UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2017September 30, 2023
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission file number 001-35770
CONTANGO ORE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 27-3431051 |
(State or other jurisdiction of incorporation or organization) | ( Identification No.) | |
3700 BUFFALO SPEEDWAY, SUITE 925 | ||
| 77098 | |
(Address of principal executive offices) | (Zip code) | |
(713) 877-1311
(Registrant’s’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, Par Value $0.01 per share | CTGO | NYSE American |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer” andfiler,” “smaller reporting company,” or “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer | ☒ | Smaller reporting company ☒ | Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The total number of shares of common stock, par value $0.01 per share, outstanding as of January 30, 2018November 14, 2023 was 5,975,048.9,400,128.
CONTANGO ORE, INC.
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PART I – FINANCIAL INFORMATION | ||||||
Item 1. | ||||||
Notes to | ||||||
Item 2. |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 4. |
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Item 5. |
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Item 6. |
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All references in this Form 10-Q to the “Company”“Company”, “CORE”“CORE”, “we”“we”, “us”“us” or “our”“our” are to Contango ORE, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2017 | June 30, 2017 | September 30, 2023 | June 30, 2023 | |||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||
Cash | $ | 15,821,738 | $ | 5,191,749 | $ | 18,507,308 | $ | 11,646,194 | ||||||||
Restricted cash | 231,000 | 231,000 | ||||||||||||||
Prepaid expenses and other | 125,560 | 175,791 | 795,111 | 413,907 | ||||||||||||
Derivative contract asset | 549,116 | — | ||||||||||||||
Total current assets | 15,947,298 | 5,367,540 | 20,082,535 | 12,291,101 | ||||||||||||
OTHER ASSETS: | ||||||||||||||||
Investment in Peak Gold, LLC (Note 4) | — | — | ||||||||||||||
Total other assets | — | — | ||||||||||||||
LONG-TERM ASSETS: | ||||||||||||||||
Investment in Peak Gold (Note 5) | 21,420,712 | — | ||||||||||||||
Property & equipment, net | 13,352,637 | 13,371,638 | ||||||||||||||
Total long-term assets | 34,773,349 | 13,371,638 | ||||||||||||||
TOTAL ASSETS | $ | 15,947,298 | $ | 5,367,540 | $ | 54,855,884 | $ | 25,662,739 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||
Accounts payable | $ | 13,116 | $ | 50,858 | $ | 2,129,361 | $ | 220,755 | ||||||||
Accrued liabilities | 117,808 | 86,561 | 871,728 | 2,077,870 | ||||||||||||
Current portion of long-term debt | 2,000,000 | — | ||||||||||||||
Total current liabilities | 130,924 | 137,419 | 5,001,089 | 2,298,625 | ||||||||||||
COMMITMENTS AND CONTINGENCIES (NOTE 11) | ||||||||||||||||
SHAREHOLDERS’ EQUITY: | ||||||||||||||||
Common Stock, $0.01 par value, 30,000,000 shares authorized; 5,975,048 shares issued and outstanding at December 31, 2017; 4,930,231 shares issued and 4,921,163 outstanding at June 30, 2017 | 59,751 | 49,303 | ||||||||||||||
NON-CURRENT LIABILITIES: | ||||||||||||||||
Advance royalty reimbursement | 1,200,000 | 1,200,000 | ||||||||||||||
Asset retirement obligations | 243,126 | 239,942 | ||||||||||||||
Contingent consideration liability | 1,240,563 | 1,240,563 | ||||||||||||||
Derivative contract liability | 3,274,527 | — | ||||||||||||||
Debt, net | 32,855,385 | 25,457,047 | ||||||||||||||
Total non-current liabilities | 38,813,601 | 28,137,552 | ||||||||||||||
TOTAL LIABILITIES | 43,814,690 | 30,436,177 | ||||||||||||||
COMMITMENTS AND CONTINGENCIES (NOTE 12) | ||||||||||||||||
STOCKHOLDERS’ EQUITY/(DEFICIT): | ||||||||||||||||
Common Stock, $0.01 par value, 45,000,000 shares authorized; 9,395,112 shares issued and 9,393,922 outstanding at September 30, 2023; 7,781,690 shares issued and outstanding at June 30, 2023 | 93,951 | 77,817 | ||||||||||||||
Additional paid-in capital | 52,345,624 | 40,500,239 | 122,393,198 | 93,424,283 | ||||||||||||
| Treasury shares at cost (0 shares at December 31, 2017 and 9,068 at June 30, 2017) | — | (207,400 | ) | |||||||||||||
Treasury stock at cost (1,190 at September 30, 2023; and 0 shares at June 30, 2023) | (21,190 | ) | — | |||||||||||||
Accumulated deficit | (36,589,001 | ) | (35,112,021 | ) | (111,424,765 | ) | (98,275,538 | ) | ||||||||
SHAREHOLDERS’ EQUITY | 15,816,374 | 5,230,121 | ||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY/(DEFICIT) | 11,041,194 | (4,773,438 | ) | |||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 15,947,298 | $ | 5,367,540 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT) | $ | 54,855,884 | $ | 25,662,739 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended December 31, | Six Months Ended December 31, | Three Months Ended September 30, | ||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2023 | 2022 | |||||||||||||||||||
EXPENSES: | EXPENSES: | |||||||||||||||||||||||
Claim rental expense | $ | (127,006 | ) | $ | (146,925 | ) | ||||||||||||||||||
Exploration expense | (1,081,927 | ) | (4,396,570 | ) | ||||||||||||||||||||
Depreciation expense | (25,997 | ) | (34,214 | ) | ||||||||||||||||||||
Accretion expense | (3,183 | ) | (3,026 | ) | ||||||||||||||||||||
General and administrative expense | $ | 808,344 | $ | 592,142 | $ | 1,476,980 | $ | 1,547,792 | (2,767,477 | ) | (2,424,068 | ) | ||||||||||||
Total expenses | 808,344 | 592,142 | 1,476,980 | 1,547,792 | (4,005,590 | ) | (7,004,803 | ) | ||||||||||||||||
OTHER EXPENSE | ||||||||||||||||||||||||
Loss from equity investment in Peak Gold, LLC (Note 4) | — | — | — | — | ||||||||||||||||||||
OTHER INCOME/(EXPENSE): | ||||||||||||||||||||||||
Interest income | 39,045 | 8,546 | ||||||||||||||||||||||
Interest expense | (847,983 | ) | (449,470 | ) | ||||||||||||||||||||
Loss from equity investment in Peak Gold, LLC (Note 5) | (5,609,288 | ) | — | |||||||||||||||||||||
Insurance recoveries | — | 338,301 | ||||||||||||||||||||||
Unrealized loss on derivative contracts | (2,725,411 | ) | — | |||||||||||||||||||||
Other income | — | 15,656 | ||||||||||||||||||||||
Total other income/(expense) | (9,143,637 | ) | (86,967 | ) | ||||||||||||||||||||
NET LOSS | $ | (808,344 | ) | $ | (592,142 | ) | $ | (1,476,980 | ) | $ | (1,547,792 | ) | $ | (13,149,227 | ) | $ | (7,091,770 | ) | ||||||
LOSS PER SHARE | LOSS PER SHARE | |||||||||||||||||||||||
Basic and diluted | $ | (0.14 | ) | $ | (0.13 | ) | $ | (0.28 | ) | $ | (0.36 | ) | $ | (1.47 | ) | $ | (1.05 | ) | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||
Basic and diluted | 5,650,321 | 4,640,034 | 5,289,934 | 4,315,444 | 8,935,863 | 6,771,245 | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended December 31, | Three Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2023 | 2022 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net loss | $ | (1,476,980 | ) | $ | (1,547,792 | ) | $ | (13,149,227 | ) | $ | (7,091,770 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Stock-based compensation | 998,117 | 959,650 | 739,783 | 787,874 | ||||||||||||
Depreciation expense | 25,997 | 34,214 | ||||||||||||||
Accretion expense | 3,183 | 3,026 | ||||||||||||||
Loss from equity investment in Peak Gold, LLC | 5,609,288 | — | ||||||||||||||
Unrealized loss from derivative contracts | 2,725,411 | — | ||||||||||||||
Interest expense paid in stock | 66,658 | — | ||||||||||||||
Amortization of debt discount and debt issuance fees | 105,633 | 49,471 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Decrease/(increase) in prepaid expenses and other | 50,231 | (61,917 | ) | |||||||||||||
Increase/(decrease) in accounts payable and accrued liabilities | (6,495 | ) | 71,681 | |||||||||||||
Decrease (increase) in prepaid expenses and other | (381,203 | ) | 13,384 | |||||||||||||
Increase in accounts payable and accrued liabilities | 702,464 | 948,756 | ||||||||||||||
Net cash used in operating activities | (435,127 | ) | (578,378 | ) | (3,552,013 | ) | (5,255,045 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Cash invested in Peak Gold, LLC | (27,030,000 | ) | — | |||||||||||||
Acquisition of property and equipment | (6,995 | ) | — | |||||||||||||
Net cash used by investing activities | (27,036,995 | ) | — | |||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Cash paid for shares withheld from employees for payroll tax withholding | — | (171,158 | ) | (21,190 | ) | (27,693 | ) | |||||||||
| Cash from warrant exercises and capital raise, net | 11,065,116 | 5,287,500 | ||||||||||||||
Net cash provided by financing activities | 11,065,116 | 5,116,342 | ||||||||||||||
| NET (DECREASE) IN CASH AND CASH EQUIVALENTS | 10,629,989 | 4,537,964 | ||||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 5,191,749 | 1,254,489 | ||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 15,821,738 | $ | 5,792,453 | ||||||||||||
Cash proceeds from debt | 10,000,000 | — | ||||||||||||||
Debt issuance costs | (707,296 | ) | (2,736 | ) | ||||||||||||
Cash proceeds from capital raise, net | 28,178,608 | — | ||||||||||||||
Net cash provided/(used) by financing activities | 37,450,122 | (30,429 | ) | |||||||||||||
NET DECREASE (INCREASE) IN CASH | 6,861,114 | (5,285,474 | ) | |||||||||||||
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD | 11,877,194 | 23,326,101 | ||||||||||||||
CASH AND RESTRICTED CASH, END OF PERIOD | $ | 18,738,308 | $ | 18,040,627 | ||||||||||||
Supplemental disclosure of cash flow information | ||||||||||||||||
Cash paid for: | ||||||||||||||||
Interest expense | $ | 472,184 | $ | 416,670 | ||||||||||||
Non-cash investing and financing activities | ||||||||||||||||
Interest expense paid with stock | 66,658 | 138,886 | ||||||||||||||
Total non-cash investing and financing activities | $ | 66,658 | $ | 138,886 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERSSTOCKHOLDERS’ EQUITY EQUITY/(DEFICIT)
(Unaudited)
Common Stock | Additional Paid-In | Treasury | Accumulated | Total Shareholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Stock At Cost | Deficit | Equity | |||||||||||||||||||
Balance at June 30, 2017 | 4,930,231 | $ | 49,303 | $ | 40,500,239 | $ | (207,400 | ) | $ | (35,112,021 | ) | $ | 5,230,121 | |||||||||||
Stock-based compensation | — | — | 998,117 | — | — | 998,117 | ||||||||||||||||||
| Restricted shares activity | 155,000 | 1,550 | (1,550 | ) | — | — | — | |||||||||||||||||
| Treasury stock activity | (9,068 | ) | (91 | ) | (207,309 | ) | 207,400 | — | — | |||||||||||||||
| Issuance of common stock | 553,672 | 5,537 | 10,514,231 | — | — | 10,519,768 | ||||||||||||||||||
| Cost of common stock issuance | — | — | (642,143 | ) | — | — | (642,143 | ) | ||||||||||||||||
| Stock option exercises | 93,026 | 930 | (930 | ) | — | — | — | |||||||||||||||||
Stock warrant exercises | 252,187 | 2,522 | 1,184,969 | — | 1,187,491 | |||||||||||||||||||
Net loss for the period | — | — | — | — | (1,476,980 | ) | (1,476,980 | ) | ||||||||||||||||
Balance at December 31, 2017 | 5,975,048 | $ | 59,751 | $ | 52,345,624 | $ | — | $ | (36,589,001 | ) | $ | 15,816,374 | ||||||||||||
Additional | Total | |||||||||||||||||||||||
Common Stock | Paid-In | Treasury | Accumulated | Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Stock | Deficit | Equity/(Deficit) | |||||||||||||||||||
Balance at June 30, 2023 | 7,781,690 | $ | 77,817 | $ | 93,424,283 | $ | — | $ | (98,275,538 | ) | $ | (4,773,438 | ) | |||||||||||
Stock-based compensation | — | — | 739,783 | — | — | 739,783 | ||||||||||||||||||
Restricted stock activity | 10,140 | 101 | (101 | ) | — | — | — | |||||||||||||||||
Issuance of common stock | 1,600,000 | 16,000 | 30,384,000 | — | — | 30,400,000 | ||||||||||||||||||
Cost of common stock issuance | — | — | (2,221,392 | ) | — | — | (2,221,392 | ) | ||||||||||||||||
Stock issued for convertible note interest payment | 3,282 | 33 | 66,625 | — | — | 66,658 | ||||||||||||||||||
Treasury shares withheld for employee taxes | — | — | — | (21,190 | ) | — | (21,190 | ) | ||||||||||||||||
Net loss for the period | — | — | — | — | (13,149,227 | ) | (13,149,227 | ) | ||||||||||||||||
Balance at September 30, 2023 | 9,395,112 | $ | 93,951 | $ | 122,393,198 | $ | (21,190 | ) | $ | (111,424,765 | ) | $ | 11,041,194 | |||||||||||
Additional | Total | |||||||||||||||||||||||
Common Stock | Paid-In | Treasury | Accumulated | Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Stock | Deficit | Equity | |||||||||||||||||||
Balance at June 30, 2022 | 6,860,420 | $ | 68,604 | $ | 74,057,859 | $ | (2,318,182 | ) | $ | (58,534,238 | ) | $ | 13,274,043 | |||||||||||
Stock-based compensation | — | — | 787,874 | — | — | 787,874 | ||||||||||||||||||
Treasury stock issued for convertible note interest payment | — | — | — | 138,886 | — | 138,886 | ||||||||||||||||||
Treasury stock withheld for employee taxes | — | — | — | (27,693 | ) | — | (27,693 | ) | ||||||||||||||||
Net loss for the period | — | — | — | — | (7,091,770 | ) | (7,091,770 | ) | ||||||||||||||||
Balance at September 30, 2022 | 6,860,420 | $ | 68,604 | $ | 74,845,733 | $ | (2,206,989 | ) | $ | (65,626,008 | ) | $ | 7,081,340 | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
1. Organization and Business
Contango ORE, Inc. (“CORE” or the “Company”) is a Houston-based company that engages in the exploration in Alaska for gold and associated minerals through a joint venture company, Peak Gold, LLC (the "Joint Venture Company"). The Company was formed on September 1,2010 as a Delaware corporation for the purpose of engaging in the exploration in the State of Alaska for gold ore and associated minerals. The Company currently has two wholly owned subsidiaries, AU CORE, Inc. and CORE Alaska, LLC. AU CORE, Inc. historically owned unpatented mining claims. Those claims were transferred to the Joint Venture Company in January 2015. CORE participates in the Joint Venture Company through its wholly owned subsidiary, CORE Alaska, LLC.
On November29,2010, Contango Mining Company (“Contango Mining”), a wholly owned subsidiary of Contango Oil & Gas Company (“Contango”), assigned its properties and certain other assets and liabilities to Contango. Contango contributed the properties and $3.5 million of cash to the Company, in exchange for approximately 1.6 million shares of the Company’s common stock, which were distributed to Contango's shareholders of record. The above transactions occurred among companies under common control and were accounted for as transactions among entities under common control, in accordance with Accounting Standards Codification ("ASC") 805, "Business Combinations" whereby the acquired assets and liabilities were recognized in the financial statements at their carrying amounts.
The Company is still in an exploration stage. The Company’s fiscal year end is June 30.
The properties contributed by Contango included: (i) a 100% leasehold interest in an estimated 675,000 acres (the “Tetlin Lease”) from the Tetlin Village Council, the council formed by the governing body for the Native Village of Tetlin, an Alaska Native Tribe (the "Tetlin Village Council"); (ii) approximately 18,021 acres in unpatented mining claims from the state of Alaska for the exploration of gold ore and associated minerals. If any of the properties are placed into commercial production, the Joint Venture Company would be obligated to pay a 3.0% production royalty to Royal Gold, Inc. ("Royal Gold"). On September 29, 2014, Juneau Exploration L.P. (“JEX”) sold its 3.0% production royalty to Royal Gold. See Note 9 - Related Party Transactions.
In September 2012, the Company and JEX entered into an Advisory Agreement in which JEX assisted the Company in acquiring 474unpatented state of Alaska mining claims consisting of 71,896 acres for the exploration of gold ore and associated minerals in exchange for aAlaska. The Company conducts its business through 2.0%three production royalty on properties acquired after July 1, 2012. If any such properties are placed into commercial production, the Joint Venture Company would be obligated to pay Royal Gold a 2.0% production royalty. On September 29, 2014, JEX sold its 2.0% production royalty to Royalprimary means:
● | 30.0% membership interest in Peak Gold, LLC (the “Peak Gold JV”), which leases approximately 675,000 acres from the Tetlin Tribal Council and holds approximately 13,000 additional acres of State of Alaska mining claims (such combined acreage, the “Peak Gold JV Property”) for exploration and development, including in connection with the Peak Gold JV’s plan to mine ore from the Main and North Manh Choh deposits within the Peak Gold JV Property (“Manh Choh” or the “Manh Choh Project”); |
● | its wholly-owned subsidiary, Alaska Gold Torrent, LLC, an Alaska limited liability company (“AGT”), which leases the mineral rights to approximately 8,600 acres of State of Alaska and patented mining claims for exploration from Alaska Hard Rock, Inc., located in three former producing gold mines located on the patented claims in the Willow Mining District about 75 miles north of Anchorage, Alaska (“Lucky Shot”, “Lucky Shot Property”, or the “Lucky Shot Project”) ; and |
● | its wholly-owned subsidiary, Contango Minerals Alaska, LLC (“Contango Minerals”), which separately owns the mineral rights to approximately 145,280 acres of State of Alaska mining claims for exploration, including (i) approximately 69,780 acres located immediately northwest of the Peak Gold JV Property (the “Eagle/Hona Property”), (ii) approximately 14,800 acres located northeast of the Peak Gold JV Property (the “Triple Z Property”), (iii) approximately 52,700 acres of new property in the Richardson district of Alaska (the “Shamrock Property”) and (iv) approximately 8,000 acres located to the north and east of the Lucky Shot Property (the “Willow Property” and, together with the Eagle/Hona Property, the Triple Z Property, and the Shamrock Property, collectively the “Minerals Property”). The Company relinquished approximately 69,000 acres located on the Eagle/Hona Property in November 2022. The Company retained essentially all of the acreage where drilling work was performed in 2019 and 2021, and used sampling data to determine which acreage should be released. |
The Lucky Shot Property and the Company terminated its Advisory Agreement with JEX. See Note 9 - Related Party TransactionsMinerals Property are collectively referred to in these Notes to Unaudited Condensed Consolidated Financial Statements as the “Contango Properties”.
On September29,2014, the Company entered into a Master Agreement (the “Master Agreement”) with Royal Gold, pursuant to which the parties agreed, subject to the satisfaction of various closing conditions, to form a joint venture to advance exploration and development of the Peak Gold Joint Venture Property, prospective for gold ore and associated minerals (the “Transactions”). The Transactions closed on January 8, 2015 (the "Closing").
In connection with the Closing, the Company contributed its Tetlin Lease and state of Alaska mining claims near Tok, Alaska (the "Peak Gold Joint Venture Property"), together with other property, to the Joint Venture Company, a newly formed limited liability company (the “Joint Venture Company”). The Joint Venture CompanyCompany’s Manh Choh Project is managed according to a Limited Liability Company Agreement (the "JV LLCA") between subsidiaries of Royal Gold and the Company. At the Closing, Royal Gold made an initial investment of $5 million to fund exploration activity. The initial $5 million did not give Royal Gold an equity stake in the Joint Venture Company. Royal Gold has the option to obtain up to 40% interestdevelopment stage. All other projects are in the joint venture by investing up to $30 million (inclusive of the initial $5 million investment) prior to October 2018. The proceeds of Royal Gold’s investment will be used by the Joint Venture Company for additional exploration of the Peak Gold Joint Venture Property. Royal Gold serves as the Manager of the Joint Venture Company and initially manages, directs, and controls operations of the Joint Venture Company. As of December 31, 2017, Royal Gold has contributed approximately $29.3 million to the Joint Venture Company and has earned an interest of 39.0%.stage.
The Company has completed eight years of exploration efforts onbeen involved, directly and through the Peak Gold Joint Venture Properties,JV, in exploration on the Manh Choh Project since 2010, which has resulted in identifying two mineral deposits (Peak(Main and North Peak)Manh Choh) and several other gold, silver, and copper prospects. In 2017,three phases of exploration drilling were completed by the Joint Venture Company onThe other 70.0% membership interest in the Peak Gold Joint Venture Property. DuringJV is owned by KG Mining (Alaska), Inc. (“KG Mining”), an indirect wholly-owned subsidiary of Kinross Gold Corporation (“Kinross”). The Peak Gold JV plans to mine ore from the quarter endedMain and North Manh Choh deposits and then process the ore at the existing Fort Knox mining and milling complex located approximately 240 miles (400 km) away. The Peak Gold JV has entered into an Ore Haul Agreement with Black Gold Transport, located in North Pole, Alaska to transport the run-of-mine ore from the Manh Choh mine site to the Fort Knox Mill complex. Peak Gold JV has also entered into a contract with Kiewit Mining Group to provide contract mining and site preparation work at the Manh Choh site. The Peak Gold JV will be charged a toll for using the Fort Knox facilities pursuant to a toll milling agreement by and between the Peak Gold JV and Fairbanks Gold Mining, Inc., which was entered into and became effective as of April 14, 2023.
Kinross released a combined feasibility study for the Fort Knox mill and the Peak Gold JV in July 2022. Also, in July 2022, Kinross announced that its board of directors (the “Kinross Board”) made a decision to proceed with development of the Manh Choh Project. Effective December 31, 2017,2022, CORE Alaska, LLC, a wholly-owned subsidiary of the Company (“CORE Alaska”), KG Mining, and the Peak Gold JV executed the First Amendment to the Amended and Restated Limited Liability Company Agreement of the Peak Gold JV (as amended the “A&R JV LLCA”). The First Amendment to the A&R JV LLCA provides that, beginning in 2023, the Company may fund its quarterly scheduled cash calls on a monthly basis. To date, the Peak Gold JV management committee (the “JV Management Committee”) has approved a budget for 2023, with cash calls totaling approximately $165.1 million, of which the Company’s share is approximately $49.5 million. As of September 30, 2023, the Joint Venture Company completed Phase IIIfunded $39.8 million of the 20172023 drilling program, which consisted of exploration drilling in the West Peak, West Peak Extension, 7 O’clock, Forks, and North Peak areas. budget.
OnAt the Lucky Shot Property, in November 10, 2017,August 2023, subsidiaries of Royal Gold and the Company entered into Amendmentbegan executing a program to complete surface drilling on the Coleman segment of the Lucky Shot vein. The program was shut down in No.September 2023 to preserve the safety of the Company's employees and contractors due to poor weather conditions.
On the Shamrock Property, the Company conducted soil and surface rock chip sampling during 2021. Follow up trenching and detailed geologic mapping is planned for the summer of 12024. At the Eagle/Hona Property, the Company carried out a detailed reconnaissance of the northern and eastern portions of the large claim block that had not previously been detail sampled. Due to the JV LLCA, which, among other things, amendedsteep topography, a helicopter was used to execute the JV LLCA to add certain claims, previously purchased by the Joint Venture Company. The claims that were added consist of 541 unpatented state of Alaska mining claims over 84,840 acresprogram safely. Follow up geologic mapping and sampling is planned for the explorationsummer of gold ore2024.
During the current quarter, the Company obtained office space in Vancouver, Canada and associated minerals (the “New Properties”). In return for locating the New Properties and incurring all related expenses, the Joint Venture Company granted tocreated a Canadian subsidiary, of Royal Gold aContango Mining Canada, Inc.
The Company’s fiscal year end is 3.0%June 30. production royalty on (i) the New Properties, (ii) prior to October 31, 2018, any additional properties contributed to the Joint Venture Company, and (iii) subsequent to October 31, 2018, any additional properties contributed to the Joint Venture Company if Royal Gold earns a 40% interest in the Joint Venture Company by October 31, 2018 (all such properties subject to the 3.0% production royalty, “Additional Properties”).
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by US GAAP for complete annual consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair statementpresentation of the consolidated financial statements have been included. All such adjustments are of a normal recurring nature. The consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes included in the Company’sCompany’s Form 10-K for the fiscal year ended June 30, 202330,2017.. The results of operations for the three and sixmonths ended December 31, 2017 September 30, 2023are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2018.2024.
3.Liquidity
The Company’s cash needs going forward will primarily relate to capital calls from the Peak Gold JV, exploration of the Contango Properties, and general and administrative expenses of the Company. The JV Management Committee has proposed a significant budget to complete and start the operations of the Manh Choh mine, which will require the Company to either elect to fund its 30% portion or be subject to dilution. The JV Management Committee has approved a budget for 2023, with cash calls totaling approximately $165.1 million, of which the Company’s share is approximately $49.5 million. As of September 30, 2023, the Company had funded $39.8 million of its share of the 2023 cash calls. The Company will finance its remaining share of the Manh Choh project by drawing down on its secured credit facility (See Note 14 - Debt). The Company also completed an Underwritten Offering in July 2023 with net proceeds of $28.2 million. Management believes the Company will maintain sufficient liquidity to meet its working capital requirements for the next twelve months from the date of this report, because it has sufficient cash on hand to cover its general and administrative expenses and debt obligations. If necessary, the Company could elect not to fund its share of the Manh Choh Project, and have its interest diluted. If the Company’s interest in the Peak Gold JV is diluted, the Company may not be able to fully realize its investment in the Peak Gold JV. Also, if no additional financing is obtained, the Company may not be able to fully realize its investment in the Contango Properties. The Company has limited financial resources and the ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, the exploration results achieved at the Peak Gold JV Property, as well as the market price of metals. The Company cannot be certain that financing will be available to the Company on acceptable terms, if at all.
3.4. Summary of Significant Accounting Policies
The Company’sPlease see the Company’s Form 10-K for the fiscal year ended June 30, 2023 for a summary of the Company's significant accounting policies, are describedas there have been no changes to the Company's significant accounting polices since the time of that filing, except for the accounting policy related to derivative instruments below.
Management Estimates.Derivative Instruments. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash Equivalents. Cash equivalents are considered to be highly liquid securities having an original maturity of 90 days or less at the date of acquisition.
Stock-Based Compensation. The Company applies theutilizes derivative instruments in order to manage exposure to risks associated with fluctuating commodity prices. The Company recognizes all derivatives as either assets or liabilities, measured at fair value, method of accounting for stock-based compensation. Under this method, compensation cost is measured at the grant date based onand recognizes changes in the fair value of the award and is recognized over the award vesting period. The Company classifies the benefits of tax deductionsderivatives in excess of the compensation cost recognized for the options (excess tax benefit) as financing cash flows. The fair value of each option award is estimated as of the date of grant using the Black-Scholes option-pricing model. The fair value of each restricted stock award is equal to the Company's stock price on the date the award is granted.
Income Taxes. The Company follows the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when, based upon management’s estimates, it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. The Company recognized a full valuation allowance as of December 31, 2017 and June 30, 2017 and has not recognized any tax provision or benefit for any of the periods. The Company reviews its tax positions quarterly for tax uncertainties. The Company did not have any uncertain tax positions as of December 31, 2017 or June 30, 2017. The Tax Cuts and Jobs Act was signed into law on December 22, 2017, which enacts significant changes to U.S. income tax and related laws. Among other things, the Tax Cuts and Jobs Act reduces the top U.S. corporate income tax rate from 35.0% to 21.0%, and makes changes to certain other business-related exclusions, deductions and credits. current earnings. The Company has assessed the impact of the tax bill on the financial statements as of December 31, 2017. Dueelected to the Company's full valuation allowance, the changes to the income tax provision as a result of the bill, are not expected to have a consolidated financial statement impact.
Investmentdesignate any of its positions under the hedge accounting rules. Accordingly, these derivative contracts are mark-to-market and any changes in the Joint Venture Company. The Company’s consolidated financial statements includeestimated values of derivative contracts held at the investmentbalance sheet date are recognized in unrealized (loss) gain on derivative contracts, net in the Joint Venture Company which is accounted for under the equity method. The Company has designated oneCondensed Consolidated Statements of the three members of the Management Committee andOperations as unrealized gains or losses on December 31, 2017 held a 61.0% ownership interestderivative contracts. Realized gains or losses on derivative contracts will be recognized in Peak Gold. Royal Gold will initially serve as the Manager of the Joint Venture Company and will manage, direct, and control operations of the Joint Venture Company. The Company recorded its investment at the historical cost of the assets contributed. The cumulative losses of the Joint Venture Company exceed the historical cost of the assets contributed to the Joint Venture Company; therefore the Company's investment(Loss) gain on derivative contracts, net in the Joint Venture Company asCondensed Consolidated Statements of December 31, 2017 and June 30, 2017 is zero. The portion of the cumulative loss that exceeds the Company's investment will be suspended and recognized against earnings, if any, from the investment in the Joint Venture Company in future periods.
Recently Adopted Accounting Pronouncements. In August 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") No.2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Before this new standard, there was minimal guidance in U.S. GAAP specific to going concern. Under the new standard, disclosures are required when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. The new standard applies to all companies and is effective for the annual period ending after December 15, 2016, and all annual and interim periods thereafter. The Company has adopted this standard, and updated our going concern analysis and disclosures accordingly.
In March 2016, the FASB issued ASU No.2016-09: Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 is part of an initiative to reduce complexity in accounting standards. The areas of simplification in ASU 2016-09 involve several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years; early application is permitted. The Company adopted this ASU in a prior quarter. The adoption of the standard did not have a material impact on the consolidated financial statements.
