UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28,August 31, 2015

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1931934

For the transition period from _____ to _____

Commission File Number:000-50907

HANDENI GOLD INC.
(Exact name of registrant as specified in its charter)

+255 222 700 08470 00 84

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]      No [X]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date,
321,416,654 shares of common stock as of March 31,October 5, 2015.

HANDENI GOLD INC. (FORMERLY DOUGLAS LAKE MINERALS INC.)

Quarterly Report On Form 10-Q
For The Quarterly Period Ended

HANDENI GOLD INC. (FORMERLY DOUGLAS LAKE MINERALS INC.)

Quarterly Report On Form 10-Q

For The Quarterly Period Ended

August 31, 2015

INDEX

February 28, 2015

INDEX

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this quarterly report include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the market price of gold, availability of funds, government regulations, permitting, common share prices, operating costs, capital costs, outcomes of ore reserve development, recoveries and other factors. Forward-looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds, environmental reclamation, operating costs and permit acquisition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in our annual report on Form 10-K for the year ended May 31, 2014,2015, and, from time to time, in other reports that we file with the Securities and Exchange Commission (the “SEC”). These factors may cause our actual results to differ materially from any forward-looking statement. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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PART I – FINANCIAL INFORMATION

Item 1.                     Financial Statements

The following unaudited interim consolidated financial statements of Handeni Gold Inc. (sometimes referred to as “we”, “us” or “our Company”) are included in this quarterly report on Form 10-Q:

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Handeni Gold Inc.

Handeni Gold Inc.

Consolidated Balance Sheets

(Expressed in U.S. dollars)

(Expressed in U.S. dollars)

(The accompanying notes are an integral part of these consolidated financial statements)

3

Handeni Gold Inc.

Handeni Gold Inc.

Interim Consolidated Statements of Operations and Comprehensive Loss

(Expressed in U.S. dollars)

(Unaudited)

(Expressed in U.S. dollars)
(Unaudited)

(The accompanying notes are an integral part of these consolidated financial statements)

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Handeni Gold Inc.

Handeni Gold Inc.

Interim Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

(Unaudited)

(Expressed in U.S. dollars)
(Unaudited)

(The accompanying notes are an integral part of these consolidated financial statements)

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Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28,

Handeni Gold Inc.

Notes to the Interim Consolidated Financial Statements as of August 31, 2015

(Expressed in U.S. dollars)

(Unaudited)

(Expressed in U.S. dollars)
(Unaudited)

The Company was incorporated in the State of Nevada on January 5, 2004. On February 14, 2012, the Company changed its name from Douglas Lake Minerals Inc. to Handeni Gold Inc. (the “Company”). The Company’s principal business is the acquisition and exploration of mineral resources located in Tanzania, Africa. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations and to determine the existence, discovery and successful exploitation of economically recoverable reserves in its resource properties, confirmation of the Company’s interests in the underlying properties, and the attainment of profitable operations.

As at August 31, 2015, the Company has not generated any revenues and has accumulated losses of $117,244,483 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company plans to raise equity and/or debt financing to fund its operations which may result in substantial dilution to the Company’s stockholders or may not be available, if at all, in amounts or on terms acceptable to the Company. If additional capital is not obtained, the Company may be forced to cease operations. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28,

Handeni Gold Inc.

Notes to the Interim Consolidated Financial Statements as of August 31, 2015

(Expressed in U.S. dollars)

(Unaudited)

(Expressed in U.S. dollars)
(Unaudited)

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Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28,

Handeni Gold Inc.

Notes to the Interim Consolidated Financial Statements as of August 31, 2015

(Expressed in U.S. dollars)

(Unaudited)

(Expressed in U.S. dollars)
(Unaudited)

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Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28,

Handeni Gold Inc.

Notes to the Interim Consolidated Financial Statements as of August 31, 2015

(Expressed in U.S. dollars)

(Unaudited)

(Expressed in U.S. dollars)
(Unaudited)

The components of amounts receivable are as follows:

The components of prepaid expenses and deposits are as follows:

The four million restricted shares of common stock of Ruby Creek Resources Inc. (“RCR”) were issued to the Company on December 16, 2010 as partial consideration to purchase the mineral property interests under the agreements between RCR and the Company. The initial fair market value of these shares was $2,760,000 based on RCR’s quoted stock price on the issuance date.

On January 13, 2015, the Company reached a binding settlement to its litigation with RCR. Under the terms of the settlement, the Company will return the 4,000,000 shares of restricted RCR common stock to RCR (see Note 13, below). As a result, the Company has recorded a loss on marketable securities of $20,000 related to the pending return of these shares. As of February 28, 2015, the Company has recognized a total of $2,740,000 (May 31, 2014: $2,600,000) in other than temporary impairment on these RCR restricted shares.

