Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jul. 29, 2019 | Jun. 30, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Desert Hawk Gold Corp. | ||
Entity Central Index Key | 0001168081 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 3,395,203 | ||
Entity Common Stock, Shares Outstanding | 26,631,603 | ||
Entity Filer Number | 333-169701 | ||
Entity Interactive Data Current | No | ||
Entity Incorporation State Country Code | NV |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash | $ 8,716 | $ 4,212 |
Inventories, current (Note 6) | 1,193,341 | 371,778 |
Prepaid expenses and other current assets | 40,475 | 102,251 |
Total Current Assets | 1,242,532 | 478,241 |
INVENTORIES, non-current, (Note 6) | 1,686,592 | |
PROPERTY AND EQUIPMENT, net (Note 7) | 3,415,707 | 3,621,436 |
MINERAL PROPERTIES AND INTERESTS, net (Note 8) | 879,001 | 1,205,387 |
RECLAMATION BONDS (Note 5) | 753,290 | 753,054 |
TOTAL ASSETS | 6,290,530 | 7,744,710 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 652,895 | 679,580 |
Accrued liabilities - officer and other wages (Notes 7 and 19) | 922,039 | 709,577 |
Interest payable - related parties (Note 9 and 10) | 463,993 | 317,436 |
Short-term notes payable - related parties (Note 10) | 249,000 | |
Convertible debt - related parties (Note 9) | 1,350,000 | 1,278,000 |
Obligation under capital lease - related party (Note 11) | 69,562 | 84,110 |
Notes payable - equipment, current portion (Note 12) | 324,111 | 452,214 |
Note and interests payable - DMRJ (Note 13) | 625,000 | |
Total Current Liabilities | 4,031,600 | 4,145,917 |
LONG-TERM LIABILITIES | ||
Asset retirement obligation (Note 14) | 792,747 | 1,046,621 |
Note and interest payable - DMRJ (Note 13) | 24,464,670 | |
Notes payable - equipment (Note 12) | 16,817 | |
Total long-term liabilities | 792,747 | 25,528,108 |
TOTAL LIABILITIES | 4,824,347 | 29,674,025 |
COMMITMENTS AND CONTINGENCIES (Notes 8, 17, 18, 19 and 20) | ||
STOCKHOLDERS' EQUITY (DEFICIT) (Note 4) | ||
Common stock, $0.001 par value, 100,000,000 shares authorized; 20,881,603 and 13,956,603 shares issued or to be issued and outstanding, respectively (Note 4) | 20,753 | 13,828 |
Additional paid-in capital | 7,120,355 | 9,143,418 |
Accumulated deficit | (5,674,925) | (31,088,143) |
Total Stockholders' Equity (Deficit) | 1,466,183 | (21,929,315) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 6,290,530 | 7,744,710 |
Series A Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) (Note 4) | ||
Preferred stock, value | 958 | |
Series A-1 Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) (Note 4) | ||
Preferred stock, value | ||
Series A-2 Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) (Note 4) | ||
Preferred stock, value | 180 | |
Series B Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) (Note 4) | ||
Preferred stock, value | $ 444 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 20,881,603 | 13,956,603 |
Common stock, shares outstanding | 20,881,603 | 13,956,603 |
Series A Preferred Stock | ||
Preferred stock, shares issued | 958,033 | |
Preferred stock, shares outstanding | 958,033 | |
Series A-1 Preferred Stock | ||
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Series A-2 Preferred Stock | ||
Preferred stock, shares issued | 180,000 | |
Preferred stock, shares outstanding | 180,000 | |
Series B Preferred Stock | ||
Preferred stock, shares issued | 444,530 | |
Preferred stock, shares outstanding | 444,530 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
REVENUE | ||
Concentrate sales | $ 248,344 | $ 162,762 |
EXPENSES | ||
General production costs | 1,587,057 | 707,732 |
Exploration expense | 3,146 | 1,300 |
Officers and directors fees | 253,752 | 252,000 |
Legal and professional | 129,135 | 71,349 |
General and administrative | 685,925 | 241,744 |
Depreciation and amortization | 421,228 | 430,934 |
Total Expenses | 3,080,243 | 1,705,059 |
OPERATING LOSS | (2,831,899) | (1,542,297) |
OTHER INCOME (EXPENSE) | ||
Gain on extinguishment of DMRJ debt (Note 13) | 24,916,561 | |
Interest and other income | 236 | 167 |
Interest and financing expense | (46,760) | (93,312) |
Financing expense - related parties (Note 9) | (120,000) | |
Interest expense - related parties (Notes 9 and 10) | (151,749) | (145,691) |
Interest expense - DMRJ (Note 13) | (421,891) | (2,295,508) |
Total Other Income (Expense) | 24,176,397 | (2,534,344) |
INCOME (LOSS) BEFORE INCOME TAXES | 21,344,498 | (4,076,641) |
INCOME TAXES | ||
NET INCOME ( LOSS) | 21,344,498 | (4,076,641) |
DEEMED CAPITAL CONTRIBUTION ON EXTINGUISHMENT OF PREFERRED STOCK (NOTE 13) | 4,068,720 | |
NET INCOME ( LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 25,413,218 | $ (4,076,641) |
BASIC INCOME (LOSS) PER SHARE | $ 1.32 | $ (0.30) |
DILUTED INCOME (LOSS) PER SHARE | $ 1.12 | $ (0.30) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC | 19,196,808 | 13,682,082 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-DILUTED | 22,654,411 | 13,682,082 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Deficit) - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2016 | $ 1,582 | $ 13,528 | $ 9,131,718 | $ (27,011,502) | $ (17,864,674) |
Balance, Shares at Dec. 31, 2016 | 1,582,563 | 13,656,603 | |||
Common stock issued in connection with extension of convertible debt (Note 4) | $ 300 | 11,700 | 12,000 | ||
Common stock issued in connection with extension of convertible debt (Note 4), shares | 300,000 | ||||
Net income (loss) | (4,076,641) | (4,076,641) | |||
Balance at Dec. 31, 2017 | $ 1,582 | $ 13,828 | 9,143,418 | (31,088,143) | (21,929,315) |
Balance, Shares at Dec. 31, 2017 | 1,582,563 | 13,956,603 | |||
Stock based compensation (Note 18) | 456,000 | (456,000) | |||
Common stock issued for cash at $.40 per share | $ 2,125 | 847,875 | 850,000 | ||
Common stock issued for cash at $.40 per share, shares | 2,125,000 | ||||
Extinguishment of preferred stock (Note 13) | (1,582) | (4,067,138) | 4,068,720 | ||
Extinguishment of preferred stock (Note 13), shares | (1,582,563) | ||||
Common stock issued to convertible debtholders in connection with extinguishment of DMRJ debt (Note 13) | 4,500 | 620,500 | 625,000 | ||
Common stock issued to convertible debtholders in connection with extinguishment of DMRJ debt (Note 13), shares | 4,500,000 | ||||
Common stock issued in connection with extension of convertible debt (Note 4) | $ 300 | 119,700 | 120,000 | ||
Common stock issued in connection with extension of convertible debt (Note 4), shares | 300,000 | ||||
Net income (loss) | 21,344,498 | 21,344,498 | |||
Balance at Dec. 31, 2018 | $ 20,753 | $ 7,120,355 | $ (5,674,925) | $ 1,466,183 | |
Balance, Shares at Dec. 31, 2018 | 20,881,603 |
Statements of Stockholders' E_2
Statements of Stockholders' Equity (Deficit) (Parenthetical) | 12 Months Ended |
Dec. 31, 2018$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Common stock issued for cash per share | $ 0.40 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 21,344,498 | $ (4,076,641) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 421,228 | 430,934 |
Gain on extinguishment of DMRJ debt (Note 13) | (24,916,561) | |
Share based compensation | 456,000 | |
Common stock issued for financing expense | 120,000 | 12,000 |
Accretion of asset retirement obligation | 80,468 | 72,512 |
Changes in operating assets and liabilities: | ||
Inventories | 865,029 | (111,997) |
Prepaid expenses and other current assets | 61,776 | 30,496 |
Accounts payable and accrued expenses | 96,795 | (65,363) |
Accrued liabilities - officer and other wages | 212,462 | 213,769 |
Interest payable - related parties | 146,557 | 124,594 |
Interest payable - DMRJ | 451,891 | 2,295,508 |
Net cash (used) by operating activities | (659,857) | (1,074,188) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property and equipment | (73,868) | (30,676) |
Additions to reclamation bonds | (236) | (300) |
Net cash (used) by investing activities | (74,104) | (30,976) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of common stock | 1,475,000 | |
Proceeds from short-term notes payable - related parties | 249,000 | |
Proceeds from convertible debt - related parties | 72,000 | 428,000 |
Payment on note payable - DMRJ | (625,000) | 944,060 |
Payment of short term notes payable - related parties | (34,500) | |
Payment of notes payable - equipment | (417,987) | (798,063) |
Payment of obligation under capital lease - related party | (14,548) | (88,065) |
Net cash provided by financing activities | 738,465 | 451,432 |
NET INCREASE (DECREASE) IN CASH | 4,504 | (653,732) |
CASH, BEGINNING OF YEAR | 4,212 | 657,944 |
CASH, END OF YEAR | 8,716 | 4,212 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for interest | 46,760 | 104,944 |
NONCASH INVESTING AND FINANCING ACTIVITIVES: | ||
Equipment acquired with notes payable - equipment (Note 12) | 141,631 | |
Accounts payable settled with notes payable - equipment (Note 12) | 131,436 | |
Extinguishment of preferred stock (Note 13) | $ 4,068,720 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | Desert Hawk Gold Corp. (the “Company”), a Nevada Corporation, was incorporated on November 5, 1957. The Company commenced its current mining activities on May 1, 2009. During the year ended December 31, 2009, the Company entered into Joint Venture Agreements with the Clifton Mining Company, the Woodman Mining Company and the Moeller Family Trust for the lease of certain of their property interests in the Gold Hill Mining District of Utah. In 2011, the Company entered into an agreement with DMRJ Group, (a Platinum Partners related entity), which allowed for long term funding of the Kiewit project and helped to provide cash flow for operations during the period from 2009 until 2014 while the permitting process was ongoing. The final permit needed to begin development of the Kiewit property was received in January 2014 and development began in February 2014. Construction at the site was substantially complete at September 30, 2014. Revenue from the heap leach operation began in October 2014 with the first sales of gold concentrate. Production commenced and revenues of approximately $7,200,000 from sales of gold and other metals concentrate have been received through December 31, 2018. Ongoing undercapitalization has continued to hamper the Company’s ability to operate. Due to lack of funding, the Company has been temporarily shut down since third quarter of 2017. Subsequent to year end, on March 7, 2019, the Company successfully finalized a lending agreement with PDK Utah Holdings, LLC that enabled production to resume in 2019. See Note 20. On March 8, 2018, the Company successfully finalized an agreement with the trustees of DMRJ Group (“DMRJ”) which eliminated the note and interest payable balance of $25,541,561 due to DMRJ in exchange for $625,000. In addition, all outstanding shares of preferred stock held by DMRJ were retired and cancelled. See Notes 4 and 13. |
Revision of Previously Issued F
Revision of Previously Issued Financial Statements for Immaterial Misstatements | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS FOR IMMATERIAL MISSTATEMENTS | NOTE 2 – REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS FOR IMMATERIAL MISSTATEMENTS In November 2018, the Company determined inventory was overstated since the beginning of production in 2014 based on an error in estimating the gold ounces contained in the ore on the leach pad. The valuation of inventory requires management to develop estimates of recoverable gold on the leach pad. Factors considered in this estimate include quantities of material placed on the leach pad (measured tons added to the leach pad), the grade of material placed on the leach pad (based on assay data), and an estimated recovery percentage (based on ore type). The miscalculation was primarily due to usage of an incorrect bench height measurement which resulted in an overstatement of tonnage contained in the pit. The accumulated overstatement of inventory was $1,263,566 through December 31, 2017. In addition, as a result of the change in estimated gold ounces, amortization of mineral properties was also miscalculated because it is based on units of production. Mineral properties were understated by $90,712 at December 31, 2017. Management assessed the materiality of the effect of the errors on the Company’s prior annual financial statements, both quantitatively and qualitatively, in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 99, “Materiality” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” Management concluded the error was not material to any previously issued financial statements. Consequently, the Company will correct this error prospectively and revise its financial statements when the balance sheets, statements of operations and comprehensive income and cash flows for such prior periods are included in future filings (“the Revisions”). The Revisions have no net impact on revenue or net cash provided by operating activities as previously reported. The adjustments at December 31, 2017 to record the cumulative amounts related to this overstatement for prior periods through December 31, 2017 were: As of and for the year ended December 31, 2017 As Previously Reported Adjustment As Revised Balance Sheet Inventories, current $ 600,000 $ (228,222 ) $ 371,778 Total current assets 706,463 (228,222 ) 478,241 Inventories, non-current 2,721,936 (1,035,844 ) 1,686,592 Mineral properties 1,114,675 90,712 1,205,387 Total Assets 8,917,564 (1,172,854 ) 7,744,710 Accumulated deficit (29,915,289 ) (1,172,854 ) (31,088,143 ) Total shareholders’ equity (20,756,461 ) (1,172,854 ) (21,929,315 ) Total Liabilities and Shareholders’ equity 8,917,564 (1,172,854 ) 7,744,710 Statement of Operations General production costs 591,725 (73,521 ) 518,204 Operating Loss (1,426,290 ) 73,521 (1,352,769 ) Net Income (Loss) (3,960,634 ) 73,521 (3,887,113 ) Basic and Diluted Income (loss) per share (0.29 ) (0.01 ) (0.30 ) Statement of Cash Flows Net Income (Loss) $ (3,960,634 ) $ 73,521 $ (3,887,113 ) Change in inventory (228,004 ) (73,521 ) (301,525 ) Cash flow from operating activities (1,074,118 ) - (1,074,118 ) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Accounting Method The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Accounting for Stock Options and Stock Awards Granted to Employees and Nonemployees All transactions in which goods or services are received for the issuance of shares of the Company’s common stock or options to purchase shares of common stock are accounted for based on the fair value of the goods or services received or the fair value of the equity interest issued, whichever is more reliably measurable. The Company estimates the fair value of stock-based compensation using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of the fair value of stock-based compensation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these financial statements include those assumed in estimating gold ounces in inventories, the recoverability of the cost of mining claims, asset retirement obligation, stock-based compensation, determination of the fair value of common stock issued, deferred tax assets and related valuation allowances. