Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 14, 2021 | |
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-Q | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 26,831,603 | |
Entity Filer Number | 333-169701 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash | $ 211,284 | $ 173,287 |
Accounts receivable | 197,496 | |
Inventories (Note 5) | 5,100,659 | 5,341,997 |
Prepaid expenses and other current assets | 19,517 | 18,713 |
Total Current Assets | 5,528,956 | 5,533,997 |
INVENTORIES (Note 5) | 661,030 | 1,505,020 |
PROPERTY AND EQUIPMENT, net (Note 6) | 4,930,985 | 5,389,660 |
MINERAL PROPERTIES AND INTERESTS, net (Note 7) | 3,766,285 | 3,785,868 |
RECLAMATION BONDS (Note 4) | 947,011 | 758,011 |
TOTAL ASSETS | 15,834,267 | 16,972,556 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 789,403 | 1,459,605 |
Royalties and upside participation payable (Note 3) | 1,133,141 | 798,257 |
Accrued liabilities - officer and other wages (Note 13) | 153,697 | 71,697 |
Notes payable - equipment, current portion (Note 8) | 860,885 | 981,759 |
Settlement of consulting contract payable | 200,000 | 200,000 |
Prepaid forward gold contract liability, current portion (Note 3) | 12,633,606 | 3,336,618 |
Due to PDK in lieu of gold deliveries (Note 3) | 1,671,500 | |
Total Current Liabilities | 17,442,232 | 6,847,936 |
LONG-TERM LIABILITIES | ||
Note payable - equipment (Note 8) | 264,368 | 226,427 |
Asset retirement obligation (Note 9) | 1,270,834 | 1,233,514 |
Prepaid forward gold contract liability (Note 3) | 10,263,382 | |
Total long-term liabilities | 1,535,202 | 11,723,323 |
TOTAL LIABILITIES | 18,977,434 | 18,571,259 |
COMMITMENTS AND CONTINGENCIES (Note 13) | ||
STOCKHOLDERS’ EQUITY (DEFICIT) (Note 10) | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued or outstanding | ||
Common stock, $0.001 par value, 100,000,000 shares authorized; 26,831,603 and 26,831,603 shares issued and outstanding | 26,833 | 26,833 |
Additional paid-in capital | 9,666,275 | 9,666,275 |
Accumulated deficit | (12,836,275) | (11,291,811) |
Total Stockholders’ Equity (Deficit) | (3,143,167) | (1,598,703) |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ 15,834,267 | $ 16,972,556 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 01, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 26,831,603 | 26,831,603 |
Common stock, shares outstanding | 26,831,603 | 26,831,603 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
REVENUE | ||
Sales of product | $ 2,131,985 | $ 1,312,080 |
EXPENSES | ||
General production and project costs | 2,108,902 | 1,385,521 |
Processing costs | 77,948 | |
Depreciation and amortization | 256,806 | 292,351 |
Other operating costs | 32,604 | 176,691 |
Exploration expense | 304,206 | |
Legal and professional | 72,431 | 74,236 |
Officers and directors fees | 89,294 | 83,754 |
General and administrative | 74,579 | 60,236 |
(Gain) loss on disposal of equipment | 204,083 | (1,965) |
Forward gold contract expense (Note 3) | 705,106 | |
Total expenses | 3,621,753 | 2,375,030 |
OPERATING LOSS | (1,489,768) | (1,062,950) |
OTHER INCOME (EXPENSE) | ||
Interest and other income | 375 | |
Interest expense - equipment financing | (23,463) | (27,615) |
Interest expense - other | (31,233) | |
Total other income (expense) | (54,696) | (27,240) |
LOSS BEFORE INCOME TAXES | (1,544,464) | (1,090,190) |
INCOME TAXES | ||
NET LOSS | $ (1,544,464) | $ (1,090,190) |
BASIC AND DILUTED NET LOSS PER SHARE | $ (0.06) | $ (0.04) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 26,831,603 | 26,631,603 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,544,464) | $ (1,090,190) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 256,806 | 292,351 |
Accretion of asset retirement obligation | 30,487 | 23,775 |
Writedown of inventory to net realizable value | 392,820 | 204,127 |
Loss (gain) on disposal of equipment | 204,083 | (1,965) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (197,496) | |
Inventories | 692,508 | (467,767) |
Prepaid expenses and other current assets | (804) | 126,852 |
Accounts payable and accrued expenses | (512,202) | 49,807 |
Royalties and upside participation payable (Note 3) | 334,884 | 81,808 |
Accrued liabilities - officer and other wages | 82,000 | |
Due to PDK in lieu of gold deliveries | 1,671,500 | |
Prepaid forward gold contract liability | (966,394) | |
Net cash provided (used) by operating activities | 443,728 | (781,202) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property and equipment | (5,094) | (223,814) |
Increase in reclamation bonds | (189,000) | (375) |
Net cash used by investing activities | (194,094) | (224,189) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of notes payable - equipment | (211,637) | (161,174) |
Net cash used by financing activities | (211,637) | (161,174) |
NET INCREASE (DECREASE) IN CASH | 37,997 | (1,166,565) |
CASH, BEGINNING OF PERIOD | 173,287 | 2,116,432 |
CASH, END OF PERIOD | 211,284 | 949,867 |
NON-CASH FINANCING AND INVESTING ACTIVITIES: | ||
Equipment acquired with notes payable - equipment | 215,510 | |
Accrued rent satisfied with equipment trade-in | $ 158,000 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2019 | $ 26,633 | $ 9,466,475 | $ (9,451,218) | $ 41,890 |
Balance, Shares at Dec. 31, 2019 | 26,631,603 | |||
Net loss | (1,090,190) | (1,090,190) | ||
Balance at Mar. 31, 2020 | $ 26,633 | 9,466,475 | (10,541,408) | (1,048,300) |
Balance, Shares at Mar. 31, 2020 | 26,631,603 | |||
Balance at Dec. 31, 2020 | $ 26,833 | 9,666,275 | (11,291,811) | (1,598,703) |
Balance, Shares at Dec. 31, 2020 | 26,831,603 | |||
Net loss | (1,544,464) | (1,544,464) | ||
Balance at Mar. 31, 2021 | $ 26,833 | $ 9,666,275 | $ (12,836,275) | $ (3,143,167) |
Balance, Shares at Mar. 31, 2021 | 26,831,603 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – 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 ("Clifton"), 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 on September 30, 2014. Revenue from the heap leach operation began in October 2014 with the first sales of gold concentrate. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In the opinion of management, the accompanying unaudited interim balance sheets and statements of operations, cash flows and stockholders' equity (deficit) contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of the Company as of March 31, 2021, and the results of its operations and its cash flows for the three months ended March 31, 2021 and 2020. The operating and financial results for the Company for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These unaudited interim financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America ("U.S. GAAP"). These unaudited interim financial statements do not include all note disclosures required by U.S. GAAP on an annual basis, and therefore should be read in conjunction with the annual audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on April 19, 2021. 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 U.S. GAAP 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 U.S. GAAP. 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 equity interest issued. 