require any permits. The State of Alaska requires an APMA exploration permit
for all substantial surface disturbances such as trenching, road building and drilling. These permits are also reviewed by related state
and federal agencies that can comment and require specific changes to the proposed work plans to minimize impacts on the environment.
The permitting process for significant disturbances generally requires 30 days for processing and all work must be bonded. Due to the
northern climate, exploration work in some areas of Alaska can be limited by excessive snow cover and cold temperatures. In general, surface
sampling work is limited to May through September and surface drilling from March through November, although some locations afford opportunities
for year round exploration operations and others, such as wetland areas, may only be explored while frozen in the winter. Mining is conducted
in a number of locations in Alaska on a year round basis, both open pit and underground.
Employees
As
of November 30, 2023, we had 6 full time employees in Canada. We rely upon and engage consultants on a contract basis to provide services,
management and personnel who assist us to carry on our administrative, shareholder communication and project exploration activities in
the United States.
We use the services of independent consultants and
contractors to perform various professional services, including land acquisition, legal, environmental and tax services. In addition,
we utilize the services of independent contractors to perform construction, geological, exploration and drilling operation services and
independent third-party engineering firms assist with the design, engineering, and cost optimization of the proposed large-scale complex.
Reports to Security Holders
We are subject to the informational requirements of the Exchange Act. Accordingly, we file annual reports, quarterly
reports and proxy statements electronically with the SEC. The SEC maintains an internet site, at www.sec.gov,
that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Copies of such documents are also available on our website at www.us.goldmining.com.
Item
1A. Risk Factors.
You
should carefully consider the following risk factors in addition to the other information included in this Annual Report on Form
10-K. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as
adversely affect the value of an investment in our shares of Common Stock or other securities. The risks described below are not the
only ones facing us. Additional risks that we are not presently aware of, or that we currently believe are immaterial, may also
adversely affect our business, operating results and financial condition. We cannot assure you that we will successfully address
these risks and caution that other unknown risks may exist or may arise that may affect our business.
An
investment in our securities is speculative and involves a high degree of risk due to the nature of our business and the present
stage of exploration and development of our mineral properties. The following risk factors, as well as risks not currently known to
us, could materially adversely affect our future business, operations and financial condition and could cause them to differ
materially from the estimates described in the forward-looking statements relating to us.
Risks
Relating to our Business and Industry
Our
success depends on the exploration development and operation of the Whistler Project, an exploration stage project which is currently
our only project.
At
present, our only mineral property is the interest that we hold in the Whistler Project, which is in the exploration stage. Unless we
acquire or develop additional mineral properties, we will be solely dependent upon this property and our future success will be largely
driven by our ability to explore and develop the Whistler Project successfully, including the results of such exploration and development
efforts. If no additional mineral properties are acquired by us, any adverse development affecting our operations and further exploration
or development of the Whistler Project may have a material adverse effect on our financial condition and results of operations.
Resource
exploration and development is a high risk, speculative business.
The
Whistler Project is at the exploration stage and is without identified Mineral Reserves. Mineral exploration and mine
development are highly speculative in nature, involve many uncertainties and risks and are frequently unsuccessful. Mineral
exploration is performed to demonstrate the dimensions, position and mineral characteristics of mineral deposits, estimate Mineral Resources, assess amenability of the deposit to mining and processing scenarios and estimate potential deposit size. Once
mineralization is discovered, it may take a number of years from the initial exploration phases before mineral development and
production is possible, during which time the potential feasibility of the Whistler Project may change adversely.
While
the discovery of an ore body may result in substantial rewards, few mineral properties which are explored are ultimately developed into
producing mines. Most exploration projects do not result in the discovery of commercially mineable deposits. Resource exploration and
development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts
resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient
in quantity or quality to return a profit from production. The marketability of minerals acquired or discovered by us may be affected
by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the proximity
and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including
regulations relating to allowable production, importing and exporting of minerals, and environmental protection, the combination of which
factors may result in our not receiving an adequate return of investment capital.
There
is no assurance that our mineral exploration and development activities will result in any discoveries of commercial bodies of ore. The
long-term profitability of our operations will in part be directly related to the costs and success of our exploration programs, which
may be affected by a number of factors. Substantial expenditures are required to establish reserves through drilling and to develop the
mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from
the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to
justify commercial operations or that funds required for development can be obtained on a timely basis.
