UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
For the quarterly period ended | |
| OR |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
For the transition period from _____________ to ____________ |
Commission File No. 000-28837
NEW JERSEY MINING COMPANY
(Name of small business issuer in its charter)
IDAHO STRATEGIC RESOURCES, INC |
(Name of small business issuer in its charter) |
Idaho |
| 82-0490295 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. employer identification No.) |
201 N. Third Street,, Coeur d’Alene,, ID83814
(Address of principal executive offices) (zip code)
(208) (208) 625-9001
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Common Stock, |
|
|
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ 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 | ☐ |
| ☒ | Small Reporting Company | ☒ |
Emerging Growth Company | ☐ |
Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No x☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
At NovemberMay 1, 2021, 150,202,8662022, 11,777,935 shares of the registrant’s common stock were outstanding.
NEW JERSEY MINING COMPANYIDAHO STRATEGIC RESOURCES, INC
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD
ENDED SEPTEMBER 30, 2021MARCH 31, 2022
TABLE OF CONTENTS
2 |
Table Of Contents |
PART I - FINANCIAL INFORMATION3
ITEM 1: Consolidated Financial Statements3
ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations18
ITEM 3: Quantitative and Qualitative Disclosures about Market Risk21
ITEM 4: Controls and Procedures21
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.21
ITEM 3. Defaults upon Senior Securities21
ITEM 4. Mine Safety Disclosures21
PART I - FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTSFinancial Statements
New Jersey Mining Company Consolidated Balance Sheets (Unaudited)
| ||||
| September 30, 2021 |
| December 31, 2020 | |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents | $ | 481,187 | $ | 2,539,945 |
Gold sales receivable |
| 212,125 |
| 264,779 |
Inventories |
| 256,106 |
| 402,537 |
Joint venture receivable |
| 1,641 |
| 4,177 |
Other current assets |
| 331,833 |
| 224,063 |
Total current assets |
| 1,282,892 |
| 3,435,501 |
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation |
| 8,155,555 |
| 7,227,144 |
Mineral properties, net of accumulated amortization |
| 5,768,471 |
| 3,455,233 |
Investment in Buckskin |
| 192,946 |
| - |
Investment in joint venture |
| 435,000 |
| 435,000 |
Reclamation bond |
| 103,320 |
| 103,320 |
Deposits |
| - |
| 12,863 |
Total assets | $ | 15,938,184 | $ | 14,669,061 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and other accrued liabilities | $ | 633,787 | $ | 687,331 |
Accrued payroll and related payroll expenses |
| 157,632 |
| 143,485 |
Notes payable related parties, current portion |
| 38,781 |
| 37,078 |
Notes payable, current portion |
| 657,738 |
| 339,704 |
Small Business Administration loan, current portion |
| 2,529 |
| 1,741 |
Total current liabilities |
| 1,490,467 |
| 1,209,339 |
|
|
|
|
|
Asset retirement obligation |
| 169,871 |
| 173,001 |
Notes payable related parties, long term |
| 87,932 |
| 117,234 |
Convertible debt |
| 1,950,000 |
| 1,010,000 |
Convertible debt-related party |
| - |
| 25,000 |
Notes payable, long term |
| 1,131,042 |
| 709,072 |
Small Business Administration loan, long term |
| 165,105 |
| 161,251 |
Total long-term liabilities |
| 3,503,950 |
| 2,195,558 |
|
|
|
|
|
Total liabilities |
| 4,994,417 |
| 3,404,897 |
|
|
|
|
|
Commitments (Note 10) |
| - |
| - |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Preferred stock, no par value, 1,000,000 shares authorized; no shares issued or outstanding |
| - |
| - |
Common stock, no par value, 200,000,000 shares authorized; September 30, 2021–143,602,866 and December 31, 2020- 137,573,309 shares issued and outstanding |
| 22,684,939 |
| 20,986,062 |
Accumulated deficit |
| (14,647,806) |
| (12,672,786) |
Total New Jersey Mining Company stockholders’ equity |
| 8,037,133 |
| 8,313,276 |
Non-controlling interest |
| 2,906,634 |
| 2,950,888 |
Total stockholders' equity |
| 10,943,767 |
| 11,264,164 |
|
|
|
|
|
Total liabilities and stockholders’ equity | $ | 15,938,184 | $ | 14,669,061 |
Idaho Strategic Resources, Inc Consolidated Balance Sheets (Unaudited) | ||||||||
|
|
|
|
|
|
| ||
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 3,409,188 |
|
| $ | 1,976,518 |
|
Gold sales receivable |
|
| 806,417 |
|
|
| 408,187 |
|
Inventories |
|
| 606,073 |
|
|
| 213,722 |
|
Joint venture receivable |
|
| 2,828 |
|
|
| 4,442 |
|
Other current assets |
|
| 297,728 |
|
|
| 334,443 |
|
Total current assets |
|
| 5,122,234 |
|
|
| 2,937,312 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation |
|
| 8,243,066 |
|
|
| 8,255,961 |
|
Mineral properties, net of accumulated amortization |
|
| 6,030,664 |
|
|
| 5,843,186 |
|
Investment in Buckskin |
|
| 333,059 |
|
|
| 332,728 |
|
Investment in joint venture |
|
| 435,000 |
|
|
| 435,000 |
|
Reclamation bond |
|
| 103,320 |
|
|
| 103,320 |
|
Deposits |
|
| 137,585 |
|
|
| 11,694 |
|
Total assets |
| $ | 20,404,928 |
|
| $ | 17,919,201 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 710,534 |
|
| $ | 647,218 |
|
Accrued payroll and related payroll expenses |
|
| 221,719 |
|
|
| 174,110 |
|
Notes payable related parties, current portion |
|
| 10,957 |
|
|
| 10,543 |
|
Notes payable, current portion |
|
| 714,401 |
|
|
| 664,153 |
|
Small Business Administration loan and interest, current portion |
|
| 2,408 |
|
|
| 2,469 |
|
Total current liabilities |
|
| 1,660,019 |
|
|
| 1,498,493 |
|
|
|
|
|
|
|
|
|
|
Asset retirement obligation |
|
| 174,864 |
|
|
| 172,348 |
|
Notes payable related parties, long term |
|
| 95,451 |
|
|
| 106,068 |
|
Convertible debt |
|
| 0 |
|
|
| 1,950,000 |
|
Notes payable, long term |
|
| 961,307 |
|
|
| 961,748 |
|
Small Business Administration loan and interest, long term |
|
| 168,394 |
|
|
| 166,742 |
|
Total long-term liabilities |
|
| 1,400,016 |
|
|
| 3,356,906 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 3,060,035 |
|
|
| 4,855,399 |
|
|
|
|
|
|
|
|
|
|
Commitments (Note 11) |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, no par value, 1,000,000 shares authorized; no shares issued or outstanding |
|
| 0 |
|
|
| 0 |
|
Common stock, no par value, 200,000,000 shares authorized; March 31, 2022-11,749,579 and December 31, 2021- 10,940,969 shares issued and outstanding |
|
| 30,756,088 |
|
|
| 26,004,756 |
|
Accumulated deficit |
|
| (16,288,557 | ) |
|
| (15,832,955 | ) |
Total Idaho Strategic Resources, Inc stockholders’ equity |
|
| 14,467,531 |
|
|
| 10,171,801 |
|
Non-controlling interest |
|
| 2,877,362 |
|
|
| 2,892,001 |
|
Total stockholders’ equity |
|
| 17,344,893 |
|
|
| 13,063,802 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
| $ | 20,404,928 |
|
| $ | 17,919,201 |
|
The accompanying notes are an integral part of these consolidated financial statements.
New Jersey Mining Company Consolidated Statements of Operations (Unaudited) For the Three and Nine Month Periods Ended September 30, 2021 and 2020
| ||||||||
| September 30, 2021 | September 30, 2020 | ||||||
|
| Three Months |
| Nine Months |
| Three Months |
| Nine Months |
|
|
|
| |||||
Revenue: |
|
|
|
|
|
|
|
|
Sales of products | $ | 2,098,849 | $ | 5,865,708 | $ | 1,556,070 | $ | 4,281,401 |
Total revenue |
| 2,098,849 |
| 5,865,708 |
| 1,556,070 |
| 4,281,401 |
|
|
|
|
|
|
|
|
|
Costs of Sales: |
|
|
|
|
|
|
|
|
Cost of sales and other direct production costs |
| 1,603,785 |
| 4,701,626 |
| 1,506,982 |
| 3,831,727 |
Depreciation and amortization |
| 217,054 |
| 595,227 |
| 156,325 |
| 425,641 |
Total costs of sales |
| 1,820,839 |
| 5,296,853 |
| 1,663,307 |
| 4,257,368 |
Gross profit |
| 278,010 |
| 568,855 |
| (107,237) |
| 24,033 |
|
|
|
|
|
|
|
|
|
Other operating expenses: |
|
|
|
|
|
|
|
|
Exploration |
| 267,644 |
| 1,193,520 |
| 44,613 |
| 133,529 |
Loss on write off equipment |
| - |
| - |
| - |
| 9,537 |
Management |
| 56,272 |
| 312,663 |
| 38,812 |
| 112,236 |
Professional services |
| 39,974 |
| 206,056 |
| 33,709 |
| 146,917 |
General and administrative |
| 101,430 |
| 751,272 |
| 117,762 |
| 308,232 |
Total other operating expenses |
| 465,320 |
| 2,463,511 |
| 234,896 |
| 710,451 |
Operating income (loss) |
| (187,310) |
| (1,894,656) |
| (342,133) |
| (686,418) |
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Small Business Administration grant income |
| - |
| - |
| 360,054 |
| 370,054 |
Timber revenue net of costs |
| - |
| 4,338 |
| 14,961 |
| 46,613 |
Interest income |
| 7 |
| 131 |
| 38 |
| 1,626 |
Interest expense |
| (50,368) |
| (150,656) |
| (40,247) |
| (113,903) |
Total other income (expense) |
| (50,361) |
| (146,187) |
| 334,806 |
| 304,390 |
|
|
|
|
|
|
|
|
|
Net income (loss) |
| (237,671) |
| (2,040,843) |
| (7,327) |
| (382,028) |
Net income (loss) attributable to non-controlling interest |
| (18,326) |
| (65,823) |
| (18,034) |
| (66,254) |
Net income (loss) attributable to New Jersey Mining Company | $ | (219,345) | $ | (1,975,020) | $ | 10,707 | $ | (315,774) |
|
|
|
|
|
|
|
|
|
Net income (loss) per common share-basic and diluted | $ | (0.00) | $ | (0.01) | $ | 0.00 | $ | (0.00) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding-basic |
| 143,194,844 |
| 139,979,837 |
| 129,394,027 |
| 126,059,427 |
Weighted average common shares outstanding-diluted |
| 143,194,844 |
| 139,979,837 |
| 133,092,547 |
| 126,059,427 |
3 |
Table Of Contents |
Idaho Strategic Resources, Inc. Consolidated Statements of Operations (Unaudited) For the Three-Month Periods Ended March 31, 2022 and 2021 | ||||||||
|
|
|
| |||||
|
| March 31 |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Revenue: |
|
|
|
|
|
| ||
Sales of products |
| $ | 2,044,417 |
|
| $ | 1,586,627 |
|
Total revenue |
|
| 2,044,417 |
|
|
| 1,586,627 |
|
|
|
|
|
|
|
|
|
|
Costs of Sales: |
|
|
|
|
|
|
|
|
Cost of sales and other direct production costs |
|
| 1,508,066 |
|
|
| 1,475,235 |
|
Depreciation and amortization |
|
| 230,208 |
|
|
| 182,795 |
|
Total costs of sales |
|
| 1,738,274 |
|
|
| 1,658,030 |
|
Gross profit (loss) |
|
| 306,143 |
|
|
| (71,403 | ) |
|
|
|
|
|
|
|
|
|
Other operating expenses: |
|
|
|
|
|
|
|
|
Exploration |
|
| 396,124 |
|
|
| 717,707 |
|
Management |
|
| 54,890 |
|
|
| 201,059 |
|
Professional services |
|
| 79,983 |
|
|
| 122,651 |
|
General and administrative |
|
| 201,312 |
|
|
| 513,835 |
|
Total other operating expenses |
|
| 732,309 |
|
|
| 1,555,252 |
|
Operating loss |
|
| (426,166 | ) |
|
| (1,626,655 | ) |
|
|
|
|
|
|
|
|
|
Other (income) expense: |
|
|
|
|
|
|
|
|
Equity income on investment in Buckskin |
|
| (331 | ) |
|
| 0 |
|
Timber revenue net of costs |
|
| - |
|
|
| (3,603 | ) |
Interest income |
|
| (526 | ) |
|
| (92 | ) |
Interest expense |
|
| 47,760 |
|
|
| 39,444 |
|
Total other expense |
|
| 46,903 |
|
|
| 35,749 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| (473,069 | ) |
|
| (1,662,404 | ) |
Net loss attributable to non-controlling interest |
|
| (17,467 | ) |
|
| (15,917 | ) |
Net loss attributable to Idaho Strategic Resources, Inc |
| $ | (455,602 | ) |
| $ | (1,646,487 | ) |
|
|
|
|
|
|
|
|
|
Net loss per common share-basic and diluted |
| $ | (0.04 | ) |
| $ | (0.17 | ) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding-basic and diluted |
|
| 11,187,648 |
|
|
| 9,833,423 |
|
The accompanying notes are an integral part of these consolidated financial statements.