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Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28, 2015
(Expressed in U.S. dollars)
(Unaudited)

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10

Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28, 2015
(Expressed in U.S. dollars)
(Unaudited)

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Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28, 2015
(Expressed in U.S. dollars)
(Unaudited)

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ASC 820,Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Pursuant to ASC 820, the fair value of cash, restricted cash equivalent and restricted marketable securities are determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. Management believes that the recorded values of all of the Company’s other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

As at August 31, 2015, there were no liabilities measured at fair value on a recurring basis presented on the Company’s consolidated balance sheet. Assets measured at fair value on a recurring basis were presented on the Company’s consolidated balance sheet as of August 31, 2015, as follows:

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Handeni Gold Inc.
Notes to the Interim Consolidated Financial Statements as of February 28, 2015
(Expressed in U.S. dollars)
(Unaudited)

As at May 31, 2014,2015, there were no liabilities measured at fair value on a recurring basis presented on the Company’s consolidated balance sheet. Assets measured at fair value on a recurring basis were presented on the Company’s consolidated balance sheet as of May 31, 2014,2015, as follows:

The Company operates in one reportable segment, being the acquisition and exploration of mineral properties. Segmented information has been compiled based on the geographic regions that the Company and its subsidiary registered and performed exploration and administration activities. Assets by geographical segment are as follows:

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

The following discussion of our financial condition, changes in financial condition and results of operations for the three months and nine months ended February 28,August 31, 2015 and 2014 should be read in conjunction with our unaudited interim financial statements and related notes for the three months and nine months ended February 28,August 31, 2015 and 2014 included herewith and our audited consolidated financial statements as at May 31, 2014, May 31, 20132015 and for the period from inception (January 5, 2004) to May 31, 2014 included in our Annual Report on Form 10-K for our fiscal year ended May 31, 20142015 as filed with the SEC. All financial information in this Management’s Discussion and Analysis (“MD&A” or the “discussion”) is expressed and prepared in conformity with U.S. generally accepted accounting principles. All dollar references are to the U.S. dollar, the Company’s reporting currency, unless otherwise noted. Some numbers in this MD&A have been rounded to the nearest thousand for discussion purposes.

FORWARD-LOOKING STATEMENTS

This MD&A contains forward-looking statements that involve risks, uncertainties and assumptions with respect to the Company’s activities and future financial results, which are made based upon management’s current expectations and beliefs. These forward-looking statements involve risks and uncertainties, including statements regarding the Company’s capital needs, business plans and expectations. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this annual report. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Management disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Overview

We are engaged in the acquisition and exploration of mineral properties. Our principal area of focus is the Handeni Gold Project located in the Handeni district, within the Tanga region of the Republic of Tanzania in East Africa, in which we have interests in mineral claims through prospecting licenses (“PLs”) and/or primary mining licenses (“PMLs”) issued by the government of the Republic of Tanzania. None of our mineral claims contain any substantiated mineral deposits, resources or reserves of minerals to date. Exploration has been carried out on these claims, in particular the eight PLs in the Handeni District. Accordingly, additional exploration of these mineral claims is required before any conclusion can be drawn as to whether any commercially viable mineral deposit may exist on any of our mineral claims. Our plan of operations is to continue exploration and drilling work when funds are available in order to ascertain whether our mineral claims warrant further advanced exploration to determine whether they possess commercially exploitable deposits of minerals. We will not be able to determine whether or not any of our mineral claims contain a commercially exploitable mineral deposit, resource or reserve, until appropriate exploratory work has been completed and an economic evaluation based on that work concludes economic viability.

We are considered an exploration or exploratory stage company, because we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering the presence of ore, if any, and its extent. There is no assurance that a commercially viable mineral deposit exists on the properties underlying our mineral claim interests, and considerable further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined.

Our Mineral Claims

Handeni District Gold Project

Location and Access

The Handeni Gold properties lie within the historic Handeni artisanal gold mining district, located in Tanga Province, roughly 175 km northwest of Tanzania’s largest city, Dar Es Salaam, and 100 km southwest of the more northerly coastal city of Tanga (Fig. 1). The road from Dar Es Salaam to Tanga is paved; the secondary road that heads northwest from this road to the town of Handeni, a distance of 65 km, has recently been paved. The Handeni property is located roughly 35 km south of the town of Handeni along a secondary gravel road. From this point, a number of dirt roads head south across various portions of the Handeni property and beyond. Driving time from Dar Es Salaam to the Handeni Gold properties is approximately five hours, depending on traffic and the weather.

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Fig. 1: Location Map: Handeni Property in Tanzania.