Recently Issued Accounting Pronouncements. In August 2016, the FASB issued Accounting Standards Update ("ASU") No.2016-15: Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The main objective of this update is to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The eight cash flow updates relate to the following issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investees; 7) beneficial interest in securitization transactions; and 8) separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will continue to assess the impact this may have on its consolidated statement of cash flows.Operations.
The Company has evaluated all other recent accounting pronouncements and believes that none5. of them will have a significant effect on the Company's consolidated financial statements.
4. Investment in the Joint Venture Company Peak Gold JV
The Company initially recorded its investment at the historical book value of the assets contributed to the Joint Venture CompanyPeak Gold JV, which was approximately $1.4$1.4 million. As of December 31, 2017, September 30, 2023Royal Gold, the Company has contributed approximately $29.3$67.5 million to the Joint Venture Company, and earned a cumulative economic interest of approximately 39.0%. Of the $29.3 million, $2.1 million was contributed during the quarter ended December 31, 2017. Therefore, as of December 31, 2017, the Company holds a 61.0% economic interest in the Joint Venture Company.Peak Gold JV. As of JuneSeptember 30, 2017, 2023, the Company held a 70.5% economic30.0% membership interest in the Joint Venture Company.Peak Gold JV.
The following table is a roll-forward of ourthe Company’s investment in the Joint Venture Company fromPeak Gold JV as of January 8, 2015 (September 30, 2023inception) to December 31, 2017::
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Investment | ||||
in Peak Gold, LLC | ||||
Investment balance at June 30, 2022 | $ | — | ||
Investment in Peak Gold, LLC | 21,120,000 | |||
Loss from equity investment in Peak Gold, LLC | (21,120,000 | ) | ||
Investment balance at June 30, 2023 | $ | — | ||
Investment in Peak Gold, LLC | 27,030,000 | |||
Loss from equity investment in Peak Gold, LLC | (5,609,288 | ) | ||
Investment balance at September 30, 2023 | $ | 21,420,712 | ||
The following table presents the condensed balance sheetunaudited results of operations for the Joint Venture Company as ofPeak Gold JV for the December 31, 2017three month periods ended September 30, 2023 and June 30, 2017:2022 in accordance with US GAAP:
December 31, 2017 | June 30, 2017 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 92,640 | $ | 58,955 | ||||
Mineral properties | 1,433,886 | 1,433,886 | ||||||
TOTAL ASSETS | $ | 1,526,526 | $ | 1,492,841 | ||||
| LIABILITIES AND MEMBERS' EQUITY | ||||||||
Accounts payable and other liabilities | $ | 274,213 | $ | 1,754,009 | ||||
TOTAL LIABILITIES | 274,213 | 1,754,009 | ||||||
MEMBERS' (DEFICIT) EQUITY | 1,252,313 | (261,168 | ) | |||||
TOTAL LIABILITIES AND MEMBERS' EQUITY | $ | 1,526,526 | $ | 1,492,841 | ||||
Three Months Ended | Three Months Ended | |||||||
September 30, 2023 | September 30, 2022 | |||||||
EXPENSES: | ||||||||
Exploration expense | $ | 4,509,967 | $ | 1,438,756 | ||||
General and administrative | 65,013 | 77,050 | ||||||
Total expenses | 4,574,980 | 1,515,806 | ||||||
NET LOSS | $ | 4,574,980 | $ | 1,515,806 | ||||
The Company'sCompany’s share of the Joint Venture Company'sPeak Gold JV’s results of operations for the three and sixmonths ended December 31, 2017 September 30, 2023was a loss of approximately $0.9 million and $3.0 million, respectively. $1.4 million. The Company'sCompany’s share in the results of operations for the three and sixmonths ended December 31, 2016 September 30, 2022was a loss of approximately $2.1 million and $5.0 million, respectively. $0.4 million. The Joint Venture CompanyPeak Gold JV loss does not include any provisions related to income taxes as the Joint Venture CompanyPeak Gold JV is treated as a partnership for income tax purposes. As of December 31, 2017 September 30, 2023and June 30, 2017, 2023, the Company'sCompany’s share of the Joint Venture Company'sPeak Gold JV’s inception-to-date results of operations was a cumulative loss of approximately $24.2$46.1 million and $21.2$44.8 million, respectively,respectively. In previous quarters, the Company's cumulative losses exceeded the historical book value of ourits cumulative investment in the Joint Venture Company,Peak Gold JV and the equity method of accounting was suspended, which resulted in suspended losses, and an investment balance of zero at $1.4June 30, 2023. million.During the current quarter, the Company's cumulative investment in the Peak Gold JV, exceeded its cumulative losses. Therefore the company recognized all of the previously suspended losses, approximately $4.3 million, and the investment in the Joint Venture CompanyPeak Gold had a balance of $21.4 million at zeroSeptember 30, 2023, as of December 31, 2017 andcompared to $0 at June 30, 2017. The Company is currently not obligated to make additional capital contributions to the Joint Venture Company and therefore only records losses up to the point of the initial investment which was $1.4 million. The portion of the cumulative loss that exceeds the Company's investment will be suspended and recognized against earnings, if any, from the Company's investment in the Joint Venture Company in future periods. The suspended losses for the period from inception to December 31, 2017 are approximately $22.8 million. The following table presents the condensed results of operations for Joint Venture Company for the three and six month periods ended December 31, 2017 and 2016:2023.
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | Period from Inception January 8, 2015 to | ||||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | December 31, 2017 | ||||||||||||||||
EXPENSES: | ||||||||||||||||||||
Exploration expense | $ | 1,186,445 | $ | 2,203,430 | $ | 4,094,520 | $ | 5,233,030 | $ | 24,886,695 | ||||||||||
General and administrative | 236,723 | 395,852 | 691,999 | 818,945 | 4,594,878 | |||||||||||||||
Total expenses | 1,423,168 | 2,599,282 | 4,786,519 | 6,051,975 | 29,481,573 | |||||||||||||||
NET LOSS | $ | 1,423,168 | $ | 2,599,282 | $ | 4,786,519 | $ | 6,051,975 | $ | 29,481,573 | ||||||||||
5.6. Prepaid Expenses and other assets
The Company has prepaid expenses and other assets of $125,560$795,111 and $175,791$413,907 as of December 31, 2017September 30, 2023 and June 30, 202330,2017,, respectively. Prepaid expenses primarily relate to prepaid insurance, surety bond deposits, and managementcommitment fees.
6.7.Net LossPer Share
A reconciliation of the components of basic and diluted net loss per share of common stock is presented below:
Three Months Ended December 31, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
Loss | Weighted Average Shares | Loss Per Share | Loss | Weighted Average Shares | Loss Per | Weighted Average | Loss | Weighted Average | Loss Per | |||||||||||||||||||||||||||||||||||||||
Basic Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss | Shares | Per Share | Net Loss | Shares | Share | |||||||||||||||||||||||||||||||||||||||||||
Basic Net Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to common stock | $ | (808,344 | ) | 5,650,321 | $ | (0.14 | ) | $ | (592,142 | ) | 4,640,034 | $ | (0.13 | ) | $ | (13,149,227 | ) | 8,935,863 | $ | (1.47 | ) | $ | (7,091,770 | ) | 6,771,245 | $ | (1.05 | ) | ||||||||||||||||||||
Diluted Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Diluted Net Loss per Share: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to common stock | $ | (808,344 | ) | 5,650,321 | $ | (0.14 | ) | $ | (592,142 | ) | 4,640,034 | $ | (0.13 | ) | $ | (13,149,227 | ) | 8,935,863 | $ | (1.47 | ) | $ | (7,091,770 | ) | 6,771,245 | $ | (1.05 | ) | ||||||||||||||||||||
Six Months Ended December 31, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
Loss | Weighted Average Shares | Loss Per Share | Loss | Weighted Average Shares | Loss Per | |||||||||||||||||||
Basic Loss per Share: | ||||||||||||||||||||||||
Net loss attributable to common stock | $ | (1,476,980 | ) | 5,289,934 | $ | (0.28 | ) | $ | (1,547,792 | ) | 4,315,444 | $ | (0.36 | ) | ||||||||||
Diluted Loss per Share: | ||||||||||||||||||||||||
Net loss attributable to common stock | $ | (1,476,980 | ) | 5,289,934 | $ | (0.28 | ) | $ | (1,547,792 | ) | 4,315,444 | $ | (0.36 | ) | ||||||||||
Options and warrants to purchase 501,000 shares of common stock of the Company were outstanding as of 271,000September 30, 2023, and 845,999options to purchase 100,000 shares of common stock were outstanding as of December 31, 2017 and JuneSeptember 30, 2017, 2022respectively.. These options and warrants were not included in the computation of diluted earnings per share for each of the three and six month periods ended December 31, 2017September 30, 2023 and 20162022 because they are anti-dilutivedue to being anti-dilutive. There were no warrants outstanding as a result of the Company’s net loss for all periods presented.September 30, 2022.
7.8. ShareholdersStockholders’ Equity
The Company’s authorized capital stock consists of 30,000,000 has 45,000,000 shares of common stock authorized, and 15,000,000 authorized shares of preferred stock. As of December 31, 2017, September 30, 2023we had 5,975,048, 9,393,922 shares of common stock were outstanding, including 298,998436,183 shares of unvested restricted stock. The Company also hasAs of September 30, 2023, options and warrants to purchase 271,000501,000 shares of common stock outstanding as of December 31, 2017. the Company were outstanding. No shares of preferred stock have been issued. The remaining restricted stock outstanding will vest between August 2018January 2024 and January 2020.August 2025.
Underwritten Offering
On July 24,2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Maxim Group LLC and Freedom Capital Markets (collectively, the “Underwriters”), relating to an underwritten public offering and sale (the “Offering”) of 1,600,000 shares (the “Underwritten Shares”) of the Company’s common stock that was registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Company’s registration statement on Form S-3. All of the Underwritten Shares were sold by the Company. The offering price of the Underwritten Shares was $19.00 per share, and the Underwriters agreed to purchase the Underwritten Shares from the Company pursuant to the Underwriting Agreement at a price of $17.77 per share (the “Purchase Price”) which included a 6.5% Underwriters discount. The net proceeds from the Offering were $28.2 million after deducting underwriting discounts and commissions and offering expenses. The Offering closed on July 26,2023.
ATM Offering
On June 8, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (the “Agent”), pursuant to which the Company may offer and sell from time to time up to $40,000,000 of shares of the Company’s common stock through the Agent (the “ATM Offering”). The offer and sale of the common stock was registered under the Securities Act, pursuant to the Company’s registration statement on Form S-3. Sales of the common stock, pursuant to the Sales Agreement, may be made in sales deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the New York Stock Exchange or on any other existing trading market for the Company’s common stock. The Company has no obligation to sell any of the common stock under the Sales Agreement and may at any time suspend or terminate the offering of its common stock pursuant to the Sales Agreement upon notice and subject to other conditions. The Agent will act as sales agent and will use commercially reasonable efforts to sell on the Company’s behalf all of the common stock requested to be sold by the Company, consistent with the Agent’s normal trading and sales practices, on mutually agreed terms between the Agent and the Company. The Company pays the Agent a commission of 2.75% of the gross proceeds of the Shares sold through it under the Sales Agreement. During the prior fiscal year, the Company had sold a total of 158,461 shares of common stock pursuant to the Sales Agreement for net proceeds of approximately $4.1 million. No further activity has occurred on the ATM Offering to date.
May 2023Warrant Exercise
In September 2016,May 2023, the Company distributed a Private Placement Memorandum tooffered the holders of its warrant holders to give themDecember 2022 Warrants and January 2023 Warrants with an original exercise price of $25.00, (collectively, “the Original Warrants”) the opportunity to exercise theirthose warrants at athe reduced exercise price of $22.00 (the “Modified Warrants”) and receive shares of common stock, par value $0.01$0.01 per share of the Company by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price ofwarrants on or before $10.00May 9, 2023. per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.00 per share. The offer expired on November 15, 2016. In conjunction with the offering aA total of 587,500 warrants313,000 Original Warrants were exercised resulting in total cash to the Company of $5.3 million. Of$6.9 million (the “Warrant Exercise Proceeds”) and the total warrants exercised, 83,334 were exercised by entities controlled by Mr. Brad Juneau, the Company's Chairman, President and Chief Executive Officer. Proceeds from the exerciseissuance of the warrants will be used for working capital purposes and for funding future obligations to the Joint Venture Company.
On October 13, 2017, the313,000 shares of Company distributed a Private Placement Memorandum to its warrant holders to give them the opportunity to exercise their warrants at a reduced exercise price and receivecommon stock upon such exercise. Such shares of common stock par value$0.01 per share of Contango ORE, Inc. by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price of $10.00 per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.50 per share. The offer expired on November 10, 2017. In conjunction with the offering a total of 124,999 warrants were exercised resulting in total cash to the Company of $1.2 million. Proceeds from the exercise of the warrants will be used for working capital purposes and for funding future obligations to the Joint Venture Company.
In connection with the exercise offer, the Company entered into a Registration Rights Agreement dated as of November 10, 2017, with each investor who exercised warrants in the offering. The Company agreed to file up to two demand registration statements with the SEC at any time after expiration of the offer but before three years after expiration of the offer in order to register the resale of shares of Common Stock, issued in the offer. In addition, the Registration Rights Agreement granted certain piggyback rights to the investors.
On October 23, 2017, the Company completed the issuance and sale of an aggregate of 553,672 shares of common stock, par value $0.01 per share, of the Company at a purchase price of $19.00 per share of Common Stock, in a private placement (the "Private Placement") to certain purchasers (the "Purchasers") pursuant to a Stock Purchase Agreement dated as of October 23, 2017 (the "Purchase Agreement"), by and among the Company and each Purchaser. The Private Placement resulted in approximately $10.5 million of gross proceeds and approximately $10.0 million of net proceeds. The Company will use the net proceeds from the Private Placement for working capital purposes and for funding future obligations to the Joint Venture Company. Petrie Partners Securities, LLC ("Petrie") acted as sole placement agent in connection with the Private Placement and received a placement agent fee equal to 6.50%, which was reduced to 3.25% for existing stockholders and other Purchasers referred by those existing stockholders, or a total of $0.5 million in placement agent fees. Juneau Exploration L.P., which is controlled by Brad Juneau, the Company’s President and Chief Executive Officer, purchased 13,200 shares of Common Stock, or $250,800, in the Private Placement on the same terms and conditions as all other Purchasers.
The shares sold in the Private Placement were issued in reliance on an exemption from registration under the Securities Act, of 1933, as amended, pursuantpursuant to Section 4(a)(2) thereof. The bases for the availability of this exemption include the facts that the issuance was a private transaction which did not involve a public offering and the shares were offered and sold to a limited number of purchasers. The Warrant Exercise Proceeds were used for working capital purposes and for funding future obligations of the Company. In connection with the accelerated exercise of the Original Warrants, the Company agreed to issue new warrants to purchase 313,000 shares of Company common stock at $30.00 per share to the exercising holders in the amount of the respective December 2022 Warrants and January 2023 Warrants that were exercised by such holders (the “May 2023 Warrants”). Consistent with the accounting guidance for modifications of a freestanding equity-classified warrant as a part of an equity offering, the Company recorded the excess in fair value of the Modified Warrants over the Original Warrants as an equity issuance cost, of approximately $383,000. The fair value of the Modified Warrants and the Original Warrants were calculated as of May 9, 2023 with the following weighted average assumptions used: (i) risk-free interest rate of 4.81%; (ii) expected life of 1 year; (iii) expected volatility of 42.5%; and (iv) expected dividend yield of 0%. The May 2023 Warrants were classified within equity and the Warrant Exercise Proceeds were allocated to the May 2023 Warrants based on their relative fair value. The fair value of each of the May 2023 Warrants was estimated as of the date of grant using the Black-Scholes option-pricing model (Level 2 of the fair value hierarchy) with the following weighted average assumptions used: (i)risk-free interest rate of 4.81%; (ii)expected life of 1.5 years; (iii)expected volatility of 43.7%; and (iv)expected dividend yield of 0%.
January 2023 Private Placement
On January 19, 2023, the Company completed the issuance and sale of an aggregate of 117,500 shares (the “January 2023 Shares”) of the Company’s common stock, for $20.00 per share, and warrants (the “January 2023 Warrants”) entitling each purchaser to purchase shares of common stock for $25.00 per share (the “January 2023 Warrant Shares” and together with the January 2023 Shares and the January 2023 Warrants, the “January 2023 Securities”), in a private placement (the “January 2023 Private Placement”) to certain accredited investors (the “January 2023 Investors”) pursuant to Subscription Agreements (the “January 2023 Subscription Agreements”), dated as of January 19, 2023 between the Company and each of the January 2023 Investors.
Pursuant to the January 2023 Warrants between the Company and each of the January 2023 Investors, the January 2023 Warrants are exercisable, in full or in part, at any time until the second anniversary of their issuance, at an exercise price of $25.00 per share of common stock. The January 2023 Warrants also provide for certain adjustments that may be made to the exercise price and the number of shares of common stock issuable upon exercise due to future corporate events or actions. The January 2023 Warrants were classified within equity and the proceeds from the capital raise were allocated to the warrants based on their relative fair value. The fair value of each of the January 2023 Warrants was estimated as of the date of grant using the Black-Scholes option-pricing model (Level 2 of the fair value hierarchy) with the following weighted average assumptions used: (i) risk-free interest rate of 4.65%; (ii) expected life of 1 year; (iii) expected volatility of 40.4%; and (iv) expected dividend yield of 0%.
Petrie Partners Securities, LLC (“Petrie”) assisted the Company with the January 2023 Private Placement and received compensation equal to 3.25% of the proceeds from the January 2023 Investors solicited by Petrie. Net proceeds from the January 2023 Private Placement totaled approximately $2.3 million and were used to fund the Company’s exploration and development program and for general corporate purposes. The January 2023 Securities sold were not registered under the Securities Act, but the January 2023 Shares and the January 2023 Warrant Shares are subject to a Registration Rights Agreement allowing the shares to be registered by the holders at a future date.
December 2022 Private Placement
On December 23, 2022, the Company completed the issuance and sale of an aggregate of 283,500 shares (the “December 2022 Shares”) of the Company’s common stock, for $20.00 per share, and warrants (the “December 2022 Warrants”) entitling each purchaser to purchase shares of common stock for $25.00 per share (the “December 2022 Warrant Shares” and together with the December 2022 Shares and the December 2022 Warrants, the “December 2022 Securities”), in a private placement (the “December 2022 Private Placement”) to certain accredited investors (the “December 2022 Investors”) pursuant to Subscription Agreements (the “December 2022 Subscription Agreements”), dated as of OctoberDecember 23, 2017 (2022 the "Registration Rights Agreement"), by and amongbetween the Company and each of the Purchasers,December 2022 Investors.
Pursuant to the December 2022 Warrants between the Company agreed to file up toand each of the twoDecember 2022 demand registration statements withInvestors, the Securities and Exchange CommissionDecember 2022 Warrants are exercisable, in full or in part, at any time afteruntil the onesecond year after the Private Placement but before three years after the Private Placement in order to register the resaleanniversary of the shares of Common Stock. In addition, the Registration Rights Agreement granted certain piggyback rights to the Purchasers.
Rights Plan
On December 19,2012, the Company adopted a Rights Plan which was amended on March 21, 2013, September 29, 2014, December 18, 2014, and on November 11, 2015. Under the terms of the amended Rights Plan, each right (a "Right") will entitle the holder to purchase 1/100 of a share of Series A Junior Preferred Stock of the Company (the “Preferred Stock”)their issuance, at an exercise price of $25.00 per share of common stock. The $80December 2022 per share. The Rights will Warrants also provide for certain adjustments that may be exercisablemade to the exercise price and will trade separately from the number of shares of common stock issuable upon exercise due to future corporate events or actions. The December 2022 Warrants were classified within equity and the proceeds from the capital raise were allocated to the warrants based on their relative fair value. The fair value of each of the December 2022 Warrants was estimated as of the date of grant using the Black-Scholes option-pricing model (Level 2 of the fair value hierarchy) with the following weighted average assumptions used: (i) risk-free interest rate of 4.66%; (ii) expected life of 1 year; (iii) expected volatility of 37.73%; and (iv) expected dividend yield of 0%.
Petrie assisted the Company with the December 2022 Private Placement and received compensation equal to 3.25% of the proceeds from the December 2022 Investors solicited by Petrie. Net proceeds from the December 2022 Private Placement totaled approximately $5.6 million and were used to fund the Company’s exploration and development program and for general corporate purposes. The December 2022 Securities sold were not registered under the Securities Act, but the December 2022 Shares and the December 2022 Warrant Shares are subject to a Registration Rights Agreement allowing the shares to be registered by the holders at a future date.
Rights PlanTermination and Rights Agreement
On September 23, 2020, the Company adopted a limited duration stockholder rights agreement (the “Rights Agreement”) to replace the Company’s prior stockholder rights plan, which was terminated upon adoption of the Rights Agreement.
Pursuant to the Rights Agreement, the Board declared a dividend of one preferred stock purchase right (a “Right”) for each share of the Company’s common stock held of record as of October 5, 2020. The Rights will trade with the Company’s common stock and no separate Rights certificates will be issued, unless and until the Rights become exercisable. In general, the Rights will become exercisable only if a person or group other than the Mr. Kenneth R. Peak Marital Trust and its affiliates, acquires beneficial ownership of 23%18.0% (or 20.0% for certain passive investors) or more of the Company'sCompany’s outstanding common stock or announces a tender or exchange offer that would result in beneficial ownership of 18.0% (or 20.0% for certain passive investors) or more of common stock. UnderEach Right will entitle the termsholder to buy one one-thousandth (1/1000) of a share of a series of junior preferred stock at an exercise price of $100.00 per Right, subject to anti-dilution adjustments.
The Rights Agreement had an initial term of one year, expiring on September 22, 2021. On September 21, 2021, the Board of Directors of the Company approved an amendment to the Rights Agreement, extending the term of the Rights Plan,Agreement by an additional year to September 22, 2022. On August 31, 2022, the Board of Directors approved an amendment the Rights have been distributed as a dividend atAgreement, extending the rate of one Right for each share of common stock that was held asterm of the closeRights Agreement by an additional year to September 22, 2023. On September 13, 2023, the Board of business on December 20,2012. Stockholders will not receive certificates forDirectors approved an amendment to the Rights butAgreement, extending the Rights will become part of each share of common stock. Anterm by an additional Right will be issued along with each share of common stock that is issued or sold by the Company afteryear to December 20, 2012. September 23, 2024.The Rights are scheduled to expire on December19,2018.
8.9. Formation of Joint Venture Company
On January 8, 2015, the Company and Royal Gold, through their wholly-owned subsidiaries, consummated the Transactions contemplated under the Master Agreement, including the formation of a joint venture to advance exploration and development of the Company’s Peak Gold Joint Venture Properties, for gold ore and associated minerals prospects.
In connection with the Closing of the Transactions, the Company formed the Joint Venture Company. The Company contributed to the Joint Venture Company its Peak Gold Joint Venture Properties near Tok, Alaska, together with other property (the “Contributed Assets”) with a historical book value of $1.4 million and an agreed fair value of $45.7 million (the “Contributed Assets Value”). At the Closing, the Company and Royal Gold, through their wholly-owned subsidiaries, entered into the JV LLCA.
Royal Gold serves as manager of the Joint Venture Company ("the Manager") and will initially manage, direct, and control the operations of the Joint Venture Company.
As a condition to the Closing, the Company and the Tetlin Village Council entered into a Stability Agreement dated October 2, 2014, pursuant to which the Company and the Tetlin Village Council, among other things, acknowledged the continued validity of the Tetlin Lease and all its terms notwithstanding any future change in the status of the Tetlin Village Council or the property subject to the Tetlin Lease.
At Closing, Royal Gold, as an initial contribution to the Joint Venture Company, contributed $5 million (the “Royal Gold Initial Contribution”). The Royal Gold Initial Contribution did not entitle Royal Gold to a percentage interest in the Joint Venture Company. Therefore, at Closing, Royal Gold’s percentage interest in the Joint Venture Company equaled 0% and the Company’s percentage interest in the Joint Venture Company equaled 100%. In addition, as part of the Closing, Royal Gold paid the Company $750,000 which was utilized to partially reimburse the Company for costs and expenses incurred in the Transactions and is included as an expense reimbursement on our consolidated statements of operations.Property &Equipment
The JV LLCA provides Royal Gold withtable below sets forth the right, but notbook value by type of fixed asset as well as the obligation, to earn a percentage interest in the Joint Venture Company (up to a maximum of 40%) by making additional contributions of capital to the Joint Venture Company of up to $30 million (inclusive of the Royal Gold Initial Contribution of $5 million) during the period beginning on the Closing and ending on October 31, 2018. If Royal Gold funds its full $30 million investment by October 31, 2018, it will receive a percentage interest of 40% in the Joint Venture Company, and the Company will retain a percentage interest of 60% in the Joint Venture Company. From inception through December 31, 2017, Royal Gold has contributed approximately $29.3 million (inclusive of the Royal Gold Initial Contribution of $5 million) to the Joint Venture Company and earned a percentage interest of 39.0%.estimated useful life:
The proceeds of Royal Gold’s contributions to the Joint Venture Company (including the Royal Gold Initial Contribution) have been used by the Joint Venture Company to fund further exploration activities on the Peak Gold Joint Venture Properties. Any additional contributions to the Joint Venture Company by Royal Gold to fund future drilling activities, or otherwise, will bring Royal Gold’s cumulative contributions closer to $30 million.
Both the Company and Royal Gold will have the right to transfer each of their respective percentage interests in the Joint Venture Company to a third party, subject to certain terms and conditions set forth in the JV LLCA. If either member intends to transfer all or part of its percentage interest to a bona fide third party purchaser, the other member will have the right to require the transferring member to include in the intended transfer the other member’s proportionate share of its percentage interests at the same purchase price and terms and conditions. Once Royal Gold has earned a 40% interest in the Joint Venture Company, it will have the additional right to require the Company to sell up to 20% of the Company’s interest in the Joint Venture Company in a sale of Royal Gold’s entire 40% interest to a bona fide third party purchaser. If Royal Gold exercises this right, the Company will be obligated to sell the relevant portion of its percentage interest to a bona fide third party purchaser on the same terms and conditions as the interest being sold by Royal Gold.
After October 31, 2018, or such earlier time as Royal Gold has earned a 40% interest in the Joint Venture Company, the members will contribute funds to approved programs and budgets in proportion to their respective percentage interests in the Joint Venture Company. If a member elects not to contribute to an approved program and budget or elects to contribute less than its proportionate interest, its percentage interest will be recalculated by dividing (i) the sum of (a) the value of its initial contribution plus (b) the total of all of its capital contributions plus (c) the amount of the capital contribution it elects to fund, by (ii) the sum of (a), (b) and (c) above for both members multiplied by 100.
The Joint Venture Company is a variable interest entity as defined by FASB ASU No.2015-02,Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company is not the primary beneficiary since it does not currently have the power to direct the activities of the Joint Venture Company. The Company's ownership interest in the Joint Venture Company is therefore accounted under the equity method.
Asset Type | Estimated Useful Life | September 30, 2023 | June 30, 2023 | ||||||||
Mineral properties | N/A - Units of Production | $ | 11,700,726 | $ | 11,700,726 | ||||||
Land | Not Depreciated | 87,737 | 87,737 | ||||||||
Buildings and improvements (years) | 20 - 39 | 1,455,546 | 1,455,546 | ||||||||
Machinery and equipment (years) | 3 - 10 | 287,635 | 287,635 | ||||||||
Vehicles (years) | 5 | 135,862 | 135,862 | ||||||||
Computer and office equipment (years) | 5 | 23,235 | 16,239 | ||||||||
Furniture & fixtures (years) | 5 | 2,270 | 2,270 | ||||||||
Less: Accumulated depreciation and amortization | (218,238 | ) | (192,241 | ) | |||||||
Less: Accumulated impairment | (122,136 | ) | (122,136 | ) | |||||||
Property & Equipment, net | $ | 13,352,637 | $ | 13,371,638 | |||||||
9.10. Related Party Transactions
Mr. Brad Juneau, who served as the Company'sCompany’s Chairman, President and Chief Executive Officer until January 6, 2020, and the Company’s Executive Chairman until November 11, 2021, and now serves as the Company’s Chairman is also the sole manager of JEX,Juneau Exploration, L.P. (“JEX”), a private company involved in the exploration and production of oil and natural gas. JEX was responsible for securing and negotiating the Tetlin Lease and assisting in obtaining other properties and initially engaged Avalon Development Corporation ("Avalon") to conduct mineral exploration activities on the Tetlin Lease. In agreeing to transfer its interests in such properties to Contango Mining, a predecessor of On December 11, 2020, the Company entered into a Second Amended and Restated Management Services Agreement (the “A&R MSA”) with JEX, retained a 3.0% overriding royalty interest inwhich amends and restates the properties transferred.
In September 2012, Amended and Restated Management Services Agreement between the Company and JEX entered into an Advisory Agreement in whichdated as of November 20, 2019. Pursuant to the A&R MSA, JEX provided assistance in acquiring additional properties in Alaska in exchange for an overriding royaltywill continue, subject to direction of 2.0% on properties acquired after July 1, 2012.
On September 29, 2014, pursuantthe board of directors of the Company (the “Board”), to a Royalty Purchase Agreement between JEXprovide certain facilities, equipment and Royal Gold (the “Royalty Purchase Agreement”), JEX sold its entire overriding royalty interestservices used in the Peak Gold Joint Venture Property to Royal Gold. On the same date, the Company terminated its Advisory Agreement with JEX.