New Jersey Mining Company Consolidated Statement of Changes in Stockholders' Equity (Unaudited) For the Nine Month Periods Ended September 30, 2021 and 2020 | |||||||||
| Common Stock Shares |
| Common Stock Amount |
| Accumulated Deficit Attributable to New Jersey Mining Company |
| Non-Controlling Interest |
| Stockholders’ Equity |
|
|
|
| ||||||
Balance January 1, 2020 | 123,812,144 | $ | 17,682,999 | $ | (12,029,910) | $ | 3,003,888 | $ | 8,656,977 |
Contribution from non-controlling interest in Mill JV | - |
| - |
| - |
| 2,659 |
| 2,659 |
Net income (loss) | - |
| - |
| (146,268) |
| (15,921) |
| (162,189) |
Balance, March 31, 2020 | 123,812,144 | $ | 17,682,999 | $ | (12,176,178) | $ | 2,990,626 | $ | 8,497,447 |
Contribution from non-controlling interest in Mill JV | - |
| - |
| - |
| 19,403 |
| 19,403 |
Issuance of common stock and warrants for cash | 1,481,481 |
| 200,000 |
| - |
| - |
| 200,000 |
Net income (loss) | - |
| - |
| (180,213) |
| (32,299) |
| (212,512) |
Balance June 30, 2020 | 125,293,625 | $ | 17,882,999 | $ | (12,356,391) | $ | 2,997,730 | $ | 8,504,338 |
Contribution from non-controlling interest in Mill JV | - |
| - |
| - |
| 2,830 |
| 2,830 |
Issuance of common stock and warrants for cash | 9,718,572 |
| 2,706,896 |
| - |
| - |
| 2,706,896 |
Exercise of common stock warrants for cash | 1,041,667 |
| 208,334 |
| - |
| - |
| 208,334 |
Conversion of convertible debt to common stock | 277,778 |
| 50,000 |
| - |
| - |
| 50,000 |
Net income (loss) | - |
| - |
| 10,707 |
| (18,034) |
| (7,327) |
Balance September 30, 2020 | 136,331,642 | $ | 20,848,229 | $ | (12,345,684) | $ | 2,962,526 | $ | 11,465,071 |
|
|
|
|
|
|
|
|
|
|
Balance January 1, 2021 | 137,573,309 | $ | 20,986,062 | $ | (12,672,786) | $ | 2,950,888 | $ | 11,264,164 |
Contribution from non-controlling interest in Mill JV | - |
| - |
| - |
| 2,469 |
| 2,469 |
Issuance of common stock for services | 10,000 |
| 2,300 |
| - |
| - |
| 2,300 |
Options issued to management, directors, and employees | - |
| 604,571 |
| - |
| - |
| 604,571 |
Options issued for services | - |
| 9,860 |
| - |
| - |
| 9,860 |
Issuance of common stock for cashless option exercise | 394,737 |
| - |
| - |
| - |
| - |
Net income (loss) | - |
| - |
| (1,646,487) |
| (15,917) |
| (1,662,404) |
Balance March 31, 2021 | 137,978,046 | $ | 21,602,793 | $ | (14,319,273) | $ | 2,937,440 | $ | 10,220,960 |
|
|
|
|
|
|
|
|
|
|
Contribution from non-controlling interest in Mill JV | - |
| - |
| - |
| 17,459 |
| 17,459 |
Issuance of common stock for services | 15,000 |
| 4,200 |
| - |
| - |
| 4,200 |
Issuance of common stock for warrants exercised | 277,778 |
| 50,000 |
| - |
| - |
| 50,000 |
Issuance of common stock for cashless option exercise | 50,000 |
| - |
| - |
| - |
| - |
Conversion of convertible debt to common stock | 4,083,333 |
| 735,000 |
| - |
| - |
| 735,000 |
Net income (loss) | - |
| - |
| (109,188) |
| (31,580) |
| (140,768) |
Balance June 30, 2021 | 142,404,157 | $ | 22,391,993 | $ | (14,428,461) | $ | 2,923,319 | $ | 10,886,851 |
Contribution from non-controlling interest in Mill JV | - |
| - |
| - |
| 1,641 |
| 1,641 |
Issuance of common stock for investment in Buckskin | 643,153 |
| 192,946 |
| - |
| - |
| 192,946 |
Conversion of convertible debt to common stock | 555,556 |
| 100,000 |
| - |
| - |
| 100,000 |
Net income (loss) | - |
| - |
| (219,345) |
| (18,326) |
| (237,671) |
Balance September 30, 2021 | 143,602,866 | $ | 22,684,939 | $ | (14,647,806) | $ | 2,906,634 | $ | 10,943,767 |
4 |
Table Of Contents |
Idaho Strategic Resources, Inc Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) For the Three-Month Periods Ended March 31, 2022 and 2021
| ||||||||||||||||||||
|
| Common Stock Shares |
|
| Common Stock Amount |
|
| Accumulated Deficit Attributable to Idaho Strategic Resources, Inc |
|
| Non-Controlling Interest |
|
| Stockholders’ Equity |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance January 1, 2021 |
|
| 9,826,665 |
|
| $ | 20,986,062 |
|
| $ | (12,672,786 | ) |
| $ | 2,950,888 |
|
| $ | 11,264,164 |
|
Contribution from non-controlling interest in Mill JV |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,469 |
|
|
| 2,469 |
|
Issuance of common stock for services |
|
| 714 |
|
|
| 2,300 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,300 |
|
Options issued to management, directors, and employees |
|
| - |
|
|
| 604,571 |
|
|
| 0 |
|
|
| 0 |
|
|
| 604,571 |
|
Options issued for services |
|
| - |
|
|
| 9,860 |
|
|
| 0 |
|
|
| 0 |
|
|
| 9,860 |
|
Issuance of common stock for cashless option exercise |
|
| 28,196 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Net loss |
|
| - |
|
|
| 0 |
|
|
| (1,646,487 | ) |
|
| (15,917 | ) |
|
| (1,662,404 | ) |
Balance March 31, 2021 |
|
| 9,855,575 |
|
| $ | 21,602,793 |
|
| $ | (14,319,273 | ) |
| $ | 2,937,440 |
|
| $ | 10,220,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance January 1, 2022 |
|
| 10,940,969 |
|
| $ | 26,004,756 |
|
| $ | (15,832,955 | ) |
| $ | 2,892,001 |
|
| $ | 13,063,802 |
|
Contribution from non-controlling interest in Mill JV |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,828 |
|
|
| 2,828 |
|
Issuance of common stock for cash net of offering costs |
|
| 360,134 |
|
|
| 2,701,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,701,000 |
|
Issuance of common stock for services |
|
| 3,572 |
|
|
| 32,326 |
|
|
| 0 |
|
|
| 0 |
|
|
| 32,326 |
|
Issuance of common stock for warrants exercised |
|
| 23,057 |
|
|
| 68,006 |
|
|
| 0 |
|
|
| 0 |
|
|
| 68,006 |
|
Issuance of common stock for cashless option exercise |
|
| 28,981 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Conversion of convertible debt to common stock |
|
| 392,866 |
|
|
| 1,950,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,950,000 |
|
Net loss |
|
| - |
|
|
| 0 |
|
|
| (455,602 | ) |
|
| (17,467 | ) |
|
| (473,069 | ) |
Balance March 31, 2022 |
|
| 11,749,579 |
|
| $ | 30,756,088 |
|
| $ | (16,288,557 | ) |
| $ | 2,877,362 |
|
| $ | 17,344,893 |
|
The accompanying notes are an integral part of these consolidated financial statements.
New Jersey Mining Company Consolidated Statements of Cash Flows (Unaudited) For the Nine Month Periods Ended September 30, 2021 and 2020 | ||||
| September 30, | |||
|
| 2021 |
| 2020 |
|
| |||
Cash flows from operating activities: |
|
|
|
|
Net income (loss) | $ | (2,040,843) | $ | (382,028) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
|
|
|
|
Depreciation and amortization |
| 595,227 |
| 425,641 |
Loss on write off of equipment |
| - |
| 9,537 |
Adjustment of inventory to net realizable value |
| - |
| 32,098 |
Accretion of asset retirement obligation |
| 7,476 |
| 7,170 |
Stock based compensation |
| 614,431 |
| - |
Issuance of common stock for services |
| 6,500 |
| - |
Change in operating assets and liabilities: |
|
|
|
|
Gold sales receivable |
| 52,654 |
| 13,762 |
Inventories |
| 146,431 |
| (27,019) |
Joint venture receivable |
| 2,536 |
| (420) |
Other current assets |
| (107,770) |
| 19,401 |
Accounts payable and other accrued liabilities |
| (48,902) |
| (7,738) |
Accrued payroll and related payroll expenses |
| 14,147 |
| 31,333 |
Net cash provided (used) by operating activities |
| (758,113) |
| 121,737 |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Purchases of property, plant and equipment |
| (351,618) |
| (286,889) |
Deposits on equipment |
| 12,863 |
| - |
Purchase of mineral property |
| (2,346,181) |
| (798,088) |
Additions to mineral property |
| - |
| (64,692) |
Net cash used by investing activities |
| (2,684,936) |
| (1,149,669) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from sale of common stock and warrants net of issuance cost |
| - |
| 2,906,896 |
Exercise of common stock warrants |
| 50,000 |
| 208,334 |
Principal payments on notes payable |
| (409,679) |
| (360,640) |
Principal payments on notes payable, related parties |
| (27,599) |
| (53,434) |
Issuance of convertible debt |
| 1,750,000 |
| 1,085,000 |
Proceeds from Small Business Administration loans |
|
|
| 149,900 |
Contributions from non-controlling interest |
| 21,569 |
| 24,892 |
Net cash provided by financing activities |
| 1,384,291 |
| 3,960,948 |
|
|
|
|
|
Net change in cash and cash equivalents |
| (2,058,758) |
| 2,933,016 |
Cash and cash equivalents, beginning of period |
| 2,539,945 |
| 217,796 |
Cash and cash equivalents, end of period | $ | 481,187 | $ | 3,150,812 |
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Deposit on property applied to purchase of mineral property |
| - | $ | 25,000 |
Notes payable for equipment purchase | $ | 1,149,683 | $ | 217,000 |
Conversion of convertible debt to common stock | $ | 835,000 | $ | 50,000 |
Investment in Buckskin acquired with issuance of common stock | $ | 192,946 |
| - |
5 |
Table Of Contents |
Idaho Strategic Resources, Inc Consolidated Statements of Cash Flows (Unaudited) For the Three-Month Periods Ended March 31, 2022 and 2021 | ||||||||
|
|
|
| |||||
|
| March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net loss |
| $ | (473,069 | ) |
| $ | (1,662,404 | ) |
Adjustments to reconcile net loss to net cash used by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 230,208 |
|
|
| 182,795 |
|
Accretion of asset retirement obligation |
|
| 2,516 |
|
|
| 2,498 |
|
Stock based compensation |
|
| - |
|
|
| 614,431 |
|
Issuance of common stock for services |
|
| 32,326 |
|
|
| 2,300 |
|
Equity income on investment in Buckskin |
|
| (331 | ) |
|
| 0 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Gold sales receivable |
|
| (398,230 | ) |
|
| 155,622 |
|
Inventories |
|
| (392,351 | ) |
|
| 96,961 |
|
Joint venture receivable |
|
| 1,614 |
|
|
| 1,708 |
|
Other current assets |
|
| 36,715 |
|
|
| 26,353 |
|
Accounts payable and accrued expenses |
|
| 64,907 |
|
|
| (142,954 | ) |
Accrued payroll and related payroll expenses |
|
| 47,609 |
|
|
| 3,523 |
|
Net cash used by operating activities |
|
| (848,086 | ) |
|
| (719,167 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant, and equipment |
|
| (66,818 | ) |
|
| (57,111 | ) |
Deposits on equipment |
|
| (29,891 | ) |
|
| 7,953 |
|
Additions to mineral property |
|
| (192,112 | ) |
|
| (140,716 | ) |
Net cash used by investing activities |
|
| (288,821 | ) |
|
| (189,874 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from sale of common stock net of issuance cost |
|
| 2,701,000 |
|
|
| 0 |
|
Proceeds from exercise of common stock warrants |
|
| 68,006 |
|
|
| 0 |
|
Principal payments on notes payable |
|
| (192,054 | ) |
|
| (111,934 | ) |
Principal payments on notes payable, related parties |
|
| (10,203 | ) |
|
| (9,063 | ) |
Issuance of convertible debt |
|
| - |
|
|
| 1,600,000 |
|
Contributions from non-controlling interest |
|
| 2,828 |
|
|
| 2,469 |
|
Net cash provided by financing activities |
|
| 2,569,577 |
|
|
| 1,481,472 |
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
| 1,432,670 |
|
|
| 572,431 |
|
Cash and cash equivalents, beginning of period |
|
| 1,976,518 |
|
|
| 2,539,945 |
|
Cash and cash equivalents, end of period |
| $ | 3,409,188 |
|
| $ | 3,112,376 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable for equipment purchase |
| $ | 241,861 |
|
| $ | 761,073 |
|
Deposit on equipment paid by lender |
| $ | 96,000 |
|
| $ | 0 |
|
Conversion of convertible debt to common stock |
| $ | 1,950,000 |
|
| $ | 0 |
|
The accompanying notes are an integral part of these consolidated financial statements.