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. Risks and Uncertainties As a mining company, the revenue, profitability and future rate of growth of the Company are substantially dependent on the prevailing prices for gold and silver. The prices of these metals are volatile and affected by many factors beyond the Company's control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors. A substantial or extended decline in commodity prices could have a material adverse effect on the Company's financial position, results of operations, cash flows, access to capital and the quantities of resources that the Company can economically produce. Further, the carrying value of the Company's property and equipment, net; mineral properties and interest, net; inventories and ore on leach pads are particularly sensitive to the outlook for commodity prices. A decline in the Company's price outlook from current levels could result in material impairment charges related to these assets. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ materially from those estimates. The more significant areas requiring the use of management estimates and assumptions relate to metal prices and material resources that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in leach pad inventories, fair value of common stock issued and valuation allowances for deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ from the amounts estimated in these financial statements. 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' equity (deficit), and cash flows as previously reported. 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 equivalent, 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. 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 March 31, 2021, the Company had a limited operating history and actual results only over a short period of time. 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 24 months. Inventory is stated at the lower of cost or net realizable value which for March 31, 2021 is net realizable value. A portion of the March 31, 2021 inventory has been classified as non-current. This classification has been made based on the amount of gold expected to be sold over the next twelve months based on prior year sales. See Note 5. Earnings (Loss) Per Share Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (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. For the three-month periods ended March 31, 2021 and 2020, 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 they were anti-dilutive due to the net loss for the periods then ended. Revenue Recognition Concentrate Sales: Processing Income: Sales and accounts receivable for sales are recorded net of charges from the customer which represent components of the transaction price. Charges are estimated by management upon transfer of risk based on contractual terms, and actual charges typically do not vary materially from management's estimates. Revenue from the sale of concentrate 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. Revenue proceeds from concentrate sales are recorded net of the impact of royalties and participation agreements. Going Concern As shown in the accompanying financial statements, the Company had an accumulated deficit of $12,836,275 through March 31, 2021 and net loss of $1,544,464 for the three-month period ended March 31, 2021, along with negative working capital of $11,913,276 which raises substantial doubt about the Company's ability to continue as a going concern. In addition, the Company has not delivered gold ounces as schedule on its prepaid forward gold contract and could be subject to default provisions within the related agreement (see Note 3). 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 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. Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. The ability of the Company to continue as a going concern is dependent on the Company's ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they are due. COVID -19 The Company's operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and elsewhere, causing disruptions to the Company's business operations and management. These disruptions are most evident in the Company's ability to retain and house employees and properly manage them while maintaining proper social distancing and with delays in obtaining materials and supplies. There has also been a reduction in the availability of equipment financing. These disruptions continue to hamper operations. It is management's belief that disruptions relating to COVID will be mitigated in the future as a large percent of the population becomes vaccinated. New Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update contains a number of provisions intended to simplify the accounting for income taxes. The update is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The update was adopted as of January 1, 2020, and its adoption did not have a material impact on the Company's financial statements. 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. |
Prepaid Forward Gold Contract L
Prepaid Forward Gold Contract Liability | 3 Months Ended |
Mar. 31, 2021 | |
Prepaid Forward Gold Contract Liability [Abstract] | |
PREPAID FORWARD GOLD CONTRACT LIABILITY | NOTE 3 – PREPAID FORWARD GOLD CONTRACT LIABILITY During 2019, the Company entered into and closed a Pre-Paid Forward Gold Purchase Agreement (the "Purchase Agreement") with PDK Utah Holdings L.P. ("PDK") for the sale and purchase by PDK of gold produced from the Company's mining property. Under the terms of the original Purchase Agreement, as amended, PDK agreed to purchase a total of 47,045 ounces of gold from the Company. The Company agreed to deliver ounces of gold produced from the Kiewit property to PDK and the Company would then receive proceeds from PDK at the then current spot price less a discount specified in the Purchase Agreement. The Company has the option of paying cash to PDK for the number of ounces to be delivered each month at a rate of $500 per ounce. The Company received a net amount of $13,600,000 in 2019 for the future delivery of these gold ounces. The Purchase Agreement contains a royalty provision whereby royalties of 4% are due to PDK on gold and silver recovered from mining operations at the Kiewit site and sold by the Company to a third party. Under the Purchase Agreement, the Company also pays a 5% withholding tax to the state of Utah on the PDK royalty payments. Royalties are payable within 30 days following the end of each fiscal quarter. PDK-related royalties and royalty withholding payable at March 31, 2021 and December 31, 2020 were $296,657 and $221,897, respectively. The March 31, 2021 balance includes royalties payable for the second, third and fourth quarters of 2020 and the first quarter of 2021. The Purchase Agreement contains a participation payment whereby PDK receives a portion of the proceeds from gold sold by the Company to a third party. The payment due to PDK is based upon a percentage of proceeds over a set gold price per ounce. The upside participation amounts are payable within four days following each sale. The March 31, 2021 and December 31, 2020 upside participation payable is $836,484 and $576,360, respectively. The March 31, 2021 balance includes