Additionally,
significant capital investment is required to discover commercial ore and to commercialize production from successful exploration effort
and maintain mineral concessions and other rights through payment of applicable taxes, advance royalties and other fees. The commercial
viability of a mineral deposit is dependent on a number of factors, including, among others: (i) deposit attributes such as size, grade
and proximity to infrastructure; (ii) current and future metal prices; and (iii) governmental regulations, including those relating to
prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and necessary supplies and environmental protection.
The complete impact of these factors, either alone or in combination, cannot be entirely predicted and their impact may result in our
not achieving an adequate return on invested capital.
There
is no certainty that the expenditures made by us towards the search for and evaluation of mineral deposits will result in discoveries
of commercial quantities of ore.
Mineral
Resource estimates are based on interpretation and assumptions and could be inaccurate or yield less mineral production under actual
conditions than is currently estimated. Any material changes in these estimates could affect the economic viability of the Whistler Project,
our financial condition and ability to be profitable.
The
estimates for Mineral Resources contained herein are estimates only and no assurance can be given that the anticipated tonnages and grades
will be achieved. There are numerous uncertainties inherent in estimating Mineral Resources, including many factors beyond our control.
Such estimation is a subjective process, and the accuracy of any Mineral Resource estimate is a function of the quantity and quality
of available data and of the assumptions made and judgments used in engineering and geological interpretation. In addition, there can
be no assurance that gold recoveries in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions
or during production, if any. If our actual Mineral Resources are less than current estimates or if we fail to develop our Mineral Resource
base through the realization of identified mineralized potential, our results of operations or financial condition may be materially
and adversely affected. Evaluation of Mineral Resources occurs from time to time and they may change depending on further geological
interpretation, drilling results and metal prices. The category of Inferred Mineral Resource is often the least reliable Mineral Resource
category and is subject to the most variability. We regularly evaluate our Mineral Resources and consider the merits of increasing the
reliability of its overall Mineral Resources.
We
have no history of earnings or mineral production, and there are currently no known commercial quantities of Mineral Reserves on the
Whistler Project.
We
have no history of earnings or mineral production and may never engage in mineral production. There are currently no known commercial
quantities of Mineral Reserves on the Whistler Project. Development of the Whistler Project and any other projects we may acquire in
the future will only follow upon obtaining satisfactory results of further exploration work and geological and other studies. Exploration
and the development of natural resources involve a high degree of risk and few properties which are explored are ultimately developed
into producing properties. There is no assurance that our exploration and development activities will result in any discoveries of commercial
bodies of ore. The long-term profitability of our operations will be in part directly related to the cost and success of our exploration
programs, which may be affected by a number of factors. Even if commercial quantities of minerals are discovered, the Whistler Project
may not be brought into a state of commercial production. The commercial viability of a mineral deposit once discovered is also dependent
on various factors, including particulars of the deposit itself, proximity to infrastructure, metal prices, and availability of power
and water to permit development.
Further,
we are subject to many risks common to mineral exploration companies, including under-capitalization, cash shortages, limitations with
respect to personnel, financial and other resources and the lack of revenues. There is no assurance we will be successful in achieving
a return on stockholder’s investment and the likelihood of success must be considered in light of its early-stage operations.
Mining and project development
is inherently risky and subject to conditions or events some of which are beyond our control, and which could have a material adverse
effect on our business.
Our activities related to the
exploration and development of the Whistler Project and any other projects we may acquire in the future are subject to hazards and risks
inherent in the mining industry. These risks, include, but are not limited to, rock falls, rock bursts, collapses, seismic activity, flooding,
environmental pollution, mechanical equipment failure, facility performance issues, and periodic disruption due to inclement or hazardous
weather conditions. Such risks could result in personal injury or fatality, damage to equipment or infrastructure, environmental damage,
delays, suspensions or permanent cessation of activities, monetary losses and possible legal liability.
Our current or future mining,
processing, development and exploration activities depend on adequate infrastructure. Mining, processing, development and exploration
activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important
determinants that affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage and government or other interference
in the maintenance or provision of such infrastructure could adversely affect our operations, financial condition and results of operations.
The development of the
Whistler Project or any other projects we may acquire in the future into an operating mine will be subject to all of the risks associated
with establishing and operating new mining operations.
If the development of the Whistler
Project or any other projects we may acquire in the future is found to be economically feasible and we seek to develop an operating mine,
the development of such a mine will require obtaining permits and financing the construction and operation of the mine itself, processing
plants and related infrastructure. As a result, we will be subject to certain risks associated with establishing new mining operations,
including:
In
addition, we may find that the costs, timing and complexities of developing the Whistler Project or any other future projects to be greater
than we anticipated. Cost estimates may increase significantly as more detailed engineering work is completed on a project. It is common
in mining operations to experience unexpected costs, problems and delays during construction, development and mine start-up. Accordingly,
our activities may not result in profitable mining operations at our mineral properties.