New Jersey Mining Company
6 |
Table Of Contents |
Idaho Strategic Resources, Inc
Notes to Consolidated Financial Statements (Unaudited)
1. The Company and Significant Accounting Policies
These unaudited interim consolidated financial statements have been prepared by the management of New Jersey Mining CompanyIdaho Strategic Resources, Inc (IDR) (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentationstatement of the interim consolidated financial statements have been included.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company'sCompany’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company'sCompany’s financial position and results of operations. Operating results for the three and nine-monththree-month period ended September 30, 2021March 31, 2022, is not necessarily indicative of the results that may be expected for the full year ending December 31, 2022.
On December 6, 2021, New Jersey Mining Company changed its name to Idaho Strategic Resources Inc. and also finalized a 1 for 14 reverse stock split of its common stock as previously approved by shareholders at a Special Meeting of the Shareholders held on October 6, 2021. On the date of the reverse stock split, every fourteen (14) shares of New Jersey Mining Company were automatically converted into one issued and outstanding share of Idaho Strategic Resources, Inc. common stock without any change in the par value per share.
For further information refer to the financial statements and footnotes thereto in the Company’s audited consolidated financial statements for the year ended December 31, 20202021, as filed with the Securities and Exchange Commission.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority-owned subsidiary, the New Jersey Mill Joint Venture (“NJMJV”). Intercompany accounts and transactions are eliminated. The portion of entities owned by other investors is presented as non-controlling interests on the consolidated balance sheets and statements of operations.
Revenue Recognition
Gold Revenue Recognition and Receivables-Sales of gold 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 our concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement by the customer. For sales of dore’doré and metals from doré, 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 by the refiner.
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. Costs charged by customers include fixed costs per ton of concentrate and price escalators. Refining, selling, and shipping costs related to sales of doré and metals from doré are recorded to cost of sales as incurred. See Note 4 for more information on our sales of products.
Other Revenue Recognition-Revenue from harvest of raw timber is recognized when the performance obligation under a contract and transfer of control of the timber have both been completed. Sales of timber found on the Company’s mineral properties are not a part of normal operations.
Inventories
Inventories are stated at the lower of full cost of production or estimated net realizable value based on current metal prices. Costs consist of mining, transportation, and milling costs including applicable overhead, depreciation, depletion and amortization relating to the operations. Costs are allocated based on the stage at which the ore is in the production process. Supplies inventory is stated at the lower of cost or estimated net realizable value.
New Jersey Mining Company
7 |
Table Of Contents |
Idaho Strategic Resources, Inc
Notes to Consolidated Financial Statements (Unaudited)
1. The Company and Significant Accounting Policies (continued)
Mine Exploration and Development Costs
The Company expenses exploration costs as such in the period they occur. The mine development stage begins once the Company identifies ore reserves which is based on a determination whether an ore body can be economically developed. Expenditures incurred during the development stage are capitalized as deferred development costs and include such costs for drift, ramps, and infrastructure. Costs to improve, alter, or rehabilitate primary development assets which appreciably extend the life, increase capacity, or improve the efficiency or safety of such assets are also capitalized. The development stage ends when the production stage of ore reserves (as defined by the SEC) begins. Amortization of deferred development costs is calculated using the units-of-production method over the expected life of the operation based on the estimated recoverable mineral ounces.
Fair Value Measurements
When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period that are included in earnings are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At September 30, 2021,March 31, 2022, and December 31, 2020,2021, the Company had no assets or liabilities that required measurement at fair value on a recurring basis.
Accounting for Investments in Joint Ventures and Equity SecuritiesMethod Investments
Investment in Joint Ventures
For joint ventures where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and its representation on the venture’s management committee.
For joint ventures in which the Company does not have joint control or significant influence, the cost method is used. For those joint ventures in which there is joint control between the parties, the equity method is utilized whereby the Company’s share of the ventures’ earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. The Company periodically assesses its investments in joint ventures for impairment. If management determines that a decline in fair value is other than temporary it will write-down the investment and charge the impairment against operations.
Equity Method Investments
Investments in companies and joint ventures in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity securitiesmethod of accounting. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and representation on governing bodies. Under the equity method of accounting, our share of the net earnings or losses of the investee are generally measured at fair value. Unrealized gains and losses forincluded in net income (loss) in the consolidated statements of operations. We evaluate equity securities resulting frommethod investments whenever events or changes in fair value are recognized in current earnings.circumstance indicate the carrying amounts of such investments may be impaired. If an equity security does not have a readily determinable fair value, we may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investmentdecline in the same issuer. At the end of each reporting period, we reassess whether an equity investment security without a readily determinable fair value qualifies to be measured at cost less impairment, consider whether impairment indicators exist to evaluate if an equity investment security is impaired and, if so, record an impairment loss. At the end of each reporting period, unrealized gains and losses resulting from changes in fair value are recognized in current earnings. Upon sale of an equity security, the realized gain ormethod investment is determined to be other than temporary, a loss is recognizedrecorded in earnings in the current earnings.period. At March 31, 2022, and December 31, 2021, the Company’s 37% common stock holding of Buckskin Gold and Silver, Inc. is accounted for using the equity method (Note 10).
At March 31, 2022 and December 31, 2021, the Company’s percentage ownership and method of accounting for each joint venture and equity method investment is as follows:
|
| March 31, 2022 |
|
|
| December 31, 2021 | ||||||
Joint Venture |
| % Ownership |
| Significant Influence? |
| Accounting Method |
| % Ownership |
| Significant Influence? |
| Accounting Method |
NJMJV |
| 65% |
| Yes |
| Consolidated |
| 65% |
| Yes |
| Consolidated |
Butte Highlands Joint Venture (“BHJV”) |
| 50% |
| No |
| Cost |
| 50% |
| No |
| Cost |
Buckskin Gold and Silver |
| 37% |
| Yes |
| Equity |
| 37% |
| Yes |
| Equity |
8 |
Table Of Contents |
Idaho Strategic Resources, Inc
Notes to Consolidated Financial Statements (Unaudited)
1. The Company and Significant Accounting Policies (continued)
Reclassifications
Certain prior period amounts have been reclassified to conform to the 20212022 financial statement presentation. Reclassifications had no effect on net income (loss), stockholders’ equity, or cash flows as previously reported.
New Accounting Pronouncement
Accounting Standards Updates Adopted
In December 2019,-In August 2020, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update contains a number of provisions intended to simplify the accounting for income taxes. The update is effective for fiscal years beginning after December 15, 2020 with early adoption permitted. The update was adopted as of January 1, 2021, and its adoption did not have a material impact on the Company’s consolidated financial statements.
Accounting Standards Updates to Become Effective in Future Periods
In August 2020, the FASB issued ASU No. 2020-06 -06Debt with Conversion and Other Options (Subtopic 470-20)470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity. The update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years and with early adoption permitted. Management is evaluating the impactThe adoption of this update on the Company’sJanuary 1, 2022, did not have a material impact on our consolidated financial statements.
New Jersey Mining Company
Notes to Consolidated Financial Statements (Unaudited)
2.Going Concern
The Company is currently producing from both the open-pit and underground at the Golden Chest Mine. In the past, the Company has been successful in raising required capital from sale of common stock, forward gold contracts, and debt. As a result of its planned production, equity sales and potential debt borrowings or restructurings, management believes cash flows from operations and existing cash are sufficient to conduct planned operations and meet contractual obligations for the next 12 months.
3. Inventories
At September 30, 2021March 31, 2022 and December 31, 2020,2021, the Company’s inventories consisted of the following:
| September 30, 2021 |
| December 31, 2020 |
| March 31, 2022 |
|
| December 31, 2021 |
| |||
Concentrate inventory |
|
|
|
|
|
|
|
|
| |||
In process | $ | 58,847 | $ | 90,743 |
| $ | 26,437 |
| $ | 41,082 |
| |
Finished goods |
| 104,803 |
| 230,318 |
|
| 341,626 |
|
|
| 97,074 |
|
Total concentrate inventory |
| 163,650 |
| 321,061 |
| 368,063 |
| 138,156 |
| |||
|
|
|
|
|
|
|
|
|
| |||
Supplies inventory |
|
|
|
|
|
|
|
|
| |||
Mine parts and supplies |
| 56,648 |
| 52,600 |
| 184,919 |
| 54,998 |
| |||
Mill parts and supplies |
| 35,808 |
| 28,876 |
|
| 53,091 |
|
|
| 20,568 |
|
Total supplies inventory |
| 92,456 |
| 81,476 |
| 238,010 |
| 75,566 |
| |||
|
|
|
|
|
|
|
|
|
| |||
Total | $ | 256,106 | $ | 402,537 |
| $ | 606,073 |
|
| $ | 213,722 |
|
The carrying value of inventory is determined each period based on the lower of cost or net realizable value. At September 30, 2021March 31, 2022 and December 31, 20202021 gold concentrate is carried at cost.
4. Sales of Products
Our products consist of both gold flotation concentrates which we sell to a single broker (H&H Metal), and an unrefined gold-silver product known as doré which we sell to a precious metal refinery. At September 30, 2021,March 31, 2022, metals that had been sold but not final settled thus exposed to future price changes totaled 1,7111,205 ounces of gold. The Company has received provisional payments on the sale of these ounces with the remaining amount due reflected in gold sales receivable.
Sales of products by metal type for the three and nine-monththree-month periods ended September 30,March 31, 2022, and 2021 and 2020 were as follows:
| September 30, 2021 | September 30, 2020 |
| March 31, |
| |||||||||||
Three Months | Nine Months | Three Months | Nine Months |
| 2022 |
|
| 2021 |
| |||||||
Gold | $ | 2,253,431 | $ | 6,256,461 | $ | 1,654,334 | $ | 4,629,816 |
| $ | 2,183,024 |
| $ | 1,716,616 |
| |
Silver |
| 5,756 |
| 20,078 |
| 2,593 |
| 6,881 |
| 3,440 |
| 5,080 |
| |||
Less: Smelter and refining charges |
| (160,338) |
| (410,831) |
| (100,857) |
| (355,296) |
|
| (142,047 | ) |
|
| (135,069 | ) |
Total | $ | 2,098,849 |
| 5,865,708 | $ | 1,556,070 | $ | 4,281,401 |
| $ | 2,044,417 |
|
| $ | 1,586,627 |
|
Sales by significant product type for the three and nine-monththree-month periods ended September 30,March 31, 2022, and 2021 and 2020 were as follows:
| September 30, 2021 | September 30, 2020 |
| March 31, |
| |||||||||||
Three Months | Nine Months | Three Months | Nine Months |
| 2022 |
|
| 2021 |
| |||||||
Concentrate sales to H&H Metal | $ | 1,845,547 | $ | 5,535,899 | $ | 1,476,395 | $ | 4,144,583 |
| $ | 2,044,417 |
| $ | 1,510,119 |
| |
Dore sales to refinery |
| 253,302 |
| 329,809 |
| 79,675 |
| 136,818 |
|
| 0 |
|
|
| 76,508 |
|
Total | $ | 2,098,849 | $ | 5,865,708 | $ | 1,556,070 | $ | 4,281,401 |
| $ | 2,044,417 |
|
| $ | 1,586,627 |
|
At September 30, 2021March 31, 2022 and December 31, 2020,2021, our gold sales receivable balance related to contracts with customers of $212,125$806,417 and $264,779,$408,187, respectively, consist only of amounts due from H&H Metal. There is no allowance for doubtful accounts.