participation payments payable for the third and fourth quarters of 2020 and the first quarter of 2021. In addition, under the agreement, PDK may reduce the required number of ounces to be sold in exchange for up to 8,000 common shares of the Company. As security for the obligations of the Company under the Purchase Agreement, the Company has granted PDK 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. The Purchase Agreement contains representations and warranties, as well as affirmative and negative covenants customary to a transaction of this nature. Under the terms of the Purchase Agreement, as amended, the Company is obligated to deliver gold in the following quantities: Months Gold Ounces Total Gold Ounces December 2020 655 655 January 2021 to March 2021 896 2,688 April 2021 to March 2022 911 10,932 April 2022 to March 2023 1,396 16,752 April 2023 to December 2023 1,753 15,777 January 2024 241 241 47,045 No gold has been delivered under the contract. As of March 31, 2021 and December 31, 2020, a cumulative of 3,343 and 655 ounces, respectively, were scheduled to be delivered to PDK under the terms of the Purchase Agreement. The ounces due but unpaid to PDK at March 31, 2021 have been reflected in current liabilities at the amount calculated based on the Company's option to pay cash in lieu of delivery at $500 per ounce. The forward gold contract balance and the related contract expense for the three month period ended March 31, 2021 are as follows: Total ounces to be delivered through March 31, 2021 3,343 Contractual payment per ounce in lieu of delivery $ 500 Amount due to PDK at March 31, 2021 $ 1,671,500 Forward gold contract balance associated with 3,343 ounces (966,394 ) Forward gold contract expense for the three months ended March 31, 2021 $ 705,106 Prepaid forward gold contract liability balance at December 31, 2020 $ 13,600,000 Forward gold contract balance associated with 3,343 ounces (966,394 ) Prepaid forward gold contract liability balance at March 31, 2021 $ 12,633,606 On December 1, 2020, the Company notified PDK that it would not be able to make the December delivery of gold and elected to use one of the delivery postponement options under the Purchase Agreement, as amended. This provision permits the Company to delay delivery by up to 30 days by delivering the amount of gold due within 30 days, plus interest calculated at the default interest rate, thereby causing the December ounces to be come due in January 2021. At the end of this 30-day extension period the Company was unable to deliver the December payment and the amount became due on January 25, 2021. As of March 31, 2021 and through the issuance of these financial statements, PDK has sent invoices to the Company for the deliveries and payments due. However, no notice of default on the Purchase Agreement has been received PDK. The failure to make gold deliveries under the Purchase Agreement, as amended, provides PDK with certain remedies, including termination of the agreement, demand for early payment of the entire delivery obligations, and enforcement of foreclosure rights against the assets pledged as security under the agreement. The Company is in ongoing negotiations with PDK in an effort to re-negotiate the terms of the agreement. Due to the delinquent status of the deliveries and PDK's rights under the default provisions of the Purchase Agreement, the Company has classified the entire liability balance owing as current on the March 31, 2021 balance sheet. |
Reclamation Bonds
Reclamation Bonds | 3 Months Ended |
Mar. 31, 2021 | |
Reclamation Bonds [Abstract] | |
RECLAMATION BONDS | NOTE 4 – RECLAMATION BONDS At March 31, 2021 and December 31, 2020, 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. In December 2020, the Company was notified that the reclamation cost estimate for the Kiewit properties had been escalated from $1,348,000 to $1,537,000, an increase of $189,000. The amount was remitted to the Utah Division of Oil, Gas and Mining on March 11, 2021. Total reclamation bonds posted at March 31, 2021 and December 31, 2020 are $947,011 and $758,011, 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 | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 5 – INVENTORIES Inventories at March 31, 2021 and December 31, 2020 consists of the following: March 31, December 31, Ore on leach pad $ 5,447,972 $ 6,583,986 Carbon column in process 96,418 133,640 Finished goods 217,299 129,391 Total $ 5,761,689 $ 6,847,017 Inventories at March 31, 2021 and December 31, 2020 were valued at net realizable value because production costs were greater than the amount the Company expected to receive on the sale of the estimated gold ounces contained in inventories. The adjustments to inventory was $392,820 and $204,127 at March 31, 2021 and December 31, 2020, respectively. A portion of the March 31, 2021 inventory has been classified as non-current. This classification has been based on the amount of gold expected to be sold over the next twelve months, using prior year sales as an estimate. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 6 – PROPERTY AND EQUIPMENT The following is a summary of property and equipment at March 31, 2021 and December 31, 2020: March 31, December 31, 2021 2020 Equipment $ 6,009,676 $ 6,361,808 Furniture and fixtures 6,981 6,981 Electronic and computer equipment 50,587 50,587 Vehicles 315,905 315,905 Land improvements 44,840 44,840 6,427,989 6,780,121 Less accumulated depreciation (3,223,458 ) (3,129,046 ) 3,204,531 3,651,075 Kiewit property facilities 2,497,436 2,497,436 Less accumulated amortization (770,982 ) (758,851 ) 1,726,454 1,738,585 Total $ 4,930,985 $ 5,389,660 For the Kiewit property facilities, amortization based on total units of production was $12,131 and $28,263 for the three months ended March 31, 2021 and 2020. Depreciation expense on property and equipment was $218,259 and $203,739 for the three months ended March 31, 2021 and 2020. During the three months ended March 31, 2021, the Company was required to return a CAT 740 Haul truck to Wheeler Machinery because the Company was 5 payments delinquent in its obligation on this note payable. The net carrying value of the equipment was $290,889 and the outstanding note payable balance was $86,806. A loss on disposal of equipment of $204,083 was recognized. The truck was purchased by a related party who in February began renting the truck to the Company on a month-to-month rental. See Note 11. During the three months ended March 31, 2021, the Company acquired a new HP4 crushing system in exchange for its HP3 crushing system which was returned to ICM Solutions, Inc.("ICM"). Prior to the acquisition, the Company had been renting the HP4 crushing system from ICM and had an accrued rent payable of $158,000. ICM financed the acquisition of the new HP4 crushing system with a new note of $215,510 for the cost of the new equipment, plus accrued rent payable, less the trade-in value of the HP3 crushing system. |
Mineral Properties and Interest
Mineral Properties and Interests | 3 Months Ended |
Mar. 31, 2021 | |
Mineral Properties and Interests [Abstract] | |