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to conform prior periods’ amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ deficit, and cash flows previously reported. Cash and Cash Equivalents The Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less when purchased to be cash equivalents. Reclamation bonds Reclamation bonds primarily represent bonds and are restricted primarily for reclamation funding which are carried at cost plus earned interest. Reclamation bonds are shown as a non-current asset and is included in the balance sheet. See Note 5. Inventories The recovery of gold from certain oxide ores is achieved through the heap leaching process. Under this method, mineralized material is placed on a leach pad where it is treated with a chemical solution, which dissolves the gold contained in the material. The resulting “pregnant” solution is further processed in a plant where gold is recovered. The Company records ore on leach pad, solution in carbon columns in process and gold concentrate, at average production cost per gold ounce, less provisions required to reduce inventory to net realizable value. Production costs include the cost of mineralized material processed; direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities; amortization of property, equipment, and mineral properties; and mine administrative expenses. Revenue from the sale of silver is accounted for as by-product and is deducted from production costs. Costs are removed from ore on leach pads as ounces are recovered, based on the average cost per recoverable ounce of gold on the leach pad. Estimates of recoverable gold on the leach pad are calculated from the quantities of material placed on the leach pad (measured tons added to the leach pad), the grade of material placed on the leach pad (based on assay data) and an estimated recovery percentage (based on ore type). The nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, actual gold ounces recovered are regularly monitored and estimates are refined based on actual results over time. As of December 31, 2018, the Company had a limited operating history and actual results only over a short period of time. Due to this, estimates of recoverable gold are based primarily on initial tests with only limited refinements. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from a leach pad will not be known until the leaching process is concluded. The quantification of material inventory on the leach pad is based on estimates of the quantities of gold at each balance sheet date that the Company expects to recover during the next 12 to 18 months. See Notes 2 and 6. Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments that extend the useful life of the property and equipment are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts and any resulting gain or loss is reflected in results of operations. See Note 7. Mineral Properties and Leases The Company capitalizes costs for acquiring mineral properties and ongoing mineral lease payments and expenses costs to maintain mineral rights. Upon reaching the production stage, the capitalized costs are amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral properties are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations. Mine property costs include the building of infrastructure of the processing facility including the heap leach pad and the carbon in column process plant along with water wells, roads and fencing. These costs are capitalized until ready for their intended use at which time they are amortized using the units of production method based on projected units of production which approximates the estimated life of the facility. Additionally, interest is capitalized to mine development until such assets are ready for their intended use. The Company does not have proven and probable reserves at this time. See Note 8. Mineral Exploration and Development Costs Until proven and probable reserves (as defined by SEC Guide 7) are established, all exploration expenditures are expensed as incurred. Once such reserves are established, expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operations, are capitalized and will be amortized on units of production basis over proven and probable reserves. Previously capitalized costs are expensed in the period the property is abandoned. Impairment of Long-Lived Assets The Company evaluates the carrying amounts of its long-lived assets for impairment whenever events and circumstances indicate the carrying value may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. Estimated undiscounted future net cash flows from each mineral property are calculated using estimated future production, three-year average metals prices, operating capital and costs, and reclamations costs. An impairment loss is recognized when the estimated discounted future cash flows expected to result from the use of an asset are less than the carrying amount of the asset. The Company’s estimates of future cash flows are subject to risks and uncertainties. It is reasonably possible that changes in estimates could occur which may affect the expected recoverability of the Company’s investments in mineral properties. Provision for Taxes Income taxes are provided based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard to allow recognition of such an asset. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. When applicable, the Company will recognize a liability for unrecognized tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. See Note 16. Earnings Per Share Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. 2018 2017 Net income (loss) $ 21,344,498 $ (4,076,641 ) Deemed capital contribution on extinguishment of preferred stock 4,068,720 - Net income (loss) available to common shareholders - basic 25,413,218 (4,150,162 ) Interest expense on convertible notes payable - related parties 74,465 - Net income (loss) available to common shareholders - diluted $ 25,487,683 $ (4,150,162 ) Weighted average shares outstanding - basic 19,196,808 13,682,082 Dilutive shares – convertible notes payable – related parties 3,457,602 - Weighted average shares outstanding - diluted 22,654,411 13,682,082 Basic income (loss) per share $ 1.32 $ (0.30 ) Diluted income (loss) per share $ 1.12 $ (0.30 ) At December 31, 2018, the common stock equivalents of 2,400,000 associated with the Company’s outstanding stock options were excluded from the calculation of diluted earnings per share because the options’ exercise price was not lower than the average share price during the year. At December 31, 2017, common stock equivalents included 3,728,886 shares associated with convertible debt – related parties and 47,211,002 shares associated with convertible preferred stock. These were excluded from the calculation of diluted earnings per share because they were anti-dilutive. Revenue Recognition Sales of gold concentrate sold directly to customers are recorded as revenues and receivables upon completion of the performance obligations and transfer of control of the product to the customer. For concentrate sales, the performance obligation is met, the transaction price can be reasonably estimated, and revenue is recognized generally at the time of shipment at estimated forward prices for the anticipated month of settlement. Due to the time elapsed from shipment to the customer and the final settlement with the customer, prices at which sales of our concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to the estimated settlement metals prices until final settlement by the customer. Sales and accounts receivable for concentrate shipments are recorded net of charges by the customer for treatment, refining, smelting losses, and other charges negotiated with the customers. Charges are estimated upon shipment of concentrates based on contractual terms, and actual charges typically do not vary materially from estimates. See Note 15. Reclamation and Remediation The Company’s operations have been, and are subject to, standards for mine reclamation that have been established by various governmental agencies. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of tangible long-lived assets. A corresponding asset is also recorded and depreciated over the life of the asset. After the initial measurement of the asset retirement obligation, the liability is adjusted when there are changes in the estimated future cash flows due to change in estimated costs or change in time until reclamation will commence. Determination of any amounts recognized is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates. Such assumptions are based on the Company’s current mining plan and the best available information for making such estimates. See Note 14. For non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are based on management’s estimate of amounts expected to be incurred when the remediation work is performed. Financial Instruments The Company’s financial instruments include cash and cash equivalents as well as various notes payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity and interest rates of these financial instruments, approximates fair value at December 31, 2018 and December 31, 2017. Fair Value Measurements The Company discloses the following information for each class of assets and liabilities that are measured at fair value: 1. the fair value measurement; 2. the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); 3. for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: a. total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings are reported in the statement of operations; b. the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported; c. purchases, sales, issuances, and settlements (net); and d. transfers into and/or out of Level 3. 4. the amount of the total gains or losses for the period included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and 5. in annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period. At December 31, 2018 and December 31, 2017, the Company has no assets nor liabilities that require measurement at fair value on a recurring basis. Going Concern As shown in the accompanying financial statements, the Company had an accumulated deficit of $5,674,925 through December 31, 2018 and negative working capital of $2,789,068 which raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. Although production has restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. Although management has procured funding through a lender (Note 20) they intend to continue to seek new capital from equity securities issuances to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. New Accounting Pronouncements Accounting Standards Updates Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 Revenue Recognition, replacing guidance previously codified in Subtopic 605-10 Revenue Recognition-Overall. The new ASU establishes a five step principles-based framework in an effort to significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. In August 2015, the FASB issued ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU No. 2015-14 deferred the effective date of ASU No. 2014-09 until annual and interim reporting periods beginning after December 15, 2017. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified-retrospective transition approach. The Company performed an assessment of the impact of implementation of ASU No. 2014-09, and concluded it does not change the timing of revenue recognition or amounts of revenue recognized compared to how it recognized revenue under previous policies. Revenues involve a very small number of types of contracts and customers. In addition, revenue contracts do not involve multiple types of performance obligations. Concentrate sales involve variable consideration as they are subject to changes in metals prices between the time of shipment and their final settlement. However, the Company is able to reasonably estimate the transaction price for the concentrate sales at the time of shipment using forward prices for the month of settlement, and values are adjusted each period until final settlement. Also, it is unlikely a significant reversal of revenue for any one concentrate lot will occur. Adoption of ASU No. 2014-09 involves additional disclosures, where applicable, concerning (i) contracts with customers, (ii) significant judgments and changes in judgments in determining the timing of satisfaction of performance obligations and the transaction price, and (iii) assets recognized for costs to obtain or fulfill contracts. See Note 15 for information on our sales of products. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification of cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We adopted this update as of January 1, 2018 and there were no material impacts on our financial statements. In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash. The update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We adopted this update as of January 1, 2018, and there were no material impacts on our financial statements. In January 2017, the FASB issued ASU No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. We adopted this update as of January 1, 2018. We will apply the applicable provisions of the update to any future acquisitions. Accounting Standards Updates to Become Effective in Future Periods In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Upon implementation of the new guidance, we will be required to recognize a liability and right-of-use asset for our operating leases. We have elected the transition option to apply the new guidance at the effective date without adjusting comparative periods presented. Our operating leases, which will be impacted upon adoption, are not significant and we anticipate no material impact upon adoption on January 1, 2019. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