New Jersey Mining Company
9 |
Table Of Contents |
Idaho Strategic Resources, Inc
Notes to Consolidated Financial Statements (Unaudited)
5.Related Party Transactions
At September 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had the following note and interest payable to related parties:
| September 30, 2021 |
| December 31, 2020 |
| March 31, 2022 |
|
| December 31, 2021 |
| |||
Ophir Holdings LLC, a company owned by two officers of the Company, 6% interest, monthly payments of $3,777 with a balloon payment of $71,075 in February 2023 | $ | 126,713 | $ | 154,312 | ||||||||
Ophir Holdings LLC, a company owned by two officers of the Company, 3.99% interest, monthly payments of $1,250 with a balloon payment of $85,016 in February 2024 |
| $ | 106,408 |
|
| $ | 116,611 |
| ||||
Total |
| 126,713 |
| 154,312 |
| 106,408 |
| 116,611 |
| |||
Current portion |
| (38,781) |
| (37,078) |
|
| (10,957 | ) |
|
| (10,543 | ) |
Long term portion | $ | 87,932 | $ | 117,234 |
| $ | 95,451 |
|
| $ | 106,068 |
|
As of September 30, 2021March 31, 2022 and December 31, 2020,2021, there was no accrued interest payable to related parties. Related party interest expense for the threethree-months ended March 31, 2022 and nine-months ended September 30, 2021 is $1,129 and 2020 is as follows.
| 2021 | 2020 | |||||||
| Three Months | Nine Months | Three Months | Nine Months | |||||
|
|
|
|
|
|
|
|
| |
| $ | 1,994 | $ | 6,397 | $ | 2,537 | $ | 8,588 |
In February 2020, the Company’s corporate secretary, Monique Hayes, participated in the Company’s convertible debt offering for $25,000. During the three and nine-month periods ended September 30, 2021 and 2020, interest expense on her note was as follows:
| 2021 | 2020 | ||||||
| Three Months | Nine Months | Three Months | Nine Months | ||||
|
|
|
|
|
|
|
|
|
| $ | - | $ | 975 | $ | 504 | $ | 1,238 |
She converted her note in May 2021 as provided in the agreement. See Note 16.$3,181, respectively.
The Company leases office space from certain related parties on a month-to-month basis. $1,500 per month is paid to NP Depot, a company owned by the Company’s president, John Swallow. Payments under these short-term lease arrangements are included in general and administrative expenses on the Consolidated Statement of Operations and are as follows:
| 2021 | 2020 | |||||||
| Three Months | Nine Months | Three Months | Nine Months | |||||
|
|
|
|
|
|
|
|
| |
| $ | 6,364 | $ | 18,791 | $ | 6,210 | $ | 18,630 |
|
| March 31, |
| |||||
|
| 2022 |
|
|
|
| ||
|
|
|
|
|
| |||
|
| $ | 6,217 |
|
| $ | 6,210 |
|
6. Joint Ventures
New Jersey Mill Joint Venture Agreement
The Company owns 65% of the New Jersey Mill Joint Venture (JV) and has significant influence in its operations. Thus, the venture is included in the consolidated financial statements along with presentation of the non-controlling interest. At September 30, 2021March 31, 2022 and December 31, 2020,2021, an account receivable existed with Crescent Silver, LLC, the other joint venture participant (“Crescent”), for $1,641$2,828 and $4,177,$4,442, respectively, for shared operating costs as defined in the JV agreement.
Butte Highlands JV, LLC (“BHJV”)
On January 29, 2016, the Company purchased a 50% interest in Butte Highlands JV, LLC (“BHJV”) from Timberline Resources Corporation for $225,000 in cash and 3,000,000 restricted shares of the Company’s common stock valued at $210,000 for a total consideration of $435,000. Highland Mining, LLC (“Highland”) is the other 50% owner and manager of the joint venture. Under the agreement, Highland will fund all future project exploration and mine development costs. The agreement stipulates that Highland is manager of BHJV and will manage BHJV until such time as all mine development costs, less $2 million are distributed to Highland out of the proceeds from future mine production. The Company has determined that because it does not currently have significant influence over the joint venture’s activities, it accounts for its investment on a cost basis.
New Jersey Mining Company
Notes to Consolidated Financial Statements (Unaudited)
7.Earnings per Share
Net income (loss)For the three-month periods ended March 31, 2022, and 2021, potentially dilutive shares including outstanding stock options (Note 14), warrants (Note 13), and convertible debt (Note 15) were excluded from the computation of diluted loss per share is computed by dividingbecause they were anti-dilutive due to net losses in those periods. For the net amount excluding net income (loss) attributable to a non-controlling interest by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur from common shares issuable through stock options, warrants,three-month periods ended March 31, 2022, and other convertible securities. Such2021, potentially dilutive common stock equivalents are included or excluded from the calculation of diluted net income (loss)earnings per share for each periodas their effect would have been anti-dilutive are as follows:
| September 30, 2021 | September 30, 2020 |
| March 31, 2022 |
| March 31, 2021 |
| |||||||||
| Three Months | Nine Months | Three Months | Nine Months | ||||||||||||
|
|
|
|
| ||||||||||||
Incremental shares included in diluted net income (loss) per share |
|
|
|
|
|
|
|
| ||||||||
Stock options |
| - |
| - |
| 2,669,034 |
| - |
| $ | 455,386 |
| $ | 401,786 |
| |
Stock purchase warrants |
| - |
| - |
| 1,029,486 |
| - |
| 646,410 |
| 426,788 |
| |||
|
| - |
| - |
| 3,698,520 |
| - | ||||||||
Excluded in diluted net income (loss) per share as inclusion would have an antidilutive effect: |
|
|
|
|
|
|
|
| ||||||||
Convertible debt |
| 5,500,000 |
| 5,500,000 |
| 5,138,889 |
| 5,138,889 |
|
| - |
|
|
| 693,595 |
|
Stock options |
| 5,525,000 |
| 5,525,000 |
| 1,943,466 |
| 4,612,500 | ||||||||
Stock purchase warrants |
| 5,697,249 |
| 5,697,249 |
| 4,859,286 |
| 6,641,694 | ||||||||
| 16,722,249 |
| 16,722,249 |
| 11,941,641 |
| 16,393,083 | |||||||||
Total |
| $ | 1,101,796 |
|
| $ | 1,522,169 |
|
10 |
Table Of Contents |
Idaho Strategic Resources, Inc
Notes to Consolidated Financial Statements (Unaudited)
8.Property, Plant, and Equipment
Property, plant and equipment at September 30, 2021March 31, 2022 and December 31, 20202021 consisted of the following:
| September 30, 2021 |
| December 31, 2020 | |
Mill |
|
|
|
|
Land | $ | 225,289 | $ | 225,289 |
Building |
| 536,193 |
| 536,193 |
Equipment |
| 4,192,940 |
| 4,192,940 |
|
| 4,954,422 |
| 4,954,422 |
Less accumulated depreciation |
| (1,043,078) |
| (914,095) |
Total mill |
| 3,911,344 |
| 4,040,327 |
|
|
|
|
|
Building and equipment |
|
|
|
|
Buildings |
| 324,075 |
| 297,932 |
Equipment |
| 4,727,631 |
| 3,250,551 |
|
| 5,051,706 |
| 3,548,483 |
Less accumulated depreciation |
| (1,674,965) |
| (1,229,136) |
Total building and equipment |
| 3,376,741 |
| 2,319,347 |
|
|
|
|
|
Land |
|
|
|
|
Bear Creek |
| 266,934 |
| 266,934 |
BOW |
| 230,449 |
| 230,449 |
Eastern Star |
| 250,817 |
| 250,817 |
Gillig |
| 79,137 |
| 79,137 |
Highwater |
| 40,133 |
| 40,133 |
Total land |
| 867,470 |
| 867,470 |
Total | $ | 8,155,555 | $ | 7,227,144 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Mill |
|
|
|
|
|
| ||
Land |
| $ | 225,289 |
|
| $ | 225,289 |
|
Building |
|
| 536,193 |
|
|
| 536,193 |
|
Equipment |
|
| 4,192,940 |
|
|
| 4,192,940 |
|
|
|
| 4,954,422 |
|
|
| 4,954,422 |
|
Less accumulated depreciation |
|
| (1,128,397 | ) |
|
| (1,085,730 | ) |
Total mill |
|
| 3,826,025 |
|
|
| 3,868,692 |
|
|
|
|
|
|
|
|
|
|
Building and equipment |
|
|
|
|
|
|
|
|
Buildings |
|
| 337,859 |
|
|
| 324,075 |
|
Equipment |
|
| 5,241,810 |
|
|
| 5,042,915 |
|
|
|
| 5,579,669 |
|
|
| 5,366,990 |
|
Less accumulated depreciation |
|
| (2,030,098 | ) |
|
| (1,847,191 | ) |
Total building and equipment |
|
| 3,549,571 |
|
|
| 3,519,799 |
|
|
|
|
|
|
|
|
|
|
Land |
|
|
|
|
|
|
|
|
Bear Creek |
|
| 266,934 |
|
|
| 266,934 |
|
BOW |
|
| 230,449 |
|
|
| 230,449 |
|
Eastern Star |
|
| 250,817 |
|
|
| 250,817 |
|
Gillig |
|
| 79,137 |
|
|
| 79,137 |
|
Highwater |
|
| 40,133 |
|
|
| 40,133 |
|
Total land |
|
| 867,470 |
|
|
| 867,470 |
|
Total |
| $ | 8,243,066 |
|
| $ | 8,255,961 |
|
New Jersey Mining Company
Notes to Consolidated Financial Statements (Unaudited)
9.Mineral Properties
Mineral properties at September 30, 2021March 31, 2022 and December 31, 20202021 consisted of the following:
| September 30, 2021 |
| December 31, 2020 |
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
Golden Chest |
|
|
|
|
|
|
|
|
| ||||
Mineral Property | $ | 1,575,832 | $ | 1,539,001 |
| $ | 1,590,672 |
| $ | 1,577,669 |
| ||
Infrastructure |
| 978,842 |
| 468,669 |
|
| 1,235,146 |
|
|
| 1,056,037 |
| |
Total Golden Chest |
| 2,554,674 |
| 2,007,670 |
| 2,825,818 |
| 2,633,706 |
| ||||
New Jersey |
| 248,289 |
| 248,289 |
| 248,289 |
| 248,289 |
| ||||
McKinley-Monarch |
| 200,000 |
| 200,000 |
| 200,000 |
| 200,000 |
| ||||
Butte Potosi |
| 274,440 |
| 274,440 |
| 274,440 |
| 274,440 |
| ||||
Alder Gulch |
| 2,473,066 |
| 773,101 |
| 2,473,066 |
| 2,473,066 |
| ||||
Park Copper |
| 78,000 |
| - |
| 78,000 |
| 78,000 |
| ||||
Less accumulated amortization |
| (59,998) |
| (48,267) |
|
| (68,949 | ) |
|
| (64,315 | ) | |
Total | $ | 5,768,471 | $ | 3,455,233 |
| $ | 6,030,664 |
|
| $ | 5,843,186 |
|
For the three and nine-monthsthree-month periods ended September 30,March 31, 2022, and 2021 $16,029$13,003 and $42,545,$10,186, respectively of interest expense was capitalized in association with the ramp access project at the Golden Chest. No interest was capitalized in 2020.
In February 2021 the Company paid $10,000 and in April of 2021 the Company paid an additional $1,689,965 to complete the purchase of approximately 508 acres of land adjacent to the Alder Gulch property for a total of $1,699,965 in cash.
In August 2021 the Company paid $78,000 in cash for 100 acres of patented mineral property in Shoshone County referred to as Park Copper.
10.Investment in Buckskin
In August 2021, the Company exchanged 643,15345,940 shares of the Company’s common stock for 22% of Buckskin Gold and Silver Inc. The Company’s closing share price on the date of the agreement (August 18, 2021) was recorded as the cost basis for the property.
New Jersey Mining In October 2021 the Company exchanged an additional 30,358 shares of the Company’s common stock for an additional 15% of Buckskin. The Company’s closing share price on the date of the exchange (October 15, 2021) was recorded as the cost basis for the investment addition. This investment in Buckskin is being accounted for using the equity method and resulted in recognition of equity income on the investment of $331 during the first quarter of 2022. The Company makes an annual payment of $12,000 to Buckskin per a lease covering 218 acres of patented mining claims. As of March 31, 2022, the Company holds 37% of Buckskin’s outstanding shares.
