UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________________
FORM 20-F/A
(Amendment No. 1)
_________________________
qREGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12 (g) OF THE SECURITIES EXCHANGE ACT OF 1934
xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2020
qTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
qSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission File Number 001-32500
TANZANIAN GOLD CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
ALBERTA, CANADA
(Jurisdiction of Incorporation or Organization)
#202, 5626 Larch Street,
Vancouver, British Columbia
Canada V6M 4E1
(Address of Principal Executive Offices)
Stephen Mullowney
Chief Executive Officer
Tanzanian Gold Corporation
#202, 5626 Larch Street,
Vancouver, British Columbia
Canada V6M 4E1
Telephone: 844-364-1830
Fax: 860.799.0350
Email: s.mullowney@tangoldcorp.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Common Shares, without Par Value |
| NYSE American |
(Title of Class) |
| Name of Each Exchange on Which Registered |
Securities registered or to be registered pursuant to Section 12(g) of the Act: NONE
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 199,975,122 (as of August 31, 2020).
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 2.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or emerging growth company. See definition of “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Emerging Growth Company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Company has elected to follow.
| Item 17 ☐ | Item 18 ☐ |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐Yes ☐ No
Tanzanian Gold Corporation (the “Company”) is filing this Amendment No. 1 to Form 20-F/A (“Amendment”) to its annual report on Form 20-F for the year ended August 31, 2020 (“Form 20-F”), as filed with the Securities and Exchange Commission (“SEC”) on December 2, 2020 (“Original Filing Date”) to respond to certain comments raise by the British Columbia Securities Commission during their review of the Company’s Annual Information Form. This Amendment is amending Item 4 of the Form 20-F to clarify certain cut-off grade for mineral resources and removal of certain historical estimates; Item 6 to clarify certain information regarding directors; and Item 19 Exhibits. This Amendment should be read in conjunction with the Form 20-F, speaks as of the Original Filing Date, does not reflect events that may have occurred subsequent to the Original Filing Date, and does not modify or update any disclosure made in the Form 20-F unless otherwise amended in this Amendment.
Except for Items 4, 6, and 19, this Amendment does not amend or restate the Original Filing, nor does it modify or update those disclosures affected by subsequent events or discoveries.
Cautionary Note to U.S. Investors Concerning Estimates of Mineral Resources
As an Alberta corporation, Tanzanian Gold Corporation (the “Company”) is subject to certain rules and regulations issued by Canadian Securities Administrators. The Company files this Annual Report on Form 20-F as its Annual Information Form (“AIF”) with the British Columbia, Alberta and Ontario Securities Commissions via the System for Electronic Document Analysis and Retrieval (“SEDAR”). Under the filing requirements for an AIF, the Company is required to provide detailed information regarding its properties including mineralization, drilling, sampling and analysis, security of samples, and mineral resource and mineral reserve estimates, if any. Further, the Company may describe its properties utilizing terminology such as “Proven Mineral Reserve” or “Probable Mineral Reserve” or “Measured Mineral Resources”, “Indicated Mineral Resources” and “Inferred Mineral Resources” that are permitted by Canadian securities regulations.
U.S. investors are cautioned not to assume that any part of the mineral deposits, if any, in the “Proven Mineral Reserve” or “Probable Mineral Reserve” or “Measured Mineral Resources”, “Indicated Mineral Resources” and “Inferred Mineral Resources” categories will ever be converted into reserves. Further, these terms are not defined terms under SEC Industry Guide 7 and are not permitted to be used in reports and registration statements filed with the United States Securities and Exchange Commission (“SEC”). The definitions of proven and probable reserves used in NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7, as interpreted by the staff of the SEC, mineralization may not be classified as a “reserve” for United States reporting purposes unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC guidelines. In addition, NI 43-101 permits disclosure of “contained ounces” of mineralization. In contrast, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures.
United States investors are cautioned not to assume that any part or all of the mineral deposits identified as an “indicated mineral resource,” “measured mineral resource” or “inferred mineral resource” will ever be converted to reserves as defined in SEC Industry Guide 7. Further, “inferred mineral resources” have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities legislation, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies. U.S. investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.