CAPITAL STOCK | NOTE 4 - CAPITAL STOCK Common Stock The Company is authorized to issue 100,000,000 shares of common stock. All shares have equal voting rights and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. 2018 Activity The Company sold 4,500,000 shares of common stock to the convertible debt holders for $625,000 in cash and several concessions as to the convertibility, due dates and default provisions on their outstanding debt. See Note 9. The Company also sold 2,125,000 shares of its common stock at $.40 per share for cash proceeds of $850,000. The Company failed to repay the related parties’ convertible debt in full on the November 30, 2018 maturity date. See Note 9. Under the terms of the debt agreements, the Company issued 300,000 shares of common stock to the note holders. The shares were valued at $0.40 per share ($120,000) which was determined by management to be the fair value of a share of common stock based upon sales of common stock shares in 2018. The issuance was accounted for as financing expense. 2017 Activity The Company failed to repay the related parties’ convertible debt in full on the November 30, 2017 maturity date. See Note 9. Under the terms of debt agreements, the Company issued a total of 300,000 shares of common stock to the note holders and these shares have been recorded as of November 30, 2017. This issuance was valued at an estimated $0.04 per share ($12,000) which was determined by management to be the fair value of a share of common stock based upon a third-party valuation performed in 2014. The issuance was accounted for as financing expense. Common stock redeemable with gold proceeds An equity financing was initiated in September 2012 for the sale of up to 1,150,000 shares of the Company’s common stock. This offering closed December 31, 2012 with proceeds of $130,000 raised through sales of 130,000 shares of the Company’s common stock. Under the terms of this offering, the shares could be redeemed for cash generated from the sale of gold for a period of 12 months after commencement of operations at the Kiewit project. Proceeds from 5% of the gold produced during the first year of production were to be allocated to fund this option. Each investor received the right to convert a minimum of one-half and up to all of his shares (on a pro rata basis) into the value of the number of ounces represented by the total investment, determined using a base price of $1,000 per ounce. Due to the redemption feature of these shares, management has concluded that the shares should be recorded as a liability and not as equity. Once sales of concentrate began in 2014, all investors in this equity financing opted to convert their shares for cash from 5% of the gold sales. Based on the sales price of gold sold during the conversion period, $151,406 in gold proceeds was due to be paid to investors at December 31, 2016 which is included in accounts payable and accrued expenses at December 31, 2017 and 2018. Payments of these funds due to investors were not made as of December 31, 2018 and the shares were not cancelled. As a condition of the financing agreement settled on March 7, 2019, settlement was made to the four investors. Because of the extended time from investment to payment, each shareholder was paid an amount equal to $1,250 per share purchased and was also allowed to retain stock shares purchased as part of this financing. Preferred Stock The Company’s Articles of Incorporation authorized 10,000,000 shares of $0.001 par value Preferred Stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine. At December 31, 2017, DMRJ Group beneficially owned 77% of the Company on a fully diluted basis. On March 8, 2018, the Company finalized an agreement with the trustees of DMRJ, who owned all of the Series A, A-2 and Series B outstanding preferred stock. This agreement discharged all of the debt owed by the Company to DMRJ and its related affiliates and returned all of the shares of preferred stock to the Company in exchange for $625,000. The Company then cancelled all of the preferred shares of stock. As a result, DMRJ relinquished all ownership in the Company. See Note 13. |
Reclamation Bonds
Reclamation Bonds | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
RECLAMATION BONDS | NOTE 5 – RECLAMATION BONDS At December 31, 2018 and 2017, the Company has a surety bond of $674,000 in an escrow account with the bonding company for reclamation of its property. This escrowed amount is held at Bank of New York, Mellon for the Company’s benefit. It may not be released to the Company without the prior consent of the surety bondholder. The escrowed amount does not earn interest. Total reclamation bonds posted at December 31, 2018 and 2017 are $753,290 and $753,054, respectively, which consists of the above escrowed amount along with certificate of deposits held with the state of Utah for the remaining bonds on the property, including exploration bonds. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 6 – INVENTORIES The following table provides the components of inventories: December 31, 2018 2017 Ore on leach pad $ 1,193,341 $ 2,058,370 Less: current portion (1,193,341 ) (371,778 ) Non-current inventories $ - $ 1,686,592 Inventories at December 31, 2017 are allocated between current and non-current based on estimated expected sales for the subsequent fiscal year. All inventory at December 31, 2018 is expected to be sold during 2019. Thus the entire balance is classified as current. Inventories at December 31, 2018 and December 31, 2017 and was valued at net realizable value because costs were greater than the market price for gold at both year-end dates. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7 - PROPERTY AND EQUIPMENT The following is a summary of property, equipment, and accumulated depreciation at December 31, 2018 and December 31, 2017: December 31, 2018 2017 Equipment $ 3,093,690 $ 2,919,165 Furniture and fixtures 6,981 6,981 Electronic and computerized equipment 52,874 52,874 Vehicles 108,089 67,115 3,261,634 3,046,135 Less accumulated depreciation (1,856,149 ) (1,434,921 ) 1,405,485 1,611,214 Kiewit property improvements 2,497,436 2,497,436 Less accumulated amortization (487,214 ) (487,214 ) 2,010,222 2,010,222 Total $ 3,415,707 $ 3,621,436 |
Mineral Properties and Interest
Mineral Properties and Interests | 12 Months Ended |
Dec. 31, 2018 | |
Mineral Industries Disclosures [Abstract] | |
MINERAL PROPERTIES AND INTERESTS | NOTE 8 – MINERAL PROPERTIES AND INTERESTS Mineral properties and interests as of December 31, 2018 and December 31, 2017 are as follows: December 31, 2018 2017 Initial lease fee Kiewit, Cactus Mill and all other sites $ 600,000 $ 600,000 600,000 600,000 Asset retirement costs Kiewit Site 452,193 789,026 Kiewit Exploration 11,126 10,780 Cactus Mill 26,234 16,133 489,553 815,939 1,089,553 1,415,939 Accumulated amortization (210,552 ) (210,552 ) Total $ 879,001 $ 1,205,387 The Company holds operating interests within the Gold Hill Mining District in Tooele County, Utah, consisting of 247 unpatented claims, including the unpatented mill site claim, and two Utah state mineral leases located on state trust lands. Annual claims fees are currently $155 per claim plus administrative fees. As part of the Pre-paid Forward Gold Purchase Agreement finalized in March 2019, the number of claims held was reduced to a total of 76 claims. See Note 20. In 2009, the Company entered into a Joint Venture Agreement with the Clifton Mining Company and the Woodman Mining Company for the lease of their property interests in the Gold Hill Mining District of Utah. Under the terms of the Joint Venture Agreement, the Company is required to pay a 4% net smelter royalty on base metals in all other areas except for production from the Kiewit gold property and a net smelter royalty on gold and silver, except for production from the Kiewit gold property, based on a sliding scale of between 2% and 15% based on the price of gold or silver, as applicable. The Company is also required to pay a 6% net smelter return on any production from the Kiewit gold property. Royalty expense of $13,424 and $9,785 was recognized during the years ended December 31, 2018 and 2017. Amortization expense is based on units of production resulting in no amortization in the year ended December 31, 2018 due to the lack of production. Amortization expense of $18,193 was recognized during the year ended December 31, 2017. On August 24, 2018, a letter of default on the Clifton Shears properties was received by the Company with a 30-day period for curing the default. As part of the Pre-paid Forward Gold Purchase Agreement finalized in March 2019, these royalties were bought out by the Company from Clifton Mining Company and two other minority royalty holders. During first quarter of 2019, the Company and Clifton Mining Company entered into a Second Amended and Restated Lease Agreement (the “Amended Lease”). Under the terms of this Amended Lease, the Company relinquished its leasehold interest in all but 10 of the patented mining claims, for which it retained only the surface rights, and 66 of the unpatented lode mining claims previously held by the Company. See Note 20. |
Convertible Notes - Related Par
Convertible Notes - Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES - RELATED PARTIES | NOTE 9 –CONVERTIBLE NOTES - RELATED PARTIES 2009 Convertible Notes: On November 18, 2009, the Company issued convertible promissory notes to two of its minority shareholders, for a total of $600,000. The notes bore interest at 15% per annum. Interest-only was payable in equal monthly installments of $7,500. The notes were convertible at a rate of $0.70 per share. The Company failed to repay the notes in full on the November 30, 2012 through the 2018 maturity dates, so the Company was required to issue an additional 300,000 shares of common stock to these debt holders in each of those years. In 2014, 2015, 2016, and 2017, the annual issuance of shares of common stock was valued at an estimated $0.04 (total $12,000) each and was accounted for as financing expense. In 2018, the issuance of shares of common stock was valued at $.40 per share based on the cash price of common stock sales during 2018. The due date of the note was extended each year and has now been extended to May 31, 2019. Interest has not been paid since November 2014. Per the terms of the notes, interest on these notes is not convertible to common stock. On February 28, 2018, the notes were amended changing the interest rate from 15% to 10% effective March 1, 2018 and allowing for accrued interest to be payable in full on May 31, 2019. The amendment further waived the default provision in the notes for past due interest. In addition, as part of the agreement, the convertible feature of the notes was removed. 2016 Convertible Notes: On October 14, 2016, the Company issued additional convertible promissory notes to the convertible debt holders for a total of $250,000. The notes bore interest at 10% per annum and were due in full on September 30, 2018. The notes were convertible at a rate of $0.25 per share. These notes were amended in February 2018 to extend the due date of the notes and the accrued interest to May 31, 2019. Interest on these notes is convertible to common stock. 2017 Convertible Notes: On August 7, 2017, the convertible debt holders agreed to fund up to an additional aggregate of $500,000 under terms similar to existing convertible debt agreements. At December 31, 2017, $428,000 of these funds had been advanced. The remaining $72,000 was advanced in 2018 with the final advance on February 9, 2018. On February 28, 2018, these notes were amended to postpone the maturity date and interest payment date to May 31, 2019. Accrued interest payable to related parties on the above convertible notes payable was $456,750 and $317,436 at December 31, 2018 and December 31, 2017, respectively. Interest expense recognized on these loans was $139,314 and 124,594 during the years ended December 31, 2018 and 2017, respectively. These loans were paid in full, including accrued interest, on March 7, 2019. See Note 20. |
Short-Term Notes Payable - Rela
Short-Term Notes Payable - Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
SHORT-TERM NOTES PAYABLE - RELATED PARTIES | NOTE 10 – SHORT-TERM NOTES PAYABLE – RELATED PARTIES During 2018, the Company entered into several short-term notes payable with the convertible debt holders (See Note 9) for a total of $201,000 and with the Company’s president for $48,000 for a total amount of $249,000. The notes bear interest at 10%, had a 2% loan initiation fee, and are due in full on March 31, 2019. Accrued interest payable to related parties on these notes at December 31, 2018 and December 31, 2017 was $7,243 and nil, respectively. Interest expense recognized on these notes was $7,243 and nil during the years ended December 31, 2018 and 2017, respectively. These short-term notes were repaid in full to the lenders, including 10% interest and a 2% loan initiation fee, in March 2019. See Note 20. |
Obligation Under Capital Lease
Obligation Under Capital Lease - Related Party | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
OBLIGATION UNDER CAPITAL LEASE - RELATED PARTY | NOTE 11 – OBLIGATION UNDER CAPITAL LEASE – RELATED PARTY A capital lease was entered into on June 20, 2016 with RMH Overhead, LLC for mining and crushing equipment, some of which had been previously owned by the Company. RMH Overhead, LLC is an entity owned by the Company’s president, Rick Havenstrite. For the years ended December 31, 2018 and 2017, equipment includes assets under capital lease amounting to $185,618 and $185,618, respectively. The equipment is being amortized over the estimated useful life of the equipment. Accumulated amortization at December 31, 2018 and 2017 was $66,292 and $39,775. At December 31, 2018, the estimated future minimum lease payments under the capital lease was $72,000 of which $2,438 is implied interest. The initial lease term was for 24 months, which expired June 20, 2018. The eight future minimum lease payments of $9,000 each plus financing costs were overdue at December 31, 2018. These lease payments were paid in full, including accrued interest and late fees, in March 2019. See Note 20. |