11 |
Table Of Contents |
Idaho Strategic Resources, Inc
Notes to Consolidated Financial Statements (Unaudited)
11. Notes Payable
At September 30, 2021March 31, 2022 and December 31, 2020,2021, notes payable are as follows:
| September 30, 2021 |
| December 31, 2020 |
| March 31, 2022 |
|
| December 31, 2021 |
| |||
Resimin Muki Bolter, 36-month note payable, 7.00% interest payable monthly through January 2025, monthly payments of $2,176 |
| $ | 66,942 |
| $ | 0 |
| |||||
Paus 2 yrd. LHD, 48-month note payable, 4.78% interest rate payable through September 2024, monthly payments of $5,181 | $ | 177,893 | $ | 217,354 |
| 150,790 |
| 164,422 |
| |||
Paus 2 yrd. LHD, 60-month note payable, 3.45% interest rate payable through July 2024, monthly payments of $4,847 |
| 156,772 |
| 195,768 |
| 130,232 |
| 143,547 |
| |||
Compressor, 48-month note payable, 5.25% interest rate payable monthly through November 2021, monthly payments of $813 |
| 2,844 |
| 9,958 | ||||||||
Compressor, 48-month note payable, 5.25% interest rate payable monthly through January 2022, monthly payments of $813 |
| 0 |
| 410 |
| |||||||
CarryAll transport, 36-month note payable, 4.5% interest rate payable monthly through June 2024, monthly payments of $627 |
| 19,421 |
| - |
| 16,066 |
| 17,752 |
| |||
CarryAll transport, 36-month note payable, 4.5% interest rate payable monthly through February 2024, monthly payments of $303 |
| 8,321 |
| - |
| 6,673 |
| 7,501 |
| |||
Atlas Copco loader, 60-month note payable, 10.5% interest rate payable monthly through June 2023, monthly payments of $3,550 |
| 67,807 |
| 93,265 |
| 49,687 |
| 58,866 |
| |||
Sandvik LH203 LHD, 36-month note payable, 4.5% interest payable monthly through May 2027, monthly payments of $10,352 |
| 311,608 |
| - |
| 255,989 |
| 283,955 |
| |||
Doosan Compressor, 36-month note payable, 6.99% interest payable monthly through July 2024, monthly payments of $602 |
| 18,558 |
| - |
| 15,544 |
| 17,064 |
| |||
Caterpillar 306 excavator, 48-month note payable, 4.6% interest payable monthly through November 2024, monthly payments of $1,512 |
| 53,355 |
| 64,896 |
| 45,438 |
| 49,421 |
| |||
Caterpillar 938 loader, 60-month note payable, 6.8% interest rate payable monthly through August 2023, monthly payments of $3,751 |
| 80,671 |
| 109,492 |
| 60,626 |
| 70,734 |
| |||
Caterpillar R1600 LHD, 48-month note payable, 4.5% interest rate payable through January 2025, monthly payments of $17,125 |
| 634,922 |
| - |
| 545,646 |
| 590,535 |
| |||
Caterpillar AD22 underground truck, 48-month note payable, 6.45% interest rate payable through June 2023, monthly payments of $12,979 |
| 256,608 |
| 358,043 |
| 186,215 |
| 221,694 |
| |||
2022 Dodge Ram, 75-month note payable, 5.99% interest rate payable monthly through June 2028, monthly payments of $1,152 |
| 71,759 |
| 0 |
| |||||||
2016 Dodge Ram, 75-month note payable, 5.99% interest rate payable monthly through June 2028, monthly payments of $1,190 |
|
| 74,101 |
|
|
| 0 |
| ||||
Total notes payable |
| 1,788,780 |
| 1,048,776 |
| 1,675,708 |
| 1,625,901 |
| |||
Due within one year |
| 657,738 |
| 339,704 |
|
| 714,401 |
|
|
| 664,153 |
|
Due after one year | $ | 1,131,042 | $ | 709,072 |
| $ | 961,307 |
|
| $ | 961,748 |
|
All notes are collateralized by the property or equipment purchased in connection with each note. Future principal payments of notes payable at September 30, 2021March 31, 2022 are as follows:
12 months ended September 30, |
|
| ||||
2022 | $ | 657,738 | ||||
12 months ended March 31, |
|
|
| |||
2023 |
| 637,511 |
| $ | 714,401 |
|
2024 |
| 417,524 |
| 575,588 |
| |
2025 |
| 76,007 |
| 302,911 |
| |
2026 |
| 23,788 |
| |||
2027 |
| 25,254 |
| |||
2028 |
| 26,809 |
| |||
2029 |
|
| 6,957 |
| ||
Total | $ | 1,788,780 |
| $ | 1,675,708 |
|
New Jersey Mining Company
Notes to Consolidated Financial Statements (Unaudited)
12. Small Business Administration Loans and Grant
On April 10,In the second quarter of 2020 the Company received a loanloans of $358,346 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The loan, which was in the form of a Note dated April 10, 2020 matures on April 9, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on October 9, 2020. The Note could be prepaid by the Company at any time prior to maturity with no prepayment penalties. This loan was forgiven after being used for qualifying expenses under the provisions of the CARES Act prior to the filing of this quarterly financial statement. Qualifying expenses included payroll costs, costs used to continue group health care benefits, rent, and utilities. The amount of the PPP loan was recognized as gain on forgiveness of the CARES Act loan in the Company’s consolidated income statement for the year ended December 31, 2020.
In April 2020, the Company received $10,000 under Division A, Title I, Section 1110 of the CARES Act. Additionally, in May 2020, the Company received a loan of $149,900$159,900 pursuant to the Small Business Act Section 7(b). The May loan which was in the form of a Note dated May 16, 2020, matures May 16, 2050, and bears interest at a rate of 3.75% per annum. Payments of $731 are due monthly and will begin in October 2021.April 2022. At September 30,March 31, 2022, and December 31, 2021 total accrued interest on the remaining loan is $7,734 of which $4,642 was accrued in 2021$10,902 and $9,311, respectively and is included in the Small Business Administration loanLoan balance on the consolidated balance sheet.
12 |
Table Of Contents |
13. Stockholders’ Equity
Idaho Strategic Resources, Inc
Notes to Consolidated Financial Statements (Unaudited)
Common stock activity in the second quarter of 2020 consists of the following:13. Stockholders’ Equity
·Stock issuance activity
The Company closed a private placement in April 2020.February 2022. Under the private placement, the Company sold 1,481,481360,134 units at $0.135$7.50 per unit for net proceeds of $200,000.$2,701,000. Each unit consisted of one share of the Company’s stock and one half of one stock purchase warrant with each whole warrant exercisable for one share ofcommon stock. In the Company’s stock at $0.18 for 24 months.
Common stock activity in the thirdfirst quarter of 2020 consists of the following:
·In July 2020, a holder of convertible debt converted $50,000 of debt to 277,778 shares of common stock.
·The Company closed a private placement in August 2020. Under the private placement,2022 the Company sold 9,718,573 units at $0.28 per unit for net proceeds of $2,706,896. Each unit consisted of one share of the Company’s stock and one half of one stock purchase warrant with each whole warrant exercisable for one share of the Company’s stock at $0.40 for 24 months.
·In the third quarter of 2020 warrants were exercised whereby 1,041,667issued 3,572 shares of common stock were issued for net proceeds of $208,334.
Common stock activity in the first quarter of 2021 consists of the following:
·The Company issued 10,000 shares of the Company’s common stock valued at $0.23$9.05 per share for services received of $2,300.
·Common shares of 394,737 were issued upon exercise of 625,000 options onprovided for a cashless basis. The intrinsictotal value of these shares was $150,000 on the date of exercise.
Common stock activity in the second quarter of 2021 consists of the following:
·The Company issued 15,000 shares of the Company’s common stock valued at $0.28 per share for services received of $4,200.
·Common shares of 50,000 were issued upon exercise of 100,000 options on a cashless basis. The intrinsic value of these shares was $14,000 on the date of exercise.
·277,778 warrants to purchase shares of the Company’s stock were exercised at $0.18 for $50,000 in cash.
·4,083,333 shares were issued at $0.18 per share in exchange for $735,000 of convertible debt. (Note 16)
New Jersey Mining Company
Notes to Consolidated Financial Statements (Unaudited)
13. Stockholders’ Equity (continued)
Common stock activity in the third quarter of 2021 consists of the following:
·555,556 shares were issued at $0.18 per share in exchange for $100,000 of convertible debt. (Note 16)
·The Company issued 643,153 shares of the Company’s common stock for 22% of Buckskin Gold and Silver in August 2021. $32,326.
Stock Purchase Warrants Outstanding
The activityIn the first quarter of 2022, 23,057 shares were issued in stock purchaseexchange for outstanding warrants is as follows:for net proceeds of $68,006.
|
| Number of Warrants |
| Exercise Prices | ||||||||
Balance December 31, 2019 |
| 12,900,123 |
| $0.18-0.22 | ||||||||
The activity in stock purchase warrants is as follows: |
| Number of Warrants |
|
| Exercise Prices |
| ||||||
Balance December 31, 2020 |
| 426,788 |
| $2.52-5.60 |
| |||||||
Issued |
| 5,600,027 |
| $0.18-0.40 |
| 289,294 |
| $5.60-7.00 |
| |||
Expired |
| (10,816,789) |
| $0.20-0.22 | ||||||||
Exercised |
| (1,708,334) |
| $0.20 |
|
| (46,615 | ) |
| $2.52 |
| |
Balance December 31, 2020 |
| 5,975,027 |
| $0.18-0.40 | ||||||||
Balance December 31, 2021 |
| 669,467 |
| $2.52-7.00 |
| |||||||
Exercised |
| (277,778) |
| $0.18 |
|
| (23,057 | ) |
| $2.52-5.60 |
| |
Balance September 30, 2021 |
| 5,697,249 |
| $0.18-0.40 | ||||||||
Balance March 31, 2022 |
|
| 646,410 |
|
| $2.52-7.00 |
|
|
|
|
|
|
| ||||||
These warrants expire as follows: |
| Shares |
|
| Exercise Price |
|
| Expiration Date | |||
|
|
| 13,228 |
|
| $ | 2.52 |
|
| April 21, 2022 | |
|
|
| 343,888 |
|
| $ | 5.60 |
|
| August 28, 2022 | |
|
|
| 235,722 |
|
| $ | 5.60 |
|
| October 14, 2023 | |
|
|
| 53,572 |
|
| $ | 7.00 |
|
| November 12, 2023 | |
|
|
| 646,410 |
|
|
|
|
|
|
|
These warrants expire as follows:
Shares | Exercise Price | Expiration Date |
375,000 | $0.18 | December 14, 2023 |
462,963 | $0.18 | April 21, 2022 |
4,859,286 | $0.40 | August 28, 2022 |
5,697,249 |
|
|
14. Stock Options
No options were granted in the second quarter of 2020 or 2021. In February 2021, the board granted 4,100,000283,936 stock options to officers, board members, and employees. These options vested immediately and are exercisable at $0.40$5.60 for 3 years. Total stock-based compensation recognized on these options during the three-month period ended March 31, 2021 was $604,571. In March 2021, the Company granted 3,572 stock options to an individual for services rendered to the Company. These options vested immediately and are exercisable at $5.60 for 3 years. Total stock-based compensation recognized on these options was $9,860. No options were granted in the first quarter of 2022. The weighted average fair value of stock option awards granted, and the key assumptions used in the Black-Scholes valuation model to calculate the fair value of the options are as follows: volatility of 97.9%, risk-free interest rate of 0.19%, an expected term of three years, dividend rate of 0.00% and forfeiture rate of 0.00%. In March 2021, the Company granted 50,000 stock options to an individual for services rendered to the Company. These options vested immediately and are exercisable at $0.40 for 3 years. Total stock-based compensation recognized on these options was $9,860 during the three-month period ended March 31, 2021. The weighted average fair value of stock option awards granted and the key assumptions used in the Black-Scholes valuation model to calculate the fair value of the options are as follows: volatility of 99.3%, risk-free interest rate of 0.33%, expected term of three years, dividend rate of 0.00% and forfeiture rate of 0.00%.
|
| February 11, 2021 |
|
| March 15, 2021 |
| ||
Fair value |
| $ | 604,572 |
|
| $ | 9,860 |
|
Options issued |
|
| 283,936 |
|
|
| 3,572 |
|
Exercise price |
| $ | 5.60 |
|
| $ | 5.60 |
|
Expected term (in years) |
|
| 3.0 |
|
|
| 3.0 |
|
Risk-free rate |
|
| 0.19 | % |
|
| 0.33 | % |
Volatility |
|
| 97.9 | % |
|
| 99.3 | % |
In the three and nine-month periods ending September 30, 2021 $0 and 725,000, respectively,first quarter of 2022, 51,789 options were exercised in exchange for 28,981 shares at an average price of $9.72 per share in a cashless exercises for 444,737 shares of the Company’s common stock.