MINERAL PROPERTIES AND INTERESTS | NOTE 7 – MINERAL PROPERTIES AND INTERESTS Mineral properties and interests as of March 31, 2021 and December 31, 2020 are as follows: March 31, December 31, Kiewit and all other sites $ 3,700,000 $ 3,700,000 JJS property 250,000 250,000 3,950,000 3,950,000 Less accumulated amortization (792,744 ) (770,560 ) 3,157,256 3,179,440 Asset retirement obligation Kiewit Site 725,122 718,289 Kiewit Exploration 28,377 28,377 JJS property 31,016 31,016 Total 784,515 777,682 Less accumulated amortization (175,486 ) (171,254 ) 609,029 606,428 Total $ 3,766,285 $ 3,785,868 The Company is required to pay a 4% net smelter royalty ("NSR") to PDK on revenues of gold and silver from the Kiewit gold property and the JJS properties. |
Notes Payable - Equipment
Notes Payable - Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Notes Payable - Equipment [Abstract] | |
NOTES PAYABLE – EQUIPMENT | NOTE 8 – NOTES PAYABLE – EQUIPMENT The following is a summary of the equipment notes payable: March 31, December 31, Note payable to Wheeler Machinery, collateralized by a 374 DL Excavator, due in 12 monthly installments of $19,575, beginning June 2020, including interest at 8.5%, with a balloon payment due in June 2021 of $150,164. (1) (2) $ 235,753 $ 304,845 Note payable to ICM Solutions, LLC, collateralized by an HP4 crushing system, due in 10 monthly payments of $22,300, beginning March 2021, including interest at 9%. 215,510 - Note payable to ICM Solutions, LLC, collateralized by 3 grasshopper leg conveyor systems, due in 12 monthly installments of $4,365, beginning April 2020, including interest at 9%, with a balloon payment of $41,696 due in April 2021. (1) 41,393 69,230 Note payable to Wheeler Machinery, collateralized by a used CAT 740 Haul truck (SN2293), originally due in 11 monthly installments of $14,475, beginning May 2019, including interest at 9%, with a balloon payment due in April 2020 of $168,873. (3) - 86,807 Note payable to Epiroc, collateralized by a used Epiroc drill, due in 6 monthly installments of $22,235, beginning October 2019, the balloon amount of $488,317 was refinanced in April 2020, with a new loan in that amount due in 36 monthly payments of $14,679 including interest at 5.2%. 347,081 386,268 Note payable to Wheeler Machinery, collateralized by a used D8T dozer, originally due in 11 monthly installments of $19,125, beginning August 2019, including interest at 9%, with a balloon payment due in July 2020 of $350,281. (1) (2) 279,847 349,761 Note payable to Komatsu Equipment, collateralized by a used PC490 Excavator, due in 11 monthly payments of $10,320, beginning July 2019, including interest at 9%, the balloon amount of $71,372 was refinanced in May 2020 with 1 payment of $28,823 and 12 monthly payments of $1,903 including interest at 4.6%. 5,669 11,275 1,125,253 1,208,186 Current portion (860,885 ) (981,759 ) Long term portion $ 264,368 $ 226,427 Principal payments due are as follows for the twelve months ended: March 31, 2022 $ 860,885 March 31, 2023 264,368 $ 1,125,253 Arrangements have been made with Wheeler CAT and ICM Solutions, LLC to accelerate the payment schedule for the first few months of 2021, with no additional penalties other than interest, thereby allowing for the accounts to become current by May 2021. (1) (2) (3) |
Asset Retirement Obligation
Asset Retirement Obligation | 3 Months Ended |
Mar. 31, 2021 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATION | NOTE 9 – ASSET RETIREMENT OBLIGATION Changes in the asset retirement obligation for the three-month periods ended March 31, 2021 and 2020 are as follows: March 31, March 31, Asset retirement obligation, beginning of period $ 1,233,514 $ 826,637 Obligation incurred: Kiewit properties 6,833 94,347 JJS property - 31,016 Accretion expense 30,487 23,775 Asset retirement obligation, end of period $ 1,270,834 $ 975,775 In the first quarter of 2021 and 2020, the Company updated the asset retirement obligation to reflect a plan for reclamation and closure of the mine at the end of its life. The asset retirement asset and obligation increased by $6,833 and $125,363, respectively, 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. |
Capital Stock
Capital Stock | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
CAPITAL STOCK | NOTE 10 – 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. During the three-month periods ended March 31, 2021 and 2020, the Company had no transactions relating to common stock. 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. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS In addition to transactions disclosed in Note 13, the Company had the following related party transactions. The Company has a month-to-month lease agreement for its office space with RMH Overhead, LLC, a company owned by Rick Havenstrite, the Company's President and a director. The Company recognized rent expense of $4,500 and $3,500 for the three-month periods ended March 31, 2021 and 2020. At March 31, 2021 and December 31, 2020, amounts due to RMH Overhead, LLC for rent of $6,000 and $3,000, respectively, are included in accounts payable and accrued expenses on the balance sheet. On February 1, 2021, RMH Overhead, LLC. ("RMH") an entity owned by Rick Havenstrite, President of the Company, purchased a CAT 740B Articulated Haul Truck from Wheeler CAT. This truck had previously been owned by the Company with an associated note payable to Wheeler CAT. See Note 6. Beginning February 1, 2021, the Company began renting this truck from RMH at a rate of $10,000 per month on a month-to-month rental. At March 31, 2021 and December 31, 2020, amounts of $10,000 and nil, respectively, are due to RMH Overhead, LLC for rent of this equipment, and this amount is included in accounts payable and accrued expenses on the balance sheet. The Company compensates directors for their contributions to the management of the Company, with one director receiving $6,000 per month and other director receiving $5,000 per quarter. At March 31, 2021 and December 31, 2020, accrued compensation due to directors was $51,000 and $34,000, respectively. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE | NOTE 12 – REVENUE Product sales for the three-month periods ended March 31, 2021 and March 31, 2020 are shown below. At March 31, 2021 and December 31, 2020, the Company had gold sales receivable balance of $197,496 and nil. Processing income is received for ore processed for another company. Once processed, the unrefined gold concentrate is shipped to a refinery where it is refined into gold and silver bullion. The Company receives a percentage of the proceeds from the sale of the gold and silver concentrate which is credited to the Company's account at the time the concentrate reaches the refinery. Three Months Three Months Concentrate sales: Gold $ 1,748,208 $ 1,594,913 Silver 27,339 15,589 1,775,547 1,610,502 Less: Royalties (74,760 ) (69,962 ) Upside participation payments (260,125 ) (173,989 ) Outside processing charges (69,533 ) (54,471 ) (404,418 ) (298,422 ) Net concentrate sales 1,371,129 1,312,080 Processing income 777,586 - Less: Outside processing charges (16,730 ) - Net processing income 760,856 - Total revenue $ 2,131,985 $ 1,312,080 For the three months ended March 31, 2021 and 2020, all revenue from concentrate sales was sold to Asahi Refining. For the three months ended March 31, 2021, all revenue from processing income was received from the outside company whose concentrate sales are to Asahi Refinery. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 – COMMITMENTS AND CONTINGENCIES In addition to commitments disclosed in Notes 3 and 7, 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 March 31, 2021 and December 31, 2020, the amount due to Tooele County for 2020 is $35,568 and $35,568, respectively. Employment Agreements The Company has an employment agreement with Mr. Havenstrite as President of the Company, which is ongoing. The agreement, as amended, 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 $144,000 plus certain performance compensation upon fulfillment of established goals. The agreement allows the board of directors to terminate Mr. Havenstrite's employment at any time, providing for a severance payment upon termination without cause. At March 31, 2021 and December 31, 2020 accrued compensation due to officers of the Company was $56,159 and $37,697, respectively. Of the amounts accrued at March 31, 2021 and December 31, 2020, accrued compensation of $37,698 and $26,621 is due to Rick Havenstrite and $18,461 and $11,076 is due to Marianne Havenstrite, Treasurer and Principal Financial Officer. Director's Fees The Company compensates its directors for their service to the Company. At March 31, 2021 and December 31, 2020 accrued compensation due to directors was $51,000 and $34,000. Finder's Agreement On May 11, 2018, the Company entered into 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. Future amounts to be received from investors could also be subject to this agreement. During the three -month period ended March 31, 2021, the Company recognized no consulting expense relating to this agreement. Mining Leases Annual claims fees are currently $155 per claim plus administrative and school trust land fees. Total paid for claims fees in the three -month periods ended March 31, 2021 and, 2020 were nil each period. Claims fees are due in August for the year beginning in September of that year. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Accounting Method | Accounting Method The Company's financial statements are prepared using the accrual basis of accounting in accordance with U.S. GAAP. |
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 equity interest issued. 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. |
Risks and Uncertainties | Risks and Uncertainties As a mining company, the revenue, profitability and future rate of growth of the Company are substantially dependent on the prevailing prices for gold and silver. The prices of these metals are volatile and affected by many factors beyond the Company's control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors. A substantial or extended decline in commodity prices could have a material adverse effect on the Company's financial position, results of operations, cash flows, access to capital and the quantities of resources that the Company can economically produce. Further, the carrying value of the Company's property and equipment, net; mineral properties and interest, net; inventories and ore on leach pads are particularly sensitive to the outlook for commodity prices. A decline in the Company's price outlook from current levels could result in material impairment charges related to these assets. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ materially from those estimates. The more significant areas requiring the use of management estimates and assumptions relate to metal prices and material resources that are the basis for future cash flow estimates utilized in impairment calculations and units-of-production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in leach pad inventories, fair value of common stock issued and valuation allowances for deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ from the amounts estimated in these financial statements. |
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' equity (deficit), and cash flows as previously reported. |
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 equivalent, 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. 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 March 31, 2021, the Company had a limited operating history and actual results only over a short period of time. 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 24 months. Inventory is stated at the lower of cost or net realizable value which for March 31, 2021 is net realizable value. A portion of the March 31, 2021 inventory has been classified as non-current. This classification has been made based on the amount of gold expected to be sold over the next twelve months based on prior year sales. See Note 5. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (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. For the three-month periods ended March 31, 2021 and 2020, 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 they were anti-dilutive due to the net loss for the periods then ended. |
Revenue Recognition | Revenue Recognition Concentrate Sales: Processing Income: Sales and accounts receivable for sales are recorded net of charges from the customer which represent components of the transaction price. Charges are estimated by management upon transfer of risk based on contractual terms, and actual charges typically do not vary materially from management's estimates. Revenue from the sale of concentrate 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. Revenue proceeds from concentrate sales are recorded net of the impact of royalties and participation agreements. |
Going Concern | Going Concern As shown in the accompanying financial statements, the Company had an accumulated deficit of $12,836,275 through March 31, 2021 and net loss of $1,544,464 for the three-month period ended March 31, 2021, along with negative working capital of $11,913,276 which raises substantial doubt about the Company's ability to continue as a going concern. In addition, the Company has not delivered gold ounces as schedule on its prepaid forward gold contract and could be subject to default provisions within the related agreement (see Note 3). 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 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. Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. The ability of the Company to continue as a going concern is dependent on the Company's ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they are due. |
COVID -19 | COVID -19 The Company's operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and elsewhere, causing disruptions to the Company's business operations and management. These disruptions are most evident in the Company's ability to retain and house employees and properly manage them while maintaining proper social distancing and with delays in obtaining materials and supplies. There has also been a reduction in the availability of equipment financing. These disruptions continue to hamper operations. It is management's belief that disruptions relating to COVID will be mitigated in the future as a large percent of the population becomes vaccinated. |