Prospecting Licenses (PLs)

Currently, our primary focus is on the undivided 100% legal, beneficial and registerable interest in and to eight PLs, located in the Handeni District of Tanzania. The total area held by the Company in the Handeni district is now 423.03 km² (Fig. 2) (Table 1).

Fig. 2. Outline of Handeni Gold PLs in the Handeni district.

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Table 1: List of Prospecting Licenses, Handeni Property (prior to the 2013 renewal of the licenses)

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Following the 2013 renewal of the properties and acquisition of PLs in the current period, the Company now holds interests in PLs with details as described in Table 2.2, below.

Table 2: Handeni Gold Prospecting Licenses December 2, 2014

Primary Mining Licenses (PMLs)

On November 30, 2011, the Company acquired from Handeni Resources a 100% interest in primary mining licenses covering an area of approximately 2.67 square kilometers to the east of Magambazi Hill (Figs. 2 and 3). To comply with the laws and regulations of the Republic of Tanzania whereby foreign companies may not own PMLs, on July 19, 2012, the Company:

An enlargement of the “excluded area” as delineated on Fig. 12 is presented below (Fig. 3). Ownership of a single, isolated claim block, depicted in fuchsia, remains uncertain; and which is something that IPP Gold andAn area within the Company are attempting to ascertain. Ownershipoutline of the smaller, rectangular block that overlies the CRI-Company boundary also remains unknown; and which again is another matter that IPP Gold and the Company are currently pursuing.32 PML’s without a PML number (Fig. 3) has now been confirmed to be part of PL6743/2010. The remaining block of 32 PMLs, shown as a grid of blue linesin grey below, belongs to the Company as described above.above and are being explored

Fig. 3: Exclusion areas within PL6743/2010.

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West of the western border of PL 6743/2010 are several more PMLs that do not belong to the Company. The area colored in green (Fig. 3) is a unitized block of four PMLs that were apparently acquired by Canaco Resources Inc. (“CRI”) (now East Africa Metals Inc.) from their owners.

Handeni District Project

We obtained a Technical Report on the Handeni Property (the “Handeni Report”), dated April 25, 2011, as prepared at our request by Avrom E. Howard, MSc, FGA, PGeol (Ontario), Principal Consultant at Nebu Consulting LLC. Mr. Howard is a Qualified Person in accordance with Canadian National Instrument 43-101 “Standards for Disclosure of Mineral Projects” and its Companion Policy (collectively, “NI 43-101”) and is a Practicing Professional Geologist registered with the Association of Professional Geoscientists of Ontario (registration number 0380).

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Subsequent to the publishing of the April 25, 2011 NI 43-101 report by Mr. Howard, the Company produced numerous in-house technical reports and is in the process of compiling an updated NI 43-101 report that will include the updated model for mineralization on our Handeni property. The drilling conducted by the Company was done implementing and following Quality Control and Quality Assessment procedures recommended by SRK (Stephen, RoberstsonRobertson and Kirsten).

Property Description

General

Mining in Tanzania in the modern era dates back over one hundred years, first under German colonial rule and then under British control under whose authorityExploration, mining and otherrelated activities continuedis regulated and expanded. Beginning in the 1990s, in line with many other developing countries around the world, the Tanzanian government instituted several reforms to move towards a free market economy, privatize the mining industry and encourage both domestic and foreign investment in all economic sectors. In the case of the mining industry, this was supplemented, in 1998, through the passage of a new, more industry-friendly mining code. This code has been streamlinedcontrolled under the Mining Act of 1998 (revised in 2010) (the “Mining Act”) currently controlling exploration, mining and related activities in the country.

. Tanzania is Africa’s fourth leading gold producer, with several major companies producing and exploring for gold, mostly in northwestern Tanzania, south of Lake Victoria, in an area informally known as the Lake Victoria gold belt.

The Handeni Property

Gold has been known in the Handeni area for many years with some attributing its discovery to the Germans prior to World War One; however, it was theThe increase in gold prices at the turn of the century and consequent increase in artisanal gold mining activity in the Handeni area that led to the discovery of larger deposits of placer gold, in turn leading in 2003 to a classic gold rush. The discovery and mining of lode deposits followed, soon after, along with the growth of a shanty mining town at the northern base of Magambazi Hill.

Between 2005 and 2010, IPP Gold carried out exploration over its PLR leading to the upgrading of its holdings from one PLR to four PLsPL’s of 800 km², in August 2010. Exploration work included airborne magnetic and radiometric surveys, ground magnetic surveys, reconnaissance geological mapping, soil sampling, pitting and trenching. It is these four PLs that were acquired by the Company from IPP Gold.Gold under a September 2010 agreement.