New Jersey Mining Company
Notes to Consolidated Financial Statements (Unaudited)
14. Stock Options (continued)
warrant exercise. Activity in the Company’s stock options is as follows:
| Number of Options |
| Exercise Prices |
Balance December 31, 2019 | 5,262,500 | $ | 0.10-0.18 |
Exercised | (1,150,000) |
| 0.10-0.18 |
Expired | (2,012,500) |
| 0.10-0.18 |
Balance December 31, 2020 | 2,100,000 |
| 0.10-0.14 |
Exercised | (725,000) |
| 0.14 |
Issued | 4,150,000 |
| 0.40 |
Balance September 30, 2021 | 5,525,000 |
| 0.10-0.40 |
Exercisable at September 30, 2021 | 5,525,000 | $ | 0.10-0.40 |
|
| Number of Options |
|
| Exercise Prices |
| ||
Balance December 31, 2020 |
|
| 150,000 |
|
| $ | 1.40-1.96 |
|
Granted |
|
| 469,674 |
|
| $ | 5.60 |
|
Exercised |
|
| (101,786 | ) |
| $ | 1.40-1.96 |
|
Forfeited |
|
| (10,713 | ) |
| $ | 1.96-5.60 |
|
Balance December 31, 2021 |
|
| 507,175 |
|
| $ | 1.96-5.60 |
|
Exercised |
|
| (51,789 | ) |
| $ | 1.96-5.60 |
|
Balance March 31, 2022 |
|
| 455,386 |
|
| $ | 1.96-5.60 |
|
Outstanding and exercisable at March 31, 2022 |
|
| 455,386 |
|
| $ | 1.96-5.60 |
|
At September 30, 2021,March 31, 2022, outstanding stock options have a weighted average remaining term of approximately 1.912.02 years and an intrinsic value of approximately $253,750.$2,317,000. Intrinsic value of the options exercised for the nine-monththree-month period ended September 30, 2021March 31, 2022, was $164,000.$134,360.
15. Asset Retirement ObligationConvertible Debt
The Company has established asset retirement obligations associated with the ultimate closingbalance of its mineral properties where there has been or currently are operations. Activity for the nine months ended September 30,convertible debt at December 31, 2021 and 2020 is as follows:
| Nine Months Ended September 30, | |||
| 2021 |
| 2020 | |
|
|
|
|
|
Balance at beginning of period | $ | 173,001 | $ | 163,369 |
Accretion expense |
| 7,476 |
| 7,170 |
Change in asset retirement obligation estimate |
| (10,606) |
| - |
Balance at end of period | $ | 169,871 | $ | 170,539 |
The change in the asset retirement obligation estimate during the current quarter relatedconsisted of $200,000 convertible to a revision to the estimated start of the reclamation process to a later date at our Golden Chest properties.
16. Convertible Debt
In February 2020, the Company issued convertible promissory notes with an aggregate principal value of $885,000 from which funds were utilized for the purchase of the Alder Gulch property (Note 9). The notes are collateralized by the Alder Gulch property as well as other unencumbered real property that the Company currently owns. The outstanding principal amount of the notes bears interest at an annual rate of 8.0% with interest payments due monthly and the principal due in February 2023. The principal amount of the notes is convertible at the option of the note holders intoCommon shares of the Company’s common stock at a price of $0.18$5.60 per share (4,916,667(35,715 shares) priorand $1,750,000 convertible to the maturity date of the notes. In July 2020, one of the participants converted $50,000 in debt for 277,778Common shares of the Company’s common stock. In the second quarter of 2021, an additional 7 participants converted $735,000 in debt for 4,083,333 shares of the Company’s common stock. The one remaining participant converted $100,000 in debt for 555,556 shares of the Company’s common stock in July 2021.
In July 2020, a current participant was issued a convertible promissory note for a principal balance of $200,000 which funds were utilized for the purchase of a new jumbo underground drill. The note is collateralized by the drill. The outstanding principal amount of the note bears interest at an annual rate of 6.0% with interest payments due monthly and the unpaid principal due in June 2023. The principal amount of the note is convertible at the option of the note holder into shares of the Company’s common stock at a price of $0.40$4.90 per share (500,000(357,151 shares) prior. All of this debt was converted to Common shares as provided in the maturity date of the note.respective agreements in March 2022.
New Jersey Mining Company
Notes to Consolidated Financial Statements (Unaudited)
13 |
Table Of Contents |
16. Convertible Debt (continued)ITEM 2: Management’s Discussion AND Analysis of Financial Condition and Results of Operations
The Company issued convertible promissory notes with an aggregate principal valuePlan of $1,600,000 in February 2021 and an additional $150,000 in May 2021 for a total of $1,750,000 from which funds were utilized for the purchase of an addition to the Alder Gulch property (Note 9). The notes are collateralized by the Alder Gulch property as well as other unencumbered real property that the Company currently owns. The outstanding principal amount of the notes bears interest at an annual rate of 8.0% with interest payments due monthly and the principal due in March 2024. The principal amount of the notes is convertible at the option of the note holders into shares of the Company’s common stock at a price of $0.35 per share (5,000,000 shares) prior to the maturity date of the notes.Operation
17.Subsequent Events
The Company closed a private placement in October 2021. Under the private placement, the Company sold 6,600,000 units at $0.30 per unit for net proceeds of $1,980,000. Each unit consisted of one share of the Company’s stock and one half of one stock purchase warrant with each whole warrant exercisable for one share of the Company’s stock at $0.40 for 24 months.
A special meeting of the Company’s shareholders was held October 6, 2021, at which two proposals were presented. The first proposal was for an amendment and restatement of the Company’s Articles of Incorporation to effect a reverse stock split of outstanding Common Stock at a ratio of one for fourteen. The second proposal was for an amendment and restatement of the Company’s Articles of Incorporation to change the Company’s name from New Jersey Mining Company to Idaho Strategic Resources, Inc. Both proposals were approved by shareholders and are awaiting Financial Industry Regulatory Authority “FINRA” approval.
On October 20, 2021 the Board of Directors granted 2,550,000 stock options to officers, board members, and employees. These options vested immediately and are exercisable at $0.40 for 3 years.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Plan of Operation
New Jersey Mining CompanyInc is a gold producer focused on diversifying and building its asset base and cash flows through a portfolio of mineral properties located in historic producing gold districts in Idaho and Montana.
The Company’s plan of operation is to generate positive cash flow, while reducing debt and growingincrease its gold production and asset base over time while being mindful of corporate overhead. The Company’s management is focused on utilizing its in-house skills to build a portfolio of producing mines and milling operations with a primary focus on gold and secondary focus on silver and base metals.exploration for Rare Earth elements (REE).
The Company’s properties include: the Golden Chest Mine (currently in production), the New Jersey Mill (majority ownership interest), and a 50% carried to production interest in the past producing Butte Highlands Mine located in Montana. In addition to its producing and near-term production projects, New Jersey Mining CompanyIdaho Strategic Resources, Inc. has additional gold exploration prospects, including the McKinley-Monarch and Eastern Star located in Central Idaho, and additional holdings near the Golden Chest in the Murray Gold Belt including the 876 acres of patented claims in Alder Gulch purchased in the first quarter of 2020 and 2021. In early 2020,Belt. Recently, the Company added the Roberts and Diamond Creektwo rare earth element properties in Idaho. Both properties are listed as belonging to the national inventory as recognized by the USGS and other agency reports. If a large economic deposit of rare earth elements becomes a reality on either of these properties, they could become an important source of critical minerals for the United States. The Company added these projectsIdaho to its portfolio of exploration properties in an effort to diversify its holdings and build potential shareholder value fromtowards the anticipated demand for these elements in the electrification of motorized vehicles, permanent magnets, and other products focused on a low-carbon and “green” future.vehicles.
COVID-19 Coronavirus Pandemic Response and Impact
Following the outbreak of the COVID-19 coronavirus global pandemic ("COVID-19"(“COVID-19”) in early 2020, in March 2020 the U.S. Centers for Disease Control issued guidelines to mitigate the spread and health consequences of COVID-19. The Company implemented changes to its operations and business practices to follow the guidelines and minimize physical interaction, including using technology to allow employees to work from home when possible and altering production procedures and schedules, asset maintenance, and limiting discretionary spending. As long as they are required, the operational practices implemented could have an adverse impact on our operating results due to deferred production and revenues or additional costs. The negative impact of COVID-19 remains uncertain, including on overall business and market conditions. There is uncertainty related to the potential additional impacts COVID-19 could have on our operations and financial results for the year.
Critical Accounting Estimates
We have, besides our estimates of the amount of depreciation on our assets, two critical accounting estimates. The ounces of gold contained in our process and concentrate inventory is based on assays taken at the time the ore is processed and the ounces of gold contained in shipped concentrate which is based upon assays taken prior to shipment however subject to final assays at the refinery, these shipments are also subject to the fluctuation in gold prices between our shipment date and estimated and actual final settlement date. Also, the reclamation bond obligation on our balance sheet is based on an estimate of the future cost to recover and remediate our properties as required by our permits upon cessation of our operations, and may differ when we cease operations.
Our concentrate sales sometimes involve variable consideration, as they can be subject to changes in metals prices between the time of shipment and their final settlement. However, we are able to reasonably estimate the transaction price for the concentrate sales at the time of shipment using forward prices for the estimated month of settlement, and previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement for financial reporting purposes. The embedded derivative contained in our concentrate sales is adjusted to fair value through earnings each period prior to final settlement. It is unlikely a significant reversal of revenue for any one concentrate lot will occur. As such, we use the expected value method to price the concentrate until the final settlement date occurs, at which time the final transaction price is known. At March 31, 2022, metals that had been sold but not final settled thus exposed to future price changes totaled 1,205 ounces of gold. The Company has received provisional payments on the sale of these ounces with the remaining amount due reflected in gold sales receivable.
The asset retirement obligation and asset on our balance sheet is based on an estimate of the future cost to recover and remediate our properties as required by our permits upon cessation of our operations, and may differ when we cease operations. At March 31, 2022 we reviewed our December 31, 2021 estimate that the cost of the machine and man hours probable to be needed to put our properties in the condition required by our permits once we cease operations would be $103,906 for the Golden Chest property and $96,600 for the New Jersey Mine and Mill. For purposes of the estimate, we evaluated the expected life in years and costs that, initially, are comparable to rates that we would incur at the present. We are adding to the liability each year, and amortizing the asset over the estimated life, which decreases our net income in total each year. We make periodic reviews of the remaining life of the mine and other operations, and the estimated remediation costs upon closure, and adjust our account balances accordingly. At this time, we think that an adjustment in our asset recovery obligation is not required, and an adjustment in future periods would not have a material impact in the year of adjustment, but would change the amount of the annual accretion and amortization costs charged to our expenses by an undetermined amount.
14 |
Table Of Contents |
The SEC has requested that all registrants address their most critical accounting policies. The SEC has indicated that a “critical accounting policy” is one which is both important to the representation of the registrant’s financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We base our estimates on past experience and on various other assumptions our management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results will differ, and may differ materially from these estimates under different assumptions or conditions. Additionally, changes in accounting estimates could occur in the future from period to period. Our management has discussed the development and selection of our most critical financial estimates with the Audit and Finance Committee of our Board of Directors. The following paragraphs identify our most critical accounting policies:
Determination of Fair Values
Management determines the fair value of a financial instrument based on the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value is calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities includes consideration of non-performance risk, including the party’s own credit risk.
Impairment of Mineral Rights and Properties, Plant and Equipment
The Company assesses its mineral rights and properties, plant and equipment for possible impairment whenever events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Such indicators include changes in the Company’s business plans, changes in precious metal prices and significant downward revisions of estimated mineralization quantities. If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset, an impairment charge is recorded for the excess of carrying value of the asset over its estimated fair value.
Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters such as future commodity prices, the effects of inflation and technology improvements on operating expenses, and the outlook for global or regional demand conditions for gold and silver. However, the impairment reviews and calculations are based on assumptions that are consistent with the Company’s business plans and long-term investment decisions. Management does not believe there are impairments present in mineral rights and properties, plant, and equipment.
Reclamation and Remediation Obligations
Reclamation costs are allocated to expense over the life of the related assets and are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and remediation costs. Reclamation obligations are based on when the spending for an existing environmental disturbance will occur. We review, on at least an annual basis, the reclamation obligation at each mine site in accordance with guidance for accounting for asset retirement obligations.
Reclamation obligations for inactive mines are accrued based on management’s best estimate of the costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised.
Accounting for reclamation and remediation obligations requires management to make estimates unique to each mining operation of the future costs we will incur to complete the reclamation and remediation work required to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required. Any such increases in future costs could materially impact the amounts charged to earnings for reclamation and remediation.