In September 2016, the Company and JEX entered into a Management Services Agreement effective October1,2016. Under the Management Services Agreement, JEX will manageconduct of the business and affairs of the Company and management of its membership interest in the Joint Venture Company, subjectPeak Gold JV. Pursuant to the direction of the Board, including corporate finance, accounting, budget, SEC reporting, risk management, operations and stockholder relation functions ofA&R MSA, JEX provides the Company office space and office equipment, and certain related services. The A&R MSA was effective for an initial term of one year forbeginning December 1, 2020 and renews automatically on a monthly basis unless terminated upon ninety days’ prior notice by either the Company or JEX. Pursuant to the A&R MSA, the Company paid JEX a monthly fee of $32,000$10,000, which includesincluded an allocation of approximately $6,900$6,900 for office space and equipment. No part of the fee will be allocated for compensation of Brad Juneau who will be compensated separately as determined by the independent Directors of the Company. JEX willis also be reimbursed for its reasonable and necessary costs and expenses of third parties incurred for the Company. The A&R MSA includes customary indemnification provisions. In addition, executives of JEX may be granted restricted stock, stock options or other forms of compensation by the independent Directors of the Company. The Company has adopted this management and compensation program because employees of JEX have historically spent significant time and effort in managing and administering the affairs of the Company. While the Company remains a small exploratory stage entity whose shares are publicly traded, the successful drilling program of the Joint Venture Company has required a significant additional allocation of time and effort to the business and affairs of the Company by the three part time executives, two of whom are officers of the Company. The amount of time and expertise required to effectively manage and administer the business and affairs of the Company will continue to be monitored by the Board for necessary adjustments or modifications depending upon the amount of time required to be spent on the business and affairs of the Company by the executives and the progress of the Joint Venture Company in its exploratory programs in Alaska.
On October 23, 2017,January 2023, the Company completed the issuance and sale of an aggregate of 553,672 shares of common stock, par value $0.01 per share, of the Company at a purchase price of $19.00 per share of Common Stock, in a private placement (the "Private Placement")monthly fee paid to certain purchasers (the "Purchasers") pursuant to a Stock Purchase Agreement dated as of October 23, 2017 (the "Purchase Agreement"), by and among the Company and each Purchaser. The Private Placement resulted in approximately $10.5 million of gross proceeds and approximately $10.0 million of net proceeds. The Company will use the net proceeds from the Private Placement for working capital purposes and for funding future obligations to the Joint Venture Company. Petrie Partners Securities, LLC ("Petrie") acted as sole placement agent in connection with the Private Placement and received a placement agent fee equal to 6.50%, whichJEX was reduced to 3.25% for existing stockholders$3,000, and other Purchasers referred by those existing stockholders, or a total of $0.5 million in placement agent fees. JEX, which is controlled by Brad Juneau, the Company’s Presidentonly covers office equipment and Chief Executive Officer, purchased 13,200 shares of Common Stock, or $250,800, in the Private Placement on the same terms and conditions as all other Purchasers. related services.
10.11. Stock-Based Compensation
On September15, 2010, the Company’s Board of Directors (the “Board”) adopted the Contango ORE, Inc. Equity Compensation Plan (the “2010 Plan”). On November 14, 2017,10, 2022, the Stockholdersstockholders of the Company approved and adopted the Second Amendment to the Contango ORE, Inc. Amended and Restated 2010 Equity Compensation Plan (the(as amended, the “Amended Equity Plan”). The amendments to the 2010 Plan included (a) increasing which increased the number of shares of Common Stockcommon stock that the Company may issue under the planAmended Equity Plan by 500,000 shares; (b) extending the term of the plan until September 15, 2017; and (c) allowing the Company to withhold shares to satisfy the Company’s tax withholding obligations with respect to grants paid in Company Stock. 600,000 shares. Under the Amended Equity Plan, the Board may issue up to 1,500,0002,600,000 shares of common stock and options to officers, directors, employees or consultants of the Company. Awards made under the Amended Equity Plan are subject to such restrictions, terms and conditions, including forfeitures, if any, as may be determined by the Board. On November 14, 2023, the stockholders of the Company approved and adopted the 2023 Omnibus Incentive Plan (the “2023 Plan”) which will replace the 2010 Plan with respect to new grants by the Company. Shares available for grant under the 2023 Plan consist of 193,500 shares of common stock plus (i) any shares remaining available for grant under the 2010 Plan (462,567 shares as of September 30, 2023), (ii) unexercised shares subject to appreciation awards (i.e. stock options or other stock-based awards based on the appreciation in value of a share of the Company’s common stock) granted under the 2010 Plan that expire, terminate, or are canceled for any reason without having been exercised in full, and (iii) shares subject to awards that are not appreciation awards granted under the 2010 Plan that are forfeited for any reason.
As of December 31, 2017, September 30, 2023, there were 298,998436.183 shares of unvested restricted common stock outstanding and 100,000 options to purchase75,000 shares of common stock outstanding issued under the Amended Equity Plan. Stock-based compensation expense for the three and sixmonths ended December 31, 2017 was $580,379September 30, 2023 and $998,117,2022 was $739,783 and $787,784, respectively. Stock-based compensation expense for the three and six months ended December 31, 2016 was $331,306 and $959,650, respectively. The amount of compensation expense recognized does not reflect cash compensation actually received by the individuals during the current period, but rather represents the amount of expense recognized by the Company in accordance with US GAAP. All restricted stock grants are expensed over the applicable vesting period based on the fair value at the date the stock is granted. The grant date fair value may differ from the fair value on the date the individual'sindividual’s restricted stock actually vests.
Restricted Stock.In November 2010, the Company granted 70,429 restricted shares of common stock to its executives and directors and an additional 23,477 restricted shares to a former technical consultant. All of the restricted stock from this grant is fully vested.
InOn December 2013, the Company's directors, executives, and a former technical consultant were granted an aggregate of 95,000 shares of restricted stock. The restricted stock was set to vest over two years, beginning with one-third vesting on the date of grant. All of the restricted stock granted in December 2013 is fully vested.
In November 2014, the Company granted 27,000 restricted shares of common stock to its executives. The restricted stock was originally set to vest over two years, beginning with one-third vesting on the date of grant. In September 2016, the restricted stock agreements were modified. The final one-third of the grant will now vest in January 2019. As of December 31, 2017, there were 9,000 shares of such restricted stock that remained unvested.
In January 2015,1, 2020, the Company granted an aggregate of 30,000 restricted20,000 shares of common stock to two new employees. The restricted stock granted to such employees vests in equal installments over three years on the anniversary of its non-executive directors,the grant date. As of which 10,000September 30, 2023, 3,334 shares vested immediately and the remainingof restricted stock granted in twoDecember 2020 -thirds vested equally overremained unvested.
On twoAugust 16, 2021, years. In addition, the Company granted 10,000 restricted shares of common stock to a former technical consultant which vested immediately.new employee. The Compensation Committee also electedrestricted stock granted to immediately vest allthe employee vests in equal installments over three years on the anniversary of the stock options and restricted stock previously issued to the former technical consultant. Allgrant date. As of theSeptember 30, 2023, 3,334 shares of restricted stock granted in January 2015August 2021 is fully vested.remain unvested.
InOn September 2015,November 11, 2021, the Company granted 85,000 restricted shares of common stock to its executives. The restricted stock was originally set to vest over two years, beginning with one-third vesting on the date of grant. In September 2016, the restricted stock agreements for two executives were modified such that the final one-third of their restricted stock grant will vest in January 2019. As of December 31, 2017, there were 13,332 shares of such restricted stock that remained unvested.
In December 2015, the Company granted 40,000 restricted shares of common stock to two of its non-executive directors. The restricted stock vests over two years, beginning with one-third vesting on the date of grant. As of December 31, 2017, all of the restricted stock from this grant was fully vested.
In August 2016, the Company granted 100,000 restricted shares of common stock to its executives. A portion of the restricted stock granted vests over two years, beginning one-third on the date of grant. The remainder of the restricted stock granted vests in January 2019. As of December 31, 2017, there were 46,666 shares of such restricted stock that remained unvested.
In November 2016, the Company granted 75,000 restricted shares of common stock to its non-executive directors. The restricted stock granted vests in January 2019. As of December 31, 2017, there were 75,000 shares of such restricted stock that remained unvested.
In November 2017, the Company granted 155,000123,500 restricted shares of common stock to its executives and non-executive directors. The restricted stock granted to the executives and non-executive directors vests between January 2023 and January 2024. As of September 30, 2023, all 113,500 shares of such restricted stock granted remained unvested.
On February 2, 2022, the Company granted to four employees a total of 12,000 shares of restricted stock. These restricted shares vest between January 2023 and January 2025. As of September 30, 2023, 6,000 shares of such restricted stock granted remained unvested.
In December 2022, the Company cancelled 167,500 shares of unvested restricted stock held by executives and the non-executive directors that were set to vest in January 2020.2023. The Company also granted 209,375 restricted shares of common stock to its executives and non-executive directors. The restricted shares cancellation and the subsequent new grants were accounted for as modification to the original restricted stock grants. The incremental fair value will be recognized over the vesting period. The impact of the modification to the current quarter was immaterial. All of the restricted stock granted in December 2022 vest in January 2025. As of December 31, 2017, September 30, 2023, there were 155,000209,375 shares of such restricted stock that remained unvested.
On February 7, 2023, the Company granted 90,500 restricted shares of common stock to its executives and non-executive directors. The restricted stock granted to the executives and non-executive directors vests in January 2025. As of December 31September 30, 2023, all 90,500 shares of such restricted stock granted remained unvested.
On 2017,August 18, 2023, the Company granted 10,140 restricted shares of common stock to two executives. The restricted stock vests equally over three years on each anniversary date of the grant. As of September 30, 2023, all 10,140 shares of such restricted stock granted remained unvested.
As of September 30, 2023, the total compensation cost related to unvested awards not yet recognized was $4,241,890.$2,666,958. The remaining costs will be recognized over the remaining vesting period of the awards. Brad Juneau, the Company's Chairman, President and Chief Executive Officer, nor any of the Company's non-executive directors have ever been paid a salary or cash compensation.
Stock Options. options.The There were no stock option awards listed in the table below have been granted to directors, executives and consultants of the Company:
Option Awards | |||||||
Period Granted |
| Options Granted |
| Weighted Average Exercise Price |
| Vesting Period (7) | Expiration Date |
September 2011 (1) |
| 50,000 |
| $13.13 |
| Vested over two years, beginning with one-third on the grant date. | September 2016 |
July 2012 (2) |
| 100,000 |
| $10.25 |
| Vested over two years, beginning with one-third on the grant date. | July 2017 |
December 2012 (3) |
| 250,000 |
| $10.20 |
| Vested over two years, beginning with one-third on the grant date. | December 2017 |
June 2013 (4) |
| 37,500 |
| $10.00 |
| Vested Immediately | June 2018 |
July 2013 (5) |
| 5,000 |
| $10.00 |
| Vested Immediately | July 2018 |
September 2013 (6) |
| 37,500 |
| $10.01 |
| Vested Immediately | September 2018 |
September 2013 (6) |
| 15,000 |
| $10.01 |
| Vests over two years, beginning with one-third on the grant date. | September 2018 |
(1)The Company granted 40,000 stock options to its directors and executives and an additional 10,000 stock options to a former technical consultant, for services performed during fiscal year 2011. Of the total options granted 15,000 were later forfeited.
(2)The Company granted 75,000 stock options to its directors and executives and an additional 25,000 stock options to a former technical consultant for services performed during fiscal year 2012. Of the total options granted as a part of this grant, 25,000 were later forfeited.
(3)The Company granted 175,000 stock options to its directors and executives and an additional 75,000 stock options to a former technical consultant for services performed during fiscal year 2013. Of the total options granted as a part of this grant, 50,000 were later forfeited.
(4)The Company granted 37,500 stock options to its executives for services performed during fiscal year 2013.
(5)The Company granted 5,000 stock options to an employee of Avalon for services performed during fiscal year 2013.
(6)The Company granted 52,500 stock options to its executives for services performedexercises during the firstthree quarter of fiscal year 2014.
(7) If at any time there occurs a change of control, as defined in the Amended Equity Plan, any options that are unvested at that time will immediately vest. The Company's Compensation Committee has determined that the Transactions do not constitute a change of control under the Amended Equity Plan.
During the quartermonths ended December 31, 2017, September 30, 2023. There were also no stock option exercises during the Company's current executives, directors, and consultants cashless exercised 190,000three stock options resulting in the issuance of 93,026 shares of common stock to the exercising parties and no proceeds to the Company. During the yearmonths ended 2017,September 30, 2022 the Company's current and former executives, directors, and consultants cashless exercised 140,000 stock options resulting in the issuance of 71,454 shares of common stock to the exercising parties and no proceeds to the Company.. The Company applies the fair value method to account for stock option expense. Under this method, cash flows from the exercise of stock options resulting from tax benefits in excess of recognized cumulative compensation cost (excess tax benefits) are classified as financing cash flows. See Note 3– Summary of Significant Accounting Policies. All employee stock option grants are expensed over the stock option’s vesting period based on the fair value at the date the options are granted. The fair value of each option is estimated as of the date of grant using the Black-Scholes options-pricing model.model (Level 2 of the fair value hierarchy). As of December 31, 2017, September 30, 2023, the stock options had a weighted-average remaining life of approximately 0.61.27 years. The totalAll of the compensation cost related to these stock options hashad been fully recognized as all of the options are fully vested.September 30, 2023.
A summary of the status of stock options granted under the Amended Equity Plan as of December 31, 2017 September 30, 2023and changes during the sixthree months then ended, is presented in the table below:
Six Months Ended | Three Months Ended | |||||||||||||||
Shares Under Options | Weighted Average Exercise Price | September 30, 2023 | ||||||||||||||
Outstanding, June 30, 2017 | 265,000 | $ | 10.00 | |||||||||||||
Shares Under Options | Weighted Average Exercise Price | |||||||||||||||
Outstanding as of June 30, 2023 | 100,000 | $ | 14.50 | |||||||||||||
Granted | — | — | — | |||||||||||||
Exercised | 190,000 | $ | — | — | ||||||||||||
Forfeited | — | — | — | |||||||||||||
Outstanding, December 31, 2017 | 75,000 | $ | 10.01 | |||||||||||||
Outstanding at the end of the period | 100,000 | $ | 14.50 | |||||||||||||
Aggregate intrinsic value | $ | 687,300 | $ | 545,000 | ||||||||||||
Exercisable, end of period | 75,000 | $ | 10.01 | |||||||||||||
Exercisable, end of the period | 100,000 | |||||||||||||||
Aggregate intrinsic value | $ | 687,300 | $ | 545,000 | ||||||||||||
Available for grant, end of period | 384,094 | 462,567 | ||||||||||||||
Weighted average fair value per share of options granted during the period | $ | — | ||||||||||||||
11.12. Commitments and Contingencies
Tetlin Lease. The Tetlin Lease had an initial has a ten year-year term beginning July 2008 which was extended for an additional ten years tothat expires on July 15, 2028, and continues for so long thereafter as the Joint Venture CompanyPeak Gold JV initiates and continues to conduct mining operations on the Tetlin Lease.
Pursuant to the terms of the Tetlin Lease, the Joint Venture CompanyPeak Gold JV is required to spend $350,000$350,000 per year until July15, 20182028 in exploration costs. However, the Company'sThe Company’s exploration expenditures through the 20112023 exploration program have satisfied this requirement because exploration funds spent in any year in excess of $350,000 are credited toward future years’ exploration cost requirements. Additionally, should the Joint Venture CompanyPeak Gold JV derive revenues from the properties covered under the Tetlin Lease, the Joint Venture CompanyPeak Gold JV is required to pay the Tetlin Tribal Council a production royalty ranging from 2.0%3.0% to 5.0%, depending on the type of metal produced and the year of production. AsIn lieu of a December 31, 2017, $450,000 cash payment to the Company had paidPeak Gold JV from the Tetlin Tribal Council $225,000 in exchange for reducing theto increase its production royalty payable to them by 0.75%., These payments lowered the Peak Gold JV agreed to credit the $450,000 against future production royalty and advance minimum royalty payments due to a range of 1.25% to 4.25%. On or before July 15, 2020, the Tetlin Tribal Council hasunder the option to increase theirlease once production royalty by (i) 0.25% by payment to the Joint Venture Company of $150,000, (ii) 0.50% by payment to the Joint Venture Company of $300,000, or (iii) 0.75% by payment to the Joint Venture Company of $450,000.begins. Until such time as production royalties begin, the Joint Venture CompanyPeak Gold JV must pay the Tetlin Tribal Council an advance minimum royalty of $50,000 per year. On July 15,2012, the advance minimum royalty increased to $75,000approximately $75,000 per year, and subsequent years are escalated by an inflation adjustment.
Gold Exploration. The Joint Venture Company’s Triple Z, Tok/Tetlin, Eagle, Bush, West Fork,Eagle/Hona, Shamrock, Willow, and NoahLucky Shot claims are all located on stateState of Alaska lands. The annual claim rentals on these projects vary based on the age of the claims, and are due and payable in full by November 30 of each year. Annual claims rentals for the 20172023-20182024 assessment year totaled $155,505.$362,465. The Joint Venture Company haspaid the current year claim rentals in October 2023. The associated rental expense is amortized over the rental claim period, September 1 through August 31 of each year. As of September 30, 2023, the Peak Gold JV had met the annual labor requirements for the stateState of Alaska acreage for the next four years, which is the maximum timeperiod allowable by Alaska law.
Lucky Shot Property. With regard to the Lucky Shot Property, the Company will be obligated to pay CRH Funding II PTE. LTD, a Singapore private limited corporation (“CRH”), additional consideration if production on the Lucky Shot Property meets two separate milestone payment thresholds. If the first threshold of (1) an aggregate “mineral resource” equal to 500,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 30,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $3.75 million in newly issued shares of CORE common stock. If the second threshold of (1) an aggregate “mineral resource” equal to 1,000,000 ounces of gold or (2) production and receipt by the Company of an aggregate of 60,000 ounces of gold (including any silver based on a 1:65 gold:silver ratio) is met, then the Company will pay CRH $5 million in cash and $5 million in newly issued shares of CORE common stock. If payable, the additional share consideration will be issued based on the 30-day volume.
Royal Gold Royalties. Royal Gold currently holds a 3.0% overriding royalty on the Tetlin Lease and certain state mining claims. Royal Gold also holds a 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease.
Retention Agreements. In February 2019, the Company entered into retention agreements with its then Chief Executive Officer, Brad Juneau, its Chief Financial Officer, Leah Gaines, and one other employee providing for payments in an aggregate amount of $1,500,000 upon the occurrence of certain conditions (collectively, the “Retention Agreements”). The Joint VentureRetention Agreements are triggered upon a change of control (as defined in the applicable retention agreement), provided that the recipient is employed by the Company when the change of control occurs. On February 6, 2020, the Company entered into amendments to the Retention Agreements to extend the term of the change of control period from August 6, 2020 until August 6, 2025. Mr. Juneau and Ms. Gaines will receive a payment of $1,000,000 and $250,000, respectively, upon a change of control that takes place prior to August 6, 2025. On June 10, 2020, the Company entered into a retention payment agreement with Rick Van Nieuwenhuyse, the Company’s President and Chief Executive Officer, providing for a payment in an amount of $350,000 upon the occurrence of certain conditions (the “Retention Payment Agreement”). The Retention Payment Agreement is triggered upon a change of control (as defined in the Retention Payment Agreement) which occurs on or prior to August 6, 2025, provided that Mr. Van Nieuwenhuyse is employed by the Company when the change of control occurs. On August 4,2023, the Company entered into a new retention agreement (the “New Retention Agreement”) with Leah Gaines, Vice President, Chief Financial Officer, Chief Accounting Officer, Treasurer and Secretary and one other employee, for payments in the aggregate amount totaling $540,000. The New Retention Agreement replaces Ms. Gaines’ previous retention agreement dated February 6, 2019 and the amendment to the retention agreement dated February 6, 2020. Pursuant to the New Retention Agreement, Ms. Gaines will remain in her positions with the Company (including as the Company’s principal financial officer and principal accounting officer) until the earlier of (i) December 31, 2023 or (ii) a date determined by the Company. Any transition is not the result of any disagreements between the Company and Ms. Gaines.
Employment Agreement. Effective July 11, 2023, Michael Clark was appointed to serve as Executive Vice President, Finance of the Company. Mr. Clark will perform certain of the functions of the Company’s principal financial officer. Pursuant to his employment agreement (the “Employment Agreement”), Mr. Clark will receive a base salary of $300,000 per annum. Beginning with fiscal year 2023, Mr. Clark will be entitled to receive short-term incentive plan and long-term incentive plan bonuses and awards that will be paid in the form of a combination of cash, restricted stock and options, which will be set forth in plans and agreements adopted, or to be adopted, by the Board. He will also receive 12 months of his regular base salary, all bonus amounts paid in the 12 months preceding the termination, and reimbursement for continued group health insurance coverage for 12 months following the termination or the date he becomes eligible for alternative coverage through subsequent employment as severance benefits in the event that his employment with the Company is terminated by the Company other than for just cause or he resigns due to a material, uncured breach of the Employment Agreement by the Company. He is also entitled to enhanced severance benefits if he terminates his employment within 30 days following a change of control. Any payment of severance benefits to him under the Employment Agreement is conditioned on his timely agreement to, and non-revocation of, a full and final release of legal claims in favor of the Company.
Short Term Incentive Plan. The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) adopted a Short-Term Incentive Plan (the “STIP”) effective as of June 10, 2020, for the benefit of Mr. Van Nieuwenhuyse. Pursuant to the terms of the STIP, the Compensation Committee establishes performance goals each year and evaluates the extent to which, if any, Mr. Van Nieuwenhuyse meets such goals. The STIP provides for a payout equal to 25.0% of Mr. Van Nieuwenhuyse’s annual base salary if the minimum performance target established by the Compensation Committee is met, 100.0% of his annual base salary if all performance goals are met, and up to 200.0% of his annual base salary if the maximum performance target is met. Amounts due under the STIP are payable 50.0% in cash and 50.0% in the form of restricted stock granted under the Amended Equity Plan, vesting in two equal annual installments on the first and second anniversaries of the grant date, and subject to the terms of the Amended Equity Plan. In addition, in the event of a Change of Control (as defined in the Amended Equity Plan) during the term of the STIP, the Compensation Committee, in its sole and absolute discretion, may make a payment to Mr. Van Nieuwenhuyse in an amount up to 200.0% of his annual base salary, payable in cash, shares of common stock of the Company under the Amended Equity Plan or a combination of both, as determined by the Compensation Committee, not later than 30 days following such Change of Control. In conjunction with the STIP plan, in January 2022, Mr. Van Nieuwenhuyse received a $300,000 cash bonus and 15,000 restricted shares of common stock, which were to vest on January 15, 2023. These 15,000 restricted shares were cancelled in December 2022, and 18,750 shares were issued to Mr. Van Nieuwenhuyse under the STIP plan which will vest in January 2025. In September 2023, Mr.Van Nieuwenhuyse received a $200,000 cash bonus in conjunction with the STIP plan.
On August 2,2023, CORE Alaska, a subsidiary of the Company, pursuant to an ISDA Master Agreement entered into with ING Capital Markets LLC (the “ING ISDA Master Agreement”) and an ISDA Master Agreement entered into with Macquarie Bank Limited (the “Macquarie ISDA Master Agreement”), in accordance with its obligations under that certain Credit and Guarantee Agreement, by and among the Company, its subsidiaries, ING Capital LLC and Macquarie Bank Limited, entered into a series of hedging agreements with ING Capital LLC and Macquarie Bank Limited for the sale of an aggregate of 124,600 ounces of gold at a weighted average price of $2,025 per ounce. The hedge agreements have delivery obligations beginning in July 2024 and ending in December 2026, and represent approximately 45% of the Company’s interest in the projected production from the Manh Choh mine over the current anticipated life of the mine (See Note 15 - Derivatives and Hedging Activities).
13.Income Taxes
The Company recognized a full valuation allowance on its deferred tax asset as of September 30, 2023 and June 30, 2023 and has recognized zero income tax expense for the three months ended September 30, 2023 and September 30, 2022. The effective tax rate was 0% for the three months ended September 30, 2023 and 2022. The Company has historically had a full valuation allowance, which resulted in no net deferred tax asset or liability appearing on its statement of financial position. The Company recorded this valuation allowance after an evaluation of all available evidence (including the Company's history of net operating losses) that led to a conclusion that, based upon the more-likely-than-not standard of the accounting literature, these deferred tax assets were unrecoverable. The Company is forecasting a book and taxable net loss for its fiscal year end, June 30, 2023. The Company reviews its tax positions quarterly for tax uncertainties. The Company did not have any uncertain tax positions as of September 30, 2023 or June 30, 2023.
14.Debt
The table below shows the components of Debt, net as of September 30, 2023 and June 30, 2023:
September 30, 2023 | June 30, 2023 | |||||||
Secured Debt Facility | ||||||||
Principal amount | $ | 20,000,000 | $ | 10,000,000 | ||||
Unamortized debt discount | (2,388,728 | ) | (2,342,484 | ) | ||||
Unamortized debt issuance costs | (2,212,417 | ) | (1,628,012 | ) | ||||
Debt, net | $ | 15,398,855 | $ | 6,029,504 | ||||
Convertible Debenture | ||||||||
Principal amount | $ | 20,000,000 | $ | 20,000,000 | ||||
Unamortized debt discount | (438,264 | ) | (461,639 | ) | ||||
Unamortized debt issuance costs | (105,206 | ) | (110,818 | ) | ||||
Debt, net | $ | 19,456,530 | $ | 19,427,543 | ||||
Total Debt, net | $ | 34,855,385 | $ | 25,457,047 | ||||
Secured Credit Facility
On May 17,2023, the Company entered into a credit and guarantee agreement (the “Credit Agreement”), by and among CORE Alaska, LLC as the borrower, each of the Company, Alaska Gold Torrent, LLC, and Contango Minerals Alaska, LLC, as guarantors, each of the lenders party thereto from time to time, ING Capital LLC (“ING”), as administrative agent for the lenders, and Macquarie Bank Limited (“Macquarie”), as collateral agent for the secured parties. The Credit Agreement provides for a senior secured loan facility (the “Facility”) of up to US$70 million, of which $65 million is committed in the form of a term loan facility and $5 million is uncommitted in the form of a liquidity facility.
The Credit Agreement will mature on December 31,2026 (the “Maturity Date”) and will be repaid via quarterly repayments over the life of the loan. The Facility has an upfront fee and a production linked arrangement fee based upon the projected total production of gold ounces in the base case financial model delivered on the closing date, payable quarterly based on attributable production, with any balance due upon the maturity or termination of the Credit Agreement. The Credit Agreement is secured by all the assets and properties of the Company and its subsidiaries, including the Company’s 30% interest in Peak Gold, LLC, but excluding the Company’s equity interests of AGT in respect of the Lucky Shot mine. As a condition precedent to the second borrowing, the Company was required to hedge approximately 125,000 ounces of its attributable gold production from Manh Choh. On August 2, 2023, CORE Alaska entered into a series of hedging agreements with ING and Macquarie for the sale of an aggregate of 124,600 ounces of gold at a weighted average price of $2,025 per ounce, which satisfied the condition of the second borrowing. The hedge agreements have delivery obligations beginning in July 2024 and ending in December 2026. See Note 15 - Derivatives and Hedging Activities.
Term loans, which can be made quarterly are to be used only to finance cash calls to the Peak Gold JV, fund the debt service reserve account, pay corporate costs in accordance with budget and base case financial model and fees and expenses in connection with the loan. Liquidity loans, which can be made once a month, are to be used for cost overruns. Any outstanding liquidity loans must be repaid on July 31, 2025.
Loans under the Facility can be Base Rate loans at the Base Rate plus the Applicable Margin or Secured Overnight Financing Rate (“SOFR”) loans at the three month adjusted term SOFR plus the Applicable Margin. The type of loan is requested by the borrower at the time of the borrowing and the type loan may be converted. The “Base Rate” is the highest of Prime Rate, Federal Funds Rate plus .50% or Adjusted Term SOFR for one month plus 1%. “Adjusted Term SOFR” is Term SOFR plus a SOFR Adjustment of .15% per annum. “Term SOFR” is the secured overnight financing rate as administered by the Term SOFR Administrator. The “Applicable Margin” is (i) 6.00% per annum prior to the completion date for the Manh Choh Project and (ii) 5.00% per annum thereafter, which will be payable quarterly.
Interest is payable commencing on the date of each loan and ending on the next payment date. The interest payment dates prior to November 1, 2025 are the last day of July, October, January and April; thereafter the payment dates are the last day of March, June, September and December. The Company also will pay commitment fee on average daily unused borrowings equal to a rate of 40% of the Applicable Margin. The commitment fee is payable in arrears on each interest payment date with the final on the commitment termination date, which is 18 months after the closing date of May 17, 2023. As of September 30, 2023, the Company had unused borrowing commitments of $45 million.
The Credit Agreement contains representations and warranties and affirmative and negative covenants customary for credit facilities of this type, including limitations on the Company and its subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates and entry into hedging arrangements. The Credit Agreement also requires the Company to maintain, as of the last day of each fiscal quarter, (i) a historical debt service coverage ratio of no less than 1.30 to 1.00, (ii) a projected debt service coverage ratio until the Maturity Date of no less than 1.30 to 1.00; (iii) a loan life coverage ratio until the Maturity Date of no less than 1.40 to 1.00; (iv) a discounted present value cash flow coverage ratio until the Manh Choh gold project termination date of no less than 1.70 to 1.00; and (v) a reserve tail (i.e., gold production) ratio until the Maturity Date of no less than 25%. The Credit Agreement also includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company or any of its material subsidiaries being false in any material respect, default under certain other material indebtedness, certain insolvency or receivership events affecting the Company or any of its material subsidiaries, certain ERISA events, material judgments and a change in control, in each case, subject to cure periods and thresholds where customary. The Company is also required to maintain a minimum cash balance of $2 million. As of September 30, 2023, the Company was in compliance with all of the required debt covenants.
The Company drew $10 million on the term loan facility at the initial closing and an additional $10 million on September 29, 2023. The Company will repay $2 million of the amount drawn on July 31, 2024, and the remaining $18 million will be divided into quarterly repayments until December 31, 2026.