New Accounting Pronouncements | New Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update contains a number of provisions intended to simplify the accounting for income taxes. The update is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The update was adopted as of January 1, 2020, and its adoption did not have a material impact on the Company's financial statements. 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. |
Prepaid Forward Gold Contract_2
Prepaid Forward Gold Contract Liability (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Prepaid Forward Gold Contract Liability [Abstract] | |
Schedule of company is obligated to deliver gold | Months Gold Ounces Total Gold Ounces December 2020 655 655 January 2021 to March 2021 896 2,688 April 2021 to March 2022 911 10,932 April 2022 to March 2023 1,396 16,752 April 2023 to December 2023 1,753 15,777 January 2024 241 241 47,045 |
Schedule of related contract expense | Total ounces to be delivered through March 31, 2021 3,343 Contractual payment per ounce in lieu of delivery $ 500 Amount due to PDK at March 31, 2021 $ 1,671,500 Forward gold contract balance associated with 3,343 ounces (966,394 ) Forward gold contract expense for the three months ended March 31, 2021 $ 705,106 Prepaid forward gold contract liability balance at December 31, 2020 $ 13,600,000 Forward gold contract balance associated with 3,343 ounces (966,394 ) Prepaid forward gold contract liability balance at March 31, 2021 $ 12,633,606 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | March 31, December 31, Ore on leach pad $ 5,447,972 $ 6,583,986 Carbon column in process 96,418 133,640 Finished goods 217,299 129,391 Total $ 5,761,689 $ 6,847,017 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | March 31, December 31, 2021 2020 Equipment $ 6,009,676 $ 6,361,808 Furniture and fixtures 6,981 6,981 Electronic and computer equipment 50,587 50,587 Vehicles 315,905 315,905 Land improvements 44,840 44,840 6,427,989 6,780,121 Less accumulated depreciation (3,223,458 ) (3,129,046 ) 3,204,531 3,651,075 Kiewit property facilities 2,497,436 2,497,436 Less accumulated amortization (770,982 ) (758,851 ) 1,726,454 1,738,585 Total $ 4,930,985 $ 5,389,660 |
Mineral Properties and Intere_2
Mineral Properties and Interests (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Mineral Properties and Interests [Abstract] | |
Schedule of mineral properties and interests | March 31, December 31, Kiewit and all other sites $ 3,700,000 $ 3,700,000 JJS property 250,000 250,000 3,950,000 3,950,000 Less accumulated amortization (792,744 ) (770,560 ) 3,157,256 3,179,440 Asset retirement obligation Kiewit Site 725,122 718,289 Kiewit Exploration 28,377 28,377 JJS property 31,016 31,016 Total 784,515 777,682 Less accumulated amortization (175,486 ) (171,254 ) 609,029 606,428 Total $ 3,766,285 $ 3,785,868 |
Notes Payable - Equipment (Tabl
Notes Payable - Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Notes Payable - Equipment [Abstract] | |
Schedule of the equipment notes payable | March 31, December 31, Note payable to Wheeler Machinery, collateralized by a 374 DL Excavator, due in 12 monthly installments of $19,575, beginning June 2020, including interest at 8.5%, with a balloon payment due in June 2021 of $150,164. (1) (2) $ 235,753 $ 304,845 Note payable to ICM Solutions, LLC, collateralized by an HP4 crushing system, due in 10 monthly payments of $22,300, beginning March 2021, including interest at 9%. 215,510 - Note payable to ICM Solutions, LLC, collateralized by 3 grasshopper leg conveyor systems, due in 12 monthly installments of $4,365, beginning April 2020, including interest at 9%, with a balloon payment of $41,696 due in April 2021. (1) 41,393 69,230 Note payable to Wheeler Machinery, collateralized by a used CAT 740 Haul truck (SN2293), originally due in 11 monthly installments of $14,475, beginning May 2019, including interest at 9%, with a balloon payment due in April 2020 of $168,873. (3) - 86,807 Note payable to Epiroc, collateralized by a used Epiroc drill, due in 6 monthly installments of $22,235, beginning October 2019, the balloon amount of $488,317 was refinanced in April 2020, with a new loan in that amount due in 36 monthly payments of $14,679 including interest at 5.2%. 347,081 386,268 Note payable to Wheeler Machinery, collateralized by a used D8T dozer, originally due in 11 monthly installments of $19,125, beginning August 2019, including interest at 9%, with a balloon payment due in July 2020 of $350,281. (1) (2) 279,847 349,761 Note payable to Komatsu Equipment, collateralized by a used PC490 Excavator, due in 11 monthly payments of $10,320, beginning July 2019, including interest at 9%, the balloon amount of $71,372 was refinanced in May 2020 with 1 payment of $28,823 and 12 monthly payments of $1,903 including interest at 4.6%. 5,669 11,275 1,125,253 1,208,186 Current portion (860,885 ) (981,759 ) Long term portion $ 264,368 $ 226,427 Principal payments due are as follows for the twelve months ended: March 31, 2022 $ 860,885 March 31, 2023 264,368 $ 1,125,253 (1) (2) (3) |
Asset Retirement Obligation (Ta
Asset Retirement Obligation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of asset retirement obligations | March 31, March 31, Asset retirement obligation, beginning of period $ 1,233,514 $ 826,637 Obligation incurred: Kiewit properties 6,833 94,347 JJS property - 31,016 Accretion expense 30,487 23,775 Asset retirement obligation, end of period $ 1,270,834 $ 975,775 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of sales of products | Three Months Three Months Concentrate sales: Gold $ 1,748,208 $ 1,594,913 Silver 27,339 15,589 1,775,547 1,610,502 Less: Royalties (74,760 ) (69,962 ) Upside participation payments (260,125 ) (173,989 ) Outside processing charges (69,533 ) (54,471 ) (404,418 ) (298,422 ) Net concentrate sales 1,371,129 1,312,080 Processing income 777,586 - Less: Outside processing charges (16,730 ) - Net processing income 760,856 - Total revenue $ 2,131,985 $ 1,312,080 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies (Textual) | |||
Accumulated deficit | $ (12,836,275) | $ (11,291,811) | |
Net loss | $ (1,544,464) | $ (1,090,190) | |
Outstanding stock options were excluded | 2,400,000 | 2,400,000 | |
Working capital | $ 11,913,276 |
Prepaid Forward Gold Contract_3
Prepaid Forward Gold Contract Liability (Details) | Mar. 31, 2021Installments |
Total Gold Ounces | 47,045 |
December 2020 [Member] | |
Gold Ounces per Month | 655 |
Total Gold Ounces | 655 |
January 2021 to March 2021 [Member] | |
Gold Ounces per Month | 896 |
Total Gold Ounces | 2,688 |
April 2021 to March 2022 [Member] | |
Gold Ounces per Month | 911 |
Total Gold Ounces | 10,932 |
April 2022 to March 2023 [Member] | |
Gold Ounces per Month | 1,396 |
Total Gold Ounces | 16,752 |
April 2023 to December 2023 [Member] | |
Gold Ounces per Month | 1,753 |
Total Gold Ounces | 15,777 |
January 2024 [Member] | |
Gold Ounces per Month | 241 |
Total Gold Ounces | 241 |
Prepaid Forward Gold Contract_4
Prepaid Forward Gold Contract Liability (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Prepaid Forward Gold Contract Liability [Abstract] | ||