Our
growth strategy and future exploration and development efforts may be unsuccessful.
In
order to grow our business and pursue our long-term growth strategy, we may seek to acquire additional mineral interests or merge with
or invest in new companies or opportunities. A failure to make acquisitions or investments may limit our growth. In pursuing acquisition
and investment opportunities, we face competition from other companies having similar growth and investment strategies, many of which
may have substantially greater resources than us. Competition for these acquisitions or investment targets could result in increased
acquisition or investment prices, higher risks and a diminished pool of businesses, services or products available for acquisition or
investment. Additionally, if we lose or abandon our interest in any of our mineral projects, there is no assurance that we will be able
to acquire another mineral property of merit or that such an acquisition would be approved by applicable regulators.
We
face various risks related to health epidemics, pandemics or other health crises, which may have material adverse effects on our business,
financial position, results of operations and/or cash flows.
Health epidemics or pandemics could adversely affect
our ability to conduct planned exploration and development and otherwise adversely affect our financial position and results from operations.
Health epidemics or pandemics have in the past and may in the future impact macroeconomic conditions, supply chains and other global
economic activities. Governmental responses thereto, including operational restrictions adversely affect our business, operations and
financial results. The duration and scope of a health epidemic or pandemic can be difficult to predict and depends on many factors, including
the emergence of new variants and the availability, acceptance and effectiveness of preventative measures. Additionally, health epidemics,
pandemics or other health crises may adversely impact or delay our ability to complete proposed work programs at the Whistler Project.
The extent that an epidemic or pandemic may impact our business, operations, work programs or financial results will depend on numerous
factors, which may be evolving and not subject to accurate prediction. Additionally, a health epidemic or pandemic may also heighten
other risks disclosed in these risk factors, including, but not limited to, those related to the availability and costs of labor, raw
materials and supply chain interruptions.
Increasing
attention to ESG matters and conservation measures may adversely impact our business.
Increasing
attention to, and societal expectations on companies to address, climate change and other environmental and social impacts and investor
and societal expectations regarding voluntary ESG disclosures may result in increased costs and reduced access to capital. While we may
announce various voluntary ESG targets in the future, such targets are aspirational. Also, we may not be able to meet such targets in
the manner or on such a timeline as initially contemplated, including, but not limited to, as a result of unforeseen costs or technical
difficulties associated with achieving such results.
In
addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes
for evaluating companies on their approach to ESG matters. Unfavorable ESG ratings could lead to increased negative investor sentiment
toward us and could impact our access to and costs of capital. Additionally, to the extent ESG matters negatively impact our reputation,
we may not be able to compete as effectively to recruit or retain employees, which may adversely impact our business. Increased focus
by stakeholders, regulators and others on ESG related matters may result in increased permitting requirements and delays in the future.
Additionally, we may become subject to misinformation campaigns related to ESG and other matters which may require substantial management
time and expense to address and could negatively impact community sentiment regarding the applicable project or delay expected development
timelines.
We
rely on information technology systems and any inadequacy, failure, interruption or security breaches of those systems may harm our reputation
and ability to effectively operate our business.
Our
operations depend on information technology (“IT”) systems. These IT systems could be subject to network disruptions
caused by a variety of sources, including computer viruses, security breaches and cyber-attacks, as well as disruptions resulting from
incidents such as cable cuts, damage to physical plants, natural disasters, terrorism, fire, power loss, vandalism and theft. Our operations
also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive
expenses to mitigate the risks of failures. Any of these and other events could result in IT system failures, delays and/or increase
in capital expenses. The failure of IT systems or a component of information systems could, depending on the nature of any such failure,
adversely impact our reputation and results of operations.
Although
to date we have not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no
assurance that we will not incur such losses in the future. Our risk and exposure to these matters cannot be fully mitigated because
of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement
of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized
access remain a priority. As cyber threats continue to evolve, we may be required to expend additional resources to continue to modify
or enhance protective measures or to investigate and remediate any security vulnerabilities.
The
mining industry is intensely competitive in all of its phases, and we compete with many companies possessing greater financial and technical
resources.