Borrowings under the term loan facility carried an original issue discount of $2.3 million and debt issuance costs of approximately $1.6 million. As of September 30, 2023, the unamortized discount and issuance costs were $2.4 million and $2.2 million, respectively and the carrying amount, net of the unamortized discount and issuance costs was $15.4 million. As of June 30,2023, the unamortized discount and issuance costs were $2.3 million and $1.6 million, respectively and the carrying amount, net of the unamortized discount and issuance costs was $6.0 million.The fair value of the debt (Level 2) as of September 30, 2023 and June 30, 2023 was $20.0 million and $10.0 million, respectively. The Company recognized interest expense totaling $0.4 million related to this debt for the three months ended September 30, 2023 (inclusive of approximately $292,000 of contractual interest, and approximately $77,000 related to the amortization of the discount and issuance fees). There was no interest expense related to the Facility for the three months ended September 30, 2022, because the Facility was not yet in place. The effective interest rate of the term loan facility was 11.58% as of September 30, 2023 and 11.75% as of June 30, 2023. As of September 30, 2023 and June 30, 2023, the effective interest rate for the amortization of the discount and issuance costs was 4.8% and 2.4%, respectively.
Convertible Debenture
On April 26, 2022, the Company closed on a $20,000,000 unsecured convertible debenture (the “Debenture”) with Queen’s Road Capital Investment, Ltd. (“QRC”). The Company used the proceeds from the sale of the Debenture to fund commitments to the Peak Gold JV, the exploration and development at its Lucky Shot property, and for general corporate purposes.
In connection with the closing of the Credit Agreement, the Company entered into a letter agreement with QRC (the “Letter Agreement”) which amended the terms of the Debenture. In accordance with the Letter Agreement, QRC acknowledged that the Debenture would be subordinate to the loans under the Credit Agreement, and acknowledged that the Company entering into the loans under the Credit Agreement would not constitute a breach of the negative covenants of the Debenture. QRC also waived its put right in respect of the Debenture that would require Contango to redeem the Debenture in whole or in part upon the completion of a secured financing or a change of control. In consideration for QRC entering into the Letter Agreement, the Company agreed to amend the interest rate of the Debenture from 8% to 9%. In accordance with the Letter Agreement the interest payment dates were modified to be the last business day of July, October, January, and April, prior to November 1, 2025 and thereafter the last business day of March, June, September, and December. The maturity date also changed from April 26, 2026 to May 26, 2028.
The Debenture currently bears interest at 9% per annum, payable quarterly, with 7% paid in cash and 2% paid in shares of common stock issued at the market price at the time of payment based on a 20-day volumetric weighted average price (“VWAP”). The Debenture is unsecured. QRC may convert the Debenture into common stock at any time at a conversion price of $30.50 per share (equivalent to 655,738 shares), subject to adjustment. The Company may redeem the Debenture after the third anniversary of issuance at 105% of par, provided that the market price (based on a 20-day VWAP) of the Company’s common stock is at least 130% of the conversion price.
The Debenture carried an original issue discount of $0.6 million and debt issuance costs of approximately $0.2 million. As of September 30, 2023 and June 30, 2023, the unamortized discount and issuance costs were $0.5 million and $0.6 million, respectively. The carrying amount of the debt at September 30, 2023 and June 30, 2023, net of the unamortized discount and issuance costs was $19.5 million and $19.4 million respectively. The fair value of the Debenture (Level 2) as of September 30, 2023 and June 30, 2023 was $20.0 million. The Company recognized interest expense totaling $0.5 million related to this debt for the three months ended September 30, 2023 (inclusive of approximately $450,000 of contractual interest, and approximately $29,000 related to the amortization of the discount and issuance fees). The Company recognized interest expense totaling $0.4 million related to this debt for the quarter ended September 30, 2022 (inclusive of approximately $400,000 of contractual interest, and approximately $49,000 related to the amortization of the discount and issuance fees).The effective interest rate of the Debenture is the same as the stated interest rate, 9.0%. The effective interest rate for the amortization of the discount and issuance costs as of September 30, 2023 and June 30, 2023 was 0.6% and 0.6%, respectively. The Company reviewed the provisions of the debt agreement to determine if the agreement included any embedded features. The Company concluded that the change of control provisions within the debt agreement met the characteristics of a derivative and required bifurcation and separate accounting. The fair value of the identified derivative was determined to be de minimis at April 26, 2022, June 30, 2023, and September 30, 2023 as the probability of a change of control was negligible as of those dates. For each subsequent reporting period, the Company will evaluate each potential derivative feature to conclude whether or not they qualify for derivative accounting. Any derivatives identified will be recorded at the applicable fair value as of the end of each reporting period.
15. Derivatives and Hedging Activities
On August 2,2023, CORE Alaska, a subsidiary of the Company, pursuant to an ISDA Master Agreement entered into with ING Capital Markets LLC (the “ING ISDA Master Agreement”) and an ISDA Master Agreement entered into with Macquarie Bank Limited (the “Macquarie ISDA Master Agreement”), in accordance with its obligations under that certain Credit and Guarantee Agreement, by and among the Company, its subsidiaries, ING Capital LLC and Macquarie Bank Limited, entered into a series of hedging agreements with ING Capital LLC and Macquarie Bank Limited for the sale of an aggregate of 124,600 ounces of gold at a weighted average price of $2,025 per ounce. The hedge agreements have delivery obligations beginning in July 2024 and ending in December 2026, and represent approximately 45% of the Company’s interest in the projected production from the Manh Choh mine over the current anticipated life of the mine.
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by gold future pricing. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments.
Non-designated Hedges
Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to gold movements and the Company has elected not to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.
As of September 30, 2023, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships:
Period | Commodity | Volume | Weighted Average Price ($/oz) | ||||||
2024 | Gold | 21,100 | $ | 2,025.17 | |||||
2025 | Gold | 62,400 | $ | 2,025.17 | |||||
2026 | Gold | 41,100 | $ | 2,025.17 | |||||
Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of September 30, 2023 and June 30, 2023.
As of September 30, 2023 | As of June 30, 2023 | ||||||||||||||||||||||||
Derivatives not designated as hedging instruments | Balance Sheet Location | Gross Recognized Assets / Liabilites | Gross Amounts Offset | Net Recognized Assets / Liabilities | Gross Recognized Assets / Liabilites | Gross Amounts Offset | Net Recognized Assets / Liabilities | ||||||||||||||||||
Commodity Contracts | Derivative contract asset - current | $ | 549,116 | $ | — | $ | 549,116 | $ | — | $ | — | $ | — | ||||||||||||
Commodity Contracts | Derivative contract liability - current | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Commodity Contracts | Derivative contract asset - noncurrent | $ | 763,631 | $ | (763,631 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Commodity Contracts | Derivative contract liability - noncurrent | $ | 4,038,158 | $ | (763,631 | ) | $ | 3,274,527 | $ | — | $ | — | $ | — | |||||||||||
As of September 30, 2023, the fair value of derivatives in a net liability position, which excludes any adjustment for nonperformance risk, related to these agreements was $2,725,411. As of September 30, 2023, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions as of September 30, 2023, it could have been required to settle its obligations under the agreements at their termination value of $2,725,411.
Effect of Derivatives Not Designated as Hedging Instruments on the Income Statement
The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Condensed Consolidated Statement of Operations for the three months ended September 30, 2023 and 2022.
Derivatives Not Designated as Hedging Instruments under Subtopic 815-20 | Location of Unrealized Gain or (Loss) Recognized in Income on Derivative | Amount of Gain or (Loss) Recognized in Income on Derivative | |||||||
Three month period ended September 30, 2023 | Three month period ended September 30, 2022 | ||||||||
Commodity Contracts | Unrealized loss on derivative contracts | $ | (2,725,411) | $ | — | ||||
Total | $ | (2,725,411 | ) | $ | — | ||||
Credit-risk-related Contingent Features
Cross Default. The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.
Material adverse change. Certain of the Company's agreements with its derivative counterparties contain provisions where if a specified event or condition occurs that materially changes the Company's creditworthiness in an adverse manner, the Company may be required to fully collateralize its obligations under the derivative instrument.
Incorporation of loan covenants. The Company has an agreement with a derivative counterparty that incorporates the loan covenant provisions of the Company's indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.
16. Fair Value Measurement
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. FASB ASC Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.
The three levels are defined as follows:
Level 1 – Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Other inputs that are observable directly or indirectly, such as quoted prices in markets that are not active or inputs, which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 – Unobservable inputs for which there are little or no market data and which the Company makes its own assumptions about how market participants would price the assets and liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were no transfers between fair value hierarchy levels for the year ended June 30, 2023.
Fair Value on a Recurring Basis
The Company performs fair value measurements on a recurring basis for the following:
• Derivative Financial Instruments - Derivative financial instruments are carried at fair value and measured on a recurring basis. The Company's potential derivative financial instruments include features embedded within its convertible debenture with Queens Road Capital (see Note 14). These measurements were not material to the Consolidated Financial Statements. The Company also has hedging agreements in place to manage its exposure to changes in gold prices.
• Contingent Consideration - As discussed in Note 12, the Company will be obligated to pay Royal Gold (i) an overriding royaltyCRH additional consideration if production on the Lucky Shot Property meets two separate milestone payment thresholds. The fair value of 3.0% shouldthis contingent consideration is measured on a recurring basis, and is driven by the Joint Venture Company derive revenues fromprobability of reaching the Tetlin Lease, Additional Propertiesmilestone payment thresholds.
The following table summarizes the fair value of the Company’s financial assets and certain other properties and (ii) an overriding royalty of 2.0% shouldliabilities, by level within the Joint Venture Company derive revenues from certain properties.fair-value hierarchy (in thousands):
As of September 30, 2023 | Level 1 | Level 2 | Level 3 | |||||||||
Financial Assets | ||||||||||||
Derivative contract asset - current | $ | — | $ | 549,116 | $ | — | ||||||
Financial Liabilities | ||||||||||||
Derivative Liability - noncurrent | $ | — | $ | 3,274,527 | $ | — | ||||||
Contingent consideration liability - noncurrent | $ | — | $ | — | $ | 1,240,563 | ||||||
As of June 30, 2023 | ||||||||||||
Financial Assets | ||||||||||||
Derivative contract asset - current | $ | — | $ | — | $ | — | ||||||
Financial Liabilities | ||||||||||||
Derivative Liability - noncurrent | $ | — | $ | — | $ | — | ||||||
Contingent consideration liability - noncurrent | $ | — | $ | — | $ | 1,240,563 | ||||||
Fair Value on a Nonrecurring Basis
The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities, including mineral properties, business combinations, and asset retirement obligations. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments if events or changes in certain circumstances indicate that adjustments may be necessary.
17. Subsequent Events
On October 20, 2023, the Committee for Safe Communities (“CSC”), an Alaskan non-profit corporation inclusive of certain owners of vacation homes along the Manh Choh ore haul route and others claiming potential impact and objecting the ore haul plan and project, filed suit (the “Complaint”) in the Superior Court in Fairbanks, Alaska against the State of Alaska Department of Transportation and Public Facilities (“DOT”). The Complaint seeks injunctive relief against the DOT with respect to its oversight of the Peak Gold JV’s ore haul plan. The Complaint alleges that the DOT has approved a haul route and trucking plan that violates DOT regulations, DOT’s actions have created an unreasonable risk to public safety constituting an attractive public nuisance, and DOT has aided and abetted the offense of negligent driving. On November 2, 2023, CSC filed a motion for a preliminary injunction against the DOT and is seeking expedited consideration of its motion. If granted, the motion could impact the Peak Gold JV’s ore haul plans. The Peak Gold JV intends to intervene in the action whether by agreement of the parties or by motion and to vigorously defend its interests and the legality of its ore haul plans. The Peak Gold JV is also in consultation with DOT on addressing the allegations raised. On November 9, 2023, the motion for expedited consideration of the motion for preliminary injunction was denied by the Superior Court Judge.
On November 7, 2023, the Company drew an additional $10 million on the term loan facility with ING and Macquarie.
Available Information
General information about the Company can be found on the Company'sCompany’s website at www.contangoore.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after we filethe Company files or furnishfurnishes them to the Securities and Exchange Commission (“SEC”).SEC.
Item2.Management’Management’ss Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the accompanying notes and other information included elsewhere in this Form 10-Q and in our Form 10-K for the fiscal year ended June 30, 2017,2023, previously filed with the SEC.
Cautionary Statement about Forward-Looking Statements
Some of the statements made in this report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act, of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”). The words and phrases “should be”, “will be”, “believe”, “expect”, “anticipate”, “estimate”, “forecast”, “goal” and similar expressions identify forward-looking statements and express our expectations about future events. Any statement that is not historical fact is a forward -looking statement. These include such matters as:
The Company's financial position
Business strategy, including outsourcing
Meeting Company forecasts and budgets
Anticipated capital expenditures
Prices of gold and associated minerals
Timing and amount of future discoveries (if any) and production of natural resources on our Peak Gold Joint Venture Property
Operating costs and other expenses
Cash flow and anticipated liquidity
Prospect development
New governmental laws and regulations
• | The Company’s financial position; | |
• | Business strategy, including outsourcing; | |
• | Meeting Company forecasts and budgets; | |
• | Anticipated capital expenditures and availability of future financings; | |
| • | Risk in the pricing or timing of hedges the Company has entered into for the production of gold and associated minerals; | |
• | Prices of gold and associated minerals; | |
• | Timing and amount of future discoveries (if any) and production of natural resources on the Contango Properties and the Peak Gold JV Property; | |
• | Operating costs and other expenses; | |
• | Cash flow and anticipated liquidity; | |
• | The Company’s ability to fund its business with current cash reserves based on currently planned activities; | |
• | Prospect development; | |
• | Operating and legal risks; and | |
• | New governmental laws and regulations. |
Although the Company believes the expectations reflected in such forward-looking statements are reasonable, such expectations may not occur. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, that may cause our actual results, performance or achievements to be materially different from future results expressed or implied by the forward-looking statements. TheseIn addition to the risk factors described in Part II, Item 1A. Risk Factors, of this report and Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended June 30, 2023, these factors include among others:
Ability to raise capital to fund capital expenditures
Operational constraints and delays
The risks associated with exploring in the mining industry
The timing and successful discovery of natural resources
Availability of capital and the ability to repay indebtedness when due
Declines and variations in the price of gold and associated minerals
Price volatility for natural resources
Availability of operating equipment
Operating hazards attendant to the mining industry
Weather
The ability to find and retain skilled personnel
Restrictions on mining activities
Legislation that may regulate mining activities
Impact of new and potential legislative and regulatory changes on mining operating and safety standards
Uncertainties of any estimates and projections relating to any future production, costs and expenses.
Timely and full receipt of sale proceeds from the sale of any of our mined products (if any)
Stock price and interest rate volatility
Federal and state regulatory developments and approvals
Availability and cost of material and equipment
Actions or inactions of third-parties
Potential mechanical failure or under-performance of facilities and equipment
Environmental risks
Strength and financial resources of competitors
Worldwide economic conditions
Expanded rigorous monitoring and testing requirements
Ability to obtain insurance coverage on commercially reasonable terms
• | Ability to raise capital to fund capital expenditures; | |
• | Ability to retain or maintain capital contributions to, and our relative ownership interest in the Peak Gold JV; | |
• | Ability to influence management of the Peak Gold JV; | |
| • | Potential delays or changes in plans with respect to exploration or development projects or capital expenditures; | |
• | Operational constraints and delays; | |
• | Risks associated with exploring in the mining industry; | |
• | Timing and successful discovery of natural resources; | |
• | Availability of capital and the ability to repay indebtedness when due; | |
• | Declines and variations in the price of gold and associated minerals, as well as price volatility for natural resources; | |
• | Availability of operating equipment; | |
• | Operating hazards attendant to the mining industry; | |
• | Weather; | |
• | Ability to find and retain skilled personnel; | |
• | Restrictions on mining activities; | |
• | Legislation that may regulate mining activities; | |
• | Impact of new and potential legislative and regulatory changes (including commitments to international agreements) on mining operating and safety standards; | |
• | Uncertainties of any estimates and projections relating to any future production, costs and expenses (including changes in the cost of fuel, power, materials, and supplies); | |
• | Timely and full receipt of sale proceeds from the sale of any of our mined products (if any); | |
• | Stock price and interest rate volatility; | |
• | Federal and state regulatory developments and approvals; | |
• | Availability and cost of material and equipment; | |
• | Actions or inactions of third-parties; | |
• | Potential mechanical failure or under-performance of facilities and equipment; | |
• | Environmental and regulatory, health and safety risks; | |
• | Strength and financial resources of competitors; | |
• | Worldwide economic conditions; | |
• | Impact of pandemics, such as the worldwide COVID-19 outbreak, which could impact the Company's or the Peak Gold JV’s exploration schedule; | |
• | Expanded rigorous monitoring and testing requirements; | |
• | Ability to obtain insurance coverage on commercially reasonable terms; | |
• | Competition generally and the increasing competitive nature of | |
• | Risks related to title to | |
• | Ability to consummate strategic transactions. |
You should not unduly rely on these forward-looking statements in this report, as they speak only as of the date of this report. Except as required by law, we undertakethe Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events.
See All forward-looking statements included herein are expressly qualified in their entirety by the information under the heading “Risk Factors”cautionary statements contained or referred to in this Form 10-Q for some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in forward-looking statements.section.
Overview
The Company is a Houston-based company, whose primary business is the participationengages in a joint venture to explore in the State of Alaskaexploration for gold ore and associated minerals. On January 8, 2015,minerals in Alaska. The Company conducts its business through three primary means:
● | 30.0% membership interest in Peak Gold, LLC (the “Peak Gold JV”), which leases approximately 675,000 acres from the Tetlin Tribal Council and holds approximately 13,000 additional acres of State of Alaska mining claims (such combined acreage, the “Peak Gold JV Property”) for exploration and development, including in connection with the Peak Gold JV’s plan to mine ore from the Main and North Manh Choh deposits within the Peak Gold JV Property (“Manh Choh” or the “Manh Choh Project”); |
● | its wholly-owned subsidiary, Alaska Gold Torrent, LLC, an Alaska limited liability company (“AGT”), which leases the mineral rights to approximately 8,600 acres of State of Alaska and patented mining claims for exploration from Alaska Hard Rock, Inc., located in three former producing gold mines located on the patented claims in the Willow Mining District about 75 miles north of Anchorage, Alaska (“Lucky Shot”, “Lucky Shot Property”, or the “Lucky Shot Property”); and |
● | its wholly-owned subsidiary, Contango Minerals Alaska, LLC (“Contango Minerals”), which separately owns the mineral rights to approximately 145,280 acres of State of Alaska mining claims for exploration, including (i) approximately 69,780 acres located immediately northwest of the Peak Gold JV Property (the “Eagle/Hona Property”), (ii) approximately 14,800 acres located northeast of the Peak Gold JV Property (the “Triple Z Property”), (iii) approximately 52,700 acres of new property in the Richardson district of Alaska (the “Shamrock Property”) and (iv) approximately 8,000 acres located to the north and east of the Lucky Shot Property (the “Willow Property” and, together with the Eagle/Hona Property, the Triple Z Property, and the Shamrock Property, collectively the “Minerals Property”). The Company relinquished approximately 69,000 acres located on the Eagle/Hona Property in November 2022. The Company retained essentially all of the acreage where drilling work was performed in 2019 and 2021, and used sampling data to determine which acreage should be released. |
The Lucky Shot Property and the Minerals Property are collectively referred to in this Quarterly Report on Form 10-Q as the “Contango Properties”.
The Company’s Manh Choh Project is in the development stage. All other projects are in the exploration stage.
The Company has been involved, directly and Royalthrough the Peak Gold JV, in exploration on the Manh Choh Project since 2010, which has resulted in identifying two mineral deposits (Main and North Manh Choh) and several other gold, silver, and copper prospects. The other 70.0% membership interest in the Peak Gold JV is owned by KG Mining (Alaska), Inc. (“Royal Gold”(“KG Mining”), through theiran indirect wholly-owned subsidiaries, consummatedsubsidiary of Kinross Gold Corporation (“Kinross”). Kinross is a large gold producer with a diverse global portfolio and extensive operating experience in Alaska. The Peak Gold JV plans to mine ore from the transactions (the “Transactions”) contemplated underMain and North Manh Choh deposits and then process the Master Agreement, dated as of September 29, 2014 (the “Master Agreement”), includingore at the formationexisting Fort Knox mining and milling complex located approximately 240 miles (400 km) away. Ore from the mine is to be trucked to Fort Knox for processing on public roadways in newly purchased state-of-the-art trucks carrying legal loads. The use of the Joint Venture Company,Fort Knox facilities is expected to advance explorationaccelerate the development of the Peak Gold Joint VentureJV Property (as defined below)and result in reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall execution risk for the Peak Gold JV to advance the Main and North Manh Choh deposits to production. The Peak Gold JV has entered into an Ore Haul Agreement with Black Gold Transport, located in North Pole, Alaska to transport the run-of-mine ore from the Manh Choh Project to the Fort Knox facilities. Peak Gold JV has also entered into a contract with Kiewit Mining Group to provide contract mining and site preparation work at the Manh Choh Project. The Peak Gold JV will be charged a toll for using the Fort Knox facilities pursuant to a toll milling agreement by and between the Peak Gold JV and Fairbanks Gold Mining, Inc., which is prospective for goldwas entered into and associated minerals. As of December 31, 2017, the Joint Venture Company leased or controlled over an estimated 849,900 acres for the exploration of gold ore and associated minerals.became effective on April 14, 2023.
Background
Contango Mining Company (“Contango Mining”),Kinross released a wholly ownedcombined feasibility study for the Fort Knox mill and the Peak Gold JV in July 2022. Also, in July 2022, Kinross announced that its board of directors (the “Kinross Board”) made a decision to proceed with development of the Manh Choh Project. Effective December 31, 2022, CORE Alaska, LLC, a wholly-owned subsidiary of Contango Oil & Gasthe Company (“Contango”CORE Alaska”), was formedKG Mining, and the Peak Gold JV executed the First Amendment to the Amended and Restated Limited Liability Company Agreement of the Peak Gold JV (as amended, the “A&R JV LLCA”). The First Amendment to the A&R JV LLCA provides that, beginning in 2023, the Company may fund its quarterly scheduled cash calls on a monthly basis. To date, the Peak Gold JV management committee (the “JV Management Committee”) has approved a budget for 2023, with cash calls totaling approximately $165.1 million, of which the purposeCompany’s share is approximately $49.5 million. As of mineral exploration inSeptember 30, 2023, the Company has funded $39.8 million of the 2023 budget. On May 15, 2023, the Peak Gold JV received approval of its Waste Management Plan, Plan of Operations, and Reclamation and Closure Plan from the State of Alaska.Alaska Departments of Environmental Conservation and Natural Resources. As of August 29, 2023, construction at the Manh Choh Project is complete and all mining equipment is on site and mining has commenced. Current mining activity consists of mostly pre-stripping the waste material and stockpiling any ore in preparation for transportation to the Fort Knox mill for processing. Kinross, on behalf of the Peak Gold JV, is also continuing its comprehensive community programs and prioritizing local economic benefits as it develops the project. All permitting activities are completed with all major permits received from both Federal and State permitting agencies. The Peak Gold JV believes that production is expected to commence at Manh Choh in the second half of 2024, with a mine plan that consists of two small, open pits that will be mined concurrently over 4.5 years.
At the Lucky Shot Property, in August 2023, the Company began executing a program to complete surface drilling on the Coleman segment of the Lucky Shot vein. The program was formedshut down in September 2023 to preserve the safety of the Company's employees and contractors due to bad weather conditions.
On the Shamrock Property, the Company conducted soil and surface rock chip sampling during 2021. Follow up trenching and detailed geologic mapping is planned for the summer of 2024. At the Eagle/Hona Property, the Company carried out a detailed reconnaissance of the northern and eastern portions of the large claim block that had not previously been detail sampled. Due to the steep topography, a helicopter was used to execute the program safely. Follow up geologic mapping and sampling is planned for the summer of 2024.
Recent Developments and Other Information
On October 20, 2023, the Committee for Safe Communities (“CSC”), an Alaskan non-profit corporation inclusive of certain owners of vacation homes along the Manh Choh ore haul route and others claiming potential impact and objecting the ore haul plan and project, filed suit (the “Complaint”) in the Superior Court in Fairbanks, Alaska against the State of Alaska Department of Transportation and Public Facilities (“DOT”). The Complaint seeks injunctive relief against the DOT with respect to its oversight of the Peak Gold JV’s ore haul plan. The Complaint alleges that the DOT has approved a haul route and trucking plan that violates DOT regulations, DOT’s actions have created an unreasonable risk to public safety constituting an attractive public nuisance, and DOT has aided and abetted the offense of negligent driving. On November 2, 2023, CSC filed a motion for a preliminary injunction against the DOT and is seeking expedited consideration of its motion. If granted, the motion could impact the Peak Gold JV’s ore haul plans. The Peak Gold JV intends to intervene in the action whether by agreement of the parties or by motion and to vigorously defend its interests and the legality of its ore haul plans. The Peak Gold JV is also in consultation with DOT on September 1, 2010 asaddressing the allegations raised. On November 9, 2023, the motion for expedited consideration of the motion for preliminary injunction was denied by the Superior Court Judge.
On August 2, 2023, CORE Alaska, pursuant to an ISDA Master Agreement entered into with ING Capital Markets LLC (the “ING ISDA Master Agreement”) and an ISDA Master Agreement entered into with Macquarie Bank Limited (the “Macquarie ISDA Master Agreement”), in accordance with its obligations under that certain Credit and Guarantee Agreement, by and among the Company, its subsidiaries, ING Capital LLC (“ING”) and Macquarie Bank Limited (“Macquarie”), entered into a Delaware corporationseries of hedging agreements with ING and on November 29, 2010, Contango Mining assigned all its propertiesMacquarie for the sale of an aggregate of 124,600 ounces of gold at a weighted average price of $2,025 per ounce. The hedge agreements have delivery obligations beginning in July 2024 and certain other assetsending in December 2026, and liabilitiesrepresent approximately 45% of the Company’s interest in the projected production from the Manh Choh mine over the current anticipated life of the mine.
On July 24, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Maxim Group LLC and Freedom Capital Markets (collectively, the “Underwriters”), relating to Contango. Contango contributedan underwritten public offering (the “Underwritten Offering”) of 1,600,000 shares (the “Underwritten Shares”) of the propertiesCompany’s common stock. All of the Underwritten Shares are being sold by the Company. The offering price of the Underwritten Shares was $19.00 per share, and $3.5 million of cashthe Underwriters agreed to purchase the Underwritten Shares from the Company pursuant to the termsUnderwriting Agreement at a price of a Contribution Agreement$17.77 per share (the “Contribution Agreement”“Purchase Price”), in exchange for approximately 1.6which includes a 6.5% Underwriters discount. The net proceeds from the Underwritten Offering were $28.2 million shares of the Company’s common stock. The transactions occurred between companies under common control. Contango then distributed all of the Company’s common stock to Contango’s stockholders of record as of October 15, 2010, promptly after the effective date of the Company’s Registration Statement Form 10 on the basis of one share of common stock for each ten (10) shares of Contango’s common stock then outstanding.
Contango Mining acquired an interest in properties from Juneau Exploration, L.P., (“JEX”) in exchange for $1 milliondeducting underwriting discounts and a 3.0% overriding royalty interest in the properties granted to JEX. JEX assisted the Company in acquiring additional properties in Alaska pursuant to an Advisory Agreement dated September 6, 2012,commissions and the Company granted to JEX a 2% overriding royalty interest in the additional properties acquired. On September 29, 2014, pursuant to a Royalty Purchase Agreement between JEX and Royal Gold (the “Royalty Purchase Agreement”), JEX sold its entire overriding royalty interest in the properties to Royal Gold. On the same date, the Company terminated the Advisory Agreement with JEX. In connection with the closing of the Transactions with Royal Gold (the “Closing”), the Company formed the Joint Venture Company and contributed to the Joint Venture Company the Peak Gold Joint Venture Property near Tok, Alaska, together with other personal property (the “Contributed Assets”) with a historical cost of $1.4 million and an agreed value of $45.7 million (the “Contributed Assets Value”). At the Closing, the Company and Royal Gold, through their wholly-owned subsidiaries, entered into the JV LLCA. offering expenses.
Upon Closing, Royal Gold initially contributed $5 million to fund exploration activity of the Joint Venture Company. The initial $5 million did not give Royal Gold an equity stake in the Joint Venture Company. In connection with the initial contribution, Royal Gold received an option to earn up to a 40% interest in the Joint Venture Company by investing up to $30 million (inclusive of the initial $5 million investment) prior to October 2018. As of December 31, 2017, Royal Gold has contributed $29.3 million (including its initial $5 million investment) to the Joint Venture Company and earned a 39.0% interest in the Joint Venture Company. The proceeds of Royal Gold’s investment have been and will be used by the Joint Venture Company for additional exploration of the property it controls.
Properties
Since 2009, the Company's primary focus has been the exploration of a mineral lease with the Native Village of Tetlin whose governmental entity is the Tetlin Tribal Council (“Tetlin Tribal Council”) for the exploration of minerals near Tok, Alaska on a currently estimated 675,000 acres (the “Tetlin Lease”) and almost all of the Company's resources have been directed to that end. All significant work presently conducted by the Company has been directed at exploration of the Tetlin Lease and increasing understanding of the characteristics of, and economics of, any mineralization. There are no known quantifiable mineral reserves on the Tetlin Lease or any of the Company's other properties as defined by the Securities and Exchange Commission ("SEC") Industry Guide 7.
The Tetlin Lease originally had a ten year term beginning July 2008 which was extended for an additional ten years to July 15, 2028. If the properties under the Tetlin Lease are placed into commercial production, the Tetlin Lease will be held throughout production and the Company would be obligated to pay a production royalty to the Tetlin Tribal Council, which varies from 2.0% to 5.0%, depending on the type of metal produced and the year of production. In June 2011, the Company paid the Tetlin Tribal Council $75,000 in exchange for reducing the production royalty payable to them by 0.25%. In July 2011, the Company paid the Tetlin Tribal Council an additional $150,000 in exchange for further reducing the production royalty by 0.50%. These payments lowered the production royalty to a range of 1.25% to 4.25%, depending on the type of metal produced and the year of production. On or before July 15, 2020, the Tetlin Tribal Council has the option to increase its production royalty by (i) 0.25% by payment to the Joint Venture Company of $150,000, (ii) 0.50% by payment to the Joint Venture Company of $300,000, or (iii) 0.75% by payment to the Joint Venture Company of $450,000.