Geological Setting

Regional Geology

Regional geological mapping programs led to the recognition of several major litho-structural provinces from Archean to recent age in Tanzania. The Archean craton covers most of the western two thirds of the country, roughly bounded to the east by the East African Rift. Archean rocks host all of the country’s kimberlite pipes and contained lode diamond deposits, and most of its lode gold deposits. The Archean basement terrain is bounded to the east and west by a series of Proterozoic mobile belts; this area, particularly that to the east, hosts most of the country’s wide variety of colored gemstone deposits. Some recent research suggests that portions of this assumed Proterozoic terrane may actually consist of Archean crust that has undergone a later phase of higher grade metamorphism.

The Handeni district forms part of the Tanzanian Mozambique belt. The belt was subjected to four tectonothermal events at 830-800Ma, ~760Ma, 630-580Ma and 560-520Ma. All except the last attained upper amphibolites / granulite grade.

Property Geology

The Handeni area is situated in the Palaeoproterozoic, Usugaran/Ubendian Metamorphic Terrane of Tanzania, along the northern extension of the north-trending Proterozoic Mozambique Mobile Belt.

The geology of the Handeni area comprises amphibolite to granulite facies metamorphic rocks interpreted to originally have formed a sequence of ultramafic to felsic volcanic flows, black shales and quartz-bearing sedimentary rocks. It is furthermore interpreted to comprise a metamorphosed/overprinted eastern extension/remnant of the Lake Victoria cratonic greenstone belt. High grade metamorphism has converted these original lithologies to a variety of metamorphic equivalents, including biotite-hornblende-garnet-pyroxene gneiss, migmatitic augen garnet- hornblende-pyroxene gneiss, quartzo-feldspathic hornblende-biotite-pyroxene gneiss, pyroxene-hornblende-biotite-garnet granulite and others.

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Recent research by geologists from the University of Western Australia suggests that much of what has previously been considered to be of Proterozic age (Usagaran System) may in fact be overprinted Archean crust. This hypothesis has been invoked to help interpret the geology within which gold in this area is found and as the basis for an analogy between this gold mineralization and that found in less metamorphosed, bona fide Archean rocks in the Lake Victoria gold district, a few hundred km to the northwest. However, this is a hypothesis, only, one that may be used for exploration modeling purposes but one that still requires more work.

Mineralization

The Handeni property is at an early stage of exploration. There are no known mineral resources or reserves on the Handeni property, nor are there any known economically mineable deposits on the property. Gold is found within garnet-amphibolite zones within biotite-feldspar gneiss at three k n o w n locations in the Company’s property, locations where historical lode gold occurrences have been documented. Gold occurs in quartz veins as well as within the garnet amphibolites adjacent to the quartz veins. Proof of this association is informally corroborated by the testimony of local, illegal artisanal miners, who apparently recover gold both from quartz veins and gold-bearing gneiss that is not quartz vein bearing. Gold in the Company’s property has also been documented in soils and placers, at a variety of locations, as well. Recent exploration increased

Our geophysical and structural geological interpretation on which the Company’s number of targets with known gold occurrences to six. Our drilling program conducted in 2012 was based, supported the mineralization model.model described above in broad terms.

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Whereas gold was known in the Handeni area prior to the arrival in 2005 of the Company’s predecessor, IPP Gold, there is no history of any formal exploration in the area aside from limited work at Magambazi Hill itself.

The foundation for modern exploration activities onitself and the Company’s properties were laid by the exploration work conducted in recent years by IPP. Their initial work consisted of soil sampling and a ground magnetic survey over an area of 200 square kilometers coveringCanaco (East African Metals) in the area now located within PL6743/2010 immediately east of Magambazi Hill. Over the five years that ensued, this was followed by a series of exploration campaigns involving a variety of exploration methods, in turn followed by interpretation and further work in an iterative fashion. Notable programs during this period included an airborne Magnetic and Radiometric Survey, a ground magnetic survey, geological mapping and structural interpretation as well as several large soil sampling and geochemical surveys.region

Handeni Gold’s intensive early exploration program following the Company’s September 2010 agreement with IPP achieved the following:following in terms of mineralization on the properties:

The 2011 – 2012 exploration period used the foregoing as a basis and the following was conducted:

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An important feature of the Kwandege target is the fact that low level gold values (0.5 g/t to 1 g/t) were encountered in numerous intersections in the drill holes and also confirmed by the latest assay results. Anomalous gold with some potentially economic intersections have been encountered in an E - W (strike) direction of 1,501 meters (based on the results of the completed phase 1 drilling program). The open ended nature of the mineralization in an E-W direction was confirmed.

Exploration Activities.