Notes Payable - Equipment
Notes Payable - Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable - Equipment [Abstract] | |
NOTES PAYABLE - EQUIPMENT | NOTE 12 – NOTES PAYABLE – EQUIPMENT The following is a summary of the equipment notes payable: December 31, December 31, Note payable to Komatsu Financial, collateralized by a Komatsu Telehandler lift, due in 48 monthly installments of $2,441 including interest at 4.99%. $ 27,192 $ 47,154 Note payable to CAT Financial, collateralized by crushing equipment, due in 7 monthly installments of $39,000, beginning in May 2018, including interest at 4.0%. 145,067 -0- Note payable to CAT Financial, collateralized by used mining equipment due in 36 monthly installments of varying amounts including interest at 4.68%. 117,002 266,675 Note payable to Komatsu Financial, collateralized by a Komatsu D275 dozer, due in monthly installments of $11,674 including interest at 2.99%. 34,851 149,687 Note payable to Star Capital, LLC, collateralized by a 2009 Multiquip generator, due in 24 monthly installments of $1,412, beginning in March 2016, including interest at 11.4%. -0- 5,515 $ 324,111 $ 469,031 Current portion (324,111 ) (452,214 ) Long term portion $ -0- $ 16,817 In November 2016, five pieces of mining equipment financed by CAT Financial were repossessed by CAT. The note payable due to CAT at the time of disposition was $960,585. The loss on impairment of equipment in the amount of $147,214 was recognized in the 2016. On July 31, 2017, a new agreement was made with Wheeler Machinery and CAT Financial for the return of four pieces of this equipment to the Company. The equipment temporarily remained in the possession of Wheeler Machinery and a new payment schedule was established. In May 2018, a note for the remaining payments due for $273,067 was formalized. Of this amount, $141,631 represented the value of the equipment and the remaining amount of $131,436 was to settle accounts payable for past due rent. The equipment was refurbished and returned to the site in 2019. All of the above notes were paid in full in March 2019 as part of funding from a Pre-paid Forward Gold Purchase Agreement. See Note 20. |
Note Payable - Dmrj
Note Payable - Dmrj | 12 Months Ended |
Dec. 31, 2018 | |
Note Payable - Related Party [Abstract] | |
NOTE PAYABLE - DMRJ | NOTE 13 – NOTE PAYABLE – DMRJ In July 2010, the Company entered into an Investment Agreement with DMRJ. The Agreement had been modified numerous times and operated under the Fourteenth Amendment to the Investment Agreement dated December 22, 2016. The Amendments provided for extensions of payment dates, increased funding capacity and other modifications to the debt agreement. At December 31, 2017, DMRJ beneficially owned approximately 77% of the Company (on a fully-diluted basis) with Series A, A-2 and B preferred stock shares convertible to 47,211,002 shares of common stock (See Note 4). The total due to DMRJ at December 31, 2018 and December 31, 2017 is as follows: December 31, December 31, 2018 2017 Principal $ - $ 15,554,552 Interest payable - 9,535,118 $ - $ 25,089,670 2018 Activity In the third quarter of 2016, control of the management of DMRJ was given to court appointed trustees of the two major funds of Platinum Partners. On March 8, 2018, the Company finalized an agreement with the trustees to discharge all of the amounts owed by the Company to DMRJ and to extinguish all of DMRJ's shares of the Company's preferred stock in exchange for $625,000. On the date of the agreement, the principal balance of the note was $15,554,552 and accrued interest payable was $9,987,009 for a total balance due of $25,541,561. As a result of the transaction, the Company recognized a gain on extinguishment of debt of $24,916,561. All of the preferred stock of the Company that had been issued to DMRJ in prior years was extinguished. The preferred stock was originally recorded for a total value $4,068,720. As a result of the extinguishment, the Company adjusted accumulated deficit for the value of the preferred stock. This amount is considered a capital contribution and has been added to net income attributable to common stockholders in the calculation of earnings per share for the year ended December 31, 2018. After the above transactions, DMRJ is no longer a shareholder (beneficially or otherwise) of the Company. The existing convertible debt holders funded the $625,000 and modifications to their existing convertible note terms were made in exchange for 4,500,000 shares of the Company's common stock. See Notes 4 and 9. |
Asset Retirement Obligation
Asset Retirement Obligation | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATION | NOTE 14 – ASSET RETIREMENT OBLIGATION Changes in the asset retirement obligation for the years ended December 31, 2018 and 2017 are as follows: 2018 2017 Asset retirement obligation, beginning of year $ 1,046,621 $ 974,109 Changes to estimated costs and timing to reclaim (334,342 ) - Accretion expense 80,468 72,512 Asset retirement obligation, end of year $ 792,747 $ 1,046,621 In the fourth quarter of 2018, the Company updated the asset retirement obligation to reflect a plan for reclamation and closure of the mine at the end of its life having estimated undiscounted costs of approximately $1,369,115, an increase of $30,586 from the $1,338,529 in the previous plan. However, the asset retirement asset and obligation decreased by $334,342 as a result of a change in the estimated timing of costs and the impact of discounting the costs to present value. The estimated reclamation costs were discounted using credit adjusted, risk-free interest rate of 10% from the time we incurred the obligation to the time we expect to pay the retirement obligation. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE RECOGNITION | NOTE 15 – REVENUE RECOGNITION Our product consists of an unrefined gold concentrate, which is then refined offsite to become doré, which in 2018 was all sold to H & H Metals Corp. who then traded it to Asahi Refining USA, Inc. (Asahi), a precious metal refinery. In 2017, we sold all of our gold concentrate directly to Asahi. Subsequent to December 31, 2018, we discontinued our agreement with H & H Metals Corp. and plan to sell directly to Asahi. See Note 20. Revenue is recognized upon the completion of the performance obligations and transfer of control of the product to the customer, and the transaction price can be determined or reasonably estimated. Sales and accounts receivable for sales are recorded net of charges for treatment and other charges which represent components of the transaction price. Charges are estimated by us upon transfer of risk based on contractual terms, and actual charges typically do not vary materially from our estimates. Revenue from the sale of metals may be subject to adjustment upon final settlement of estimated metal prices, weights and assays, and are recorded as adjustments to revenue in the period of final settlement of prices, weights and assays; such adjustments are typically not material in relation to the initial invoice amounts. Costs charged by the refiner include fixed treatment, refining and costs per ton of concentrate and may include penalty charges for other metal content above a negotiated baseline as well as excessive moisture. We have determined the performance obligation is met and title is transferred when the Company delivers the concentrate to the customer because, at that time, (i) legal title is transferred to the customer, (ii) the customer has accepted the concentrate lot and obtained the ability to realize all of the benefits from the product, (iii) the concentrate content specifications are known, have been communicated to the customer, and the customer has the significant risks and rewards of ownership to it, and (iv) we have the right to payment for the concentrate. The performance obligation is met, the transaction price is known, and revenue is recognized at the time of transfer of control of the agreed-upon metal quantities to the customer. Sales of products by metal for the years ended December 31, 2018 and 2017 were as follows: December 31, 2018 December 31, 2017 Gold $ 248,344 $ 162,762 Silver (by-product) 3,060 4,860 Less: Smelter and refining charges (21,432 ) (5,038 ) Total $ 229,972 $ 162,584 At December 31, 2018 and 2017, we did not have a gold sales receivable balance. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 16 – INCOME TAXES There was no income tax provision (benefit) for the years ended December 31, 2018 and 2017. The components of the Company's net deferred tax assets are as follows: 2018 2017 Deferred tax asset: Net operating loss carryforward $ 952,000 $ 5,531,000 Property and equipment 37,000 37,000 Exploration costs 85,000 113,000 Stock based compensation 96,000 - Financing costs 23,000 1,000 Asset retirement obligation 42,000 27,000 Total deferred tax assets 1,235,000 5,709,000 Valuation allowance (1,235,000 ) (5,709,000 ) Net deferred tax assets $ - $ - Deferred income taxes arise from timing differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. A deferred tax asset valuation allowance is recorded when it is more likely than not that deferred tax assets will not be realized. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax assets, a valuation allowance equal to 100% of the deferred tax assets has been recorded at December 31, 2018 and 2017. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "Act") resulting in significant modifications to existing law. The Company did not incur any net income tax benefit or provision for the year ended December 31, 2018 as a result of the changes to tax laws and tax rates under the Act. The Company's net deferred tax asset was reduced by approximately $3.8 million during the year ended December 31, 2018, which consisted primarily of the re-measurement of federal deferred tax assets from 35% to 21%. A reconciliation between the statutory federal income tax rate and the Company's tax benefit (provision) is as follow: December 31, 2018 December 31, 2017 Amount computed using the statutory rate $ 4,482,000 (21 %) $ (1,387,000 ) (35 %) Other (8,000 ) - - - Impact of change in statutory tax rate - - 3,805,000 96 % Change in valuation allowance (4,474,000 ) 21 % (2,418,000 ) (61 %) Total income tax provision (benefit) $ - - % $ - - % At December 31, 2018, the Company had a federal net operating loss carry forward of approximately $4.5 million which expires in 2037. During the years ended December 31, 2018 and 2017, there were no material uncertain tax positions taken by the Company. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at December 31, 2018 and 2017. The Company's federal income tax returns for fiscal years 2014 through 2018 remain open and subject to examination. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 17 – RELATED PARTY TRANSACTIONS In addition to transactions disclosed in Note 9, 10, 11 and 13, the Company had the following related party transactions. The Company recognized rent expense for rental of office space of $12,000 each for the years ended December 31, 2018 and 2017, respectively, paid to RMH Overhead, LLC, a company owned by Rick Havenstrite, the Company's President and CEO. Of the amounts recognized as expense, RMH Overhead, LLC was paid $10,000 and $12,000 during the years ended December 31, 2018 and 2017, respectively, leaving a total of $18,750 and $16,750 remaining in accounts payable at December 31, 2018 and 2017, respectively, including amounts from prior years. The accounts payable was paid in full in March 2019. As of December 31, 2018 and 2017, accrued compensation of $922,039 and $709,577 was due to directors and officers. Of the amounts accrued at December 31, 2018 and December 31, 2017, accrued compensation of $593,232 and $491,693 is due to Rick Havenstrite and $234,807 and $173,884 is due to Marianne Havenstrite, Treasurer and Principal Financial Officer, respectively. In addition, $94,000 and $44,000 was due to other directors and employees at December 31, 2018 and December 31, 2017, respectively. The amount due at December 31, 2018 was paid in full in March 2019. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 18 – STOCK-BASED COMPENSATION The Company has reserved 2,400,000 shares under its 2018 Stock Incentive Plan (the “Plan”). The Plan was adopted by the board of directors on March 28, 2018, retroactive to February 23, 2018, as a vehicle for the recruitment and retention of qualified employees, officers, directors, consultants, and other service providers. The Plan is administered by the Board of Directors. The Company may issue, to eligible persons, restricted common stock, incentive and non-statutory options, stock appreciation rights and restricted stock units. The terms and conditions of awards under the Plan will be determined by the Board of Directors. On February 23, 2018, the Board approved the grant of an aggregate of 2,400,000 non-statutory options under the 2018 Plan exercisable at $0.40 per share which expire February 23, 2023 in the amounts and to the following: ● Rick Havenstrite, President and CEO – 1,000,000 options ● Howard Crosby, Director – 1,000,000 options ● John Ryan, Director – 200,000 options ● Linde Havenstrite, Project Engineer – 200,000 options The options were fully vested on the date of grant. The fair value of each option award is estimated using the Black-Scholes valuation model. Assumptions used in calculating the fair value during the year ended December 31, 2018 were as follows: Weighted Annual dividend yield - Expected life (years) 5.0 Risk-free interest rate 2.54 % Expected volatility based on comparable peers 51.2 % Common stock price based on most recent sale of common stock for cash $ 0.40 Stock based compensation cost for the year ended December 31, 2018 was $456,000, which was included in general and administrative expenses. Option activity for the year ended December 31, 2018 consists of the following: Stock Options Weighted Weighted Outstanding, December 31, 2017 - - - Issued 2,400,000 $ 0.40 4.2 Exercised -0- - - Expired -0- - Outstanding and exercisable, December 31, 2018 2,400,000 $ 0.40 4.2 No options were issued prior to the year ended December 31, 2018. The options have intrinsic value of nil at December 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 19 – COMMITMENTS AND CONTINGENCIES