Total ounces to be delivered through March 31, 2021 | $ 3,343 | |
Contractual payment per ounce in lieu of delivery | 500 | |
Amount due to PDK at March 31, 2021 | 1,671,500 | |
Forward gold contract balance associated with 3,343 ounces | (966,394) | |
Forward gold contract expense for the three months ended March 31, 2021 | 705,106 | |
Prepaid forward gold contract liability balance at December 31, 2020 | 13,600,000 | |
Forward gold contract balance associated with 3,343 ounces | (966,394) | |
Prepaid forward gold contract liability balance at March 31, 2021 | $ 12,633,606 |
Prepaid Forward Gold Contract_5
Prepaid Forward Gold Contract Liability (Details Textual) - USD ($) | Dec. 02, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Forward Gold Sales Contract Liability (Textual) | ||||
Participation payments | $ 836,484 | $ 576,360 | ||
Common shares | 8,000 | |||
PDK [Member] | ||||
Forward Gold Sales Contract Liability (Textual) | ||||
Purchase agreement, description | The Purchase Agreement contains a royalty provision whereby royalties of 4% are due to PDK on gold and silver recovered from mining operations at the Kiewit site and sold by the Company to a third party. Under the Purchase Agreement, the Company also pays a 5% withholding tax to the state of Utah on the PDK royalty payments. Royalties are payable within 30 days following the end of each fiscal quarter. PDK-related royalties and royalty withholding payable at March 31, 2021 and December 31, 2020 were $296,657 and $221,897, respectively. The March 31, 2021 balance includes royalties payable for the second, third and fourth quarters of 2020 and the first quarter of 2021. | |||
Debt received net amount | $ 13,600,000 | |||
Original purchase agreement | Under the terms of the original Purchase Agreement, as amended, PDK agreed to purchase a total of 47,045 ounces of gold from the Company. | |||
Prepaid forward gold contract liability, description | The Company notified PDK that it would not be able to make the December delivery of gold and elected to use one of the delivery postponement options under the Purchase Agreement, as amended. This provision permits the Company to delay delivery by up to 30 days by delivering the amount of gold due within 30 days, plus interest calculated at the default interest rate, thereby causing the December ounces to be come due in January 2021. At the end of this 30-day extension period the Company was unable to deliver the December payment and the amount became due on January 25, 2021. | A cumulative of 3,343 and 655 ounces, respectively, were scheduled to be delivered to PDK under the terms of the Purchase Agreement. The ounces due but unpaid to PDK at March 31, 2021 have been reflected in current liabilities at the amount calculated based on the Company's option to pay cash in lieu of delivery at $500 per ounce. | A cumulative of 3,343 and 655 ounces, respectively, were scheduled to be delivered to PDK under the terms of the Purchase Agreement. The ounces due but unpaid to PDK at March 31, 2021 have been reflected in current liabilities at the amount calculated based on the Company's option to pay cash in lieu of delivery at $500 per ounce. |
Reclamation Bonds (Details)
Reclamation Bonds (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Reclamation Bonds (Textual) | ||
Surety bond in escrow account | $ 674,000 | $ 674,000 |
Reclamation bonds | $ 947,011 | 758,011 |
Properties escalated from amount | 189,000 | |
Minimum [Member] | ||
Reclamation Bonds (Textual) | ||
Properties escalated from amount | 1,348,000 | |
Maximum [Member] | ||
Reclamation Bonds (Textual) | ||
Properties escalated from amount | $ 1,537,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Ore on leach pad | $ 5,447,972 | $ 6,583,986 |
Carbon column in process | 96,418 | 133,640 |
Finished goods | 217,299 | 129,391 |
Total | $ 5,761,689 | $ 6,847,017 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Inventories (Textual) | ||
Adjustment to inventory | $ 392,820 | $ 204,127 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Summary of property, equipment, and accumulated depreciation | ||
Less accumulated depreciation amortization | $ (770,982) | $ (758,851) |
Property and equipment, Total | 4,930,985 | 5,389,660 |
Property, Plant and Equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 6,427,989 | 6,780,121 |
Less accumulated depreciation amortization | (3,223,458) | (3,129,046) |
Property and equipment, Total | 3,204,531 | 3,651,075 |
Property, Plant and Equipment [Member] | Equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 6,009,676 | 6,361,808 |
Property, Plant and Equipment [Member] | Furniture and fixtures [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 6,981 | 6,981 |
Property, Plant and Equipment [Member] | Electronic and computer equipment [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 50,587 | 50,587 |
Property, Plant and Equipment [Member] | Vehicles [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 315,905 | 315,905 |
Property, Plant and Equipment [Member] | Land Improvements [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 44,840 | 44,840 |
Finite-Lived Intangible Assets [Member] | Kiewit property facilities [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Gross | 2,497,436 | 2,497,436 |
Total [Member] | Kiewit property facilities [Member] | ||
Summary of property, equipment, and accumulated depreciation | ||
Property and equipment, Total | $ 1,726,454 | $ 1,738,585 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property and Equipment (Textual) | ||
Amortization expense | $ 12,131 | $ 28,263 |
Depreciation expense | 218,259 | 203,739 |
Net carrying value of equipment | 290,889 | |
Outstanding note payable | 86,806 | |
Loss on disposal of equipment | (204,083) | $ 1,965 |
HP3 Crushing System [Member] | ||
Property and Equipment (Textual) | ||
Accrued rent payable | 158,000 | |
HP4 Crushing System [Member] | ||
Property and Equipment (Textual) | ||
Accrued rent payable | $ 215,510 |
Mineral Properties and Intere_3
Mineral Properties and Interests (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Mineral Properties and Interests [Abstract] | ||
Kiewit and all other sites | $ 3,700,000 | $ 3,700,000 |
JJS property | 250,000 | 250,000 |
Total | 3,950,000 | 3,950,000 |
Less accumulated amortization | (792,744) | (770,560) |
Total | 3,157,256 | 3,179,440 |
Asset retirement obligation | ||
Kiewit Site | 725,122 | 718,289 |
Kiewit Exploration | 28,377 | 28,377 |
JJS property | 31,016 | 31,016 |
Total | 784,515 | 777,682 |
Less accumulated amortization | (175,486) | (171,254) |
Mineral properties after accumulated depletion | 609,029 | 606,428 |
Total | $ 3,766,285 | $ 3,785,868 |
Mineral Properties and Intere_4
Mineral Properties and Interests (Details Textual) | 3 Months Ended |
Mar. 31, 2021 | |
Mineral Properties and Interests [Abstract] | |
Joint venture agreement, description | The Company is required to pay a 4% net smelter royalty (“NSR”) to PDK on revenues of gold and silver from the Kiewit gold property and the JJS properties. |
Notes Payable - Equipment (Deta
Notes Payable - Equipment (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||
Note payable | $ 1,125,253 | $ 1,208,186 | |