The company’s exploration activities are mainly focused on delineating a hard-rock based economic deposit, but it also includes efforts to outline an economically viable alluvial (in broad terms) gold deposit/s.

During the 2013 – 2014 periods up to date we achieved the following:

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The following conclusions were drawn from the alluvial program:

Exploration conducted during the fiscal year 2015:

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Compliance with Government Regulation

We are subject to local laws and regulation governing the exploration, development, mining, production, importing and exporting of minerals; taxes; labor standards; occupational health; waste disposal; protection of the environment; mine safety; toxic substances; and other matters. We require licenses and permits to conduct exploration and mining operations. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a material adverse impact on our Company. Applicable laws and regulations will require us to make certain capital and operating expenditures to initiate new operations. Under certain circumstances, we may be required to close an operation once it is started until a particular problem is remedied or to undertake other remedial actions. This would have a material adverse effect on our results and financial condition.

Four of our mineral interests in Tanzania are currently held under PLs granted pursuant to the Mining Act for an initial period of three years and are renewable in two successive periods of two years only. The remaining four PL’s are being held under the 2010 Mining Act and are valid for an initial period of 4 years (the initial period expiring in 2018 (Table 2)). Following this the first renewal is for 3 years and the second renewal for 2 years, each renewal accompanied by a mandatory relinquishment of at least 50% of the license area. The application fees are $300 on initial application and $300 for each renewal. There is a preparation fee of $500 applicable on each license. The annual rent for the licenses are $100/km² (initial period), $150/km² (1^st renewal) and $200/km² (2^nd renewal).

All PLs in Tanzania require the holder to employ and train local residents, typically amounting to $5,000 per year, and make exploration expenditures, as set out in the Mining Act. At each renewal, at least 50% of our licensed area must be relinquished. If we wish to keep the relinquished one-half portion, we must file a new application for the relinquished portion.

The geographical area covered by a PL may contain one or more previously granted PML’s. A PML is a mining license granted only to a Tanzanian citizen consisting of an area of not to exceed 10 hectares. Once a PL is granted, no additional PMLs can be granted within the geographical area covered by the PL. The PL is subject to the rights of previously granted and existing PMLs. The holder of a PL will have to work around the geographical area of the PML unless the PL holder acquires the PML and any rights to the land covered by the PML.

We must hold a mining license to carry out mining activities, which are granted only to the holder of a PL covering a particular area. A mining license is granted for a period of 25 years or the life of the mine. It is renewable after 10 years for a period not exceeding 15 years. Other than the PMLs being held under Handeni Resources, we do not hold any mining licenses, only PL’s. An application for the 32 PMLs being held under agreement by Handeni Resources to be changed into a mining license (ML) is underway. Prospecting and mining license holders must submit regular reports in accordance with mining regulations. Upon commercial production, the government of Tanzania imposes a royalty on the gross value of all production at the rate of 3% of all gold produced. The applicable regulatory body in Tanzania is the Ministry of Energy and Minerals.

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In July 1999, environmental management and protection regulations under the Mining Act came into force. An environmental impact statement and an environmental management plan must accompany special mining license, mining license and gemstone mining license applications for mineral rights. In addition to the establishment of environmental regulations, the Tanzanian government has improved management procedures for effective monitoring and enforcement of these regulations by strengthening the institutional capacity, especially in the field offices. The government has provided rules for the creation of reclamation funds to reinstate land to alternative uses after mining and it has developed guidelines for mining in restricted areas, such as forest reserves, national parks, near sources of water and other designated areas. These regulations have not had any material effect on our operations to date.

Competition

We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual investors, which are actively seeking minerals exploration properties throughout the world together with the equipment, labour and materials required to exploit such properties. Many of our competitors have financial resources, staff and facilities substantially greater than ours. The principal area of competition is encountered in the financial ability to cost effectively acquire prime minerals exploration prospects and then exploit such prospects. Competition for the acquisition of minerals exploration properties is intense, with many properties available in a competitive bidding process in which we may lack technological information or expertise available to other bidders. Therefore, we may not be successful in acquiring, exploring and developing profitable properties in the face of this competition. No assurance can be given that a sufficient number of suitable minerals exploration properties will be available for acquisition, exploration and development.

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Employees

Other than our directors and executive officers, we had approximately fiveapproximate four full-time equivalent employees and consultants as of February 28,August 31, 2015 all located in Tanzania. We also retainutilize independent geologists and consultants on a contract basis to conduct the work programs on our mineral properties in order to carry out our plan of operations.

Research and Development Expenditures

We have not incurred any research or development expenditures since our incorporation.

Subsidiaries

The Company has two subsidiaries, both of which are Tanzanian companies: (i) HG Limited (formerly DLM Tanzania Limited); and (ii) Douglas Lake Tanzania Limited, which is inactive.