The Joint Venture Company also holds certain State of Alaska unpatented mining claims for the exploration of gold ore and associated minerals. The Company believes that the Joint Venture Company holds good title to its properties, in accordance with standards generally accepted in the mineral industry. As is customary in the mineral industry, the Company conducted only a preliminary title examination at the time it acquired the Tetlin Lease. The Joint Venture Company conducted a title examination prior to the assignment of the Tetlin Lease to the Joint Venture Company and performed certain curative title work. Before the Joint Venture Company begins any mine development work, however, the Joint Venture Company is expected to again conduct a full title review and perform curative work on any defects that it deems significant. A significant amount of additional work is likely required in the exploration of the properties before any determination as to the economic feasibility of a mining venture can be made.
The following table summarizes the Tetlin Lease and unpatented mining claims (the "Peak Gold Joint Venture Property") held by the Joint Venture Company as of December 31, 2017:
Property |
| Location |
| Commodities |
| Claims |
| Estimated Acres |
| Type | |
Tetlin-Tok |
| Eastern Interior |
| Gold, Copper, Silver |
| 131 |
| 10,900 |
| State Mining Claims | |
Eagle |
| Eastern Interior |
| Gold, Copper, Silver |
| 428 |
| 65,900 |
| State Mining Claims | |
Bush |
| Eastern Interior |
| Gold, Copper, Silver |
| 48 |
| 7,700 |
| State Mining Claims | |
West Fork |
| Eastern Interior |
| Gold, Copper, Silver |
| 48 |
| 7,700 |
| State Mining Claims | |
Triple Z |
| Eastern Interior |
| Gold, Copper, Silver |
| 45 |
| 7,200 |
| State Mining Claims | |
| Noah | Eastern Interior | Gold, Copper, Silver | 482 | 75,400 | State Mining Claims | ||||||
Tetlin-Village |
| Eastern Interior |
| Gold, Copper, Silver |
| - |
| 675,000 |
| Lease | |
|
| TOTALS: |
|
|
| 1,182 |
| 849,800 |
|
| |
Strategy
Partnering with strategic industry participants to expand future exploration work.In connection As of October 1, 2020, in conjunction with an evaluation of the Company’s strategic options conducted byKinross transactions that established the Board of Directors and its financial advisor, the Company determined to continue its exploration activities oncurrent ownership interests in the Peak Gold Joint Venture Property through a joint venture with an experienced industry participant. As a result,JV and the Company formedsigning of the Joint Venture Company pursuant to theA&R JV LLCA, with Royal Gold. Under the JV LLCA, Royal Gold is appointed asKG Mining became the manager of the Joint Venture CompanyPeak Gold JV (the “Manager”), initially, with overall management responsibility for operations of the Joint Venture Company through October 31, 2018, and, thereafter, provided Royal Gold earns at least a forty percent (40%) percentage interest by October 31, 2018. Royal Gold. KG Mining may resign as Manager and can be removed as Manager for a material breach of the A&R JV LLCA, a material failure to perform its obligations as the Manager, a failure to conduct the Joint Venture CompanyPeak Gold JV operations in accordance with industry standards and applicable laws, and other limited circumstances. The Manager will manage, and direct the operation of the Joint Venture Company, and will discharge its duties, in accordance with approved programs and budgets. The Manager will implement the decisions of the Management Committee of the Joint Venture Company (the “Management Committee”) and will carry out the day-to-day operations of the Joint Venture Company. Except as expressly delegated to the Manager, the A&R JV LLCA provides that the JV Management Committee has exclusive authority to determine all management matters related to the Company. Initially, theThe JV Management Committee currently consists of one appointee designated by the Company and two appointees designated by Royal Gold. Each designate onKG Mining. The Representatives designated by each member of the Management Committee is entitled to one vote. Except for the list of specific actions set forthPeak Gold JV vote as a group, and in accordance with their respective membership interests in the JV LLCA Agreement,Peak Gold JV. Except in the case of certain actions that require approval by unanimous vote of the Representatives, the affirmative vote byof a majority of designates is required for action.the membership interests in the Peak Gold JV constitutes the action of the JV Management Committee.
Structuring Incentives to Drive Behavior. The Company believes that equity ownership aligns the interests of the Company'sCompany’s executives and directors with those of its stockholders. As of December 31, 2017,September 30, 2023, the Company'sCompany’s directors and executives beneficially own approximately 14.9%17.8% of the Company'sCompany’s common stock. An additional 13.2% of the Company's common stock is beneficially owned by the Marital Trust of Mr. Kenneth R. Peak, the Company's former Chairman, who passed away on April 19, 2013.
Stock Options. As of the date of this report, the option awards listed in the table below have been granted to directors, officers, employees and consultants of the Company:
Option Awards | |||||||
Period Granted |
| Options Granted |
| Weighted Average Exercise Price |
| Vesting Period (7) | Expiration Date |
September 2011 (1) |
| 50,000 |
| $13.13 |
| Vests over two years, beginning with one-third on the grant date. | September 2016 |
July 2012 (2) |
| 100,000 |
| $10.25 |
| Vests over two years, beginning with one-third on the grant date. | July 2017 |
December 2012 (3) |
| 250,000 |
| $10.20 |
| Vests over two years, beginning with one-third on the grant date. | December 2017 |
June 2013 (4) |
| 37,500 |
| $10.00 |
| Vested Immediately | June 2018 |
July 2013 (5) |
| 5,000 |
| $10.00 |
| Vested Immediately | July 2018 |
September 2013 (6) |
| 37,500 |
| $10.01 |
| Vested Immediately | September 2018 |
September 2013 (6) |
| 15,000 |
| $10.01 |
| Vests over two years, beginning with one-third on the grant date. | September 2018 |
(1)The Company granted 40,000 stock options to its directors and executives and an additional 10,000 stock options to its technical consultant, the owner of Avalon, for services performed during fiscal year 2011. Of the total options granted 15,000 were later forfeited.
(2) The Company granted 75,000 stock options to its directors and executives and an additional 25,000 stock options to its technical consultant for services performed during fiscal year 2012. Of the total options granted as a part of this grant, 25,000 were later forfeited.
(3) The Company granted 175,000 stock options to its directors and executives and an additional 75,000 stock options to its technical consultant for services performed during fiscal year 2013. Of the total options granted as a part of this grant, 50,000 were later forfeited.
(4) The Company granted 37,500 stock options to its executives for services performed during fiscal year 2013.
(5) The Company granted 5,000 stock options to an employee of Avalon for services performed during fiscal year 2013.
(6) The Company granted 52,500 stock options to its executives for services performed during the first quarter of fiscal year 2014.
(7) If at any time there occurs a change of control, as defined in the Amended Equity Plan, any options that are unvested at that time will immediately vest. The Company's Compensation Committee has determined that the Transactions do not constitute a change in control under the Amended Equity Plan.
During the quarter ended December 31, 2017, the Company's current executives, directors, and consultants cashless exercised 190,000 stock options resultingAcquiring exploration properties. The Company anticipates from time to time acquiring additional properties in the issuance of 93,026 shares of common stockAlaska for exploration, subject to the exercising parties and no proceeds to the Company. During fiscal year 2017, the Company's current and former executives, directors, and consultants cashless exercised 140,000 stock options resulting in the issuanceavailability of 71,454 shares of common stock to the exercising parties and no proceeds to the Company.
Exploration and Mining Property
Exploration and miningfunds. The acquisitions may include leases or similar rights infrom Alaska Native corporations or may be acquired in the following manner: public lands, private fee lands, unpatentedinclude filing Federal or State of Alaska mining claims patented miningby staking claims for exploration. Acquiring additional properties will likely result in additional expense to the Company for minimum royalties, minimum rents and tribal lands.annual exploratory work requirements. The primary sources for acquisition of these lands are the United States government, through the Bureau of Land ManagementCompany is open to strategic partnerships or alliances with other companies as a means to enhance its ability to fund new and the United States Forest Service, the Alaskan state government, tribal governments,existing exploration and individuals or entities who currently hold title to or lease government and private lands.development opportunities.
Tribal lands are those lands that are under control by sovereign Native American tribes, such as land constituting the Tetlin Lease or Alaska Native corporations established by the Alaska Native Claims Settlement Act of 1971 (ANSCA). Areas that show promise for exploration and mining can be leased or joint ventured with the tribe controlling the land, including land constituting the Tetlin Lease.
The State of Alaska government owns public lands. Mineral resource exploration, development and production are administered primarily by the State Department of Natural Resources. Ownership of the subsurface mineral estate, including alluvial and lode mineral rights, can be acquired by staking a 40 acre or 160 acre mining claim, which right is granted under Alaska Statute Sec. 38.05.185 to 38.05.275, as amended (the “Alaska Mining Law”). The State of Alaska government continues to own the surface estate, subject to certain rights of ingress and egress owned by the claimant, even though the subsurface can be controlled by a claimant with a right to extract through claim staking. A mining claim is subject to annual assessment work requirements, the payment of annual rental fees and royalties due to the State of Alaska after commencement of commercial production. Both private fee-land and unpatented mining claims and related rights, including rights to use the surface, are subject to permitting requirements of federal, state, tribal and local governments.
Gold Exploration
The Joint Venture Company controls an estimated 849,800 acres consisting of the Tetlin Lease and State of Alaska mining claims for the exploration of gold and associated minerals. To date, our gold exploration has concentrated on the Tetlin Lease, with only a limited amount of work performed on the Tok, Eagle, Bush, West Fork, Triple Z, and Noah claims.
The Joint Venture Company initiated a summer of 2015 exploration program on the Tetlin Lease. The work program anticipated spending $5 million with a possible expansion of the work program in early fall if drilling results warranted further work. The drilling program included exploration targets that were helicopter-supported at the Tors, Saddle, North Saddle and Saddle Skarn targets and road-supported work at the Peak Zone area. Most of the initial work program (Phase I) was completed by early August with assay results received by early September. On August 31, 2015, the Joint Venture Company approved a budget of up to approximately $4 million for additional exploration work to be completed before the drilling season ended in October 2015 and incurred aggregate cost of approximately $6.8 million for the calendar 2015 exploration program.
The Joint Venture Company initiated a calendar 2016 Phase I exploration program consisting of drilling the North Peak target area which began in February 2016 on the Tetlin Lease with an approved budget of $4.4 million. An additional budget was approved for spending up to an additional $6.8 million during the remainder of calendar 2016. The Joint Venture Company initiated a 2016 Phase II exploration drilling program in May, which was completed in September. A Phase III exploration drilling program was initiated in October and completed in November. The project incurred an aggregate cost in calendar 2016 of approximately $10.6 million.
The Joint Venture Company initiated a calendar 2017 Phase I exploration program consisting of drilling the North Peak target area and testing the True Blue Moon target area which began in February 2017 on the Tetlin Lease with an approved budget of $5.3 million. The 2017 Phase I program was completed in April. The Joint Venture Company initiated a 2017 Phase II exploration drilling and reconnaissance program in May, which was completed in July 2017. The Joint Venture Company initiated Phase III of the 2017 drilling program, which consisted of exploration drilling in the West Peak, West Peak Extension, 7 O’clock, Forks, and North Peak areas in September 2017. Phase III was completed in October 2017. The calendar 2017 Phase I, Phase II, and Phase III programs and associated technical work incurred an aggregate cost through December 31, 2017 of approximately $12.2 million.
From inception to December 31, 2017, the Joint Venture Company has incurred $29.5 million in exploration program expenditures. As of December 31, 2017, Royal Gold had funded a total of $29.3 million (including the initial investment of $5 million) and earned a 39.0% interest in the Joint Venture Company.
The exploration effort on the Tetlin Lease has resulted in identifying two mineral deposits (Peak and North Peak) and several other gold and copper prospects following drilling programs starting in 2011. Surface, bedrock, and stream sediment data on the Tetlin Lease as well as on the Eagle, Noah and Tok state of Alaska claims adjacent to the Tetlin Lease have been gathered during the summer exploration programs. There was no exploration program in 2014. None of the exploration targets are known to host quantifiable commercial mineral reserves and none are near or adjacent to other known significant gold or copper deposits. There has been no recorded past placer or lode mining on Peak Gold joint venture project, and the Company and the Joint Venture Company are the only entities known to have conducted drilling operations on the Peak Gold joint venture project.
Chief Danny Prospect Area
The Chief Danny Prospect Area currently is the most advanced exploration target on the Tetlin Lease and is comprised of several distinct mineralized areas: Main Peak Zone, Discovery Zone, West Peak Zone, North Peak Zone, Saddle Zone and the 7 O’clock area. The Chief Danny prospect was discovered during rock, stream sediment and pan concentrate sampling in 2009 and since then has been explored using top of bedrock soil auger sampling, trenching, ground induced polarization (IP) geophysics, airborne magnetic and resistivity surveys and core drilling. Results from this work indicate the presence of a zoned metal-bearing system consisting of a gold-copper-iron enriched core covering six square miles at Chief Danny South (includes Main Peak, Discovery, West Peak, and North Peak) and a fault-offset arsenic-gold enriched zone to the north covering three square miles at the Saddle Zone. The Company has conducted extensive drilling on the Main Peak, North Peak, and West Peak Zones. The Company has also conducted some environmental base line studies on the areas surrounding the Chief Danny prospect, as well as airborne magnetic and resistivity programs. From 2009 through 2017, the Company conducted field-related exploration work at the Chief Danny Prospect, including collecting the following samples:
Year |
| Program |
| Core Samples |
| Rock Samples |
| Soil Samples |
| Pan Con Samples |
| Stream Silt Samples |
| Core (feet) |
| IP/Geophysics (kilometers) |
| Trenching (feet) | ||||||||
2009 |
| Chief Danny |
| — |
| 958 |
| 33 |
| 94 |
| 11 |
| — |
| — |
| 2,330 | ||||||||
2010 |
| Chief Danny |
| — |
| 613 |
| 760 |
| 668 |
| 795 |
| — |
| 14 |
| — | ||||||||
2011 |
| Chief Danny |
| 1,267 |
| 20 |
| 688 |
| — |
| — |
| 8,057 |
| 3,957 |
| — | ||||||||
2012 |
| Chief Danny |
| 5,223 |
| 82 |
| 1,029 |
| — |
| — |
| 36,006 |
| — |
| — | ||||||||
2013 |
| Chief Danny |
| 8,970 |
| 14 |
| 1,406 |
| 85 |
| 278 |
| 47,081 |
| 2,414 |
| — | ||||||||
2014 |
| Chief Danny |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||
2015 |
| Chief Danny |
| 8,352 |
| 133 |
| — |
| — |
| — |
| 46,128 |
| — |
| — | ||||||||
2016 |
| Chief Danny |
| 10,450 |
| 21 |
| 694 |
| — |
| — |
| 67,336 |
| 24 |
| — | ||||||||
| 2017 | Chief Danny | 11,864 | 112 | 975 | 408 | 408 | 59,347 | 48 | — | |||||||||||||||||
|
| Total |
| 46,126 |
| 1,953 |
| 5,585 |
| 1,255 |
| 1,492 |
| 263,955 |
| 6,457 |
| 2,330 | ||||||||
The map below depicts the grade times thickness in the Main Peak, North Peak, and West Peak zones:
2017 Exploration Program - Phase III. The Phase III exploration drilling completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaled 2,966 meters (9,731 feet) in 16 holes. The Joint Venture Company spent an estimated $4.7 million, during the September and December quarter combined, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Phase III drilling consisted of exploration drilling West Peak and West Peak Extension (1,707 meters), 7 O’clock (203 meters), Forks (729 meters), and North Peak (327). The 2017 Phase III program was completed October 18, 2017, and statistics represent the full Phase III program.
A total of 363 pan concentrate, 364 stream sediment and 5 grab rock samples were collected over the Noah and southern Eagle claims in July and early August. Results from these efforts were received in the third quarter and revealed three large areas where anomalous gold, arsenic, and copper were concentrated. Gold, arsenic and copper in steams sediment samples range up to 377 ppb, 161 ppm and 412 ppm, respectively. Gold, arsenic and copper in pan cons range up to 9,929 ppb, 803 ppm and 206 ppm, respectively.
The map below depicts the location of the core holes drilled during the 2017 Phase III program:
Significant Drill Intercepts from the 2017 Phase III Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase II of the 2017 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au_gpt | Au_opt | Ag_gpt | Cu % |
| TET17408 | West Peak Ext | 78.05 | 82.01 | 3.96 | 1.35 | 0.039 | 0.1 | 0.006 |
| and | West Peak Ext | 88.33 | 93.75 | 5.42 | 1.33 | 0.039 | 0.3 | 0.013 |
| TET17408 | West Peak Ext | 150.08 | 151.93 | 1.85 | 2.50 | 0.073 | 1.9 | 0.021 |
| TET17409 | West Peak Ext | 113.07 | 117.54 | 4.47 | 0.86 | 0.025 | 1.3 | 0.010 |
| TET17411 | West Peak Ext | 161.17 | 162.78 | 1.61 | 4.55 | 0.133 | 10.0 | 0.116 |
| TET17412 | West Peak Ext | 140.19 | 141.22 | 1.03 | 4.79 | 0.140 | 2.1 | 0.018 |
| and | West Peak Ext | 148.44 | 151.19 | 2.75 | 0.76 | 0.022 | 0.9 | 0.005 |
| TET17412 | West Peak Ext | 156.50 | 157.44 | 0.94 | 1.61 | 0.047 | 0.0 | 0.010 |
| TET17413 | West Peak Ext | 140.50 | 142.57 | 2.07 | 1.68 | 0.049 | 2.97 | 0.082 |
| TET17415 | West Peak Ext | 201.73 | 202.98 | 1.25 | 2.95 | 0.086 | 12.3 | 0.004 |
2017 Exploration Program - Phase II. The Phase II exploration drilling completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaled 9,761 meters (32,038 feet) in 44 holes. The Joint Venture Company spent an estimated $4.7 million, during the June quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling, through the end of July, consisted of exploration drilling West Peak (461 meters), West Peak Extension (2,603 meters) Discovery (1,034 meters), 7 O’clock (1,443 meters), New Moon (1,398 meters), Waterpump (1,161 meters), Main Peak (570 meters) and North Peak (1,095). Soils auger sampling and IP geophysical surveys were conducted in the Chief Danny area. Stream sediment and pan concentrate samples were collected across the Noah group of claims. The 2017 Phase II program was completed July 31, 2017, and statistics represent the full Phase II program.
The map below depicts the location of the core holes drilled during the 2017 Phase II program:
Significant Drill Intercepts from the 2017 Phase II Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase II of the 2017 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au_gpt | Au_opt | Ag_gpt | Cu % |
TET17351 | Main Peak | 16.30 | 18.55 | 2.25 | 1.88 | 0.055 | 1.0 | 0.025 |
TET17353 | True Blue Moon | 91.97 | 93.73 | 1.76 | 9.15 | 0.267 | 2.0 | 0.375 |
Including | True Blue Moon | 91.97 | 92.14 | 0.17 | 81.60 | 2.380 | 2.4 | 0.249 |
TET17357 | True Blue Moon | 56.43 | 61.77 | 5.34 | 0.87 | 0.025 | 1.5 | 0.249 |
| TET17360 | North Peak | 24.27 | 26.67 | 2.40 | 0.63 | 0.044 | 2.4 | 0.137 |
TET17362 | New Moon | 66.01 | 68.58 | 2.57 | 1.03 | 0.030 | 2.6 | 0.084 |
TET17363 | New Moon | 39.48 | 41.76 | 2.28 | 1.78 | 0.052 | 0.0 | 0.016 |
and | New Moon | 213.59 | 215.31 | 1.72 | 0.95 | 0.028 | 1.1 | 0.017 |
TET17367 | Discovery | 44.65 | 45.11 | 0.46 | 4.33 | 0.126 | 6.1 | 0.069 |
and | Discovery | 182.06 | 183.80 | 1.74 | 1.11 | 0.032 | 1.9 | 0.102 |
and | Discovery | 253.68 | 257.10 | 3.42 | 1.28 | 0.037 | 1.0 | 0.052 |
and | Discovery | 313.34 | 315.15 | 1.81 | 1.44 | 0.042 | 1.6 | 0.121 |
TET17368 | West Peak Ext | 117.15 | 118.00 | 0.85 | 2.70 | 0.079 | 17.7 | 0.063 |
and | West Peak Ext | 123.75 | 126.70 | 2.95 | 0.70 | 0.020 | 2.9 | 0.073 |
and | West Peak Ext | 142.35 | 147.22 | 4.87 | 0.76 | 0.022 | 1.2 | 0.021 |
and | West Peak Ext | 175.41 | 178.11 | 2.70 | 1.14 | 0.033 | 0.7 | 0.020 |
TET17369 | West Peak Ext | 172.82 | 186.91 | 14.09 | 2.75 | 0.080 | 3.1 | 0.101 |
Including | West Peak Ext | 172.82 | 173.79 | 0.97 | 9.57 | 0.279 | 4.7 | 0.022 |
and | West Peak Ext | 174.94 | 176.17 | 1.23 | 9.51 | 0.277 | 5.1 | 0.206 |
TET17370 | Discovery | 100.30 | 103.03 | 2.73 | 0.66 | 0.019 | 2.4 | 0.058 |
and | Discovery | 166.73 | 167.73 | 1.00 | 6.30 | 0.184 | 1.3 | 0.041 |
and | Discovery | 221.36 | 223.04 | 1.68 | 0.93 | 0.027 | 0.0 | 0.002 |
TET17371 | West Peak Ext | 196.94 | 199.75 | 2.81 | 0.74 | 0.022 | 3.2 | 0.075 |
TET17372 | Discovery | 292.78 | 298.19 | 5.41 | 0.58 | 0.017 | 1.7 | 0.047 |
and | Discovery | 304.01 | 305.65 | 1.64 | 1.87 | 0.055 | 1.8 | 0.077 |
TET17375 | Seven o'clock | 218.14 | 219.54 | 1.40 | 13.20 | 0.385 | 24.7 | 0.594 |
TET17377 | Seven o'clock | 246.66 | 249.10 | 2.44 | 4.25 | 0.124 | 59.6 | 0.540 |
TET17379 | West Peak Ext | 103.24 | 111.40 | 8.16 | 5.22 | 0.152 | 0.7 | 0.010 |
Including | West Peak Ext | 108.36 | 109.14 | 0.78 | 18.20 | 0.531 | 1.5 | 0.025 |
and | West Peak Ext | 116.60 | 145.70 | 29.10 | 2.53 | 0.074 | 0.6 | 0.030 |
Including | West Peak Ext | 143.16 | 143.86 | 0.70 | 8.93 | 0.260 | 2.4 | 0.091 |
TET17381 | West Peak Ext | 135.90 | 138.17 | 2.27 | 1.27 | 0.037 | 1.7 | 0.012 |
TET17385 | West Peak Ext | 154.53 | 160.07 | 5.54 | 2.06 | 0.060 | 80.5 | 0.278 |
TET17388 | West Peak Ext | 6.71 | 12.48 | 5.77 | 0.67 | 0.020 | 0.8 | 0.162 |
and | West Peak Ext | 20.47 | 22.08 | 1.61 | 2.59 | 0.076 | 0.0 | 0.080 |
and | West Peak Ext | 127.56 | 133.50 | 5.94 | 0.55 | 0.016 | 0.4 | 0.013 |
and | West Peak Ext | 151.66 | 166.73 | 15.07 | 1.66 | 0.048 | 1.3 | 0.027 |
TET17389 | West Peak Ext | 162.60 | 166.12 | 3.52 | 0.66 | 0.019 | 2.1 | 0.042 |
TET17390 | West Peak Ext | 57.15 | 60.33 | 3.18 | 1.92 | 0.056 | 1.6 | 0.258 |
and | West Peak Ext | 206.96 | 213.17 | 6.21 | 1.31 | 0.038 | 0.8 | 0.031 |
and | West Peak Ext | 264.99 | 266.49 | 1.50 | 6.31 | 0.184 | 0.0 | 0.004 |
TET17393 | Main Peak | 2.13 | 20.51 | 18.38 | 3.22 | 0.094 | 2.0 | 0.082 |
Including | Main Peak | 3.96 | 5.18 | 1.22 | 10.60 | 0.309 | 2.1 | 0.073 |
and | Main Peak | 19.04 | 19.51 | 0.47 | 15.10 | 0.440 | 8.6 | 0.205 |
TET17393 | Main Peak | 27.98 | 71.82 | 43.84 | 6.93 | 0.202 | 1.9 | 0.057 |
Including | Main Peak | 39.06 | 40.08 | 1.02 | 92.70 | 2.704 | 33.9 | 0.127 |
and | Main Peak | 50.06 | 52.00 | 1.94 | 19.70 | 0.575 | 2.2 | 0.088 |
TET17393 | Main Peak | 78.33 | 102.72 | 24.39 | 2.29 | 0.067 | 1.1 | 0.010 |
Including | Main Peak | 82.75 | 83.54 | 0.79 | 8.75 | 0.255 | 1.5 | 0.019 |
and | Main Peak | 93.57 | 94.38 | 0.81 | 11.40 | 0.333 | 6.5 | 0.014 |
TET17393 | Main Peak | 111.86 | 134.99 | 23.13 | 12.56 | 0.366 | 9.0 | 0.086 |
Including | Main Peak | 127.91 | 128.83 | 0.92 | 48.70 | 1.420 | 25.7 | 0.131 |
and | Main Peak | 133.20 | 134.99 | 1.79 | 71.20 | 2.077 | 15.9 | 0.157 |
TET17395 | Main Peak | 34.11 | 36.15 | 2.04 | 4.55 | 0.133 | 0.0 | 0.031 |
and | Main Peak | 51.80 | 55.13 | 3.33 | 0.90 | 0.026 | 3.6 | 0.141 |
and | Main Peak | 62.55 | 73.59 | 11.04 | 4.72 | 0.138 | 5.7 | 0.147 |
TET17395 | Main Peak | 78.51 | 219.37 | 140.86 | 13.27 | 0.387 | 42.6 | 0.609 |
Including | Main Peak | 116.62 | 118.70 | 2.08 | 49.20 | 1.435 | 94.7 | 0.997 |
and | Main Peak | 118.70 | 120.25 | 1.55 | 93.40 | 2.724 | 175.0 | 1.830 |
and | Main Peak | 155.39 | 158.37 | 2.98 | 44.30 | 1.292 | 78.0 | 1.180 |
TET17396 | Waterpump | 33.77 | 35.55 | 1.78 | 1.07 | 0.031 | 2.3 | 0.264 |
TET17397 | Main Peak | 23.47 | 47.89 | 24.42 | 12.42 | 0.362 | 7.8 | 0.236 |
Including | Main Peak | 24.89 | 25.62 | 0.73 | 71.60 | 2.088 | 14.8 | 0.137 |
and | Main Peak | 30.14 | 32.29 | 2.15 | 49.50 | 1.444 | 8.0 | 0.283 |
and | Main Peak | 32.29 | 32.65 | 0.36 | 40.80 | 1.190 | 24.4 | 0.907 |
TET17397 | Main Peak | 56.87 | 94.03 | 37.16 | 1.70 | 0.050 | 4.2 | 0.093 |
Including | Main Peak | 61.80 | 63.55 | 1.75 | 7.02 | 0.205 | 20.3 | 0.148 |
and | Main Peak | 66.14 | 67.24 | 1.10 | 10.20 | 0.298 | 8.6 | 0.280 |
TET17397 | Main Peak | 99.44 | 165.21 | 65.77 | 20.14 | 0.587 | 8.8 | 0.260 |
Including | Main Peak | 124.66 | 124.94 | 0.28 | 162.70 | 4.745 | 23.8 | 0.613 |
and | Main Peak | 124.94 | 125.75 | 0.81 | 68.00 | 1.983 | 11.4 | 0.237 |
and | Main Peak | 148.44 | 149.12 | 0.68 | 57.00 | 1.663 | 31.0 | 1.000 |
2017 Exploration Program - Phase I. During the quarter ending March 31, 2017, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 5,236 meters (17,179 feet) in 47 holes. The Joint Venture Company spent an estimated $2.8 million, during the quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling consisted of infilling and expanding the mineralized zone in North Peak totaling 3,703 meters, target testing in West Peak totaling 282 meters and target testing of True Blue Moon totaling 1,251 meters.