Current portion | (860,885) | (981,759) | |
Long term portion | 264,368 | 226,427 | |
Principal payments due are as follows for the twelve months ended: | |||
March 31, 2022 | 860,885 | ||
March 31, 2023 | 264,368 | ||
Total Principal amount | 1,125,253 | ||
Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | [1],[2] | 235,753 | 304,845 |
Notes Payable One [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | 215,510 | ||
Notes Payable Two [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | [1] | 41,393 | 69,230 |
Notes Payable Three [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | [3] | 86,807 | |
Notes Payable Four [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | 347,081 | 386,268 | |
Notes Payable Five [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | [1],[2] | 279,847 | 349,761 |
Notes Payable Six [Member] | |||
Debt Instrument [Line Items] | |||
Note payable | $ 5,669 | $ 11,275 | |
[1] | The Company was between 1 and 3 payments delinquent in its obligation on this note at March 31, 2021. | ||
[2] | Wheeler CAT has extended the terms of this 12-month amortization, allowing for continued monthly payments of the same amount until other financing becomes available or until the balance has been paid in full, whichever comes first. | ||
[3] | In February 2021, Wheeler CAT requested the return of this equipment because the Company was 5 payments delinquent in its obligation on this note payable. This truck was then purchased from Wheeler CAT by a related party who in February began renting the truck to the Company on a month-to-month rental. See Note 11. This arrangement relieved the Company of any other financial obligation on this note. |
Notes Payable - Equipment (De_2
Notes Payable - Equipment (Details Textual) | 3 Months Ended |
Mar. 31, 2021USD ($)Installments | |
Note payable to Komatsu Equipment [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 12 |
Installments amount | $ 28,823 |
Interest rate percentage | 4.60% |
Balloon payment | $ 1,903 |
Note payable to Epiroc [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 36 |
Installments amount | $ 14,679 |
Interest rate percentage | 5.20% |
Notes Payable [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 12 |
Installments amount | $ 19,575 |
Interest rate percentage | 8.50% |
Maturity date | Jun. 30, 2021 |
Balloon payment | $ 150,164 |
Notes Payable One [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 10 |
Installments amount | $ 22,300 |
Interest rate percentage | 9.00% |
Notes Payable Two [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 12 |
Installments amount | $ 4,365 |
Interest rate percentage | 9.00% |
Maturity date | Apr. 30, 2021 |
Balloon payment | $ 41,696 |
Notes Payable Three [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 11 |
Installments amount | $ 14,475 |
Interest rate percentage | 9.00% |
Maturity date | Apr. 30, 2020 |
Balloon payment | $ 168,873 |
Notes Payable Four [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 6 |
Installments amount | $ 22,235 |
Maturity date | Apr. 30, 2020 |
Balloon payment | $ 488,317 |
Notes Payable Five [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 11 |
Installments amount | $ 19,125 |
Interest rate percentage | 9.00% |
Maturity date | Jul. 31, 2020 |
Balloon payment | $ 350,281 |
Notes Payable Six [Member] | |
Notes Payable - Equipment (Textual) | |
Number of installments | Installments | 11 |
Installments amount | $ 10,320 |
Interest rate percentage | 9.00% |
Maturity date | May 31, 2020 |
Balloon payment | $ 71,372 |
Asset Retirement Obligation (De
Asset Retirement Obligation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Asset retirement obligation, beginning of period | $ 1,233,514 | $ 826,637 |
Obligation incurred: | ||
Kiewit properties | 6,833 | 94,347 |
JJS property | 31,016 | |
Accretion expense | 30,487 | 23,775 |
Asset retirement obligation, end of period | $ 1,270,834 | $ 975,775 |
Asset Retirement Obligation (_2
Asset Retirement Obligation (Details Textual) | 3 Months Ended |
Mar. 31, 2021 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset retirement obligations, description | The asset retirement asset and obligation increased by $6,833 and $125,363, respectively, as a result of a change in the estimated timing of costs and the impact of discounting the costs to present value. |
Risk-free interest rate | 10.00% |
Capital Stock (Details)
Capital Stock (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Dec. 01, 2020 | |
Capital Stock (Textual) | ||
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. | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
RMH Overhead, LLC [Member] | |||
Related Party Transactions (Textual) | |||
Rent expense | $ 4,500 | $ 3,500 | |
accounts payable and accrued expenses | $ 6,000 | $ 3,000 | |
Associated note payable, description | The Company with an associated note payable to Wheeler CAT. See Note 6. Beginning February 1, 2021, the Company began renting this truck from RMH at a rate of $10,000 per month on a month-to-month rental. At March 31, 2021 and December 31, 2020, amounts of $10,000 and nil, respectively, are due to RMH Overhead, LLC for rent of this equipment, and this amount is included in accounts payable and accrued expenses on the balance sheet. | ||
Other Directors [Member] | |||
Related Party Transactions (Textual) | |||
Rent expense | $ 6,000 | ||
Other Director [Member] | |||
Related Party Transactions (Textual) | |||
Rent expense | 5,000 | ||
Director [Member] | |||
Related Party Transactions (Textual) | |||
Accrued compensation | $ 51,000 | $ 34,000 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Gold | $ 1,748,208 | $ 1,594,913 |
Silver | 27,339 | 15,589 |
Total product sales | 1,775,547 | 1,610,502 |
Less: Royalties | (74,760) | (69,962) |
Upside participation payments | (260,125) | (173,989) |
Outside processing charges | (69,533) | (54,471) |
Total | (404,418) | (298,422) |
Net concentrate sales | 1,371,129 | 1,312,080 |
Processing income | 777,586 | |
Less: Outside processing charges | (16,730) | |
Net processing income | 760,856 | |
Total revenue | $ 2,131,985 | $ 1,312,080 |
Revenue (Details Textual)
Revenue (Details Textual) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Revenue | ||
Sales receivable | $ 197,496 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | May 11, 2018 | Mar. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies (Textual) | |||
Finder's agreement, description | The Company entered into 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. | ||
Amount due | $ 35,568 | $ 35,568 | |
Mr. Havenstrite [Member] | |||
Commitments and Contingencies (Textual) | |||
Base annual salary | 144,000 | ||
Accrued compensation | 56,159 | 37,697 | |
Rick Havenstrite [Member] | |||
Commitments and Contingencies (Textual) | |||
Accrued compensation | 37,698 | 26,621 | |
Marianne Havenstrite [Member] | |||
Commitments and Contingencies (Textual) | |||
Accrued compensation | 18,461 | 11,076 | |
Mining Leases [Member] | |||
Commitments and Contingencies (Textual) | |||
Annual claims fees | 155 | ||
Total claims fees | 29,739 | ||
Director [Member] | |||
Commitments and Contingencies (Textual) | |||
Accrued compensation | $ 51,000 | $ 34,000 |