Income Taxes
Our income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, we develop assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that we are using to manage the underlying businesses. Valuation allowances are recorded as reserves against net deferred tax assets by the Company when it is determined that net deferred tax assets are not likely to be realized in the foreseeable future.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.
15 |
Table Of Contents |
Highlights during the thirdfirst quarter of 20212022 include:
·At the Golden Chest, ore mined from underground stopes totaled approximately 6,310 tonnes of which about one-half was from the 833 stope and the remainder from the 824 stope. Development waste tonnage totaled 3,160 tonnes as the Main Access Ramp (MAR) was extended at depth. A second ventilation and escapeway raise was partially completed by the Company’s in-house mining crews during the quarter. During the quarter, operations were temporarily halted due to a rock fall and injury to one miner working in the 833N stope. Access to the 833N stope was restricted for two weeks, but access to the rest of the mine was permitted. This and a temporary road closure due to area forest fires also impacted operations during the 3rd quarter.
·Open pit mining progressed from the 1017 bench to the 1011 bench as production averaged 1,180 tonnes per day. Mining continued through the Klondike area as historic stopes were encountered that reduced the ore tonnage modeled.
·For the quarter ended September 30, 2021 a total of 12,554 dry metric tonnes (dmt) were processed at the Company’s New Jersey mill with a flotation feed head grade of 3.22 gpt with gold recovery of 87.8%
·The Company drilled 1,416 meters during the quarter and released core drilling results from the Joe Dandy area of the Golden Chest mine which is on the southern end of the property. The intercepts are summarized below:
oGC 21-194 intercepted 0.5 meters of 7.8 gpt gold in the upper vein and 0.4 meters of 4.6 gpt gold in the lower vein.
oGC 21-195 intercepted 0.5 meters of 3.8 gpt gold in the upper vein and 0.4 meters of 2.9 gpt gold in the lower vein.
oGC 21-196 intercepted 0.6 meters of 8.3 gpt gold in the upper vein and 1.7 meters of 2.7 gpt gold in the lower vein.
oGC 21-197 intercepted 2.56 meters of 10.98 gpt gold (including 0.94 meters of 28.7 gpt gold) in the upper vein and 0.53 meters of 2.60 gpt gold in the lower vein.
· | IDR up-listed its common stock onto the NYSE American and ‘rang’ the Opening Bell for the New York Stock Exchange (NYSE) on Monday, March 21st, 2022. IDR became the first company to ring the Opening Bell of the New York Stock Exchange virtually, via video stream, from underground at the Golden Chest Mine. | |
· | At the Golden Chest, ore mined from underground stopes totaled approximately 4,900 tonnes from the 815 and 830 stopes. Development waste tonnage totaled 3,200 tonnes as the Main Access Ramp (MAR) was extended at depth. Additionally, 2,800 cubic meters of backfill was placed during the quarter which was a record thanks to our hard-working miners. | |
· | Open pit mining progressed from the 1005 bench to the 1002 bench as production averaged 1,140 tonnes per day. | |
· | For the quarter ended March 31, 2022, a total of 11,014 dry metric tonnes (dmt) were processed at the Company’s New Jersey mill with a flotation feed head grade of 3.55 gpt with gold recovery of 89.5% | |
· | The Company drilled 1,437 meters during the quarter and released core drilling results from the Klondike area of the Golden Chest mine which is on the northern end of the property. The intercepts are summarized below: |
·The Company released core drilling results from the Klondike area of the Golden Chest mine which is located on the northern end of the property, and the intercepts are summarized below.
GC 21-210
· | 0.74 gpt gold over 51.6 meters (m) from 185.1 to 236.7 m including the following higher-grade intervals: | ||
o | 2.11 gpt gold over 6.1 m from 196.2 to 202.3 m | ||
· | 14 gpt gold over 0.7 m from 249.3 to 250.0 m | ||
· | 31.7 gpt gold over 0.8 m from 272.2 to 273.0 m |
oGC 21-203 intercepted 1.8 meters of 14.4 gpt gold (including 0.8 meters of 31.8 gpt gold).
oGC 21-204 intercepted 7.5 meters of 5.2 gpt gold (including 3.3 meters of 9.4 gpt gold) in the upper vein and 3.4 meters of 12.2 gpt gold (including 1.1 meters of 34.1 gpt gold) in the lower vein.
oGC 21-205 intercepted multiple zones of gold mineralization summarized below:
o1.4 meters of 12.2 gpt gold from 117.9 to 118.9 m.
o1.1 meters of 6.4 gpt gold from 126.4 to 127.5 m.
o2.3 meters of 15.5 gpt gold from 165.0 to 167.3 m (including 0.5 meters of 35.4 gpt gold and 0.1 meter of 138 gpt gold).
o7.6 meters of 1.9 gpt gold from 175.2 to 186.3 m (including 1.3 meters of 6.9 gpt gold).
o1.8 meters of 3.8 gpt gold from 207.9 to 209.7 m.
o6.0 meters of 3.1 gpt gold from 225.21 to 231.2 m (including 3.1 meters of 5.4 gpt gold).
o1.5 meters of 3.3 gpt gold from 233.5 to 235.0 m.
o3 meters of 7.8 gpt gold from 246.6 to 247.9 m.
GC 22-212
·The Company’s Roberts and Diamond Creek Rare Earth Element projects were included in the Earth MRI program overseen by the United States Geologic Survey (USGS) and conducted by the Idaho Geologic Survey (IGS). Additional groundwork was completed at Diamond Creek, including advancing the plan of operations for a 10-hole drill program. Furthermore, it is anticipated that core samples from this drill program are to be included in future partnership discussions with the IGS and University of Idaho, with an eye toward further drilling, extraction, separation, and processing of REE’s in Idaho.
· | 8.77 gpt gold over 9.2 m from 137.6 m to 146.8 m including the following higher-grade interval: | ||
o | 37.35 gpt gold over 1.3 m from 143.3 to 144.6 m | ||
· | 3.14 gpt gold over 1.3 m from 149.6 to 150.9 m | ||
· | 13.87 gpt gold over 0.7 m from 157.6 to 158.3 m | ||
· | 3.17 gpt gold over 1 m from 192.2 to 193.2 m | ||
· | 7.00 gpt gold over 1.4 m from 218.3 to 219.7 m |
· | Regarding the Company’s Rare Earth Element projects, the Company announced its partnership and participation in the Idaho Global Entrepreneurial Mission (IGEM) Project focused on the “Development of Idaho-Sourced Rare Earth Elements Drilling and Extraction”. In addition to IDR, the complete list of participants includes the University of Idaho (UI), Idaho Geological Survey (IGS), Idaho National Labs (INL), Center for Advanced Energy Studies (CAES), and the Idaho Department of Commerce. | |
· | The overall goal of the IGEM Project is to advance Idaho-sourced rare earth elements (REEs), with a possible result being the demonstration of the potential for environmentally minded Idaho-based commercialization of REEs and REE end products. Idaho Strategic was chosen as the industry partner for the project due to its ownership of two nationally recognized REE project(s) in Idaho (Roberts and Diamond Creek). The Company plans to conduct roughly $1 million worth of rare earth element drilling on its Diamond Creek property near Salmon, Idaho, and will supply REE core samples to its program partners for study and analysis. |
Results of Operations
Our financial performance during the quarter is summarized below:
·The Company had a gross profit of $278,010 and $568,855 for the three and nine-month periods ended September 30, 2021 compared to a gross loss of $107,237 and gross profit of $24,033 for the comparable periods in 2020. Gross profit increased primarily because of improved grade of mineralized material being mined and processed and increased production.
· | The Company had a gross profit of $306,143 compared to a gross loss of $71,403 for the three-month periods ended March 31, 2022, and 2021 respectively. Gross profit increased primarily because of improved gold prices. | |
· | Cash costs per ounce decreased for the three-month period ended March 31, 2022, to $978.70 per ounce compared to $1,476.24 per ounce in 2021 because of increased production and improved inventory valuation. AISC per ounce decreased to $1,557.32 per ounce for the three-month period ended March 31, 2022, compared to $2,097.34 for the comparable period in 2021 as a result of utilizing the Company’s in house core drilling versus using in-house drilling in addition to using a contract driller for drilling in the Paymaster/Joe Dandy. | |
· | Revenue was $2,044,417 for the three-month period ended March 31, 2022, compared to $1,586,627 for the comparable period of 2021. The increase was mostly the result of higher realized gold prices and increased gold inventories. |
·Cash costs per ounce decreased for the three and nine-month periods ended September 30, 2021, to $1,256.75 and $1,296.27 per ounce compared to $1,855.58 and $1,372.68, respectively, per ounce in 2020 because of increased grade of mineralized material being mined and processed in the periods and increased production. AISC per ounce decreased to $1,592.34 for the three-month period ended September 30, 2021 compared to $2,368.21 for the comparable period in 2020 as a result of increased grade of mineralized material being mined and processed in the periods and increased production. AISC per ounce increased to $1,741.66 per ounce for the nine-month period ended September 30, 2021 compared to $1,628.91 for the comparable period in 2020 due to additional exploration core drilling completed by an outside drill contractor
16 |
Table Of Contents |
· | An operating loss of $426,166 for the three-month period ended March 31, 2022, compared to an operating loss of $1,626,655 in the comparable period of 2021. The change was mostly a result of contract core drilling in the Paymaster/Joe Dandy and expense for stock options granted in the first quarter of 2021. | |
· | Net loss of $473,069 for the three-period ended March 31, 2022, compared to net loss of $1,662,404 for the three-month period ended March 31, 2021. The reasons for these changes are the same as those for the operating loss described above. | |
· | Exploration costs decreased in 2022 compared to 2021 because of the elimination of contract core drilling in the Paymaster/Joe Dandy and an increase in core drilling completed by the Company’s in-house drill. | |
· | Management, professional services, and general and administrative expenses decreased in the three-month period ended March 31, 2022, compared to 2021 as a result of options being granted to management, directors, and employees for a total cost of $604,571. | |
· | Timber revenue decreased in 2022. No logging on the Company’s property occurred in 2022. | |
· | The consolidated net loss for the three-months ended March 31, 2022, and 2021 included non-cash charges as follows: depreciation and amortization of $230,208 ($182,795 in 2021), accretion of asset retirement obligation of $2,516 ($2,498 in 2021), stock-based compensation of none in 2022 ($614,431 in 2021), the issuance of common stock for services $32,326 ($2,300 in 2021), and equity income on investment in Buckskin $331 in 2022 (None in 2021). |
·Revenue was $2,098,849 and $5,865,708 for the three and nine-month periods ended September 30, 2021 compared to $1,556,070 and $4,281,401 for the comparable periods of 2020. The increase was a result of a higher average gold grade and increased production in 2021 compared to 2020.
·An operating loss of $219,345 for the three-month period ended September 30, 2021 compared to operating income of $10,707 in the comparable period of 2020. This was a result of increased exploration spending for the three months ended September 30, 2021. An operating loss of $1,975,020 for the nine-month period ended September 30, 2021 compared to operating loss of $315,774 in the comparable period of 2020. The increased loss for the nine-month period in 2021 was mostly a result of increased core drilling and expense for stock options granted in the first quarter of 2021.
·Net loss of $237,671 and $2,040,843 for the three and nine-month periods ended September 30, 2021 compared to net loss of $7,327 and $382,028 for the three and nine-month periods ended September 30, 2020. the reasons for these changes are the same as those for the operating loss described above.
·Exploration costs increased in 2021 compared to 2020 as a result of contract core drilling that the Company had done in the first quarter of 2021 and additional core drilling completed by the Company’s drill in 2021. A total of 3,500 meters of core drilling was completed by a contractor in the first quarter of 2021.
·Management, professional services, and general and administrative expenses increased in the nine-month period ended September 21, 2021 compared to 2020 as a result of options being granted to management, directors, and employees for a total cost of $604,572.
·Timber revenue decreased in 2021. In 2020 more sales of timber at the Company’s Potosi property were realized.
·The consolidated net loss for the nine-months ended September 30, 2021 and 2020 included non-cash charges as follows: depreciation and amortization of $595,227 ($425,641 in 2020), write off of equipment of $0 in 2021 ($9,537 in 2020), adjustment on inventory to net realizable value of $0 in 2021 ($32,098 in 2020), accretion of asset retirement obligation of $7,476 ($7,170 in 2020), stock-based compensation of $614,431 in 2021 ($0 in 2020) , and the issuance of common stock for services $6,500 in 2021 ($0 in 2020).
Cash Costs and All-In Sustaining Costs Reconciliation to GAAP-Reconciliation of cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) to cash cost per ounce and all-in sustaining costs (AISC) per ounce (non-GAAP).
The table below presents reconciliations between the most comparable GAAP measure of cost of sales and other direct production costs and depreciation, depletion, and amortization to the non-GAAP measures of cash cost per ounce and all in sustaining costs per ounce for the Company’s gold production in the three and nine-monththree-month periods ended September 30, 2021March 31, 2022, and 2020.2021.