In addition to commitments disclosed in Notes 8, 9, 10, 11, 12 and 13, the Company had the following commitments and contingencies. Personal property tax and other accrued liabilities Personal property tax for Tooele County, Utah is billed and becomes due on November 30 of each year. At December 31, 2018, $25,693 was due for 2018, $26,894 was due for 2017, and $82,100 was due for 2016, including interest and penalties, for a total of $134,687 due to Tooele County at December 31, 2018. At December 31, 2018 this amount remains unpaid and is included in Accounts payable and accrued expenses on the balance sheet. These amounts were paid in full in March 2019. Proceeds of $130,000 were raised in 2012 from the sale of stock, with shares redeemable for cash generated from the sale of gold. Based on gold prices during the conversion period in 2014, conversion amounts due to shareholders is $151,406. At December 31, 2018 and 2017, this amount remains unpaid and is included in accounts payable and accrued expenses on the balance sheet. Settlement of these amounts was made in full in June 2019. Employment agreements In September 2010, the Company entered into an employment agreement with Mr. Havenstrite as President of the Company, which is ongoing. The agreement requires Mr. Havenstrite to meet certain time requirements and limits the number of other board member obligations in which he can participate. The agreement allows for a base annual salary of $120,000 plus certain performance compensation upon fulfillment of established goals. The agreement allows the Board to terminate Mr. Havenstrite’s employment at any time, providing for a severance payment upon termination without cause. This agreement was amended in 2019 to allow for a rate increase for Mr. Havenstrite to an annual rate of $144,000. The Board also agreed in 2019 to compensate it’s directors for their contributions to the management of the Company, with one director receiving $5,000 per month and the other two directors receiving $5,000 per quarter. Finder’s Agreement On May 11, 2018, the Company agreed to an agreement with Mount Royal Consultants (Mount Royal) to assist in finding prospective investors. Mount Royal would receive a finder’s fee of 7% for a connection with a company that resulted in a qualified investment consisting of equity securities or a fee of 3% for a connection with a company that resulted in a purchase of debt securities. On March 8, 2019, the Company closed a Pre-paid Forward Gold Purchase Agreement (the “Purchase Agreement”) to a buyer for the purchase of gold produced from the Company’s mining property. This investment was considered to be a debt agreement and resulted in a payment to Mount Royal of $318,000, 3% of the $10,600,000 beneficially received by the Company from PDK Utah Holdings, LLC in 2019. Future amounts to be received from PDK Utah Holdings, LLC would also be subject to this agreement. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20 – SUBSEQUENT EVENTS Mining Leases During first quarter of 2019, the Company and Clifton Mining Company entered into a Second Amended and Restated Lease Agreement (the “Amended Lease”). Under the terms of the Amended Lease, the Company relinquished its leasehold interest in all but 10 of the patented mining claims, for which it retained only the surface rights, and 66 of the unpatented lode mining claims previously held by the Company. The mining claims retained by the Company represent the Kiewit area of interest. The Amended Lease term is 20 years and for so long thereafter as the mining claims are being actively used by the Company for commercial mining purposes. Under the terms of the Amended Lease the Company acquired and cancelled Clifton’s 5% royalty interest from production on the Kiewit project. The Company also acquired from third parties and cancelled the remaining 1% outstanding royalty interest thereon, for which the Company paid each party $50,000. As consideration for entering into the Amended Lease, the Company paid Clifton $3,000,000 and issued 5,500,000 shares of its common stock. In addition, the Company and Clifton entered into a Registration Rights Agreement to register for resale the shares issued to Clifton which requires the Company to register the shares within 18 months following the Initial Funding (see below). In the event the Company does not register the shares within the 18-month period, the Company is obligated to pay Clifton a royalty equal to 2.5% of the net smelter returns from the minerals generated from the Company’s mining claims. Gold Sale Funding Transaction During the first quarter of 2019, the Company closed a Pre-paid Forward Gold Purchase Agreement (the “Purchase Agreement”) to a buyer for the purchase of gold produced from the Company’s mining property. Under the terms of the Purchase Agreement, the buyer has agreed to purchase 73,910 ounces of gold from the Company in three tranches, with prepayment of the initial tranche in the amount of $11,200,000 having been made upon execution of the Purchase Agreement (the “Initial Funding”), $4,500,000 for Tranche 2 to occur at least six months following the Initial Funding date, and $5,500,000 for Tranche 3 to occur at least 10 months following the Initial Funding date, provided that all conditions precedent for funding Tranches 2 and 3 are met. From the initial funds, the Company paid an upfront fee of $600,000 to buyer for expenses incurred in connection with the transaction. Under the terms of the Purchase Agreement the Company is obligated to deliver gold in the following quantities following prepayment of each tranche: ● Beginning the 21 st ● Beginning the 15 th ● Beginning the 15 th If during the term of the Purchase Agreement, the gold spot price falls below $1,134 per ounce, the buyer may require the Company to sell an additional 10 ounces of gold to the buyer for each scheduled delivery month thereafter at a discounted amount as determined by the Purchase Agreement. As security for the obligations of the Company under the Purchase Agreement, the Company has granted the buyer a security interest in all of the assets of the Company and has issued and recorded a Leasehold Deed of Trust, Assignment of Leases, Rents, As Extracted Collateral and Contracts, Security Agreement and Fixture Filing. Concurrent with the Initial Funding, the Company granted a perpetual royalty to the buyer equal to 4% of the net smelter returns payable on all minerals mined, produced, or otherwise recovered from the Company’s mining properties, for which the buyer paid $2,200,000 to the Company. Consultant Settlement Agreement During the first quarter of 2019, the Company terminated a consulting agreement and paid $600,000 to the consultant, with an agreement to pay an additional $200,000 within 18 months, and further agreed to pay $36,000 as a payment against the final shipment of ore by the Company. In addition, the Company issued 250,000 shares of its common stock to the consultant. A principal of the consulting company was also appointed a director of the Company. Repayment of Notes During the first quarter of 2019, the Company repaid convertible promissory notes and short-term notes payable to two of its minority shareholders in the amount of $2,103,289 including interest and fees. In addition, all of the notes payable – equipment and the leased equipment liability note were paid in full. Claim Acquisition The Company entered into an agreement dated March 26, 2019 with Ben Julian, LLC for an option to purchase 64 claims adjacent to the Kiewit property for a purchase price of $500,000. On June 13, 2019, an agreement between the Company, Clifton Mining Company and Ben Julian, LLC was signed in which the purchase option was exercised. The Company acquired 20 claims and Clifton Mining Company acquired the remaining 44 claims at a cost of $250,000 to each company. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Accounting Method | Accounting Method The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. |
Accounting for Stock Options and Stock Awards Granted to Employees and Nonemployees | Accounting for Stock Options and Stock Awards Granted to Employees and Nonemployees All transactions in which goods or services are received for the issuance of shares of the Company’s common stock or options to purchase shares of common stock are accounted for based on the fair value of the goods or services received or the fair value of the equity interest issued, whichever is more reliably measurable. The Company estimates the fair value of stock-based compensation using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of the fair value of stock-based compensation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these financial statements include those assumed in estimating gold ounces in inventories, the recoverability of the cost of mining claims, asset retirement obligation, stock-based compensation, determination of the fair value of common stock issued, deferred tax assets and related valuation allowances. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain reclassifications have been made to conform prior periods’ amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ deficit, and cash flows previously reported. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less when purchased to be cash equivalents. |
Reclamation bonds | Reclamation bonds Reclamation bonds primarily represent bonds and are restricted primarily for reclamation funding which are carried at cost plus earned interest. Reclamation bonds are shown as a non-current asset and is included in the balance sheet. See Note 5. |
Inventories | Inventories The recovery of gold from certain oxide ores is achieved through the heap leaching process. Under this method, mineralized material is placed on a leach pad where it is treated with a chemical solution, which dissolves the gold contained in the material. The resulting “pregnant” solution is further processed in a plant where gold is recovered. The Company records ore on leach pad, solution in carbon columns in process and gold concentrate, at average production cost per gold ounce, less provisions required to reduce inventory to net realizable value. Production costs include the cost of mineralized material processed; direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities; amortization of property, equipment, and mineral properties; and mine administrative expenses. Revenue from the sale of silver is accounted for as by-product and is deducted from production costs. Costs are removed from ore on leach pads as ounces are recovered, based on the average cost per recoverable ounce of gold on the leach pad. Estimates of recoverable gold on the leach pad are calculated from the quantities of material placed on the leach pad (measured tons added to the leach pad), the grade of material placed on the leach pad (based on assay data) and an estimated recovery percentage (based on ore type). The nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, actual gold ounces recovered are regularly monitored and estimates are refined based on actual results over time. As of December 31, 2018, the Company had a limited operating history and actual results only over a short period of time. Due to this, estimates of recoverable gold are based primarily on initial tests with only limited refinements. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from a leach pad will not be known until the leaching process is concluded. The quantification of material inventory on the leach pad is based on estimates of the quantities of gold at each balance sheet date that the Company expects to recover during the next 12 to 18 months. See Notes 2 and 6. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments that extend the useful life of the property and equipment are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts and any resulting gain or loss is reflected in results of operations. See Note 7. |
Mineral Properties and Leases | Mineral Properties and Leases The Company capitalizes costs for acquiring mineral properties and ongoing mineral lease payments and expenses costs to maintain mineral rights. Upon reaching the production stage, the capitalized costs are amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral properties are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations. Mine property costs include the building of infrastructure of the processing facility including the heap leach pad and the carbon in column process plant along with water wells, roads and fencing. These costs are capitalized until ready for their intended use at which time they are amortized using the units of production method based on projected units of production which approximates the estimated life of the facility. Additionally, interest is capitalized to mine development until such assets are ready for their intended use. The Company does not have proven and probable reserves at this time. See Note 8. |
Mineral Exploration and Development Costs | Mineral Exploration and Development Costs Until proven and probable reserves (as defined by SEC Guide 7) are established, all exploration expenditures are expensed as incurred. Once such reserves are established, expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operations, are capitalized and will be amortized on units of production basis over proven and probable reserves. Previously capitalized costs are expensed in the period the property is abandoned. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates the carrying amounts of its long-lived assets for impairment whenever events and circumstances indicate the carrying value may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. Estimated undiscounted future net cash flows from each mineral property are calculated using estimated future production, three-year average metals prices, operating capital and costs, and reclamations costs. An impairment loss is recognized when the estimated discounted future cash flows expected to result from the use of an asset are less than the carrying amount of the asset. The Company’s estimates of future cash flows are subject to risks and uncertainties. It is reasonably possible that changes in estimates could occur which may affect the expected recoverability of the Company’s investments in mineral properties. |