Plan of Operations

Our plan of operations through our fiscal year ending May 31, 20152016 is to continue to focus on the exploration of our Handeni mineral property in Tanzania, and the budget for this plan requires approximately $0.8$0.6 million for our plan of the exploration work, $100,000 for mineral licenses fees and $0.9a minimum of $0.6 million for our general and administration expenses, professional and consulting fees and other operating expenses.

Handeni Gold Inc. has clearly identifiable goals for its exploration program in Tanzania:

Illegal artisanal activity on the Company’s license areas is increasing. The Company is addressing this issue with responsible local and central government authorities. The Company will follow all available legal structures to protect its interests.

Other low cost exploration activities being conducted on a continuous basis on the Company’s Handeni licenses include:

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The estimated budget for the completion of these exploration programs is provided below:

At August 31, 2015, we had cash of $107,000 and a working capital of $105,000. In addition, we have a total of $150,000 funds available to be withdrawn pursuant to a facility agreement with a related party. As such, we estimated that we will still need a minimum of $900,000 additional funds in order to cover our planned operations over the fiscal year ending May 31, 2016. Our actual expenditures may exceed our estimations.

We anticipate that we will not generate any revenues for so long as we are an exploration stage company. Accordingly, we will be required to obtain additional financing in order to pursue our plan of operations.

Exploration related activities currently under way on the Company’s Handeni licenses include:

The estimated budget for the completion of these exploration programs is provided below:

At February 28, 2015, we had cash of $83,000 but a working capital deficit of $1,490,000. On November 20, 2014, the Company entered into a facility agreement with a related party. The funding is in the form of an interest free unsecured loan to the Company of up to $500,000 due May 31, 2017. As of the date of this report, the Company has received $125,000 pursuant to this facility agreement. In addition, the Company has $1.125 million in loans from related parties due June 30, 2015.

We assume such related parties’ loans to the Company from the Company’s major shareholder will not be demanded for repayment at the due date. As such, we estimate that we will still need a minimum of $1.1 million additional funds in order to cover our planned operations over the fiscal year ending May 31, 2015. Our actual expenditures may exceed our estimations.

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We believe that external debt financing will not be an alternative for funding our next fiscal year exploration, as we do not have significant tangible assets to secure any debt financing. Therefore, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock and/or related parties debt financing. We cannot provide investors with any assurance that we will be able to obtain sufficient financing to fund our acquisition and exploration program going forward. In the absence of sufficient funding, we will not be able to continue acquisition and exploration of mineral claims and we will be forced to abandon our mineral claims and our plan of operations. Even if we are successful in obtaining financing to fund our acquisition and exploration program, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of any mineral claims.

Results of Operations

We have had no operating revenues and accumulated net loss of $117 million since our inception (January 5, 2004) to February 28,August 31, 2015. The following table sets out our losses from operations for the periods indicated:

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Three Months Ended February 28,August 31, 2015 Compared to Three Months Ended February 28,August 31, 2014

Our net loss for the three months ended February 28,August 31, 2015 was $329,000,$136,000, compared to $322,000$288,000 for the same period ended February 28,August 31, 2014, the difference is mainly due to $53,600 permanent impairment of marketable securities and loss on marketable securities of $20,000 recorded during the three months ended February 28, 2015 and the following operation expenses changes.

Our operating expenses for the three months ended February 28,August 31, 2015 decreased by $67,000$162,000 to $255,000$146,000 from $322,000$308,000 for the same period ended February 28,August 31, 2014, and the main changes are as follows:

• our general and administrative fees decreased by $28,000 to $110,000 during the period ended February 28, 2015 (2014 - $138,000), primarily due to continuing cost management; At February 28, 2015, approximately $423,000 (May 31, 2014 - $278,000) of general and administrative fees remained as payables due to related parties;

• our exploration expenses decreased by $35,000 to $36,000 during the three months ended February 28, 2015 (2014 - $71,000) mainly due to our reduced exploration and drilling activities caused by our funding limitations;

• depreciation fees decreased by $32,000 to $14,000 during the three months ended February 28, 2015 (2014 - $46,000) mainly because the majority of our equipment was fully depreciated;

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• interest expenses increased by $5,000 to $28,000 during the three months ended February 28, 2015 (2014 - $23,000), which represented deemed interest on an interest free unsecured loan from a related party. Such deemed interest was recorded as donated capital;

• our professional fees increased by $41,000 to $57,000 during the three months ended February 28, 2015 (2014 - $16,000) primarily due to increased legal fees on the RC litigation;

• our rent expenses decreased by $18,000 during the three months ended February 28, 2015 compared to the same period ended February 28, 2014 mainly because our Vancouver office lease expired and our Tanzania office has been moved to a smaller space; and

• our travel and investor relations expenses decreased by $5,000 to $5,000 during the three months ended February 28, 2015 (2014 - $10,000) primarily due to less travel expenses incurred for investors relations.