Cash cost per ounce is an important operating measure that we utilize to measure operating performance. AISC per ounce is an important measure that we utilize to assess net cash flow after costs for pre-development, exploration, reclamation, and sustaining capital. Current GAAP measures used in the mining industry, such as cost of goods sold do not capture all of the expenditures incurred to discover, develop, and sustain gold production.
| 2021 | 2020 | ||||||
| Three Months | Nine Months | Three Months | Nine Months | ||||
Cost of sales and other direct production costs and depreciation and amortization | $ | 1,820,839 | $ | 5,296,853 | $ | 1,663,306 | $ | 4,257,368 |
Depreciation and amortization |
| (217,054) |
| (595,227) |
| (156,324) |
| (425,641) |
Change in concentrate inventory |
| 37,535 |
| 146,431 |
| 64,526 |
| 33,407 |
Cash Cost | $ | 1,641,320 | $ | 4,848,057 | $ | 1,571,508 | $ | 3,865,134 |
Exploration |
| 267,643 |
| 1,193,520 |
| 44,613 |
| 133,529 |
Sustaining capital |
| 78,380 |
| 349,363 |
| 274,199 |
| 286,889 |
General and administrative |
| 101,430 |
| 751,272 |
| 117,762 |
| 308,233 |
Less stock-based compensation and other non-cash items |
| (9,178) |
| (628,407) |
| (2,426) |
| (7,170) |
All in sustaining costs | $ | 2,079,595 | $ | 6,513,805 | $ | 2,005,657 | $ | 4,586,614 |
Divided by ounces produced |
| 1,306 |
| 3,740 |
| 847 |
| 2,816 |
Cash cost per ounce | $ | 1,256.75 | $ | 1,296.27 | $ | 1,855.58 | $ | 1,372.68 |
All in sustaining cost (AISC) per ounce | $ | 1,592,34 | $ | 1,741.66 | $ | 2,368.21 | $ | 1,628.91 |
|
| March 31 |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cost of sales and other direct production costs and depreciation and amortization |
| $ | 1,738,274 |
|
| $ | 1,658,030 |
|
Depreciation and amortization |
|
| (230,208 | ) |
|
| (182,795 | ) |
Change in concentrate inventory |
|
| (392,351 | ) |
|
| 96,960 |
|
Cash Cost |
| $ | 1,115,715 |
|
| $ | 1,572,196 |
|
Exploration |
|
| 396,124 |
|
|
| 717,707 |
|
Sustaining capital |
|
| 96,709 |
|
|
| 49,158 |
|
General and administrative |
|
| 201,312 |
|
|
| 513,835 |
|
Less stock-based compensation and other non-cash items |
|
| (34,511 | ) |
|
| (619,231 | ) |
All in sustaining costs |
| $ | 1,775,349 |
|
| $ | 2,233,665 |
|
Divided by ounces produced |
|
| 1,140 |
|
|
| 1,065 |
|
Cash cost per ounce |
| $ | 978.70 |
|
| $ | 1,476.24 |
|
All in sustaining cost (AISC) per ounce |
| $ | 1,557.32 |
|
| $ | 2,097.34 |
|
Financial Condition and Liquidity
| For the Nine Months Ended September 30, | |||
Net cash provided (used) by: |
| 2021 |
| 2020 |
Operating activities | $ | (758,113) | $ | 121,737 |
Investing activities |
| (2,684,936) |
| (1,149,669) |
Financing activities |
| 1,384,291 |
| 3,960,948 |
Net change in cash and cash equivalents |
| (2,058,758) |
| 2,933,016 |
Cash and cash equivalents, beginning of period |
| 2,539,945 |
| 217,796 |
Cash and cash equivalents, end of period | $ | 481,187 | $ | 3,150,812 |
|
| For the Three Months Ended March 31, |
| |||||
Net cash provided (used) by: |
| 2022 |
|
| 2021 |
| ||
Operating activities |
| $ | (848,086 | ) |
| $ | (719,167 | ) |
Investing activities |
|
| (288,821 | ) |
|
| (189,874 | ) |
Financing activities |
|
| 2,569,577 |
|
|
| 1,481,472 |
|
Net change in cash and cash equivalents |
|
| 1,432,670 |
|
|
| 572,431 |
|
Cash and cash equivalents, beginning of period |
|
| 1,976,518 |
|
|
| 2,539,945 |
|
Cash and cash equivalents, end of period |
| $ | 3,409,188 |
|
| $ | 3,112,376 |
|
The Company is currently producing from both the open-pit and underground at the Golden Chest Mine. In the past, the Company has been successful in raising required capital from sale of common stock, forward gold contracts, and debt. As a result of its planned production, equity sales and potential debt borrowings or restructurings, management believes cash flows from operations and existing cash are sufficient to conduct planned operations and meet contractual obligations for the next 12 months.
17 |
Table Of Contents |
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for small reporting companies.
ITEM 4: CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
At September 30, 2021,March 31, 2022, our Vice President who also serves as our Chief Accounting Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods specified by the Securities & Exchange Commission rules and forms.
Based upon that evaluation, it was concluded that our disclosure controls were effective as of September 30, 2021,March 31, 2022, to ensure timely reporting with the Securities and Exchange Commission. Specifically, the Company’s corporate governance and disclosure controls and procedures provided reasonable assurance that required reports were timely and accurately reported in our periodic reports filed with the Securities and Exchange Commission.
Changes in internal control over financial reporting
There was no material change in internal control over financial reporting in the quarter ended September 30, 2021.March 31, 2022.
18 |
Table Of Contents |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Neither the constituent instruments defining the rights of the Company’s securities filers nor the rights evidenced by the Company’s outstanding common stock have been modified, limited or qualified.
The Company closed a private placement in April 2020. Under the private placement, the Company sold 1,481,481 units at $0.135 per unit for net proceeds of $200,000. Each unit consisted of one share of the Company’s stock and one half of one stock purchase warrant with each whole warrant exercisable for one share of the Company’s stock at $0.18 for 24 months. The Company closed a private placement in August 2020. Under the private placement, the Company sold 9,718,572 units at $0.28 per unit for net proceeds of $2,706,896. Each unit consisted of one share of the Company’s stock and one half of one stock purchase warrant with each whole warrant exercisable for one share of the Company’s stock at $0.18 for 24 months. In July of 2020 277,778 shares of the Company’s stock were issued to a holder of convertible debt at a rate of $0.18 per share in exchange for $50,000 in debt. In the third quarter of 2020 1,041,667 shares were issued in exchange for outstanding warrants for net proceeds of $208,334.
In the first quarter of 2021 the Company issued 10,000714 shares of common stock at $0.23$3.22 per share for services provided for a total value of $2,300. Also, in the first quarter of 2021 625,00044,643 options were exercised in exchange for 394,73728,196 shares at $0.38$5.32 per share in a cashless warrant exercise.
The Company closed a private placement in February 2022. Under the private placement, the Company sold 360,134 units at $7.50 per unit for net proceeds of $2,701,000. Each unit consisted of one share of the Company’s common stock. In the secondfirst quarter of 20212022 the Company issued 15,0003,572 shares of common stock at $0.28$9.05 per share for services provided for a total value of $4,200. 277,778 warrants$32,326. In the first quarter of 2022 23,057 shares were exercised at $0.18 per share for $50,000. 4,083,333 options were exercised at $0.18 per shareissued in exchange for $735,000outstanding warrants for net proceeds of convertible debt. Also, in$68,006. In the secondfirst quarter of 2021 100,0002022 51,789 options were exercised in exchange for 50,00028,981 shares at $0.28an average price of $9.72 per share in a cashless warrant exercise. In March of 2022 392,866 shares of the third quarterCompany’s stock were issued to holders of 2021 555,556 optionsconvertible debt. 35,715 of those shares were exercisedissued at $0.18rate of $5.60 per share and the remaining 357,151 of those shares were issued at a rate of $4.90 per share in exchange for $100,000a total of convertible$1,950,000 in debt. Also, in August of 2021 the Company issued 643,153 shares of common stock $0.30 per share for 22.23% of Buckskin Gold and Silver company.
The Company relied on the transaction exemption afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D Rule 506(b). The common shares are restricted securities which may not be publicly sold unless registered for resale with the Securities and Exchange Commission or exempt from the registration requirements of the Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company has no outstanding senior securities.
ITEM 4.MINE SAFETY DISCLOSURES
Pursuant to
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety
violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended September 30, 2021, the Company had four citations for a violation of mandatory health or safety standards that could significantly and substantially (S&S citation) contribute to the cause and effect a mine safety or health hazard under sectionItem 104 of Regulation S-K is included in exhibit 95 to this report.
ITEM 5. OTHER INFORMATION
In January 2022, the Federal Mine SafetyBoard adopted its (a) Code of Business Conduct and Health Act of 1977. There were no legal actions, mining-related fatalities, or similar events in relation to the Company’s United States operations requiring disclosure pursuant to Section 1503(a)Ethics; (b) Charter of the Dodd-Frank Act.Audit Committee; (c) Charter of the Compensation Committee; (d) Charter of the Corporate Governance and Nominating Committee; and (e) Whistle Blower Policy. Copies of each are attached hereto as Exhibits 14, 99.1, 99.2, 99.3, and 99.4, respectively.
19 |
Table Of Contents |
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
3.0*Articles of Incorporation of New Jersey Mining Company filed July 18, 1996
3.1*Articles of Amendment filed September 29, 2003
3.2*Articles of Amendment filed November 10, 2011
3.3*Bylaws of New Jersey Mining Company
10.1*Venture Agreement with United Mine Services, Inc. dated January 7, 2011.
10.2**Rupp Mining Lease dated May 3, 2013
10.3***Consent, Waiver and Assumption of Venture Agreement by Crescent dated February 14, 2014
10.4Form of Agreement to Purchase the “Four Square Property Group” of Patented and Un-Patented Mining Claims dated March 2, 2018, incorporated by reference to the Company’s Form 8-K as filed with the Securities and exchange Commission on March 7, 2018,
10.5Form of Convertible Note Purchase Agreement dated as of February 18, 2020, incorporated by reference to the Company’s 8-K as filed with the Securities and Exchange Commission on February 20, 2020.
10.6Form of Convertible Promissory Note dated as of February 18, 2020, incorporated by reference to the Company’s 8-K as filed with the Securities and Exchange Commission on February 20, 2020.
10.7Form of Convertible Note Purchase Agreement dated as of April14, 2021, incorporated by reference to the Company’s 8-K as filed with the Securities and Exchange Commission on April 19, 2021.
10.8Form of Convertible Promissory Note dated as of April 14, 2021, incorporated by reference to the Company’s 8-K as filed with the Securities and Exchange Commission on April 19, 2021.
21*Subsidiaries of the Registrant
31.1****Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2****Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1****Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2****Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS****XBRL Instance Document
101.SCH****XBRL Taxonomy Extension Schema Document
101.CAL****XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF****XBRL Taxonomy Extension Definition Linkbase Document
101.LAB****XBRL Taxonomy Extension Label Linkbase Document
101.PRE****XBRL Taxonomy Extension Presentation Linkbase Document
* Filed with the Registrant’s Form 10 on June 4, 2014. Exhibits
**Filed July 2, 2014
Venture Agreement with United Mine Services, Inc. dated January 7, 2011. | ||
Consent, Waiver and Assumption of Venture Agreement by Crescent dated February 14, 2014 | ||
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Mine safety information listed in Section 1503 of the Dodd-Frank Act. **** | ||
Charter of the Corporate Governance and Nominating Committee | ||
101.INS**** | XBRL Instance Document | |
101.SCH**** | XBRL Taxonomy Extension Schema Document | |
101.CAL**** | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF**** | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB**** | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE**** | XBRL Taxonomy Extension Presentation Linkbase Document |
***
* | Filed with the Registrant’s Form 10 on June 4, 2014. |
** | Filed July 2, 2014 |
*** | Filed March 31, 2015. |
**** | Filed herewith. |
20 |
Table Of Contents |
****Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
IDAHO STRATEGIC RESOURCES, INC | |||
By: | /s/ John Swallow | ||
John Swallow, | |||
its: President and Chief Executive Officer | |||
Date May 16, 2022 | |||
By: | /s/ Grant Brackebusch | ||
Grant Brackebusch, | |||
its: Vice President and Chief Financial Officer | |||
Date: May 16, 2022 |
21 |
NEW JERSEY MINING COMPANY
By: /s/ John Swallow
John Swallow,
its: President and Chief Executive Officer
Date November 15, 2021
By: /s/ Grant Brackebusch
Grant Brackebusch,
its: Vice President and Chief Financial Officer
Date: November 15, 2021
24