Provision for Taxes | Provision for Taxes Income taxes are provided based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard to allow recognition of such an asset. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. When applicable, the Company will recognize a liability for unrecognized tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. See Note 16. |
Earnings Per Share | Earnings Per Share Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. 2018 2017 Net income (loss) $ 21,344,498 $ (4,076,641 ) Deemed capital contribution on extinguishment of preferred stock 4,068,720 - Net income (loss) available to common shareholders - basic 25,413,218 (4,150,162 ) Interest expense on convertible notes payable - related parties 74,465 - Net income (loss) available to common shareholders - diluted $ 25,487,683 $ (4,150,162 ) Weighted average shares outstanding - basic 19,196,808 13,682,082 Dilutive shares – convertible notes payable – related parties 3,457,602 - Weighted average shares outstanding - diluted 22,654,411 13,682,082 Basic income (loss) per share $ 1.32 $ (0.30 ) Diluted income (loss) per share $ 1.12 $ (0.30 ) At December 31, 2018, the common stock equivalents of 2,400,000 associated with the Company’s outstanding stock options were excluded from the calculation of diluted earnings per share because the options’ exercise price was not lower than the average share price during the year. At December 31, 2017, common stock equivalents included 3,728,886 shares associated with convertible debt – related parties and 47,211,002 shares associated with convertible preferred stock. These were excluded from the calculation of diluted earnings per share because they were anti-dilutive. |
Revenue Recognition | Revenue Recognition Sales of gold concentrate sold directly to customers are recorded as revenues and receivables upon completion of the performance obligations and transfer of control of the product to the customer. For concentrate sales, the performance obligation is met, the transaction price can be reasonably estimated, and revenue is recognized generally at the time of shipment at estimated forward prices for the anticipated month of settlement. Due to the time elapsed from shipment to the customer and the final settlement with the customer, prices at which sales of our concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to the estimated settlement metals prices until final settlement by the customer. Sales and accounts receivable for concentrate shipments are recorded net of charges by the customer for treatment, refining, smelting losses, and other charges negotiated with the customers. Charges are estimated upon shipment of concentrates based on contractual terms, and actual charges typically do not vary materially from estimates. See Note 15. |
Reclamation and Remediation | Reclamation and Remediation The Company’s operations have been, and are subject to, standards for mine reclamation that have been established by various governmental agencies. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of tangible long-lived assets. A corresponding asset is also recorded and depreciated over the life of the asset. After the initial measurement of the asset retirement obligation, the liability is adjusted when there are changes in the estimated future cash flows due to change in estimated costs or change in time until reclamation will commence. Determination of any amounts recognized is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates. Such assumptions are based on the Company’s current mining plan and the best available information for making such estimates. See Note 14. For non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are based on management’s estimate of amounts expected to be incurred when the remediation work is performed. |
Financial Instruments | Financial Instruments The Company’s financial instruments include cash and cash equivalents as well as various notes payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity and interest rates of these financial instruments, approximates fair value at December 31, 2018 and December 31, 2017. |
Fair Value Measurements | Fair Value Measurements The Company discloses the following information for each class of assets and liabilities that are measured at fair value: 1. the fair value measurement; 2. the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); 3. for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: a. total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings are reported in the statement of operations; b. the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported; c. purchases, sales, issuances, and settlements (net); and d. transfers into and/or out of Level 3. 4. the amount of the total gains or losses for the period included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and 5. in annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period. At December 31, 2018 and December 31, 2017, the Company has no assets nor liabilities that require measurement at fair value on a recurring basis. |
Going Concern | Going Concern As shown in the accompanying financial statements, the Company had an accumulated deficit of $5,674,925 through December 31, 2018 and negative working capital of $2,789,068 which raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. Although production has restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. Although management has procured funding through a lender (Note 20) they intend to continue to seek new capital from equity securities issuances to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Updates Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 Revenue Recognition, replacing guidance previously codified in Subtopic 605-10 Revenue Recognition-Overall. The new ASU establishes a five step principles-based framework in an effort to significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. In August 2015, the FASB issued ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU No. 2015-14 deferred the effective date of ASU No. 2014-09 until annual and interim reporting periods beginning after December 15, 2017. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified-retrospective transition approach. The Company performed an assessment of the impact of implementation of ASU No. 2014-09, and concluded it does not change the timing of revenue recognition or amounts of revenue recognized compared to how it recognized revenue under previous policies. Revenues involve a very small number of types of contracts and customers. In addition, revenue contracts do not involve multiple types of performance obligations. Concentrate sales involve variable consideration as they are subject to changes in metals prices between the time of shipment and their final settlement. However, the Company is able to reasonably estimate the transaction price for the concentrate sales at the time of shipment using forward prices for the month of settlement, and values are adjusted each period until final settlement. Also, it is unlikely a significant reversal of revenue for any one concentrate lot will occur. Adoption of ASU No. 2014-09 involves additional disclosures, where applicable, concerning (i) contracts with customers, (ii) significant judgments and changes in judgments in determining the timing of satisfaction of performance obligations and the transaction price, and (iii) assets recognized for costs to obtain or fulfill contracts. See Note 15 for information on our sales of products. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification of cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We adopted this update as of January 1, 2018 and there were no material impacts on our financial statements. In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash. The update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We adopted this update as of January 1, 2018, and there were no material impacts on our financial statements. In January 2017, the FASB issued ASU No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. We adopted this update as of January 1, 2018. We will apply the applicable provisions of the update to any future acquisitions. Accounting Standards Updates to Become Effective in Future Periods In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Upon implementation of the new guidance, we will be required to recognize a liability and right-of-use asset for our operating leases. We have elected the transition option to apply the new guidance at the effective date without adjusting comparative periods presented. Our operating leases, which will be impacted upon adoption, are not significant and we anticipate no material impact upon adoption on January 1, 2019. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Revision of Previously Issued_2
Revision of Previously Issued Financial Statements for Immaterial Misstatements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of adjustments related to overstatement for prior periods | As of and for the year ended December 31, 2017 As Previously Reported Adjustment As Revised Balance Sheet Inventories, current $ 600,000 $ (228,222 ) $ 371,778 Total current assets 706,463 (228,222 ) 478,241 Inventories, non-current 2,721,936 (1,035,844 ) 1,686,592 Mineral properties 1,114,675 90,712 1,205,387 Total Assets 8,917,564 (1,172,854 ) 7,744,710 Accumulated deficit (29,915,289 ) (1,172,854 ) (31,088,143 ) Total shareholders' equity (20,756,461 ) (1,172,854 ) (21,929,315 ) Total Liabilities and Shareholders' equity 8,917,564 (1,172,854 ) 7,744,710 Statement of Operations General production costs 591,725 (73,521 ) 518,204 Operating Loss (1,426,290 ) 73,521 (1,352,769 ) Net Income (Loss) (3,960,634 ) 73,521 (3,887,113 ) Basic and Diluted Income (loss) per share (0.29 ) (0.01 ) (0.30 ) Statement of Cash Flows Net Income (Loss) $ (3,960,634 ) $ 73,521 $ (3,887,113 ) Change in inventory (228,004 ) (73,521 ) (301,525 ) Cash flow from operating activities (1,074,118 ) - (1,074,118 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of net income (loss) available to common shareholders | 2018 2017 Net income (loss) $ 21,344,498 $ (4,076,641 ) Deemed capital contribution on extinguishment of preferred stock 4,068,720 - Net income (loss) available to common shareholders - basic 25,413,218 (4,150,162 ) Interest expense on convertible notes payable - related parties 74,465 - Net income (loss) available to common shareholders - diluted $ 25,487,683 $ (4,150,162 ) Weighted average shares outstanding - basic 19,196,808 13,682,082 Dilutive shares – convertible notes payable – related parties 3,457,602 - Weighted average shares outstanding - diluted 22,654,411 13,682,082 Basic income (loss) per share $ 1.32 $ (0.30 ) Diluted income (loss) per share $ 1.12 $ (0.30 ) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventories | December 31, 2018 2017 Ore on leach pad $ 1,193,341 $ 2,058,370 Less: current portion (1,193,341 ) (371,778 ) Non-current inventories $ - $ 1,686,592 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of property, equipment, and accumulated depreciation | December 31, 2018 2017 Equipment $ 3,093,690 $ 2,919,165 Furniture and fixtures 6,981 6,981 Electronic and computerized equipment 52,874 52,874 Vehicles 108,089 67,115 3,261,634 3,046,135 Less accumulated depreciation (1,856,149 ) (1,434,921 ) 1,405,485 1,611,214 Kiewit property improvements 2,497,436 2,497,436 Less accumulated amortization (487,214 ) (487,214 ) 2,010,222 2,010,222 Total $ 3,415,707 $ 3,621,436 |
Mineral Properties and Intere_2
Mineral Properties and Interests (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Mineral Industries Disclosures [Abstract] | |
Schedule of mineral properties and interests | December 31, 2018 2017 Initial lease fee Kiewit, Cactus Mill and all other sites $ 600,000 $ 600,000 600,000 600,000 Asset retirement costs Kiewit Site 452,193 789,026 Kiewit Exploration 11,126 10,780 Cactus Mill 26,234 16,133 489,553 815,939 1,089,553 1,415,939 Accumulated amortization (210,552 ) (210,552 ) Total $ 879,001 $ 1,205,387 |
Notes Payable - Equipment (Tabl
Notes Payable - Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable - Equipment [Abstract] | |
Schedule of the equipment notes payable | December 31, December 31, Note payable to Komatsu Financial, collateralized by a Komatsu Telehandler lift, due in 48 monthly installments of $2,441 including interest at 4.99%. $ 27,192 $ 47,154 Note payable to CAT Financial, collateralized by crushing equipment, due in 7 monthly installments of $39,000, beginning in May 2018, including interest at 4.0%. 145,067 -0- Note payable to CAT Financial, collateralized by used mining equipment due in 36 monthly installments of varying amounts including interest at 4.68%. 117,002 266,675 Note payable to Komatsu Financial, collateralized by a Komatsu D275 dozer, due in monthly installments of $11,674 including interest at 2.99%. 34,851 149,687 Note payable to Star Capital, LLC, collateralized by a 2009 Multiquip generator, due in 24 monthly installments of $1,412, beginning in March 2016, including interest at 11.4%. -0- 5,515 $ 324,111 $ 469,031 Current portion (324,111 ) (452,214 ) Long term portion $ -0- $ 16,817 |
Note Payable - DMRJ (Tables)
Note Payable - DMRJ (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Note Payable - Related Party [Abstract] | |
Schedule of due to DMRJ | December 31, December 31, 2018 2017 Principal $ - $ 15,554,552 Interest payable - 9,535,118 $ - $ 25,089,670 |
Asset Retirement Obligation (Ta
Asset Retirement Obligation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of asset retirement obligations | 2018 2017 Asset retirement obligation, beginning of year $ 1,046,621 $ 974,109 Changes to estimated costs and timing to reclaim (334,342 ) - Accretion expense 80,468 72,512 Asset retirement obligation, end of year $ 792,747 $ 1,046,621 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of sales of products by metal | December 31, 2018 December 31, 2017 Gold $ 248,344 $ 162,762 Silver (by-product) 3,060 4,860 Less: Smelter and refining charges (21,432 ) (5,038 ) Total $ 229,972 $ 162,584 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of deferred tax assets | 2018 2017 Deferred tax asset: Net operating loss carryforward $ 952,000 $ 5,531,000 Property and equipment 37,000 37,000 Exploration costs 85,000 113,000 Stock based compensation 96,000 - Financing costs 23,000 1,000 Asset retirement obligation 42,000 27,000 Total deferred tax assets 1,235,000 5,709,000 Valuation allowance (1,235,000 ) (5,709,000 ) Net deferred tax assets $ - $ - |