Nine Months Ended February 28, 2015 Compared to Nine Months Ended February 28, 2014

Our net loss for the nine months ended February 28, 2015 was $1,003,000, compared to $1,922,000 for the same period ended February 28, 2014, the difference mainly due to $860,000 additional permanent impairment of marketable securities recorded during the nine months ended February 28, 2014.

Our operating expenses for the nine months ended February 28, 2015 decreased by $80,000 to $843,000 from $923,000 for the same period ended February 28, 2014, and the main changes are as follows:

• our consulting, general and administrative fees decreased by $50,000 to $355,000 during the nine months ended February 28, 2015 (2014 - $405,000), primarily due to continuing cost management; At February 28, 2015, approximately $423,000 (May 31, 2014 - $278,000) of general and administrative fees remained as payables due to related parties;

• our exploration expenses decreased slightly by $7,000 to $174,000 during the nine months ended February 28, 2015 (2014 - $181,000) mainly due to decreased exploration activities caused by our funding limitations;

• depreciation fees decreased by $91,000 to $53,000 during the nine months ended February 28, 2015 (2014 - $144,000) mainly because the majority of our equipment was fully depreciated;

• gain on disposal of equipment increased by $17,000 to $20,000 during the nine months ended February 28, 2015 (2014 - $3,000) mainly due to vehicle and office furniture disposal in our subsidiary in Tanzania.

• interest expenses increased by $24,000 to $83,000 during the nine months ended February 28, 2015 (2014 - $59,000), which represented deemed interest on an interest free unsecured loan from a related party. Such deemed interest was recorded as donated capital;

• our professional fees increased by $55,000 to $107,000 during the nine months ended February 28, 2015 (2014 - $52,000) primarily due to increased legal fees on the RC litigation and additional audit fees in Tanzania related to our subsidiary’s value added tax recovery;

• our rent decreased by $11,000 to $59,000 during the nine months ended February 28, 2015 (2014: $70,000) representing 60% of rental expense associated with renting our Chief Executive Officer’s family house in Tanzania pursuant to the Executive Services Agreement, offset by a significant decrease on the rent on our Tanzania office as a result of moving to a small office and Vancouver office lease expiry; and

• our travel and investor relations expenses increased by $17,000 to $32,000 during the nine months ended February 28, 2015 (2014 - $15,000) primarily due to travel expenses incurred for an in-person Board of Directors meeting held in Dar er Salaam, Tanzania.

Liquidity and Capital Resources

The Company has been reviewing its budgets for its current business needs and its further exploration. We estimate that our total expenditures for our fiscal year ending May 31, 20152016 will be approximately $1.7$1.3 million, as outlined above under the heading “Plan of Operations”. At February 28,August 31, 2015, we had cash of $83,000 but$107,000 and a working capital deficit of $1,490,000.

$105,000. We entered into facility agreements with private companies controlled bybelieve that we have insufficient capital to fund our Chairmanplan of operations and we estimate we will be required to obtain a minimum of $900,000 additional funds in order to pursue our planned operations over the Board of Directors in December 2012 and October 2013. The funding is in the form of interest free unsecured loans to the Company of up to $1,125,000 due June 30, 2015. As of the date of this report, we received a total of $1,125,000 pursuant to these facility agreements.fiscal year ending May 31, 2016.

On November 20, 2014, the Company entered into an additionala credit facility agreement with a private company controlled by our Chairman of the Board of Directors. The funding is also in the form of an interest freeinterest-free unsecured loan to the Company of up to $500,000 due May 31, 2017. As of the date of this report, we received a total of $170,000$350,000, with $330,000 funds$150,000 available to be withdrawn pursuant to this facility agreement.

AsWe expected to receive approximately $10,000 of February 28, 2015, there was $30,000recoverable goods and services tax/harmonized sales tax from Canada Revenue Agency in the next quarter. Based on requirements of the Tanzania Revenue Authority (“TRA”), we had submitted recoverable value added tax (“VAT”) refund certificates in January 2015 with TRA to request a VAT refund of $23,000 (TZS 49,061,634). However, as of the date of this report, we have not received the claimed refund yet.

As at August, 2015, there was $27,000 of recoverable VAT paid in Tanzania and $7,000$13,000 of recoverable goods and services tax paid in Canada. Such recoverable amounts were included in our working capital and expected to be refunded during the fiscal year 2016.