The map below depicts the location of the core holes drilled during the 2017 Phase I program:
2017 PHASE I CORE HOLES DRILLED
Significant Drill Intercepts from the 2017 Phase I Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase I of the 2017 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au_gpt | Au_opt | Ag_gpt | Cu % |
TET17312 | North Peak | 4.27 | 33.39 | 29.12 | 7.12 | 0.208 | 69.4 | 0.121 |
Including | North Peak | 16.46 | 18.92 | 2.46 | 24.10 | 0.703 | 368.0 | 0.044 |
and | North Peak | 22.95 | 24.08 | 1.13 | 57.40 | 1.674 | 72.9 | 0.237 |
TET17312 | North Peak | 36.79 | 37.59 | 0.80 | 4.93 | 0.144 | 37.6 | 0.190 |
TET17313 | North Peak | 3.66 | 31.70 | 28.04 | 8.80 | 0.257 | 83.8 | 0.147 |
Including | North Peak | 18.29 | 20.27 | 1.98 | 55.25 | 1.611 | 443.3 | 0.072 |
TET17313 | North Peak | 37.62 | 39.92 | 2.30 | 4.67 | 0.136 | 27.5 | 0.110 |
TET17313 | North Peak | 79.07 | 84.43 | 5.36 | 3.20 | 0.093 | 39.0 | 0.231 |
TET17313 | North Peak | 85.34 | 85.65 | 0.31 | 18.95 | 0.553 | 588.0 | 1.055 |
TET17313 | North Peak | 85.95 | 86.87 | 0.92 | 9.03 | 0.263 | 266.0 | 1.140 |
TET17314 | North Peak | 137.02 | 139.90 | 2.88 | 1.23 | 0.036 | 217.1 | 0.102 |
TET17315 | North Peak | 81.95 | 83.06 | 1.11 | 2.43 | 0.071 | 17.4 | 0.084 |
TET17316 | North Peak | 20.49 | 26.44 | 5.95 | 2.56 | 0.075 | 23.5 | 0.296 |
TET17316 | North Peak | 87.03 | 87.97 | 0.94 | 2.79 | 0.081 | 13.4 | 0.178 |
TET17316 | North Peak | 100.18 | 105.16 | 4.98 | 1.00 | 0.029 | 21.3 | 0.243 |
TET17317 | North Peak | 38.95 | 46.57 | 7.62 | 8.72 | 0.254 | 4.1 | 0.086 |
Including | North Peak | 44.48 | 46.57 | 2.09 | 27.80 | 0.811 | 11.2 | 0.149 |
TET17318 | North Peak | 116.91 | 117.16 | 0.25 | 64.20 | 1.873 | 14.5 | 0.008 |
TET17320 | North Peak | 2.44 | 6.46 | 4.02 | 2.59 | 0.076 | 26.0 | 0.054 |
TET17320 | North Peak | 50.90 | 57.52 | 6.62 | 7.81 | 0.228 | 170.0 | 0.323 |
TET17321 | North Peak | 49.99 | 52.20 | 2.21 | 2.28 | 0.067 | 258.0 | 0.430 |
TET17322 | North Peak | 29.01 | 32.46 | 3.45 | 0.88 | 0.026 | 39.3 | 0.193 |
TET17323 | North Peak | 1.27 | 7.32 | 6.05 | 2.34 | 0.068 | 40.3 | 0.016 |
TET17325 | North Peak | 5.49 | 6.20 | 0.71 | 22.00 | 0.642 | 9.5 | 0.128 |
TET17325 | North Peak | 10.04 | 14.83 | 4.79 | 3.63 | 0.106 | 2.0 | 0.036 |
Including | North Peak | 12.68 | 13.22 | 0.54 | 21.50 | 0.627 | 7.7 | 0.162 |
TET17325 | North Peak | 19.11 | 20.32 | 1.21 | 41.10 | 1.199 | 17.4 | 0.145 |
TET17325 | North Peak | 24.88 | 25.60 | 0.72 | 5.40 | 0.158 | 56.0 | 0.308 |
TET17326 | North Peak | 3.73 | 9.99 | 6.26 | 11.98 | 0.349 | 172.7 | 0.038 |
Including | North Peak | 7.40 | 7.67 | 0.27 | 84.50 | 2.465 | 656.0 | 0.115 |
TET17328 | North Peak | 17.68 | 19.20 | 1.52 | 2.25 | 0.066 | 1.6 | 0.008 |
TET17331 | North Peak | 2.13 | 18.98 | 16.85 | 8.68 | 0.253 | 5.1 | 0.023 |
Including | North Peak | 8.53 | 9.79 | 1.26 | 22.40 | 0.653 | 7.0 | 0.048 |
and | North Peak | 17.84 | 18.98 | 1.14 | 28.80 | 0.840 | 8.8 | 0.029 |
TET17331 | North Peak | 23.77 | 33.45 | 9.68 | 2.58 | 0.075 | 2.0 | 0.045 |
TET17331 | North Peak | 44.74 | 46.20 | 1.46 | 5.43 | 0.158 | 2.2 | 0.056 |
TET17333 | North Peak | 4.54 | 7.64 | 3.10 | 0.58 | 0.017 | 1.6 | 0.004 |
TET17335 | North Peak | 50.32 | 75.83 | 25.51 | 4.87 | 0.142 | 2.6 | 0.137 |
Including | North Peak | 53.64 | 55.70 | 2.06 | 12.25 | 0.357 | 2.8 | 0.112 |
and | North Peak | 60.19 | 61.32 | 1.13 | 18.80 | 0.548 | 4.3 | 0.202 |
and | North Peak | 63.06 | 63.81 | 0.75 | 11.30 | 0.330 | 6.3 | 0.297 |
TET17335 | North Peak | 81.06 | 93.37 | 12.31 | 14.04 | 0.410 | 3.0 | 0.158 |
Including | North Peak | 87.88 | 89.61 | 1.73 | 56.30 | 1.642 | 5.6 | 0.192 |
TET17336 | North Peak | 20.42 | 22.46 | 2.04 | 0.75 | 0.022 | 4.2 | 0.095 |
TET17336 | North Peak | 106.91 | 119.89 | 12.98 | 1.33 | 0.039 | 3.3 | 0.122 |
Including | North Peak | 111.25 | 112.31 | 1.06 | 8.46 | 0.247 | 13.7 | 0.403 |
TET17339 | North Peak | 73.28 | 75.56 | 2.28 | 4.66 | 0.136 | 38.1 | 0.105 |
Including | North Peak | 73.28 | 73.92 | 0.64 | 12.40 | 0.362 | 74.1 | 0.216 |
TET17340 | North Peak | 82.87 | 84.04 | 1.17 | 8.33 | 0.243 | 18.7 | 0.080 |
TET17342 | North Peak | 9.42 | 17.37 | 7.95 | 0.50 | 0.015 | 1.0 | 0.055 |
TET17342 | North Peak | 20.94 | 21.37 | 0.43 | 4.36 | 0.127 | 4.4 | 0.034 |
TET17343 | North Peak | 52.88 | 57.32 | 4.44 | 0.60 | 0.018 | 39.5 | 0.524 |
TET17344 | North Peak | 10.82 | 33.38 | 22.56 | 3.64 | 0.106 | 79.3 | 0.206 |
Including | North Peak | 15.70 | 16.38 | 0.68 | 10.90 | 0.318 | 103.0 | 1.330 |
and | North Peak | 31.09 | 32.00 | 0.91 | 19.35 | 0.564 | 152.0 | 0.024 |
TET17345 | North Peak | 4.71 | 22.86 | 18.15 | 2.99 | 0.087 | 31.4 | 0.330 |
Including | North Peak | 14.87 | 16.53 | 1.66 | 12.75 | 0.372 | 73.3 | 0.983 |
TET17345 | North Peak | 28.04 | 31.70 | 3.66 | 9.07 | 0.265 | 118.6 | 0.056 |
Including | North Peak | 31.09 | 31.70 | 0.61 | 23.50 | 0.685 | 56.9 | 0.049 |
TET17346 | North Peak | 4.57 | 7.45 | 2.88 | 6.37 | 0.186 | 58.8 | 0.080 |
TET17348 | North Peak | 11.28 | 12.53 | 1.25 | 21.10 | 0.615 | 62.2 | 0.431 |
TET17348 | North Peak | 16.30 | 17.21 | 0.91 | 5.09 | 0.148 | 79.1 | 0.182 |
2016 Exploration Program - Phase III. During the quarter ending December 31, 2016, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 3,883 meters (12,739 feet) in 37 holes. The Joint Venture Company spent an estimated $2.6 million, during the quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling was all completed in the North Peak area with the objective of infilling the mineralized area to support a resource estimation.
The map below depicts the location of the core holes drilled during the 2016 Phase III program:
2016 PHASE III CORE HOLES DRILLED
Significant Drill Intercepts from the 2016 Phase III Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase III of the 2016 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16274 | North Peak | 10.65 | 18.67 | 8.02 | 5.56 | 0.162 | 73.5 | 0.297 |
Including | North Peak | 17.37 | 18.67 | 1.30 | 23.90 | 0.697 | 82.5 | 0.146 |
TET16274 | North Peak | 32.62 | 39.09 | 6.47 | 0.99 | 0.029 | 42.9 | 0.241 |
TET16274 | North Peak | 46.40 | 46.78 | 0.38 | 4.56 | 0.133 | 65.4 | 0.475 |
TET16275 | North Peak | 33.07 | 36.88 | 3.81 | 0.90 | 0.026 | 19.1 | 0.321 |
TET16275 | North Peak | 70.76 | 71.84 | 1.08 | 2.04 | 0.060 | 9.4 | 0.226 |
TET16276 | North Peak | 30.30 | 34.80 | 4.50 | 1.21 | 0.035 | 13.3 | 0.048 |
TET16276 | North Peak | 38.99 | 55.00 | 16.01 | 3.23 | 0.094 | 51.1 | 0.046 |
Including | North Peak | 45.57 | 46.10 | 0.53 | 12.35 | 0.360 | 39.5 | 0.066 |
and | North Peak | 52.58 | 55.00 | 2.42 | 11.75 | 0.343 | 237.0 | 0.020 |
TET16276 | North Peak | 71.68 | 78.24 | 6.56 | 1.67 | 0.049 | 47.5 | 0.150 |
TET16276 | North Peak | 82.90 | 86.36 | 3.46 | 1.53 | 0.045 | 50.1 | 0.166 |
TET16276 | North Peak | 90.68 | 94.66 | 3.98 | 0.70 | 0.020 | 8.2 | 0.141 |
TET16276 | North Peak | 99.30 | 104.88 | 5.58 | 1.19 | 0.035 | 4.1 | 0.119 |
TET16277 | North Peak | 7.45 | 9.75 | 2.30 | 1.66 | 0.048 | 37.2 | 0.160 |
TET16277 | North Peak | 16.90 | 18.14 | 1.24 | 1.84 | 0.054 | 55.0 | 0.163 |
TET16277 | North Peak | 41.15 | 42.95 | 1.80 | 1.49 | 0.043 | 45.4 | 0.018 |
TET16277 | North Peak | 65.02 | 67.13 | 2.11 | 1.02 | 0.030 | 21.1 | 0.124 |
TET16277 | North Peak | 83.27 | 95.79 | 12.52 | 2.56 | 0.075 | 128.1 | 0.091 |
Including | North Peak | 93.88 | 95.79 | 1.91 | 9.51 | 0.277 | 479.0 | 0.200 |
TET16277 | North Peak | 121.47 | 123.70 | 2.23 | 1.91 | 0.056 | 11.8 | 0.129 |
TET16277 | North Peak | 129.97 | 134.00 | 4.03 | 1.45 | 0.042 | 17.7 | 0.042 |
TET16278 | North Peak | 31.81 | 45.86 | 14.05 | 10.58 | 0.309 | 16.5 | 0.137 |
Including | North Peak | 31.81 | 32.99 | 1.18 | 26.00 | 0.758 | 10.7 | 0.292 |
and | North Peak | 38.73 | 39.88 | 1.15 | 30.60 | 0.893 | 42.6 | 0.239 |
and | North Peak | 42.38 | 43.11 | 0.73 | 31.50 | 0.919 | 29.8 | 0.175 |
and | North Peak | 44.42 | 45.86 | 1.44 | 30.00 | 0.875 | 38.4 | 0.163 |
TET16278 | North Peak | 55.81 | 59.03 | 3.22 | 1.56 | 0.046 | 11.3 | 0.076 |
TET16278 | North Peak | 73.02 | 83.97 | 10.95 | 3.08 | 0.090 | 26.5 | 0.025 |
TET16278 | North Peak | 104.62 | 105.77 | 1.15 | 1.46 | 0.042 | 66.5 | 0.982 |
TET16278 | North Peak | 119.33 | 120.33 | 1.00 | 1.90 | 0.055 | 57.7 | 0.880 |
TET16278 | North Peak | 142.97 | 148.53 | 5.56 | 2.78 | 0.081 | 19.1 | 0.060 |
TET16278 | North Peak | 156.32 | 157.87 | 1.55 | 2.14 | 0.062 | 43.7 | 0.136 |
TET16279 | North Peak | 129.88 | 134.47 | 4.59 | 1.75 | 0.051 | 5.6 | 0.022 |
TET16279 | North Peak | 160.22 | 163.75 | 3.53 | 1.52 | 0.044 | 2.9 | 0.014 |
TET16279 | North Peak | 169.94 | 173.50 | 3.56 | 5.06 | 0.148 | 17.6 | 0.027 |
Including | North Peak | 172.88 | 173.50 | 0.62 | 17.60 | 0.513 | 93.8 | 0.138 |
TET16279 | North Peak | 176.61 | 178.79 | 2.18 | 5.40 | 0.158 | 28.3 | 0.025 |
TET16280 | North Peak | 141.16 | 143.23 | 2.07 | 1.07 | 0.031 | 10.8 | 0.017 |
TET16280 | North Peak | 165.74 | 167.70 | 1.96 | 1.15 | 0.034 | 94.0 | 0.220 |
TET16280 | North Peak | 198.15 | 200.08 | 1.93 | 1.96 | 0.057 | 5.9 | 0.032 |
TET16280 | North Peak | 205.20 | 205.70 | 0.50 | 5.95 | 0.174 | 3.1 | 0.004 |
TET16280 | North Peak | 210.98 | 212.89 | 1.91 | 0.91 | 0.027 | 3.6 | 0.010 |
TET16281 | North Peak | 14.33 | 22.86 | 8.53 | 22.01 | 0.642 | 63.0 | 0.060 |
Including | North Peak | 17.37 | 19.51 | 2.14 | 43.90 | 1.280 | 96.5 | 0.055 |
and | North Peak | 22.37 | 22.86 | 0.49 | 57.40 | 1.674 | 227.0 | 0.017 |
TET16285 | North Peak | 7.32 | 21.63 | 14.31 | 11.59 | 0.338 | 6.2 | 0.096 |
Including | North Peak | 11.58 | 16.15 | 4.57 | 26.63 | 0.777 | 8.2 | 0.116 |
TET16286 | North Peak | 37.80 | 56.58 | 18.78 | 5.02 | 0.146 | 6.2 | 0.044 |
Including | North Peak | 48.07 | 52.75 | 4.68 | 14.44 | 0.421 | 12.1 | 0.083 |
TET16287 | North Peak | 75.60 | 81.72 | 6.12 | 7.35 | 0.214 | 1.9 | 0.069 |
Including | North Peak | 81.17 | 81.72 | 0.55 | 20.00 | 0.583 | 4.0 | 0.211 |
TET16288 | North Peak | 96.32 | 105.77 | 9.45 | 1.11 | 0.032 | 27.3 | 0.029 |
Including | North Peak | 101.29 | 102.72 | 1.43 | 3.28 | 0.096 | 3.9 | 0.050 |
TET16289 | North Peak | 10.52 | 36.00 | 25.48 | 18.73 | 0.546 | 8.3 | 0.071 |
TET16289 | North Peak | 39.12 | 55.70 | 16.58 | 13.52 | 0.394 | 7.4 | 0.044 |
TET16291 | North Peak | 0.60 | 4.63 | 4.03 | 6.39 | 0.186 | 10.3 | 0.028 |
TET16291 | North Peak | 11.28 | 33.21 | 21.93 | 4.69 | 0.137 | 10.9 | 0.064 |
Including | North Peak | 22.85 | 25.33 | 2.48 | 18.03 | 0.526 | 31.7 | 0.245 |
and | North Peak | 26.52 | 26.92 | 0.40 | 28.40 | 0.828 | 28.9 | 0.178 |
TET16291 | North Peak | 42.30 | 44.98 | 2.68 | 2.05 | 0.060 | 3.5 | 0.016 |
Including | North Peak | 44.33 | 44.98 | 0.65 | 7.00 | 0.204 | 8.8 | 0.044 |
TET16291 | North Peak | 50.90 | 53.27 | 2.37 | 5.48 | 0.160 | 11.7 | 0.056 |
TET16292 | North Peak | 5.79 | 21.18 | 15.39 | 1.58 | 0.046 | 22.3 | 0.108 |
Including | North Peak | 8.53 | 10.97 | 2.44 | 5.55 | 0.162 | 55.3 | 0.215 |
TET16292 | North Peak | 24.63 | 28.80 | 4.17 | 0.83 | 0.024 | 22.9 | 0.034 |
TET16293 | North Peak | 7.11 | 11.89 | 4.78 | 1.26 | 0.037 | 50.5 | 0.133 |
Including | North Peak | 11.48 | 11.89 | 0.41 | 5.15 | 0.150 | 66.6 | 0.073 |
TET16294 | North Peak | 9.10 | 16.71 | 7.61 | 6.56 | 0.191 | 86.2 | 0.233 |
Including | North Peak | 12.03 | 12.60 | 0.57 | 17.05 | 0.497 | 141.0 | 0.051 |
TET16295 | North Peak | 5.66 | 20.65 | 14.99 | 11.67 | 0.340 | 11.5 | 0.111 |
Including | North Peak | 7.94 | 10.35 | 2.41 | 32.40 | 0.945 | 14.1 | 0.317 |
TET16296 | North Peak | 6.13 | 9.80 | 3.67 | 1.78 | 0.052 | 40.7 | 0.267 |
TET16296 | North Peak | 24.13 | 26.28 | 2.15 | 0.87 | 0.025 | 45.3 | 0.059 |
TET16297 | North Peak | 6.91 | 30.09 | 23.18 | 3.72 | 0.109 | 10.9 | 0.196 |
Including | North Peak | 16.06 | 17.78 | 1.72 | 9.51 | 0.277 | 10.3 | 0.139 |
and | North Peak | 24.85 | 26.91 | 2.06 | 12.80 | 0.373 | 21.9 | 0.419 |
TET16297 | North Peak | 39.91 | 41.44 | 1.53 | 11.50 | 0.335 | 505.0 | 0.131 |
TET16298 | North Peak | 6.75 | 14.30 | 7.55 | 4.37 | 0.127 | 17.0 | 0.106 |
Including | North Peak | 8.91 | 10.79 | 1.88 | 13.60 | 0.397 | 20.2 | 0.218 |
TET16298 | North Peak | 24.82 | 31.57 | 6.75 | 15.53 | 0.453 | 33.2 | 0.383 |
Including | North Peak | 31.27 | 31.57 | 0.30 | 108.00 | 3.150 | 33.8 | 0.282 |
TET16298 | North Peak | 34.90 | 37.94 | 3.04 | 1.40 | 0.041 | 35.8 | 0.295 |
TET16298 | North Peak | 44.18 | 59.02 | 14.84 | 3.08 | 0.090 | 25.6 | 0.302 |
Including | North Peak | 52.00 | 53.19 | 1.19 | 8.78 | 0.256 | 12.6 | 0.267 |
TET16299 | North Peak | 24.77 | 39.32 | 14.55 | 5.46 | 0.159 | 66.0 | 0.348 |
Including | North Peak | 31.39 | 33.68 | 2.29 | 17.05 | 0.497 | 93.2 | 0.476 |
and | North Peak | 39.05 | 39.32 | 0.27 | 60.00 | 1.750 | 428.0 | 0.964 |
TET16299 | North Peak | 47.85 | 50.90 | 3.05 | 9.83 | 0.287 | 156.0 | 0.062 |
TET16299 | North Peak | 53.95 | 54.71 | 0.76 | 9.49 | 0.277 | 120.0 | 0.093 |
TET16299 | North Peak | 59.74 | 65.46 | 5.72 | 2.14 | 0.062 | 59.1 | 0.159 |
Including | North Peak | 64.95 | 65.46 | 0.51 | 13.95 | 0.407 | 301.0 | 0.741 |
TET16299 | North Peak | 81.38 | 84.43 | 3.05 | 7.82 | 0.228 | 53.0 | 0.095 |
TET16300 | North Peak | 0.00 | 1.52 | 1.52 | 1.08 | 0.032 | 10.4 | 0.073 |
TET16300 | North Peak | 16.63 | 21.41 | 4.78 | 0.90 | 0.026 | 16.8 | 0.289 |
TET16300 | North Peak | 24.73 | 39.78 | 15.05 | 5.15 | 0.150 | 62.7 | 0.299 |
Including | North Peak | 36.27 | 38.79 | 2.52 | 22.10 | 0.645 | 175.0 | 0.060 |
TET16300 | North Peak | 44.81 | 47.70 | 2.89 | 2.90 | 0.085 | 64.5 | 0.030 |
TET16300 | North Peak | 51.00 | 67.00 | 16.00 | 3.43 | 0.100 | 64.8 | 0.141 |
Including | North Peak | 51.51 | 53.96 | 2.45 | 10.57 | 0.308 | 61.1 | 0.032 |
and | North Peak | 57.91 | 58.52 | 0.61 | 10.20 | 0.298 | 180.0 | 0.070 |
TET16300 | North Peak | 70.10 | 71.78 | 1.68 | 2.19 | 0.064 | 41.3 | 0.366 |
TET16301 | North Peak | 147.29 | 151.66 | 4.37 | 1.37 | 0.040 | 7.6 | 0.084 |
TET16302 | North Peak | 7.14 | 9.14 | 2.00 | 10.98 | 0.320 | 7.2 | 0.041 |
TET16302 | North Peak | 14.31 | 37.05 | 22.74 | 26.61 | 0.776 | 5.2 | 0.035 |
Including | North Peak | 19.31 | 21.95 | 2.64 | 103.50 | 3.019 | 12.5 | 0.069 |
and | North Peak | 27.09 | 29.20 | 2.11 | 58.70 | 1.712 | 9.2 | 0.075 |
TET16302 | North Peak | 44.36 | 48.44 | 4.08 | 7.78 | 0.227 | 3.4 | 0.065 |
Including | North Peak | 45.67 | 46.36 | 0.69 | 22.90 | 0.668 | 6.3 | 0.070 |
TET16302 | North Peak | 52.54 | 57.60 | 5.06 | 1.05 | 0.031 | 6.2 | 0.049 |
Including | North Peak | 52.54 | 53.64 | 1.10 | 3.40 | 0.099 | 19.7 | 0.143 |
TET16303 | North Peak | 59.45 | 60.96 | 1.51 | 1.64 | 0.048 | 28.5 | 0.041 |
TET16303 | North Peak | 91.95 | 97.70 | 5.75 | 1.03 | 0.030 | 0.2 | 0.009 |
Including | North Peak | 91.95 | 92.27 | 0.32 | 3.92 | 0.114 | 0.9 | 0.012 |
TET16304 | North Peak | 16.31 | 37.51 | 21.20 | 11.86 | 0.346 | 3.9 | 0.044 |
Including | North Peak | 24.26 | 26.12 | 1.86 | 35.40 | 1.033 | 8.1 | 0.123 |
and | North Peak | 28.31 | 30.94 | 2.63 | 27.62 | 0.806 | 5.8 | 0.050 |
TET16304 | North Peak | 46.97 | 69.52 | 22.55 | 5.49 | 0.160 | 12.5 | 0.051 |
Including | North Peak | 48.01 | 48.62 | 0.61 | 21.50 | 0.627 | 3.2 | 0.105 |
and | North Peak | 64.31 | 65.42 | 1.11 | 19.05 | 0.556 | 3.8 | 0.078 |
and | North Peak | 67.42 | 67.72 | 0.30 | 22.40 | 0.653 | 8.7 | 0.169 |
TET16304 | North Peak | 75.52 | 77.70 | 2.18 | 2.78 | 0.081 | 1.5 | 0.064 |
TET16304 | North Peak | 80.93 | 82.79 | 1.86 | 5.88 | 0.172 | 4.1 | 0.343 |
TET16304 | North Peak | 87.01 | 87.30 | 0.29 | 28.80 | 0.840 | 13.6 | 0.133 |
TET16305 | North Peak | 11.13 | 13.41 | 2.28 | 4.43 | 0.129 | 4.3 | 0.051 |
TET16305 | North Peak | 17.70 | 47.24 | 29.54 | 7.17 | 0.209 | 1.6 | 0.032 |
Including | North Peak | 18.14 | 19.66 | 1.52 | 24.93 | 0.727 | 3.0 | 0.085 |
and | North Peak | 21.34 | 22.86 | 1.52 | 36.76 | 1.072 | 5.9 | 0.061 |
and | North Peak | 30.18 | 30.48 | 0.30 | 21.80 | 0.636 | 4.0 | 0.075 |
TET16306 | North Peak | 58.83 | 60.50 | 1.67 | 1.31 | 0.038 | 39.8 | 0.035 |
TET16306 | North Peak | 65.65 | 68.19 | 2.54 | 3.13 | 0.091 | 94.8 | 0.143 |
Including | North Peak | 67.67 | 68.19 | 0.52 | 9.15 | 0.267 | 174.0 | 0.087 |
TET16306 | North Peak | 93.94 | 94.63 | 0.69 | 6.79 | 0.198 | 18.9 | 0.090 |
TET16306 | North Peak | 113.00 | 122.53 | 9.53 | 3.79 | 0.111 | 117.1 | 0.147 |
Including | North Peak | 121.96 | 122.53 | 0.57 | 17.80 | 0.519 | 92.2 | 0.099 |
TET16307 | North Peak | 58.03 | 68.88 | 10.85 | 3.29 | 0.096 | 41.2 | 0.187 |
Including | North Peak | 60.07 | 61.12 | 1.05 | 9.32 | 0.272 | 79.6 | 0.442 |
and | North Peak | 64.58 | 65.32 | 0.74 | 9.00 | 0.263 | 82.3 | 0.091 |
TET16307 | North Peak | 139.64 | 141.31 | 1.67 | 1.23 | 0.036 | 60.6 | 0.237 |
TET16308 | North Peak | 41.68 | 51.36 | 9.68 | 1.79 | 0.052 | 20.3 | 0.055 |
TET16310 | North Peak | 38.56 | 43.40 | 4.84 | 1.88 | 0.055 | 0.4 | 0.013 |
Including | North Peak | 38.56 | 39.10 | 0.54 | 13.80 | 0.403 | 3.7 | 0.055 |
2016 Exploration Program - Phase II. During the quarter ending December 31, 2016, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 6,498 meters (22,795 feet) in 30 holes, a continuation of the 2016 Phase II program, started in the prior quarter. The Phase II program, which was initiated in the quarter ended June 30, 2016, has completed 12,601 meters (41,342 ft) of exploration drilling in 63 holes. The Joint Venture Company spent an estimated $3.9 million, during the quarter, on program activities, including drilling, geochemical analyses, landholding fees and other related expenses. Drilling targeted three areas, North Peak, West Peak, and Connector Zones to better define the areas with known mineralization. During the full program, high grade-gold mineralization was drilled in the area that joins North Peak to the Connector Zone mineralization identified in the 2016 Phase I program. Several holes drilled revealed significant grade-thickness intervals of gold such as drill hole 16235 which intercepted 38.88 meters grading 51.62 gpt gold starting at 14.50 meters, drill hole 16237 which intercepted 14.19 meters grading 45.33 gpt gold starting at 9.75 meters, drill hole16271 which intercepted 17.12 meters grading 51.89 gpt gold starting at 24.08 meters, and drill hole 16256 which intercepted 13.20 meters grading 48.59 gpt gold starting at 7.92 meters.