Schedule of reconciliation between the statutory federal income tax rate and the Company's tax provision (benefit) | December 31, 2018 December 31, 2017 Amount computed using the statutory rate $ 4,482,000 (21 %) $ (1,387,000 ) (35 %) Other (8,000 ) - - - Impact of change in statutory tax rate - - 3,805,000 96 % Change in valuation allowance (4,474,000 ) 21 % (2,418,000 ) (61 %) Total income tax provision (benefit) $ - - % $ - - % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of fair value of option award assumptions used | Weighted Annual dividend yield - Expected life (years) 5.0 Risk-free interest rate 2.54 % Expected volatility based on comparable peers 51.2 % Common stock price based on most recent sale of common stock for cash $ 0.40 |
Schedule of stock based compensation cost | Stock Options Weighted Weighted Outstanding, December 31, 2017 - - - Issued 2,400,000 $ 0.40 4.2 Exercised -0- - - Expired -0- - Outstanding and exercisable, December 31, 2018 2,400,000 $ 0.40 4.2 |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 08, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Revenues from sales of gold concentrate, description | Production commenced and revenues of approximately $7,200,000 from sales of gold and other metals concentrate have been received through December 31, 2018. | ||
Note and interest payable | $ 25,541,561 | $ 625,000 | |
Due to DMRJ | $ 625,000 |
Revision of Previously Issued_3
Revision of Previously Issued Financial Statements for Immaterial Misstatements (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories, current | $ 1,193,341 | $ 371,778 | |
Total current assets | 1,242,532 | 478,241 | |
Inventories, non-current | 1,686,592 | ||
Mineral properties | 879,001 | 1,205,387 | |
Total Assets | 6,290,530 | 7,744,710 | |
Accumulated deficit | (5,674,925) | (31,088,143) | |
Total shareholders' equity | 1,466,183 | (21,929,315) | $ (17,864,674) |
Total Liabilities and Shareholders' equity | $ 6,290,530 | 7,744,710 | |
As Previously Reported [Member] | |||
Inventories, current | 600,000 | ||
Total current assets | 706,463 | ||
Inventories, non-current | 2,721,936 | ||
Mineral properties | 1,114,675 | ||
Total Assets | 8,917,564 | ||
Accumulated deficit | (29,915,289) | ||
Total shareholders' equity | (20,756,461) | ||
Total Liabilities and Shareholders' equity | 8,917,564 | ||
Adjustment [Member] | |||
Inventories, current | (228,222) | ||
Total current assets | (228,222) | ||
Inventories, non-current | (1,035,844) | ||
Mineral properties | 90,712 | ||
Total Assets | (1,172,854) | ||
Accumulated deficit | (1,172,854) | ||
Total shareholders' equity | (1,172,854) | ||
Total Liabilities and Shareholders' equity | $ (1,172,854) |
Revision of Previously Issued_4
Revision of Previously Issued Financial Statements for Immaterial Misstatements (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
General production costs | $ 1,587,057 | $ 707,732 |
Operating Loss | (2,831,899) | (1,542,297) |
Net Income (Loss) | $ 21,344,498 | (4,076,641) |
As Previously Reported [Member] | ||
General production costs | 591,725 | |
Operating Loss | (1,426,290) | |
Net Income (Loss) | $ (3,960,634) | |
Basic and Diluted Income (loss) per share | $ (0.29) | |
Adjustment [Member] | ||
General production costs | $ (73,521) | |
Operating Loss | 73,521 | |
Net Income (Loss) | $ 73,521 | |
Basic and Diluted Income (loss) per share | $ (0.01) |
Revision of Previously Issued_5
Revision of Previously Issued Financial Statements for Immaterial Misstatements (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net Income (Loss) | $ 21,344,498 | $ (4,076,641) |
Change in inventory | (865,029) | 111,997 |
Cash flow from operating activities | $ (659,857) | (1,074,188) |
As Previously Reported [Member] | ||
Net Income (Loss) | (3,960,634) | |
Change in inventory | (228,004) | |
Cash flow from operating activities | (1,074,118) | |
Adjustment [Member] | ||
Net Income (Loss) | 73,521 | |
Change in inventory | (73,521) | |
Cash flow from operating activities |
Revision of Previously Issued_6
Revision of Previously Issued Financial Statements for Immaterial Misstatements (Details Textual) | Dec. 31, 2017USD ($) |
Revision of Previously Issued Financial Statements for Immaterial Misstatements (Textual) | |
Accumulated overstatement of inventory | $ 1,263,566 |
Mineral properties | $ 90,712 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Net income (loss) | $ 21,344,498 | $ (4,076,641) |
Deemed capital contribution on extinguishment of preferred stock | 4,068,720 | |
Net income (loss) available to common shareholders - basic | 25,413,218 | (4,150,162) |
Interest expense on convertible notes payable - related parties | 74,465 | |
Net income (loss) available to common shareholders - diluted | $ 25,413,218 | $ (4,076,641) |
Weighted average shares outstanding - basic | 19,196,808 | 13,682,082 |
Dilutive shares - convertible notes payable - related parties | 3,457,602 | |
Weighted average shares outstanding - diluted | 22,654,411 | 13,682,082 |
Basic income (loss) per share | $ 1.32 | $ (0.30) |
Diluted income (loss) per share | $ 1.12 | $ (0.30) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies (Textual) | ||
Outstanding stock options were excluded | 2,400,000 | |
Accumulated deficit | $ (5,674,925) | $ (31,088,143) |
Negative working capital | $ 2,789,068 | |
Convertible Preferred Stock [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Outstanding stock options were excluded | 47,211,002 | |
Convertible Debt - Related Parties [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Outstanding stock options were excluded | 3,728,886 |
Capital Stock (Details)
Capital Stock (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($)Investors$ / sharesshares | Dec. 31, 2016USD ($) | Dec. 31, 2014 | Dec. 31, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | ||
Voting rights, description | Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. | |||
Number of investors | Investors | 4 | |||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||
Beneficial ownership, percentage | 77.00% | |||
Shares of common stock sold | 4,500,000 | |||
Cash proceeds | $ | $ 625,000 | |||
Maturity date | May 31, 2019 | |||
Agreement for debt owed related, description | This agreement discharged all of the debt owed by the Company to DMRJ and its related affiliates and returned all of the shares of preferred stock to the Company in exchange for $625,000. | |||
Shares of preferred stock | $ | $ 151,406 | |||
Conversion of shares, percentage | 5.00% | |||
Common stock redeemable, description | An equity financing was initiated in September 2012 for the sale of up to 1,150,000 shares of the Company’s common stock. This offering closed December 31, 2012 with proceeds of $130,000 raised through sales of 130,000 shares of the Company’s common stock. Under the terms of this offering, the shares could be redeemed for cash generated from the sale of gold for a period of 12 months after commencement of operations at the Kiewit project. Proceeds from 5% of the gold produced during the first year of production were to be allocated to fund this option. Each investor received the right to convert a minimum of one-half and up to all of his shares (on a pro rata basis) into the value of the number of ounces represented by the total investment, determined using a base price of $1,000 per ounce. | |||
2018 Activity [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares of common stock sold | 2,125,000 | |||
Cash proceeds | $ | $ 850,000 | |||
Common stock per share | $ / shares | $ 0.4 | |||
Maturity date | Nov. 30, 2018 | |||
Debt, description | Under the terms of the debt agreements, the Company issued 300,000 shares of common stock to the note holders. The shares were valued at $0.40 per share ($120,000) which was determined by management to be the fair value of a share of common stock based upon sales of common stock shares in 2018. The issuance was accounted for as financing expense. | |||
2017 Activity [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maturity date | Nov. 30, 2017 | |||
Debt, description | Under the terms of debt agreements, the Company issued a total of 300,000 shares of common stock to the note holders and these shares have been recorded as of November 30, 2017. This issuance was valued at an estimated $0.04 per share ($12,000) which was determined by management to be the fair value of a share of common stock based upon a third-party valuation performed in 2014. The issuance was accounted for as financing expense. |
Reclamation Bonds (Details)
Reclamation Bonds (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Reclamation Bonds (Textual) | ||
Surety bond in escrow account | $ 674,000 | $ 674,000 |
Reclamation bonds | $ 753,290 | $ 753,054 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Ore on leach pad | $ 1,193,341 | $ 2,058,370 |
Less: current portion | (1,193,341) | (371,778) |
Non-current inventories | $ 1,686,592 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | $ 3,415,707 | $ 3,621,436 |
Property and equipment, Total | 3,415,707 | 3,621,436 |
Property, Plant and Equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 3,261,634 | 3,046,135 |
Less accumulated depreciation | (1,856,149) | (1,434,921) |
Property and equipment, Total | 1,405,485 | 1,611,214 |
Property, Plant and Equipment [Member] | Vehicles [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 108,089 | 67,115 |
Property, Plant and Equipment [Member] | Electronic and computerized equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 52,874 | 52,874 |
Property, Plant and Equipment [Member] | Equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 3,093,690 | 2,919,165 |
Property, Plant and Equipment [Member] | Furniture and fixtures [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 6,981 | 6,981 |
Finite-Lived Intangible Assets [Member] | Kiewit property improvements [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 2,497,436 | 2,497,436 |
Less accumulated depreciation | (487,214) | (487,214) |
Property and equipment, Total | $ 2,010,222 | $ 2,010,222 |
Mineral Properties and Intere_3
Mineral Properties and Interests (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Initial lease fee | ||
Kiewit, Cactus Mill and all other sites | $ 600,000 | $ 600,000 |
Total | 600,000 | 600,000 |
Asset retirement costs | ||
Kiewit Site | 452,193 | 789,026 |
Kiewit Exploration | 11,126 | 10,780 |
Cactus Mill | 26,234 | 16,133 |
Total | 489,553 | 815,939 |
Mineral properties net before accumulated amortization | 1,089,553 | 1,415,939 |
Accumulated amortization | (210,552) | (210,552) |
Total | $ 879,001 | $ 1,205,387 |
Mineral Properties and Intere_4
Mineral Properties and Interests (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2009 | Dec. 31, 2018 | Dec. 31, 2017 | |
Mineral Properties and Interests; Reclamation Bonds (Textual) | |||
Claims fees (per claim) | $ 155 | ||
Joint venture agreement, description | The Company is also required to pay a 6% net smelter return on any production from the Kiewit gold property. | ||
Royalty expense | $ 13,424 | $ 9,785 | |
Amortization expense | $ 18,193 | ||
Corporate Joint Venture [Member] | |||
Mineral Properties and Interests; Reclamation Bonds (Textual) | |||
Joint venture agreement, description | Under the terms of the Joint Venture Agreement, the Company is required to pay a 4% net smelter royalty on base metals in all other areas except for production from the Kiewit gold property and a net smelter royalty on gold and silver, except for production from the Kiewit gold property, based on a sliding scale of between 2% and 15% based on the price of gold or silver, as applicable. |
Convertible Notes - Related P_2
Convertible Notes - Related Parties (Details) - USD ($) | Oct. 14, 2016 | Nov. 18, 2009 | Feb. 28, 2018 | Aug. 07, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Nov. 30, 2018 | Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2013 | Nov. 30, 2012 |
Short-term Debt [Line Items] | ||||||||||||||||
Convertible debt | $ 600,000 | $ 1,350,000 | $ 1,278,000 | |||||||||||||
Interest payable | 15.00% | |||||||||||||||
Periodic payment of interest | $ 7,500 | |||||||||||||||
Conversion price | $ 0.70 | |||||||||||||||
Additional shares of common stock issued to debt holders | 300,000 | 300,000 | 300,000 | 300,000 | 300,000 | 300,000 | 300,000 | |||||||||
Share price per share | $ 0.40 | $ 0.04 | $ 0.04 | $ 0.04 | $ 0.04 | |||||||||||
Loan maturity date | May 31, 2019 | |||||||||||||||
Financing expense | $ 12,000 | $ 12,000 | $ 12,000 | $ 12,000 | ||||||||||||
Minimum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Interest payable | 10.00% | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Interest payable | 15.00% | |||||||||||||||
Convertible Debt [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Convertible debt | $ 250,000 | $ 500,000 | 428,000 | |||||||||||||
Interest payable | 10.00% | |||||||||||||||
Conversion price | $ 0.25 | |||||||||||||||
Accrued interest payable | $ 456,750 | 317,436 | ||||||||||||||
Common stock and principal and interest were initially due date | Sep. 30, 2018 | |||||||||||||||
Loan maturity date | May 31, 2019 | |||||||||||||||
Convertible debt, description | The remaining $72,000 was advanced in 2018 with the final advance on February 9, 2018. | |||||||||||||||
Long term | $ 139,314 | $ 124,594 |
Short-Term Notes Payable - Re_2
Short-Term Notes Payable - Related Parties (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Short-Term Notes Payable - Related Parties (Textual) | ||
Short-term notes payable | $ 249,000 | |
Short-term debt, percentage bearing interest rate | 10.00% | |
Loan initiation fee, percentage | 2.00% | |
Interest expense | $ 421,891 | 2,295,508 |
Accrued interest payable | 7,243 | |
President [Member] | ||
Short-Term Notes Payable - Related Parties (Textual) | ||
Short-term notes payable | 48,000 | |
Convertible Debt [Member] | ||
Short-Term Notes Payable - Related Parties (Textual) | ||
Short-term notes payable | $ 201,000 |
Obligation under Capital Leas_2
Obligation under Capital Lease - Related Party (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Obligation Under Capital Lease - Related Party (Textual) | ||
Estimated future minimum lease payments | $ 72,000 | |
Implied interest | 2,438 | |