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We believe that we have insufficient capital to fund our plan of operations through the fiscal year ending May 31, 2015. If we exclude $1.125 million of the related parties’ loans from the current liabilities, we still have a working capital deficit of $365,000. During the nine months ended February 28, 2015, our cash used in operating activities was $615,000. As such, we estimate we will be required to obtain a minimum of $1.1 million additional funds in order to pursue our planned operations over the fiscal year ending May 31, 2015.

We have not generated revenues since the date of inception on January 5, 2004, and our cash has been generated primarily from the sale of our securities. We anticipate that we will not generate any revenue in near future. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock, debt financing, joint ventures or some combination of these or other means. We believe that external debt financing will not be an alternative at this stage for funding additional phases of our exploration as we do not have significant tangible assets to secure any debt financing.

We cannot provide investors with any assurance that we will be able to raise sufficient funding to continue our acquisition and exploration program going forward. If we are not able to obtain financing in the amounts required or on terms that are acceptable to us, we may be forced to scale back, or abandon, our plan of operations. Even if we are successful in obtaining equity and/or debt financing to fund our acquisition and exploration program, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of any mineral claims. If we do not continue to obtain additional funding, we will be forced to abandon our mineral claims and our plan of operations.

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Net Cash Used in Operating Activities

Net cash used in operating activities was $615,000$124,000 during the ninethree months ended February 28,August 31, 2015, as compared to $545,000$245,000 during the same period in 2014.

Net Cash Used in Investing Activities

Net cash provided in investing activities was $31,000$10,000 during the ninethree months ended February 28,August 31, 2015 (2014: 20,000) due to proceeds from disposal of an automobile vehicle and redemption of the restricted cash. During the same period in 2014, net cash from investing activities was $5,000 mainly due to proceeds from disposal of an automobile vehicle.vehicles.

Net Cash from Financing Activities

During the ninethree months ended February 28,August 31, 2015, we received $134,000$135,000 (2014: $475,000)$Nil) in loans pursuant to facility agreements. We have funded our business to date primarily from sales of our common stock.stock and loans from related parties.

There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our exploration of the property underlying our mineral claim interest and our venture will fail.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive exploration activities. In addition, we had a $1.5The Company has not generated any revenues and has accumulated losses of $117 million working capital deficit as of February 28,since inception to August 31, 2015. For these reasons our auditors stated in their report on our audited consolidated financial statements for the year ended May 31, 20142015 that they have substantial doubt we will be able to continue as a going concern.

Future Financings

We anticipate continuing to rely on equity sales of our common shares, debt financing from our related parties, and/or other financing in order to continue to fund our business operations through our next fiscal year ending May 31, 2016. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned exploration activities.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Related Party Transactions

The details of related party transactions are disclosed in footnote 98 of our Company’s interim unaudited consolidated financial statements for the fiscal quarter ended February 28,August 31, 2015 (Item 1, above).

Segment Disclosures

The Company operates in one reportable segment, located in Tanzania Africa, being the acquisition and exploration of mineral properties. The details of segment disclosures are disclosed in footnote 1514 of our Company’s interim unaudited consolidated financial statements for the fiscal quarter ended February 28,August 31, 2015 (Item 1, above).

Inflation

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We do not believe that inflation has had a significant impact on our consolidated results of operations or financial condition.

Contractual Obligations

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Critical Accounting Policies

Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

The critical accounting policies are disclosed in footnote 2 of our Company’s interim unaudited consolidated financial statements for the fiscal quarter ended February 28,August 31, 2015 (Item 1, above).

We believe the critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Item 3.                     Quantitative and Qualitative Disclosures About Market Risk

Not required because we are a smaller reporting company.

Item 4.                     Controls and Procedures

Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”), Reyno Scheepers, and the Company’s Chief Financial Officer (“CFO”), Melinda Hsu, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules 13a-15(b) and 15d-15(b) under the Exchange Act as of the end of the period covered by this report. Based upon the evaluation, the Company’s CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of the end of the period covered by this report (that is, as of February 28, 2015), due to the material weaknesses in our internal control over financial reporting as disclosed in the Company’s annual report for our fiscal year ended May 31, 2014,2015, which have not been completely resolved as of February 28,August 31, 2015.

Management believes that the material weaknesses did not have a material impact on the Company’s financial results and information required to be disclosed by the Company in its reports. However, management believes that these material weaknesses resulting in ineffective oversight in the establishment and monitoring of required internal control over financial reporting can impact the Company’s consolidated financial statements for future years. As a result material errors could occur.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during our fiscal quarter ended February 28,August 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.                     Legal Proceedings

Except as disclosed below, management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this quarterly report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

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