The map below depicts the location of 63 core holes drilled during the 2016 Phase II program:
2016 PHASE II CORE HOLES DRILLED
Significant Drill Intercepts from the 2016 Phase II Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained for the complete Phase II of the 2016 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16211 | Connector | 16.11 | 26.42 | 10.31 | 3.500 | 0.102 | 34.4 | 0.299 |
Including | Connector | 20.57 | 21.00 | 0.43 | 13.650 | 0.398 | 45.6 | 0.199 |
TET16211 | Connector | 29.87 | 42.82 | 12.95 | 3.090 | 0.090 | 58.9 | 0.295 |
Including | Connector | 41.61 | 42.82 | 1.21 | 14.350 | 0.419 | 251.0 | 0.681 |
TET16211 | Connector | 50.04 | 54.25 | 4.21 | 2.700 | 0.079 | 18.0 | 0.147 |
TET16211 | Connector | 114.76 | 121.05 | 6.29 | 1.440 | 0.042 | 66.3 | 0.09 |
TET16212 | North Peak | 52.88 | 55.85 | 2.97 | 0.900 | 0.026 | 2.5 | 0.151 |
TET16212 | North Peak | 142.22 | 144.57 | 2.35 | 1.560 | 0.046 | — | 0.028 |
TET16213 | North Peak | 115.98 | 127.84 | 11.86 | 0.610 | 0.018 | 1.0 | 0.042 |
TET16214 | North Peak | 54.67 | 56.49 | 1.82 | 1.400 | 0.041 | 5.6 | 0.025 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16214 | North Peak | 140.47 | 143.77 | 3.30 | 1.270 | 0.037 | 20.5 | 0.730 |
Including | North Peak | 140.47 | 141.10 | 0.63 | 4.890 | 0.143 | 83.1 | 2.970 |
TET16215 | North Peak | 50.58 | 66.20 | 15.62 | 2.400 | 0.070 | 42.0 | 0.520 |
TET16215 | North Peak | 86.10 | 89.68 | 3.58 | 0.930 | 0.027 | 7.5 | 0.012 |
TET16216 | North Peak | 17.28 | 32.99 | 15.71 | 1.840 | 0.054 | 19.4 | 0.107 |
Including | North Peak | 17.28 | 18.17 | 0.89 | 9.720 | 0.284 | 74.5 | 0.317 |
TET16216 | North Peak | 55.85 | 69.79 | 13.94 | 0.900 | 0.026 | 48.8 | 0.384 |
TET16216 | North Peak | 110.33 | 112.00 | 1.67 | 0.940 | 0.027 | 22.3 | 0.044 |
TET16217 | West Peak | 50.02 | 52.64 | 2.62 | 0.780 | 0.023 | — | 0.007 |
TET16217 | West Peak | 88.30 | 89.40 | 1.10 | 1.470 | 0.043 | 2.9 | 0.093 |
TET16218 | West Peak | 49.53 | 55.42 | 5.89 | 1.980 | 0.058 | — | 0.005 |
TET16218 | West Peak | 60.76 | 63.82 | 3.06 | 1.760 | 0.051 | — | 0.009 |
TET16218 | West Peak | 77.11 | 85.80 | 8.69 | 2.250 | 0.066 | 0.7 | 0.008 |
TET16218 | West Peak | 191.47 | 206.48 | 15.01 | 7.100 | 0.207 | 8.9 | 0.325 |
Including | West Peak | 194.18 | 194.91 | 0.73 | 73.500 | 2.144 | 37.0 | 1.550 |
TET16218 | West Peak | 215.60 | 216.96 | 1.36 | 1.280 | 0.037 | 0.6 | 0.018 |
TET16219 | West Peak | 37.65 | 47.55 | 9.90 | 1.370 | 0.040 | 0.2 | 0.019 |
TET16219 | West Peak | 195.24 | 199.32 | 4.08 | 0.640 | 0.019 | 9.0 | 0.025 |
TET16219 | West Peak | 207.11 | 210.16 | 3.05 | 0.910 | 0.027 | 0.8 | 0.025 |
TET16220 | North Peak | 23.27 | 56.23 | 32.96 | 4.870 | 0.142 | 2.4 | 0.045 |
Including | North Peak | 27.70 | 29.41 | 1.71 | 12.300 | 0.359 | 7.3 | 0.124 |
and | North Peak | 32.96 | 33.99 | 1.03 | 15.150 | 0.442 | 4.5 | 0.138 |
and | North Peak | 33.99 | 34.98 | 0.99 | 14.950 | 0.436 | 5.7 | 0.108 |
and | North Peak | 42.72 | 44.37 | 1.65 | 12.900 | 0.376 | 5.3 | 0.040 |
and | North Peak | 51.89 | 53.24 | 1.35 | 11.900 | 0.347 | 5.9 | 0.110 |
TET16220 | North Peak | 64.16 | 66.14 | 1.98 | 6.810 | 0.199 | 6.0 | 0.111 |
TET16220 | North Peak | 71.72 | 73.75 | 2.03 | 1.340 | 0.039 | 2.3 | 0.064 |
TET16221 | North Peak | 21.61 | 39.53 | 17.92 | 8.230 | 0.240 | 3.0 | 0.035 |
Including | North Peak | 30.82 | 32.90 | 2.08 | 18.300 | 0.534 | 3.1 | 0.067 |
and | North Peak | 37.50 | 39.53 | 2.03 | 17.150 | 0.500 | 5.0 | 0.063 |
TET16221 | North Peak | 74.07 | 92.63 | 18.56 | 2.910 | 0.085 | 3.3 | 0.023 |
Including | North Peak | 74.07 | 77.27 | 3.20 | 9.730 | 0.284 | 2.8 | 0.019 |
TET16221 | North Peak | 97.82 | 99.86 | 2.04 | 3.060 | 0.089 | 11.7 | 0.127 |
TET16221 | North Peak | 105.71 | 117.65 | 11.94 | 2.740 | 0.080 | 10.3 | 0.035 |
TET16221 | North Peak | 125.10 | 129.54 | 4.44 | 4.430 | 0.129 | 3.3 | 0.051 |
TET16223 | North Peak | 56.44 | 57.63 | 1.19 | 2.670 | .078 | 20.4 | 0.070 |
TET16223 | North Peak | 74.36 | 85.80 | 11.44 | 1.070 | 0.031 | 30.6 | 0.184 |
TET16223 | North Peak | 93.42 | 95.48 | 2.06 | 3.390 | 0.099 | 42.0 | 0.476 |
TET16223 | North Peak | 103.10 | 109.08 | 5.98 | 2.920 | 0.085 | 4.3 | 0.093 |
TET16224 | North Peak | 109.07 | 115.61 | 6.54 | 2.500 | 0.073 | 8.8 | 0.168 |
TET16225 | North Peak | 55.60 | 64.90 | 9.30 | 11.770 | 0.343 | 51.1 | 0.041 |
Including | North Peak | 63.09 | 64.90 | 1.81 | 36.200 | 1.056 | 171.0 | 0.093 |
TET16225 | North Peak | 87.64 | 105.14 | 17.50 | 2.950 | 0.086 | 33.7 | 0.187 |
Including | North Peak | 102.41 | 105.14 | 2.73 | 8.630 | 0.252 | 19.7 | 0.103 |
TET16226 | North Peak | 11.58 | 13.46 | 1.88 | 0.960 | 0.028 | 88.4 | 0.016 |
TET16226 | North Peak | 18.75 | 26.09 | 7.34 | 16.970 | 0.495 | 6.7 | 0.040 |
Including | North Peak | 18.75 | 20.20 | 1.45 | 71.300 | 2.080 | 18.2 | 0.045 |
TET16226 | North Peak | 35.51 | 36.88 | 1.37 | 1.430 | 0.042 | 8.3 | 0.028 |
TET16226 | North Peak | 54.08 | 57.81 | 3.73 | 1.430 | 0.042 | 5.8 | 0.035 |
TET16227 | North Peak | 21.56 | 32.31 | 10.75 | 18.620 | 0.543 | 10.2 | 0.083 |
Including | North Peak | 24.00 | 25.20 | 1.20 | 81.900 | 2.389 | 19.3 | 0.116 |
and | North Peak | 25.20 | 26.14 | 0.94 | 43.400 | 1.266 | 15.0 | 0.140 |
TET16227 | North Peak | 88.11 | 90.22 | 2.11 | 1.320 | 0.039 | 0.6 | 0.002 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16228 | North Peak | 25.42 | 40.23 | 14.81 | 4.640 | 0.135 | 21.7 | 0.257 |
Including | North Peak | 33.81 | 35.95 | 2.14 | 17.900 | 0.522 | 41.9 | 0.602 |
TET16228 | North Peak | 43.89 | 51.47 | 7.58 | 3.540 | 0.103 | 12.3 | 0.255 |
TET16228 | North Peak | 56.86 | 59.74 | 2.88 | 3.140 | 0.092 | 1.3 | 0.022 |
TET16228 | North Peak | 62.94 | 75.23 | 12.29 | 1.090 | 0.032 | 26.6 | 0.234 |
TET16230 | North Peak | 42.95 | 50.22 | 7.27 | 4.170 | 0.122 | 24.0 | 0.303 |
| TET16231 | North Peak | 18.61 | 23.52 | 4.91 | 0.990 | 0.029 | 5.3 | 0.062 |
TET16231 | North Peak | 53.89 | 57.32 | 3.43 | 0.730 | 0.021 | 7.0 | 0.053 |
TET16231 | North Peak | 68.17 | 70.83 | 2.66 | 7.730 | 0.225 | 26.1 | 0.118 |
TET16231 | North Peak | 75.61 | 81.16 | 5.55 | 3.090 | 0.090 | 21.1 | 0.235 |
TET16231 | North Peak | 88.19 | 90.34 | 2.15 | 1.110 | 0.032 | 4.3 | 0.031 |
TET16231 | North Peak | 101.08 | 102.64 | 1.56 | 3.810 | 0.111 | 5.5 | 0.054 |
TET16231 | North Peak | 128.15 | 132.89 | 4.74 | 2.000 | 0.058 | 9.3 | 0.139 |
Including | North Peak | 131.41 | 131.97 | 0.56 | 6.930 | 0.202 | 6.7 | 0.125 |
TET16232 | North Peak | 43.28 | 50.90 | 7.62 | 1.180 | 0.034 | 55.4 | 0.054 |
TET16232 | North Peak | 117.35 | 121.62 | 4.27 | 0.710 | 0.021 | 64.0 | 0.355 |
TET16232 | North Peak | 138.53 | 152.21 | 13.68 | 5.520 | 0.161 | 12.4 | 0.067 |
Including | North Peak | 139.47 | 139.75 | 0.28 | 32.400 | 0.945 | 52.7 | 0.117 |
and | North Peak | 142.29 | 143.89 | 1.60 | 18.400 | 0.537 | 12.8 | 0.260 |
and | North Peak | 146.94 | 147.36 | 0.42 | 28.100 | 0.820 | 93.8 | 0.095 |
TET16233 | North Peak | 23.11 | 24.14 | 1.03 | 7.890 | 0.230 | 13.3 | 0.032 |
TET16233 | North Peak | 38.23 | 42.98 | 4.75 | 2.060 | 0.060 | 16.4 | 0.070 |
TET16233 | North Peak | 56.10 | 70.69 | 14.59 | 5.760 | 0.168 | 35.2 | 0.389 |
TET16234 | North Peak | 16.00 | 17.75 | 1.75 | 8.280 | 0.242 | 27.2 | 0.016 |
TET16234 | North Peak | 23.90 | 35.63 | 11.73 | 8.760 | 0.256 | 14.8 | 0.034 |
TET16234 | North Peak | 58.67 | 65.60 | 6.93 | 5.530 | 0.161 | 15.8 | 0.015 |
TET16235 | North Peak | 14.50 | 53.38 | 38.88 | 51.620 | 1.506 | 216.0 | 0.020 |
Including | North Peak | 17.68 | 20.73 | 3.05 | 320.000 | 9.333 | 589.0 | 0.025 |
and | North Peak | 23.93 | 24.47 | 0.54 | 371.000 | 10.821 | 3,210.0 | 0.006 |
and | North Peak | 24.47 | 25.76 | 1.29 | 109.000 | 3.179 | 265.0 | 0.016 |
and | North Peak | 28.85 | 29.34 | 0.49 | 116.000 | 3.383 | 151.0 | 0.003 |
and | North Peak | 52.98 | 53.38 | 0.40 | 125.000 | 3.646 | 143.0 | 0.014 |
TET16235 | North Peak | 59.50 | 65.92 | 6.42 | 8.730 | 0.255 | 43.4 | 0.053 |
TET16235 | North Peak | 70.05 | 73.00 | 2.95 | 4.970 | 0.145 | 13.1 | 0.019 |
TET16236 | North Peak | 4.67 | 7.23 | 2.56 | 0.830 | 0.024 | 2.1 | 0.007 |
TET16236 | North Peak | 60.45 | 63.09 | 2.64 | 2.930 | 0.085 | 51.4 | 0.012 |
TET16237 | North Peak | 9.75 | 23.94 | 14.19 | 45.330 | 1.322 | 9.3 | 0.078 |
Including | North Peak | 11.58 | 13.56 | 1.98 | 97.000 | 2.829 | 19.6 | 0.248 |
and | North Peak | 13.56 | 14.80 | 1.24 | 166.000 | 4.842 | 14.3 | 0.019 |
TET16237 | North Peak | 28.81 | 33.23 | 4.42 | 2.170 | 0.063 | 4.7 | 0.014 |
TET16237 | North Peak | 41.15 | 42.95 | 1.80 | 6.720 | 0.196 | 1.9 | 0.021 |
TET16237 | North Peak | 50.90 | 53.82 | 2.92 | 1.550 | 0.045 | — | 0.003 |
TET16237 | North Peak | 57.38 | 61.18 | 3.80 | 1.660 | 0.048 | 0.9 | 0.014 |
TET16238 | North Peak | 68.42 | 74.68 | 6.26 | 4.980 | 0.145 | 34.3 | 0.099 |
TET16238 | North Peak | 77.90 | 93.57 | 15.67 | 3.170 | 0.092 | 3.1 | 0.023 |
Including | North Peak | 79.92 | 81.35 | 1.43 | 18.200 | 0.531 | 3.1 | 0.034 |
TET16239 | North Peak | 35.66 | 38.45 | 2.79 | 1.230 | 0.036 | 5.1 | 0.005 |
TET16239 | North Peak | 50.79 | 54.72 | 3.93 | 7.760 | 0.226 | 23.3 | 0.023 |
Including | North Peak | 50.79 | 51.27 | 0.48 | 26.800 | 0.782 | 104.0 | 0.129 |
TET16239 | North Peak | 109.41 | 116.13 | 6.72 | 1.420 | 0.041 | 9.6 | 0.071 |
TET16240 | North Peak | 119.33 | 132.85 | 13.52 | 1.590 | 0.046 | 1.7 | 0.020 |
TET16241 | North Peak | 56.43 | 56.79 | 0.36 | 11.450 | 0.334 | 172.0 | 0.066 |
TET16242 | North Peak | 19.38 | 25.45 | 6.07 | 2.720 | 0.079 | 70.5 | 0.236 |
TET16242 | North Peak | 31.04 | 34.41 | 3.37 | 5.720 | 0.167 | 64.4 | 0.541 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16242 | North Peak | 37.58 | 63.93 | 26.35 | 5.550 | 0.162 | 39.3 | 0.134 |
Including | North Peak | 50.44 | 53.15 | 2.71 | 18.300 | 0.534 | 75.5 | 0.097 |
and | North Peak | 58.18 | 63.09 | 4.91 | 12.050 | 0.351 | 38.8 | 0.149 |
TET16242 | North Peak | 151.88 | 152.58 | 0.70 | 3.860 | 0.113 | 56.7 | 0.070 |
TET16242 | North Peak | 156.00 | 157.25 | 1.25 | 3.170 | 0.092 | 66.5 | 0.376 |
TET16243 | North Peak | 10.93 | 12.30 | 1.37 | 14.950 | 0.436 | 28.8 | 0.105 |
TET16243 | North Peak | 15.85 | 21.55 | 5.70 | 4.300 | 0.125 | 47.6 | 0.247 |
TET16243 | North Peak | 25.82 | 34.29 | 8.47 | 3.990 | 0.116 | 49.6 | 0.391 |
TET16243 | North Peak | 39.68 | 57.19 | 17.51 | 4.970 | 0.145 | 61.2 | 0.116 |
TET16243 | North Peak | 99.42 | 104.70 | 5.28 | 2.600 | 0.076 | 18.7 | 0.210 |
TET16244 | North Peak | 35.08 | 51.00 | 15.92 | 11.740 | 0.342 | 51.1 | 0.183 |
TET16244 | North Peak | 62.14 | 67.55 | 5.41 | 2.050 | 0.060 | 34.6 | 0.152 |
TET16244 | North Peak | 76.60 | 87.06 | 10.46 | 2.580 | 0.075 | 4.9 | 0.035 |
TET16245 | North Peak | 43.11 | 46.02 | 2.91 | 0.630 | 0.018 | 2.5 | 0.022 |
TET16245 | North Peak | 50.36 | 52.65 | 2.29 | 1.210 | 0.035 | 12.0 | 0.047 |
TET16245 | North Peak | 63.55 | 71.74 | 8.19 | 2.160 | 0.063 | 30.0 | 0.161 |
TET16245 | North Peak | 83.27 | 86.11 | 2.84 | 2.600 | 0.076 | 26.5 | 0.030 |
TET16246 | North Peak | 90.80 | 92.49 | 1.69 | 2.180 | 0.064 | 26.1 | 0.113 |
TET16246 | North Peak | 126.39 | 128.51 | 2.12 | 0.900 | 0.026 | 2.2 | 0.010 |
TET16247 | North Peak | 14.31 | 16.56 | 2.25 | 1.560 | 0.046 | 88.5 | 0.064 |
TET16247 | North Peak | 61.30 | 66.74 | 5.44 | 3.970 | 0.116 | 12.6 | 0.104 |
TET16247 | North Peak | 71.78 | 74.18 | 2.40 | 0.670 | 0.020 | 18.1 | 0.094 |
TET16247 | North Peak | 77.39 | 83.97 | 6.58 | 1.220 | 0.036 | 23.2 | 0.127 |
TET16247 | North Peak | 107.49 | 108.58 | 1.09 | 3.180 | 0.093 | 38.1 | 0.080 |
TET16247 | North Peak | 137.78 | 145.02 | 7.24 | 1.970 | 0.057 | 0.5 | 0.003 |
TET16248 | North Peak | 9.38 | 10.75 | 1.37 | 9.290 | 0.271 | 25.2 | 0.063 |
TET16248 | North Peak | 13.83 | 22.89 | 9.06 | 5.020 | 0.146 | 6.1 | 0.035 |
Including | North Peak | 18.36 | 19.35 | 0.99 | 13.400 | 0.391 | 5.8 | 0.054 |
TET16248 | North Peak | 30.78 | 36.56 | 5.78 | 1.790 | 0.052 | 4.4 | 0.081 |
TET16248 | North Peak | 43.22 | 45.96 | 2.74 | 10.620 | 0.310 | 3.8 | 0.052 |
TET16248 | North Peak | 52.75 | 57.73 | 4.98 | 5.530 | 0.161 | 5.7 | 0.037 |
Including | North Peak | 52.75 | 53.95 | 1.20 | 17.100 | 0.499 | 5.9 | 0.045 |
TET16248 | North Peak | 61.23 | 72.02 | 10.79 | 4.050 | 0.118 | 13.0 | 0.042 |
Including | North Peak | 67.80 | 70.55 | 2.75 | 10.400 | 0.303 | 32.5 | 0.042 |
and | North Peak | 71.48 | 72.02 | 0.54 | 11.350 | 0.331 | 10.7 | 0.087 |
TET16251 | North Peak | 118.21 | 120.82 | 2.61 | 0.800 | 0.023 | 0.8 | 0.025 |
TET16252 | North Peak | 49.43 | 51.94 | 2.51 | 2.220 | 0.065 | 1.7 | 0.010 |
TET16253 | North Peak | 105.65 | 107.96 | 2.31 | 0.860 | 0.025 | 0.8 | 0.033 |
TET16255 | North Peak | 35.30 | 44.72 | 9.42 | 5.530 | 0.161 | 56.2 | 0.230 |
Including | North Peak | 36.90 | 37.43 | 0.53 | 16.700 | 0.487 | 113.0 | 1.165 |
and | North Peak | 43.35 | 44.72 | 1.37 | 19.200 | 0.560 | 80.6 | 0.071 |
TET16256 | North Peak | 7.92 | 21.12 | 13.20 | 48.590 | 1.417 | 112.2 | 0.053 |
Including | North Peak | 8.55 | 10.66 | 2.11 | 222.000 | 6.475 | 316.0 | 0.021 |
TET16257 | North Peak | 73.82 | 74.33 | 0.51 | 3.300 | 0.096 | 526.0 | 0.080 |
TET16261 | East Peak | 215.78 | 216.57 | 0.79 | 3.940 | 0.115 | 11.7 | 0.004 |
TET16262 | West Peak | 35.05 | 35.72 | 0.67 | 4.040 | 0.118 | 35.8 | 0.084 |
TET16262 | West Peak | 60.22 | 63.09 | 2.87 | 1.730 | 0.050 | 0.6 | 0.029 |
TET16262 | West Peak | 151.08 | 159.61 | 8.53 | 5.750 | 0.168 | 37.6 | 0.136 |
Including | West Peak | 151.65 | 152.57 | 0.92 | 16.500 | 0.481 | 55.4 | 0.260 |
and | West Peak | 152.57 | 153.73 | 1.16 | 13.850 | 0.404 | 92.9 | 0.191 |
TET16262 | West Peak | 195.76 | 198.19 | 2.43 | 1.720 | 0.050 | 5.7 | 0.111 |
TET16262 | West Peak | 210.69 | 216.02 | 5.33 | 4.560 | 0.133 | 5.7 | 0.199 |
TET16262 | West Peak | 221.50 | 222.90 | 1.40 | 1.510 | 0.044 | 96.2 | 0.151 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16263 | West Peak | 52.20 | 54.07 | 1.87 | 5.540 | 0.162 | 0.8 | 0.036 |
TET16263 | West Peak | 180.50 | 182.03 | 1.53 | 10.650 | 0.311 | 12.7 | 0.099 |
TET16263 | West Peak | 197.21 | 199.77 | 2.56 | 2.040 | 0.060 | 1.0 | 0.027 |
TET16263 | West Peak | 204.00 | 216.64 | 12.64 | 1.280 | 0.037 | 0.3 | 0.010 |
TET16264 | West Peak | 237.78 | 244.53 | 6.75 | 0.630 | 0.018 | 2.2 | 0.100 |
TET16265 | West Peak | 77.02 | 78.04 | 1.02 | 4.200 | 0.123 | 2.2 | 0.421 |
TET16265 | West Peak | 84.42 | 86.45 | 2.03 | 0.990 | 0.029 | 1.5 | 0.446 |
TET16265 | West Peak | 245.97 | 247.01 | 1.04 | 1.720 | 0.050 | 7.9 | 0.271 |
TET16265 | West Peak | 255.43 | 257.19 | 1.76 | 1.440 | 0.042 | 22.5 | 0.395 |
TET16265 | West Peak | 270.23 | 279.30 | 9.07 | 1.590 | 0.046 | 1.1 | 0.028 |
TET16266 | North Peak | 115.58 | 118.77 | 3.19 | 0.660 | 0.019 | 6.7 | 0.035 |
TET16266 | North Peak | 143.21 | 147.31 | 4.10 | 0.530 | 0.015 | 7.1 | 0.193 |
TET16266 | North Peak | 155.94 | 158.81 | 2.87 | 10.010 | 0.292 | 11.5 | 0.091 |
TET16266 | North Peak | 166.76 | 184.16 | 17.40 | 1.060 | 0.031 | 22.1 | 0.061 |
Including | North Peak | 166.76 | 167.22 | 0.46 | 6.760 | 0.197 | 2.3 | 0.008 |
TET16267 | Main Peak | 110.39 | 161.24 | 50.85 | 12.050 | 0.351 | 11.5 | 0.184 |
Including | Main Peak | 110.39 | 113.38 | 2.99 | 148.500 | 4.331 | 39.6 | 0.474 |
and | Main Peak | 136.02 | 136.25 | 0.23 | 32.400 | 0.945 | 17.7 | 0.232 |
and | Main Peak | 154.32 | 154.59 | 0.27 | 31.400 | 0.916 | 179.0 | 3.320 |
TET16267 | Main Peak | 165.04 | 170.93 | 5.89 | 14.740 | 0.430 | 14.1 | 0.392 |
Including | Main Peak | 165.04 | 165.28 | 0.24 | 70.200 | 2.048 | 99.1 | 2.360 |
TET16268 | Main Peak | 16.61 | 19.05 | 2.44 | 0.660 | 0.019 | 47.0 | 0.258 |
TET16268 | Main Peak | 49.37 | 49.92 | 0.55 | 4.350 | 0.127 | 3.4 | 0.102 |
TET16268 | Main Peak | 90.31 | 93.66 | 3.35 | 11.860 | 0.346 | 4.3 | 0.157 |
Including | Main Peak | 91.88 | 92.53 | 0.65 | 37.500 | 1.094 | 12.5 | 0.497 |
TET16268 | Main Peak | 105.39 | 173.28 | 67.89 | 8.700 | 0.254 | 3.8 | 0.146 |
Including | Main Peak | 118.97 | 127.41 | 8.44 | 22.520 | 0.657 | 5.5 | 0.246 |
and | Main Peak | 134.53 | 137.55 | 3.02 | 20.540 | 0.599 | 4.9 | 0.192 |
TET16269 | North Peak | 25.30 | 42.93 | 17.63 | 2.270 | 0.066 | 1.3 | 0.026 |
Including | North Peak | 27.43 | 30.18 | 2.75 | 8.020 | 0.234 | 2.7 | 0.072 |
TET16269 | North Peak | 47.93 | 56.47 | 8.54 | 2.000 | 0.058 | 1.6 | 0.032 |
Including | North Peak | 50.42 | 52.17 | 1.75 | 6.670 | 0.195 | 2.8 | 0.058 |
TET16269 | North Peak | 60.66 | 74.56 | 13.90 | 13.970 | 0.407 | 2.6 | 0.048 |
Including | North Peak | 69.39 | 71.27 | 1.88 | 61.320 | 1.789 | 7.9 | 0.144 |
TET16269 | North Peak | 91.90 | 94.92 | 3.02 | 8.840 | 0.258 | 2.3 | 0.095 |
TET16269 | North Peak | 108.27 | 125.65 | 17.38 | 9.700 | 0.283 | 2.2 | 0.127 |
Including | North Peak | 118.39 | 120.24 | 1.85 | 36.000 | 1.050 | 2.6 | 0.107 |
TET16270 | North Peak | 78.03 | 93.60 | 15.57 | 8.560 | 0.250 | 2.3 | 0.097 |
Including | North Peak | 88.68 | 91.09 | 2.41 | 21.500 | 0.627 | 3.1 | 0.085 |
TET16270 | North Peak | 105.30 | 111.06 | 5.76 | 11.240 | 0.328 | 2.4 | 0.071 |
TET16270 | North Peak | 119.09 | 122.73 | 3.64 | 1.430 | 0.042 | 3.9 | 0.078 |
TET16271 | North Peak | 24.08 | 41.20 | 17.12 | 51.890 | 1.513 | 23.7 | 0.088 |
Including | North Peak | 31.50 | 34.31 | 2.81 | 181.920 | 5.306 | 49.8 | 0.133 |
TET16271 | North Peak | 44.73 | 53.92 | 9.19 | 41.020 | 1.196 | 18.1 | 0.043 |
Including | North Peak | 51.51 | 53.15 | 1.64 | 151.500 | 4.419 | 37.5 | 0.070 |
TET16271 | North Peak | 57.25 | 71.20 | 13.95 | 24.280 | 0.708 | 20.5 | 0.058 |
Including | North Peak | 67.43 | 69.62 | 2.19 | 62.900 | 1.835 | 49.4 | 0.146 |
TET16271 | North Peak | 82.32 | 85.63 | 3.31 | 4.470 | 0.130 | 1.9 | 0.041 |
TET16272 | North Peak | 1.83 | 4.88 | 3.05 | 0.840 | 0.025 | 0.9 | 0.004 |
TET16272 | North Peak | 14.33 | 16.76 | 2.43 | 7.040 | 0.205 | 11.7 | 0.008 |
Including | North Peak | 16.16 | 16.76 | 0.60 | 19.150 | 0.559 | 33.8 | 0.006 |
TET16272 | North Peak | 23.13 | 32.96 | 9.83 | 49.010 | 1.429 | 146.7 | 0.015 |
Including | North Peak | 29.99 | 30.38 | 0.39 | 345.000 | 10.063 | 735.0 | 0.006 |
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16272 | North Peak | 37.39 | 38.98 | 1.59 | 1.760 | 0.051 | 2.7 | 0.004 |
TET16272 | North Peak | 43.09 | 51.05 | 7.96 | 15.990 | 0.466 | 49.0 | 0.035 |
Including | North Peak | 45.50 | 47.10 | 1.60 | 39.700 | 1.158 | 160.0 | 0.136 |
TET16272 | North Peak | 55.92 | 59.31 | 3.39 | 1.550 | 0.045 | 25.9 | 0.129 |
TET16272 | North Peak | 84.90 | 87.84 | 2.94 | 1.530 | 0.045 | 2.2 | 0.030 |
TET16273 | West Peak | 163.78 | 166.98 | 3.20 | 0.740 | 0.022 | 6.1 | 0.024 |
TET16273 | West Peak | 176.67 | 178.70 | 2.03 | 2.960 | 0.086 | 14.0 | 0.168 |
TET16273 | West Peak | 188.36 | 191.00 | 2.64 | 1.030 | 0.030 | 3.2 | 0.045 |
2016 Exploration Program - Phase I. During the first three months of calendar year 2016, exploration drilling was completed by the Joint Venture Company on the Peak Gold Joint Venture Property totaling 4,040 meters (13,255 feet) in 19 holes, referred to as the 2016 Phase I program. The Joint Venture Company spent an estimated $1.9 million to complete the program including drilling, geochemical analyses, landholding fees and other related expenses. Drilling targeted two areas, North Peak and West Peak, with the objective of enhancing the understanding of mineralization geometry and geochemical variability. During the program, an area located between the Peak Zone and North Peak was tested, producing significant gold and copper assay intervals in a Connector Zone.
The map below depicts the location of 16 of the 19 core holes drilled during the 2016 Phase I program:
2016 PHASE I CORE HOLES DRILLED
Significant Drill Intercepts from the 2016 Phase I Program. Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness. Intercepts shown are drill intercept lengths. True width of mineralization is unknown. The grade cutoff for gold (Au) is 0.5 gpt; for silver (Ag) is 10 gpt; and for copper (Cu) is 0.1%. The following table summarizes the significant drilling results obtained to date for Phase I of the 2016 Program:
DrillHole | Zone | From (meters) | To (meters) | Interval (meters) | Au gpt | Au opt | Ag gpt | Cu % |
TET16192 | North Peak | 31.34 | 38.29 | 6.95 | 0.784 | 0.023 | 2.5 | 0.023 |
TET16192 | North Peak | 42.00 | 43.42 | 1.42 | 1.803 | 0.053 | 1.5 | 0.021 |
TET16192 | North Peak | 78.51 | 91.78 | 13.27 | 49.194 | 1.435 | 4.5 | 0.035 |
including | North Peak | 80.96 | 81.59 | 0.63 | 416.000 | 12.133 | 26.7 | 0.066 |
TET16192 | North Peak | 102.84 | 105.46 | 2.62 | 2.536 | 0.074 | 4.5 | 0.151 |
TET16192 | North Peak | 122.07 | 123.79 | 1.72 | 3.850 | 0.112 | 1.1 | 0.067 |
TET16192 | North Peak | 139.90 | 143.78 | 3.88 | 3.992 | 0.116 | 3.1 | 0.119 |
TET16193 | North Peak | 85.91 | 90.62 | 4.71 | 12.452 | 0.363 | 3.6 | 0.065 |
including | North Peak | 88.09 | 89.71 | 1.62 | 27.974 | 0.816 | 5.9 | 0.041 |
TET16195 | North Peak | 66.50 | 68.34 | 1.84 | 6.718 | 0.196 | 3.7 | 0.069 |
TET16196 | North Peak | 65.78 | 69.12 | 3.34 | 0.712 | 0.021 | 14.1 | 0.096 |
TET16199 | West Peak | 21.09 | 23.13 | 2.04 | 3.462 | 0.101 | 6.9 | 0.037 |
TET16199 | West Peak | 50.19 | 52.08 | 1.89 | 1.375 | 0.040 | 0.7 | 0.022 |
TET16199 | West Peak | 55.62 | 57.79 | 2.17 | 1.805 | 0.053 | — | 0.005 |
TET16199 | West Peak | 80.44 | 82.76 | 2.32 | 1.529 | 0.045 | 1.9 | 0.054 |
TET16199 | West Peak | 95.08 | 96.63 | 1.55 | 2.690 | 0.078 | 0.9 | 0.006 |
TET16199 | West Peak | 139.46 | 145.31 | 5.85 | 0.699 | 0.020 | 1.1 | 0.03 |
TET16204 | North Peak | 50.41 | 53.34 | 2.93 | 1.100 | 0.032 | 5.2 | 0.189 |
TET16204 | North Peak | 63.06 | 65.42 | 2.36 | 2.050 | 0.060 | 1.1 | 0.044 |
TET16204 | North Peak | 194.11 | 195.93 | 1.82 | 16.338 | 0.477 | 328.4 | 0.157 |
TET16205 | North Peak | 65.07 | 70.61 | 5.54 | 0.954 | 0.028 | 2.8 | 0.165 |
TET16205 | North Peak | 82.91 | 83.67 | 0.76 | 6.715 | 0.196 | 11.2 | 0.005 |
TET16205 | North Peak | 150.74 | 151.73 | 0.99 | 3.360 | 0.098 | 4.2 | 0.314 |
TET16206 | North Peak | 60.95 | 104.38 | 43.43 | 3.611 | 0.105 | 2.1 | 0.108 |
including | North Peak | 98.34 | 100.04 | 1.70 | 30.700 | 0.895 | 2.3 | 0.108 |
TET16207 | North Peak | 92.88 | 95.92 | 3.04 | 2.590 | 0.076 | 1.4 | 0.057 |
TET16208 | West Peak | 55.02 | 58.20 | 3.18 | 2.543 | 0.074 | 0.5 | 0.005 |
TET16208 | West Peak | 88.66 | 108.65 | 19.99 | 2.822 | 0.082 | 0.1 | 0.006 |
including | West Peak | 95.55 | 97.45 | 1.90 | 12.050 | 0.351 | 0.5 | 0.011 |
and | West Peak | 98.93 | 100.02 | 1.09 | 14.200 | 0.414 | 0.7 | 0.013 |
TET16209 | West Peak | 46.33 | 48.95 | 2.62 | 2.222 | 0.065 | 0.8 | 0.007 |
TET16209 | West Peak | 52.73 | 58.98 | 6.25 | 4.863 | 0.142 | 0.5 | 0.014 |
including | West Peak | 55.78 | 57.54 | 1.76 | 12.788 | 0.373 | 1.1 | 0.037 |
TET16210 | Connector | 16.95 | 60.91 | 43.96 | 3.275 | 0.096 | 30.6 | 0.402 |
including | Connector | 18.12 | 22.29 | 4.17 | 9.006 | 0.263 | 51.5 | 0.291 |
and | Connector | 51.90 | 53.26 | 1.36 | 10.150 | 0.296 | 19.6 | 0.583 |
and | Connector | 56.57 | 57.15 | 0.58 | 10.550 | 0.308 | 50.4 | 2.28 |
TET16210 | Connector | 131.83 | 135.60 | 3.77 | 2.614 | 0.076 | 52.5 | 0.14 |
Consulting Services provided by Avalon Development Corporation
Until January 8, 2015, the Company was a party to a Professional Services Agreement (“PSA”) with Avalon to provide certain geological consulting services and exploration activities with respect to the Peak Gold Joint Venture Property. Pursuant to the PSA, Avalon provided geological consulting services and exploration activities, including all field work at the Tetlin Lease. In connection with the Transactions, the Company terminated the PSA with Avalon, and Avalon is now providing services to the Joint Venture Company.