RMH Overhead LLC [Member] | ||
Obligation Under Capital Lease - Related Party (Textual) | ||
Equipment includes assets under capital lease amount | 185,618 | $ 185,618 |
Accumulated amortization | $ 66,292 | $ 39,775 |
Initial lease term, description | The initial lease term was for 24 months, which expired June 20, 2018. | |
Future minimum lease payments, description | The eight future minimum lease payments of $9,000 each plus financing costs were overdue at December 31, 2018. These lease payments were paid in full, including accrued interest and late fees, in March 2019. |
Notes Payable - Equipment (Deta
Notes Payable - Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Note payable | $ 324,111 | $ 469,031 |
Current portion | (324,111) | (452,214) |
Long term portion | 16,817 | |
Notes Payable Three [Member] | ||
Debt Instrument [Line Items] | ||
Note payable | 34,851 | 149,687 |
Notes Payable One [Member] | ||
Debt Instrument [Line Items] | ||
Note payable | 145,067 | 0 |
Notes Payable [Member] | ||
Debt Instrument [Line Items] | ||
Note payable | 27,192 | 47,154 |
Notes Payable Two [Member] | ||
Debt Instrument [Line Items] | ||
Note payable | 117,002 | 266,675 |
Notes Payable Four [Member] | ||
Debt Instrument [Line Items] | ||
Note payable | $ 0 | $ 5,515 |
Notes Payable - Equipment (De_2
Notes Payable - Equipment (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | |
Jul. 31, 2017 | Dec. 31, 2016 | Nov. 30, 2016 | |
Notes Payable - Equipment (Textual) | |||
Mining equipment financed, description | A new agreement was made with Wheeler Machinery and CAT Financial for the return of four pieces of this equipment to the Company. The equipment temporarily remained in the possession of Wheeler Machinery and a new payment schedule was established. In May 2018, a note for the remaining payments due for $273,067 was formalized. Of this amount, $141,631 represented the value of the equipment and the remaining amount of $131,436 was to settle accounts payable for past due rent. The equipment was refurbished and returned to the site in 2019. | ||
Note Payable Cat Equipment [Member] | |||
Notes Payable - Equipment (Textual) | |||
Note payable due to CAT | $ 960,585 | ||
Loss on impairment of equipment | $ 147,214 |
Note Payable - DMRJ (Details)
Note Payable - DMRJ (Details) - USD ($) | Dec. 31, 2018 | Mar. 08, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | |||
Principal | $ 25,541,561 | $ 625,000 | |
Dmrj [Member] | |||
Related Party Transaction [Line Items] | |||
Principal | 15,554,552 | ||
Interest payable | 9,535,118 | ||
Total | $ 25,089,670 |
Note Payable - DMRJ (Details Te
Note Payable - DMRJ (Details Textual) - USD ($) | Mar. 08, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Note Payable Dmrj (Textual) | |||
Convertible debt holders | $ 463,993 | $ 317,436 | |
Preferred stock issued | $ 4,068,720 | ||
Dmrj [Member] | |||
Note Payable Dmrj (Textual) | |||
Ownership percentage of stock on a fully-diluted basis | 77.00% | ||
Convertible shares of common stock | 4,500,000 | 47,211,002 | |
Settled for payment | $ 625,000 | ||
Convertible debt holders | $ 625,000 | ||
Preferred stock issued | $ 625,000 | $ 4,068,720 | |
Debt instrument, description | On the date of the agreement, the principal balance of the note was $15,554,552 and accrued interest payable was $9,987,009 for a total balance due of $25,541,561. As a result of the transaction, the Company recognized a gain on extinguishment of debt of $24,916,561. |
Asset Retirement Obligation (De
Asset Retirement Obligation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Asset retirement obligation, beginning of year | $ 1,046,621 | $ 974,109 |
Changes to estimated costs and timing to reclaim | (334,342) | |
Accretion expense | 80,468 | 72,512 |
Asset retirement obligation, end of year | $ 792,747 | $ 1,046,621 |
Asset Retirement Obligation (_2
Asset Retirement Obligation (Details Textual) | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligation (Textual) | |
Risk free interest rate | 10.00% |
Retirement Obligation, description | The Company updated the asset retirement obligation to reflect a plan for reclamation and closure of the mine at the end of its life having estimated undiscounted costs of approximately $1,369,115, an increase of $30,586 from the $1,338,529 in the previous plan. However, the asset retirement asset and obligation decreased by $334,342 as a result of a change in the estimated timing of costs and the impact of discounting the costs to present value. |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Gold | $ 248,344 | $ 162,762 |
Silver (by-product) | 3,060 | 4,860 |
Less: Smelter and refining charges | (21,432) | (5,038) |
Total | $ 229,972 | $ 162,584 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax asset: | ||
Net operating loss carryforward | $ 952,000 | $ 5,531,000 |
Property and equipment | 37,000 | 37,000 |
Exploration costs | 85,000 | 113,000 |
Stock based compensation | 96,000 | |
Financing costs | 23,000 | 1,000 |
Asset retirement obligation | 42,000 | 27,000 |
Total deferred tax assets | 1,235,000 | 5,709,000 |
Valuation allowance | (1,235,000) | (5,709,000) |
Net deferred tax assets |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Amount computed using the statutory rate | $ 4,482,000 | $ (1,387,000) |
Other | (8,000) | |
Impact of change in statutory tax rate | 3,805,000 | |
Change in valuation allowance | (4,474,000) | (2,418,000) |
Total income tax provision (benefit) | ||
Amount computed using the statutory rate, percentage | (21.00%) | (35.00%) |
Other, percentage | ||
Impact of change in statutory tax rate, percentage | 96.00% | |
Change in valuation allowance, percentage | 21.00% | (61.00%) |
Total income tax provision (benefit), percentage |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes (Textual) | ||
Percentage of deferred tax assets | 100.00% | 100.00% |
Net deferred tax asset reduced | $ 380,000 | |
Federal net operating loss carry forwards | $ 450,000 | |
Operating loss carryforwards expiration date | Dec. 31, 2037 | |
Federal income tax returns examination, description | The Company’s federal income tax returns for fiscal years 2014 through 2018 remain open and subject to examination. | |
Minimum [Member] | ||
Income Taxes (Textual) | ||
Percentage of re-measurement of federal deferred tax assets | 21.00% | |
Maximum [Member] | ||
Income Taxes (Textual) | ||
Percentage of re-measurement of federal deferred tax assets | 35.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions (Textual) | ||
Accrued compensation | $ 922,039 | $ 709,577 |
Short-term loan | 249,000 | |
President [Member] | ||
Related Party Transactions (Textual) | ||
Accrued compensation | 491,693 | 593,232 |
Short-term loan | 48,000 | |
Other Directors [Member] | ||
Related Party Transactions (Textual) | ||
Accrued compensation | 94,000 | 44,000 |
Limited Liability Company [Member] | ||
Related Party Transactions (Textual) | ||
Rent expense for rental of office space | 12,000 | 12,000 |
Accounts payable | 18,750 | 16,750 |
Limited Liability Company [Member] | President [Member] | ||
Related Party Transactions (Textual) | ||
Rent expense for rental of office space | 10,000 | 12,000 |
Marianne Havenstrite [Member] | ||
Related Party Transactions (Textual) | ||
Accrued compensation | $ 234,807 | $ 173,884 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2018$ / shares | |
Share-based Payment Arrangement [Abstract] | |
Annual dividend yield | |
Expected life (years) | 5 years |
Risk-free interest rate | 2.54% |
Expected volatility based on comparable peers | 51.20% |
Common stock price based on most recent sale of common stock for cash | $ 0.40 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Options, Outstanding, Beginning balance | shares | |
Number of Options, Granted | shares | 2,400,000 |
Number of Options, Exercised | shares | 0 |
Number of Options, Expired | shares | 0 |
Number of Options, Outstanding, Ending balance | shares | 2,400,000 |
Number of Options, Exercisable | shares | 2,400,000 |
Weighted-Average Exercise Price, Outstanding, Beginning balance | $ / shares | |
Weighted-Average Exercise Price, Granted | $ / shares | 0.40 |
Weighted-Average Exercise Price, Exercised | $ / shares | |
Weighted-Average Exercise Price, Expired | $ / shares | |
Weighted-Average Exercise Price, Outstandingg, Ending balance | $ / shares | 0.40 |
Weighted-Average Exercise Price, Exercisable | $ / shares | $ 0.40 |
Weighted-Average Remaining Contractual Term, Issued | 4 years 2 months 12 days |
Weighted-Average Remaining Contractual Term, Outstanding | 4 years 2 months 12 days |
Weighted-Average Remaining Contractual Term, Exercisable | 4 years 2 months 12 days |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended |
Feb. 23, 2018 | Dec. 31, 2018 | |
Stock-Based Compensation (Textual) | ||
Reserved shares under stock incentive plan | 2,400,000 | |
Number of Options, Granted | 2,400,000 | |
Weighted-Average Exercise Price, Granted | $ 0.40 | |
Stock based compensation cost | $ 456,000 | |
Share based compensation expiration date | Feb. 23, 2023 | |
Rick Havenstrite [Member] | ||
Stock-Based Compensation (Textual) | ||
Number of Options, Granted | 1,000,000 | |
Howard Crosby [Member] | ||
Stock-Based Compensation (Textual) | ||
Number of Options, Granted | 1,000,000 | |
John Ryan [Member] | ||
Stock-Based Compensation (Textual) | ||
Number of Options, Granted | 200,000 | |
Linde Havenstrite [Member] | ||
Stock-Based Compensation (Textual) | ||
Number of Options, Granted | 200,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | May 11, 2018 | Dec. 31, 2014 | Dec. 31, 2012 | Sep. 30, 2010 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Commitments and Contingencies (Textual) | |||||||
Base annual salary | $ 120,000 | ||||||
Personal property tax due | $ 25,693 | $ 26,894 | $ 82,100 | ||||
Proceeds from the sale of stock | $ 130,000 | ||||||
Conversion amounts due to shareholders | $ 151,406 | ||||||
Finder’s agreement, description | The Company agreed to an agreement with Mount Royal Consultants (Mount Royal) to assist in finding prospective investors. Mount Royal would receive a finder’s fee of 7% for a connection with a company that resulted in a qualified investment consisting of equity securities or a fee of 3% for a connection with a company that resulted in a purchase of debt securities. On March 8, 2019, the Company closed a Pre-paid Forward Gold Purchase Agreement (the “Purchase Agreement”) to a buyer for the purchase of gold produced from the Company’s mining property. This investment was considered to be a debt agreement and resulted in a payment to Mount Royal of $318,000, 3% of the $10,600,000 beneficially received by the Company from PDK Utah Holdings, LLC in 2019. Future amounts to be received from PDK Utah Holdings, LLC would also be subject to this agreement. | ||||||
Employment agreements, description | This agreement was amended in 2019 to allow for a rate increase for Mr. Havenstrite to an annual rate of $144,000. The Board also agreed in 2019 to compensate it’s directors for their contributions to the management of the Company, with one director receiving $5,000 per month and the other two directors receiving $5,000 per quarter. | ||||||
Tooele County [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Interest and penalties | $ 134,687 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | Mar. 26, 2019 | |
Subsequent Events (Textual) | |||
Payments to Clifton Mining | $ 3,000,000 | ||
Short term loan | $ 2,103,289 | ||
Shares of stock issued | 5,500,000 | ||
Amended lease, description | Under the terms of the Amended Lease the Company acquired and cancelled Clifton's 5% royalty interest from production on the Kiewit project. The Company also acquired from third parties and cancelled the remaining 1% outstanding royalty interest thereon, for which the Company paid each party $50,000. | ||
Acquisition costs | $ 250,000 | ||
Amended lease term | 20 years | ||
Percentage of royalty | 2.50% | ||
Spot price | $ 1,134 | ||
Subsequent Event [Member] | |||
Subsequent Events (Textual) | |||
Property for a purchase price | $ 2,200,000 | $ 500,000 | |
Purchase agreement, description | Under the terms of the Purchase Agreement, the buyer has agreed to purchase 73,910 ounces of gold from the Company in three tranches, with prepayment of the initial tranche in the amount of $11,200,000 having been made upon execution of the Purchase Agreement (the “Initial Funding”), $4,500,000 for Tranche 2 to occur at least six months following the Initial Funding date, and $5,500,000 for Tranche 3 to occur at least 10 months following the Initial Funding date, provided that all conditions precedent for funding Tranches 2 and 3 are met. From the initial funds, the Company paid an upfront fee of $600,000 to buyer for expenses incurred in connection with the transaction. Under the terms of the Purchase Agreement the Company is obligated to deliver gold in the following quantities following prepayment of each tranche: ● Beginning the 21st calendar month following the Initial Funding, 655 ounces of gold per month for each of the four calendar months thereafter, 670 ounces for each the 12 calendar months thereafter, and 1,155 ounces for each of the 24 calendar months thereafter. ● Beginning the 15th Calendar month following the Tranche 2 funding, 50 ounces of gold per month for each of the four calendar months thereafter, 220 ounces for each the 12 calendar months thereafter, 370 ounces for each of the 24 months thereafter, and 600 ounces for each of the six calendar months thereafter. ● Beginning the 15th Calendar month following the Tranche 3 funding, 90 ounces of gold per month for each of the 12 calendar months thereafter, 270 ounces for each the 24 calendar months thereafter, 1,025 ounces for each of the six calendar months thereafter, and 1,625 ounces for each of the four calendar months thereafter. | ||
Percentage of royalty | 4.00% | ||
Consultant settlement agreement, description | The Company terminated a consulting agreement and paid $600,000 to the consultant, with an agreement to pay an additional $200,000 within 18 months, and further agreed to pay $36,000 as a payment against the final shipment of ore by the Company. In addition, the Company issued 250,000 shares of its common stock to the consultant. A principal of the consulting company was also appointed a director of the Company. |