The
mining industry is intensely competitive in all of its phases, and we compete with many companies possessing greater financial and technical
resources. Competition in the precious metals mining industry is primarily for: (i) mineral rich properties that can be developed and
produced economically; (ii) technical expertise to find, develop, and operate such properties; (iii) labor to operate the properties;
and capital for the purpose of funding such properties. Many competitors not only explore for and mine precious metals but conduct refining
and marketing operations on a global basis. Such competition may result in being unable to acquire desired properties, to recruit or
retain qualified employees or to acquire the capital necessary to fund its operations and develop mining properties. Existing or future
competition in the mining industry could materially adversely affect our prospects for mineral exploration and success in the future.
Risks Related to Economic and Market Conditions
Global financial markets can have a profound
impact on the global economy in general and on the mining industry in particular.
Many industries, including the precious metals mining industry, are impacted by volatile market conditions. Global
financial conditions remain subject to sudden and rapid destabilization in response to economic shocks. A slowdown in the financial markets
or other economic conditions, including but not limited to consumer spending, employment rates, business conditions, inflation, fluctuations
in fuel and energy costs, consumer debt levels, lack of available credit, the state of financial markets, interest rates and tax rates
may adversely affect our growth and financial condition. Any sudden or rapid destabilization of global economic conditions could impact
our ability to obtain equity or debt financing in the future on favorable terms or at all. In such an event, our operations and financial
condition could be adversely affected.
The volatility in gold and other commodity prices may adversely affect any future operations and, if warranted, our
ability to develop our properties.
We are exposed to commodity price risk. The price of gold or other commodities fluctuates widely and may be affected
by numerous factors beyond our control, including, but not limited to, the sale or purchase of commodities by various central banks and
financial institutions, interest rates, exchange rates, inflation or deflation, global and regional supply and demand, and political and
economic climates and conditions of major mineral-producing countries around the world.
Declines in the market price of gold, base metals and other minerals may adversely affect our ability to raise capital
or attract joint venture partners in order to fund our ongoing operations and meet obligations under option and other agreements underlying
our mineral interests. Commodity price declines could also reduce the amount we would receive on the disposition of the Whistler Project
to a third party. In addition, the decision to put a mine into production and to commit the funds necessary for that purpose must be made
long before the first revenue from production would be received. A decrease in the price of gold may prevent a property from being economically
mined or result in the write-off of assets whose value is impaired as a result of lower gold prices.
We
may be adversely affected by the effects of inflation.
Increased inflation has resulted in, and may continue to result in, higher interest rates
and capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates, and other similar effects. Our
ability to conduct exploration of the Whistler Project is dependent on the acquisition of goods and services at a reasonable cost, such
as drilling equipment and skilled labor, assay laboratory testing in a timeframe that allows us to execute on follow-up exploration
phases expeditiously, and aircraft (fixed wing and helicopter) charter service availability to mobilize labor, position equipment and
supply exploration campaigns. If we are unable to take effective measures in a timely manner to mitigate the impact of the inflation,
the scope of our exploration of the Whistler Project may decrease and our business, financial condition, and results of operations could
be adversely affected.
Our
results of operations could be affected by currency fluctuations.
We
maintain accounts in currencies including the United States dollars and Canadian dollars. We conduct our business using both the aforementioned currencies depending on the location of the operations
in question and the payment obligations involved. Accordingly, the results of our operations are subject to currency
exchange risks. To date, we have not engaged in any formal hedging program to mitigate these risks. The fluctuations in currency
exchange rates may significantly impact our financial position and results of operations in the future.
Risks
Relating to Financial Matters
We have negative cash flows from operating
activities.
We had negative cash flow from operating activities in the period from our incorporation until the date of this Annual
Report. Given that we have no operating revenues, and do not anticipate generating operating revenues for the foreseeable
future, we expect that expenditures to fund operating activities will be provided by financings. There is no assurance that future financings
can be completed on acceptable terms or at all, and our failure to raise capital when needed could limit our ability to continue our operations
in the future.
We will require additional financing to fund exploration and, if warranted, development and production. Failure to
obtain additional financing could have a material adverse effect on our financial condition and results of operation and could cast uncertainty
on our ability to continue our operations in the future.
Even if the results of exploration are encouraging, we may not have sufficient funds to conduct the further exploration
that may be necessary to determine whether or not a commercially minable deposit exists on any portion of the Whistler Project. While
we may generate additional working capital through further equity offerings, there is no assurance that any such funds will be available
on acceptable terms, or at all. If available, future equity financing may result in substantial dilution to stockholders. At present it
is impossible to determine what amounts of additional funds, if any, may be required.