Avalon is a Fairbanks, Alaska based mineral exploration consulting firm, which has conducted mineral exploration in Alaska since 1985. The President of Avalon is Curtis J. Freeman who graduated from the College of Wooster, Ohio, with a B.A. degree in Geology (1978) and graduated from the University of Alaska with an M.S. degree in Economic Geology (1980). From 1980 to the present Mr. Freeman has been actively employed in various capacities in the mining industry in numerous locations in North America, Central America, South America, New Zealand and Africa. Avalon's team of engineers and geoscientists combined with its geographic information systems (GIS) database allows Avalon to synthesize existing geological, geochemical and geophysical data and identify specific target areas for ground evaluation and/or acquisition. Avalon’s exploration team has identified or conducted discovery drilling on several gold deposits in Alaska and has completed digital GIS compilations of the Tintina Gold Belt, a regional-scale mineral province stretching from southwest Alaska to the southern Yukon Territory. Avalon also has experience exploring for copper, nickel and platinum group elements (“Cu-Ni-PGE”) deposits and also created a comprehensive GIS compilation of Cu-Ni-PGE prospects in Alaska, an internally-owned database that contains data on over 200 PGE occurrences in Alaska.
Services Provided by Tetlin Village Members
Since the start of the term of our Tetlin Lease, the Company has worked closely with the Tetlin Tribal Council to train and employ Tetlin residents during Peak Gold Joint Venture project exploration programs. During the Company's exploration programs, there were 10 to 15 Tetlin residents working on the Peak Gold Joint Venture project employed on a seasonal basis through Avalon. Their duties included reconnaissance soil, stream sediment and pan concentrate sampling, diamond drill core processing, drill pad construction and related tasks, expediting services, food services, database management, vehicle transportation and maintenance services, reclamation activities, and project management tasks.
Community Affairs
In April 2015, the Joint Venture Company entered into a Community Support Agreement with the Tetlin Village for a one year period, which has been extended for an additional two year period under the same terms. Under the extended agreement the Joint Venture Company provides payments to the village four times during the year for an aggregate amount of $110,000 through January 1, 2017 and an additional $100,000 through January 1, 2018. The agreement was extended a second time for an additional two year period under the same terms. Under the second extension, the Joint Venture Company provides payments to the village four times during the year for an aggregate amount of $100,000 through January 1, 2019 and an additional $100,000 through January 1, 2020. The agreement defines agreed uses for the funds and auditing rights regarding use of funds. In addition, the Joint Venture Company supports the Tetlin Village in maintenance of the village access road, which is used by the Joint Venture Company.
Adverse Climate Conditions
Weather conditions affect the Joint Venture Company's ability to conduct exploration activities and mine any ore from the Peak Gold Joint Venture Property in Alaska. While the Company believes exploration, development work and any subsequent mining may be conducted year-round, the arctic climate limits many exploration and mining activities during certain seasons.
Competition
The Company currently faces strong competition for the acquisition of any new exploration-stage properties as well as extraction of any minerals in Alaska. Numerous larger mining companies actively seek out and bid for mining prospects as well as for the services of third party providers and supplies, such as mining equipment and transportation equipment. The Company's competitors in the exploration, development, acquisition and mining business will include major integrated mining companies as well as numerous smaller mining companies, almost all of which have significantly greater financial resources and in-house technical expertise. In addition, the Company will compete with others in efforts to obtain financing to explore our mineral properties.
Off-Balance Sheet Arrangements
None.
Contractual Obligations
The Tetlin Lease had an initial ten year term beginning July 2008 which was extended for an additional ten years to July 15, 2028, or so long as the Joint Venture Company initiates and continues to conduct mining operations on the Tetlin Lease. The Joint Venture Company is required to spend $350,000 per year annually until July 15, 2018 in exploration costs pursuant to the Tetlin Lease. However, exploration expenditures to date under the lease have already satisfied this work commitment requirement for the full lease term, through 2028, because exploration funds spent in any year in excessApplication of Critical Accounting Policies and Management’s Estimates
The discussion and analysis of the Company’sCompany’s financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We haveThe Company has identified below the policiescritical accounting estimate that areis of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management. The Company analyzes its estimates, including those related to its mineral reserve estimates, on a periodic basis and bases its estimates on historical experience, independent third party engineers and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements:
Stock-Based Compensation.Business Combinations. The In determining whether an acquisition should be accounted for as a business combination or asset acquisition, the Company appliesfirst determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this is the case, the single identifiable asset or the group of similar assets is not deemed to be a business, and is instead deemed to be an asset. If this is not the case, the Company then further evaluates whether the single identifiable asset or group of similar identifiable assets and activities includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If so, the Company concludes that the single identifiable asset or group of similar identifiable assets and activities is a business. The Company accounts for business combinations using the acquisition method of accounting. Application of this method of accounting requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill, which is not amortized for stock-based compensation. Under this method, theaccounting purposes but is subject to testing for impairment at least annually. The Company measures and recognizes compensation expense for all stock-based paymentsasset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs. Goodwill is not recognized in asset acquisitions. Contingent consideration in asset acquisitions payable in the form of cash is recognized when payment becomes probable and reasonably estimable, unless the contingent consideration meets the definition of a derivative, in which case the amount becomes part of the asset acquisition cost when acquired. Contingent consideration payable in the form of a fixed number of the Company’s own shares is measured at fair value as of the acquisition date and recognized when the issuance of the shares becomes probable. Upon recognition of the contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets. The Company carries a liability for contingent consideration related to the acquisition of AGT. In estimating the fair value of the contingent consideration at each reporting period, the Company makes estimates regarding the probability and timing of reaching the milestones associated with payment of the consideration, as well as the weighted average cost of capital used to discount the liability to its present value as of the balance sheet date. The estimate of the fair value of the contingent consideration is sensitive to changes in any one of these estimates.
Derivative Instruments. The Company utilizes derivative instruments in order to manage exposure to risks associated with fluctuating commodity prices. The Company recognizes all derivatives as either assets or liabilities, measured at fair value, and recognizes changes in the fair value of derivatives in current earnings. The Company has elected to not designate any of its positions under the hedge accounting rules. Accordingly, these derivative contracts are mark-to-market and any changes in the estimated values of derivative contracts held at the balance sheet date are recognized in unrealized (loss) gain on derivative contracts, net in the Condensed Consolidated Statements of grant and amortizeOperations as unrealized gains or losses on derivative contracts. Realized gains or losses on derivative contracts will be recognized in (Loss) gain on derivative contracts, net in the amount over the employee’s service period. Management is required to make assumptions including stock price volatility and employee turnover that are utilized to measure compensation expense.Condensed Consolidated Statements of Operations.
Investment in the Joint Venture Company. The Company’s consolidated financial statements include the investment in the Joint Venture Company which is accounted for under the equity method. The Company has designated one
Results of Operations
Neither the Company nor the Joint Venture CompanyPeak Gold JV has commenced mining or producing commercially marketable minerals. To date, neither the Company nor the Joint Venture CompanyPeak Gold JV has not generated any revenue from mineral sales or operations. Neither the Company nor the Joint Venture CompanyPeak Gold JV has any recurring source of revenue and other than Royal Gold’s contributions in connection with the Transactions, therevenue. The Company’s ability to continue as a going concern is dependent on ourthe Company’s ability to raise capital to fund our future exploration and working capital requirements. In the future, the Joint Venture Company and the Peak Gold JV may generate revenue from a combination of mineral sales and other payments resulting from any commercially recoverable minerals from the Peak Gold Joint Venture Properties. We doManh Choh Project. The Company does not expect the Joint Venture CompanyPeak Gold JV to generate revenue from mineral sales in the foreseeable future.prior to mid-2024. If the Peak Gold Joint Venture PropertiesCompany’s properties or the Manh Choh Project fail to contain any proven reserves, ourthe Company’s ability to generate future revenue, and ourthe Company’s results of operations and financial position, would be materially adversely affected. Other potential sources of cash, or relief of demand for cash, include external debt, the sale of shares of ourthe Company’s stock, joint ventures, or alternative methods such as mergers or sale of our assets. No assurances can be given, however, that wethe Company will be able to obtain any of these potential sources of cash. WeThe Company will need to generate significant revenues to achieve profitability and wethe Company may never do so.
Three Months Ended December 31, 2017September 30, 2023 Compared to Three Months Ended December 31, 2016September 30, 2022
Claim Rentals Expense. Claim rental expense primarily consists of State of Alaska rental payments and annual labor payments. We recognized claim rental expense of $0.1 million compared to $0.1 million for the three months ended September 30, 2022.
Exploration Expense. Exploration expense for the three months ended September 30, 2023 was $1.1 million compared to $4.4 million for the three months ended September 30, 2022. Current and prior period exploration expense relates to exploration work performed on our Lucky Shot Property. The current period exploration program at Lucky Shot was shut down in September 2023 due to poor weather conditions. The prior period program was carried out through November 2022.
General and Administrative Expense. General and administrative expense for the three months ended December 31, 2017September 30, 2023 and 2016 were $808,3442022 was $2.8 million and $592,142,$2.4 million, respectively. Current yearThe Company’s general and administrative expensesexpense primarily relaterelates to audit fees, legal fees, management fees, payroll and stock-based compensation expense. We recognized $580,379 of stock-based compensation expenseGeneral and administrative expenses were higher for the three months ended December 31, 2017,September 30, 2023, as a result of a $0.2 million bonus paid to Rick Van Nieuwenhuyse during that quarter, additional payroll related to restricted stock granted to our officers and directorsfees for the addition of two employees during the quarter, as well as increased audit fees.
Loss fromEquity Investment in November 2017, November 2016, August 2016, December 2015, September 2015 and November 2014, all pursuant tothe Peak Gold JV. The loss from the Company’s 2010 Equity Compensation Plan. We recognized $331,306 of stock-based compensation expenseequity investment in the Peak Gold JV for the three months ended December 31, 2016, related September 30, 2023 and 2022 was $5.6 million and zero, respectively. The current period expense includes the recognition of $4.3 million in suspended losses from previous periods and $1.3 million in current period losses from our 30.0% investment in the Peak Gold JV. The Company did not make a capital contribution to restricted stock granted to our officersthe Peak Gold JV during the three months ended September 30, 2022, and directors in November 2016, August 2016, December 2015,at that time the cumulative loss exceeded the Company’s cumulative investment thus the prior period losses from the Peak Gold JV were suspended losses. There were no suspended losses as of September 2015, January 2015, and November 2014.
Six Months Ended December 31, 2017 Compared to Six Months Ended December 31, 201630, 2023.
GeneralInterest Expense. In connection with the closing of the Credit Agreement, the Company entered into an amendment to its $20,000,000 unsecured convertible debenture (the “Debenture”) with Queen’s Road Capital Investment, Ltd. (“QRC”) that raised the stated interest rate from 8% to 9%. The Debenture currently bears interest at 9% per annum, payable quarterly, with 7% paid in cash and Administrative Expense. General and administrative2% paid in shares of common stock of the Company (See Note 14 - Debt for discussion of both debt arrangements). The current quarter interest expense for the six months ended December 31, 2017 and 2016 were $1,476,980 and $1,547,792 respectively. Current year general and administrative expenses primarily relate to audit fees, legal fees, management fees, and stock-based compensation expense. We recognized $998,117 of stock-based compensation$0.8 million includes a full quarter of interest expense for the six months ended December 31, 2017, related to restricted stock granted to our officersthe Debenture, and directors in November 2017, November 2016, August 2016, December 2015, September 2015, January 2015, and November 2014 all pursuanta full quarter of interest expense related to the Company’s 2010 Equity Compensation Plan. We recognized $959,650cumulative $20 million draw-down on the Facility. Prior year interest expense of stock-based compensation$0.4 million only included the current quarter interest expense for the six months ended December 31, 2016, related to restricted stock grantedthe Debenture.
Loss on Derivative Contracts. The Company incurred a loss of $2.7 million during the current quarter related to our officersderivative contracts compared to $0 during the quarter ended September 30, 2022. The Company did not enter into any derivative contracts until July 2023 (see Note 15 - Derivative and directors in November 2016, August 2016, December 2015, September 2015, January 2015, and November 2014.Hedging Activities).
Liquidity and Capital Resources
Prior toAs of September 30, 2023, the Closing, the Company's primary cash requirements were for exploration-related expenses. Since the Closing, the Company'sCompany had approximately $18.7 million of cash.
The Company’s primary cash requirements have been for general and administrative expenses.expenses, capital calls from the Peak Gold JV for the Manh Choh Property, and exploration expenditures on the Lucky Shot Property. The Company'sCompany’s sources of cash have been from common stock offerings. offerings, the issuance of the Debenture, and the proceeds from the Facility (see Note 8 - Stockholder's Equity and Note 14 - Debt, for a discussion of the recent activity).
The JV Management Committee of the Peak Gold Joint Venture PropertyJV has proposed a significant budget to complete and start the operations of the Manh Choh mine. Specifically, the JV Management Committee has approved a budget for 2023, with cash calls totaling approximately $165.1 million, of which the Company’s share is still inapproximately $49.5 million. As of the initial stagesdate of exploration,this filing, the Company has funded $45.4 million of the approved 2023 budget. This budget primarily relates to completion of the Manh Choh camp, mine access road construction, earthworks, general construction and the longer term liquidity of theinstallation, pre-production stripping, etc. The Company will be impairedrequired to make capital contributions of 30% of the extent the Joint Venture Company’s exploration effortsbudgeted amounts when cash calls are not successful in generating commercially viable mineral deposits onreceived from the Peak Gold Joint Venture Property. In September 2016,JV or face the possible dilution of its interest in the Peak Gold JV.
The Company’s cash needs going forward will primarily relate to capital calls from the Peak Gold JV, exploration of the Contango Properties, and general and administrative expenses of the Company. If a large budget is undertaken, and no additional financing is obtained, the Company distributed a Private Placement Memorandum to its warrant holders to give them the opportunity to exercise their warrants at a reduced exercise price and receive shares of common stock, par value $0.01 per share of Contango ORE, Inc. by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price of $10.00 per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.00 per share. The offer expired on November 15, 2016. In conjunction with the offering a total of 587,500 warrants were exercised resulting in total cash to the Company of $5.3 million. On October 13, 2017, the Company distributed a Private Placement Memorandum to its warrant holders to give them the opportunity to exercise their warrants at a reduced exercise price and receive shares of common stock, par value $0.01 per share of Contango ORE, Inc. by paying the reduced exercise price in cash and surrendering the original warrants. The offering applied to warrant holders with an exercise price of $10.00 per share originally issued in March 2013. The offering gave the warrant holders the opportunity to exercise the warrants for $9.50 per share. The offer expired on November 10, 2017. In conjunction with the offering a total of 124,999 warrants were exercised resulting in total cash to the Company of $1.2 million. Proceeds from the exercise of the warrants will be used for working capital purposes and for funding future obligations to the Joint Venture Company.
As of December 31, 2017, the Company has approximately $15.8 million of cash, cash equivalents, and short term investments. In September 2017, a capital budget of $1.5 million was approved for the 2017 Phase III Drilling Exploration Program. Phase III was completed in October 2017. On October 23, 2017, the Company completed the issuance and sale of an aggregate of 553,672 shares of common stock, par value $0.01 per share, of the Company at a purchase price of $19.00 per share of Common Stock, in a private placement to certain purchasers pursuant to a Stock Purchase Agreement dated as of October 23, 2017, by and among the Company and each Purchaser. Brad Juneau, the Company's President and Chief Executive Officer, purchased 13,200 shares of Common Stock, at an aggregate purchase price of $250,800, in the Private Placement on the same terms and conditions as all other Purchasers. The Private Placement resulted in approximately $10.5 million of gross proceeds and approximately $10.0 million of net proceeds. The Company will use the net proceeds from the Private Placementcan elect not to fund its exploration and development program and for general corporate purposes. Petrie acted as sole placement agentportion of the approved budget, in connection withwhich case the Private Placement and received a placement agent fee equal to 6.50%, which was reduced to 3.25% for existing stockholders and other Purchasers referred by those existing stockholders, or a total of $0.5 million in placement agent fees. The Company believes that its current cash balances will bewould maintain sufficient liquidity to meet its working capital requirements for the next twelve months.
On January 8, 2015, Royal Gold invested $5 million to fund exploration activity, and will have the option to earn up to a 40%months; however, its membership interest in the Joint Venture Company by investing up to $30 million (inclusive ofPeak Gold JV would be diluted. If the initial $5 million investment) prior to October 31, 2018. As of December 31, 2017, Royal Gold had funded approximately $29.3 million (including the initial investment of $5 million) and earned a 39.0%Company’s interest in the Joint Venture Company. The proceeds of Royal Gold’sPeak Gold JV is diluted, the Company may not be able to fully realize its investment have been used by the Joint Venture Company for additional exploration ofin the Peak Gold Joint Venture Property. ForJV. Also, if no additional information regardingfinancing is obtained, the Joint Venture Company’s capital budget and expenditures, see the “Gold Exploration” section above.
Any additional contributionsCompany may not be able to the Joint Venture Company by Royal Gold to fund future drilling programs, or otherwise, will bring Royal Gold’s cumulative contributions closer to $30 million. Once Royal Gold contributes a total of $30 million, it will receive a percentage interest of 40%fully realize its investment in the Joint Venture Company. Pursuant to the JV LLCA, upon the earlier of the investment by Royal Gold of $30 million into the Joint Venture Company or October 31, 2018, the Company and Royal Gold are required to jointly fund the joint venture operations in proportion to their interests in the Joint Venture Company. After such point, if a member elects not to contribute to an approved program and budget or elects to contribute less than its proportionate interest, its percentage interest will be reduced. The capital costs of developing a large gold mining facility could exceed $1 billion. The Company’s ability to contribute funds sufficient to retain its membership interests in the Joint Venture Company may be limited. To date, neither the Company nor the Joint Venture Company has generated any revenue from mineral sales or operations. In the future, the Joint Venture Company may generate revenue from a combination of mineral sales and other payments resulting from any commercially recoverable minerals from the Peak Gold Joint Venture Property. The Company does not expect the Joint Venture Company to generate revenue from mineral sales in the foreseeable future. Further, neither the Company nor the Joint Venture Company has any recurring source of revenue other than Royal Gold’s contributions in connection with the Transactions. As a result, the Company’s ability to contribute funds to the Joint Venture Company and retain its interest will depend on its ability to raise capital.Contango Properties. The Company has limited financial resources and the ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, the exploration results achieved at the Peak Gold Joint VentureJV Property, as well as the market price of metals. The Company cannot be certain that financing will be available to the Company on acceptable terms, if at all. If the Company were unable to fund its contributions to the approved programs and budgets for the Joint Venture Company, its interest in the Joint Venture Company would be diluted. In addition, once Royal Gold has earned a percentage interest of 40% in the Joint Venture Company, it has the option to require the Company to sell an additional 20% of the Company’s interest in the Joint Venture Company in a sale by Royal Gold of its entire percentage interest of 40% to a bona fide third party purchaser.
Further financing by the Company may include issuances of equity, instruments convertible into equity (such as warrants) or various forms of debt. The Company has issued common stock and other instruments convertible into equity in the past and cannot predictpredict the size or price of any future issuances of common stock or other instruments convertible into equity, and the effect, if any, that such future issuances and sales will have on the market price of the Company’s securities. Any additional issuances of common stock or securities convertible into, or exercisable or exchangeable for, common stock may ultimately result in dilution to the holders of common stock, dilution in any future earnings per share of the Company and may have a material adverse effect upon the market price of the common stock of the Company.
Risk Factors
In addition to the risk factors set forth below and the other information set forth elsewhere in this Form 10-Q, you should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended June 30, 2017, under the headings “Item 1. Business — Adverse Climate Conditions,” “—Competition,” “— Government Regulation” and “— Environmental Regulation,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” which risks could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended June 30, 2017 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, other than updating the risk factors below. The risks described in our Annual Report on Form 10-K for the year ended June 30, 2017 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. An investment in the Company is subject to risks inherent in our business and involves a high degree of risk. The trading price of the shares of the Company is affected by the performance of our business relative to, among other things, competition, market conditions and general economic and industry conditions. The value of an investment in the Company may decrease, resulting in a loss. The updated risk factors are as follows:
There can be no assurance that Royal Gold will continue to fund the Joint Venture Company to continue exploration work.
The JV LLCA contains earn-in periods where Royal Gold has the option to fund up to $25 million on or before October 31, 2018 after its initial $5 million investment at the Closing of the Master Agreement. As of December 31, 2017, Royal Gold has funded approximately $29.3 million (including the initial investment of $5 million) and earned a 39.0% interest in the Joint Venture Company. There is no requirement that Royal Gold contribute any future amounts to the Joint Venture Company to continue exploration work, and the Company will have limited funds to continue exploration of its Peak Gold Joint Venture Property, if Royal Gold fails to contribute additional amounts to the Joint Venture Company.
The Joint Venture Company has no assurance of title to its properties.
The Joint Venture Company holds approximately 175,000 acres in the form of State of Alaska unpatented mining claims, for gold ore exploration. Unpatented mining claims are unique property interests, in that they are subject to the paramount title of, the State of Alaska and rights of third parties to uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 - 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 - 86.600. The validity of all State of Alaska unpatented mining claims is dependent upon inherent uncertainties and conditions.
With respect to the Tetlin Lease, the Company retained title lawyers to conduct a preliminary examination of title to the mineral interest prior to executing the Tetlin Lease. The Joint Venture Company conducted a title examination prior to the assignment of the Tetlin Lease to the Joint Venture Company and performed certain curative title work. In addition, in connection with the assignment of the Tetlin Lease from the Company to the Joint Venture Company, the Company and the Native Village of Tetlin entered into an Estoppel and Agreement and a Stability Agreement (the "Agreements") that were approved by the Tetlin Village Council and the Native Village of Tetlin members. The Agreements approved the assignment of the Tetlin Lease to the Joint Venture Company and, among other things, confirmed the validity and effectiveness of the Tetlin Lease. Nevertheless, a deficiency in title or claims by a third party may not be curable. It does happen, from time to time, that the title to a property is defective, having been obtained in error from a person who is not the rightful owner of the mineral interest desired. In these circumstances, the Joint Venture Company might not be able to proceed with exploration of the lease site or might incur costs to remedy a defect. It might also happen, from time to time, that the Joint Venture Company might elect to proceed with mining work despite any such deficiency or claim.
The Company's common stock is thinly traded.
As of December 31, 2017, there were approximately 6.0 million shares of the Company's common stock outstanding, with directors and officers beneficially owning approximately 14.9% of the common stock and the Marital Trust of Mr. Kenneth R. Peak, the Company's former Chairman, beneficially owning approximately 13.2% of our common stock. Since the Company's common stock is thinly traded, the purchase or sale of relatively small common stock positions may result in disproportionately large increases or decreases in the price of the Company's common stock.
Item3.Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are the Company is not required to provide this information.
Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) of the Exchange Act, we havethe Company has evaluated, under the supervision and with the participation of ourits management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we filethe Company files or submitsubmits under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2017September 30, 2023 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting (as(as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
From time to time, we arethe Company is party to litigation or other legal and administrative proceedings that we considerit considers to be a part of the ordinary course of business. For a discussion of the complaint filed on October 20, 2023 by CSC seeking injunctive relief against the Alaska DOT with respect to its oversight of the Peak Gold JV’s ore haul plan, see Note 17 – Subsequent Events and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments and Other Information. As of the date of this Form 10-Q, we arethe Company is not a party to any material legal proceedings and we arethe Company is not aware of any material proceedings contemplated against us, that could individually or in the aggregate, reasonably be expected to have a material adverse effect on ourthe Company's financial condition, cash flows or results of operations.
As a “smaller reporting company”, we are not requiredIn addition to providethe risk factor set forth below and the other information set forth in this information. See Part I, Form 10-Q, you should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended June 30, 2023, under the headings “Item 2, “Management’s 1. Business — Adverse Climate Conditions,”“—Competition,”“— Government Regulation” and “Item 2. Properties— Environmental Regulation and Permitting,”“Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” which identifies and discloses certainrisks could materially affect our business, financial condition or future results.There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended June 30, 2023. The risks described in our Annual Report on Form 10-K for the year ended June 30, 2023 are not the only risks the Company faces. Additional risks and uncertainties including, without limitation, certain “Risk Factors."not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. An investment in the Company is subject to risks inherent in our business and involves a high degree of risk. The trading price of the shares of the Company isaffected by the performance of our business relative to, among other things, competition, market conditions and general economic and industry conditions. The value of an investment in the Company may decrease, resulting in a loss.The updated risk factors are as follows:
Opposition to our operations and those of the Peak Gold JV from local stakeholders or non-governmental organizations could have a material adverse effect on us.
There is an increasing level of public concern relating to the effect of mining production on its surroundings, communities, and environment. Local communities and non-governmental organizations (“NGOs”), some of which oppose resource development, are often vocal critics of the mining industry. For instance, certain NGOs have recently filed suit against the State of Alaska and the Alaska Department of Transportation to stop trucking of mining ore on public highways, citing safety and environmental concerns. While we and the Peak Gold JV seek to operate in a socially responsible manner, opposition to extractive industries, or our operations specifically, adverse publicity generated by local communities or NGOs related to extractive industries, or our operations specifically, or the modification or increase in enforcement of laws regarding truck weight limits or public road access could prevent us from obtaining permits necessary for our operations or to continue operations as planned or at all. Further, such events could have a material adverse effect on our reputation, our relationships with the communities in which we operate and our financial condition and prospects.
Item2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item4. Mine Safety Disclosures
None.
None.
(a) | Exhibits: |
The following is a list of exhibits filed as part of this Form 10-Q. Where so indicated, by a footnote, exhibits, which were previously filed, are incorporated herein by reference.reference (File No. 001-35770, unless otherwise indicated).
Exhibit Number | Description | |
3.1 | Certificate of Incorporation of Contango ORE, Inc. | |
3.2 | Certificate of Amendment to Certificate of Incorporation of Contango ORE, Inc. (Filed as Exhibit 3.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on December 17, 2020). | |
3.3 | Bylaws of Contango ORE, Inc. | |
3.4 | Amendment No. 1 to the Bylaws of Contango ORE, Inc. (Filed as Exhibit 3.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on October 21, 2021). | |
4.1 | Form of Certificate of Contango ORE, Inc. | |
4.2 | Certificate of Designation of Series A Junior Preferred Stock of Contango ORE, Inc. | |
4.3 | Certificate of Elimination of Series A Junior Preferred Stock of Contango ORE, Inc. (Filed as Exhibit 3.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on September 24, 2020). | |
4.4 | Certificate of Designations of Series A-1 Junior Participating Preferred Stock of Contango ORE, Inc. (Filed as Exhibit 3.2 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on September 24, 2020). | |
4.5 | Registration Rights Agreement dated as of | |
4.6 | Registration Rights Agreement dated as of August 24, 2021, by and between the Company and CRH Funding II Pte. Ltd. (Filed as Exhibit 4.1 to the Company’s current report on Form 8-K, as filed with the Securities and Exchange Commission on August 25, 2021). | |
4.7 | Rights Agreement, dated as of September 23, 2020, between Contango ORE, Inc. and Computershare Trust Company, N.A., as Rights Agent. | |
4.8 | ||
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4.10 | Form of Registration Rights Agreement dated | |
4.11 | Form of Registration Rights Agreement dated | |
10.1 |
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104 | Cover Page Interactive Data File (formatted as |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
CONTANGO ORE, INC. | ||||||||
Date: | November 14, 2023 | By: | /s/ | |||||
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(Principal Executive Officer) | ||||||||
Date: | November 14, 2023 | By: | /s/ LEAH GAINES | |||||
Leah Gaines | ||||||||
Vice President, Chief Financial Officer, Chief Accounting Officer and Controller (Principal Financial and Accounting Officer) | ||||||||