On October 31, 2018, the United States Securities and Exchange Commission adopted Section 1300 of Regulation S-K (“Regulation SK-1300”) to modernize the property disclosure requirements for mining registrants, and related guidance, under the Securities Act of 1933 and the Securities Exchange Act of 1934. All registrants are required to comply with Regulation SK-1300 for fiscal years ending after January 1, 2021. Accordingly, the Company must comply with Regulation SK-1300 for its fiscal year ending August 31, 2021, and thereafter. Regulation SK-1300 uses the Committee for Mineral Reserves International Reporting Standards (“CRIRSCO”) based classification scheme for mineral resources and mineral reserves, that includes definitions for inferred, indicated, and measured mineral resources. Upon the implementation of Regulation SK-1300 by the Company, the Company will no longer utilized Industry Guide 7.
For clarification, the Company has no properties that contain “Proven (Measured) Reserves” or “Probable (Indicated) Reserves” as defined by SEC securities regulations.
Currency
All references to dollar amounts are expressed in the currency of Canada, unless otherwise specifically stated.
Foreign Private Issuer Filings
As a foreign private issuer registered under section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company is subject to section 13 of the Exchange Act, and is required to file an Annual Report on Form 20-F and Reports of Foreign Private Issuer on Form 6-K with the SEC. However, the Company is exempt from the proxy rules under section 14 of the Exchange Act, and the short-swing profit and other rules regarding disclosures of directors, officers and principal stockholders under section 16 of the Exchange Act.
Item 4.Information on the Company
A.History and Development of the Company
The Company was originally incorporated under the name “424547 Alberta Ltd.” in the Province of Alberta on July 5, 1990, under the Business Corporations Act (Alberta). The name was changed to “Tan Range Exploration Corporation” on August 13, 1991. The name of the Company was again changed to “Tanzanian Royalty Exploration Corporation” on February 28, 2006 and to Tanzanian Gold Corporation on April 17, 2019.
The Company is also registered in the Province of British Columbia as an extra-provincial company under the Business Corporations Act (British Columbia).
The principal executive office of the Company is located at #202, 5626 Larch Street, Vancouver, BC V6M 4E1, and its telephone number is (844) 364-1830. The Company’s internet address is www.tangoldcorp.com.
For the year ended August 31, 2020, the Company reported a net loss of $16,221,757.
In connection with the Company’s disclosure of mineral resources/mineral reserves and the cut-off grade associated with each mineral resource/reserve, it has made certain assumptions for mineral pricing and cost associated with each cut-off grade to determine the reasonable prospects for economic extraction as discussed below.
During fiscal 2020, the Company focused on the Buckreef Project.
During fiscal 2020, the Company focused on the Buckreef Project.
During the 1st quarter period of 2020 (Sep 2019-Nov 2019), the Company continued its focus on resource upgrade drilling as follows:
·Continued with Phase 2 resource upgrade Diamond Core (DD) drilling program. Some of the deeper diamond core holes were first pre-collared with RC.
During the reporting period, a total 7,448.57m split as 4,221m (RC) and 3,227.57m (diamond core) was drilled. Most of the diamond core holes were initially pre-collared with RC as part of a cost saving and time saving measure as detailed below.
Reverse Circulation (RC) Drilling: Buckreef Main & North
RC drill-holes with a combined total metreage of 1,549m all drilled by Coreworthy mainly as RC pre-collaring was completed during the reporting period.
Reverse Circulation (RC) Drilling: Buckreef South
RC drill-holes with a combined total metreage of 2,672m all drilled by Coreworthy were drilled to probe mainly for the down-dip extension of the partially mined out ore zones below the South pit.
Diamond Core (DD) Drilling
DD drill-holes with a combined total metreage of 3,227.57m (all done by Coreworthy) were completed during the reporting period. The core drilling was targeting down-dip extensions of the Buckreef Main and Buckreef North sections of the deposit.
Drilling Assay Results
During the reporting period, assays results received from the drilling program for the three main sections that make up the Buckreef deposit returned encouraging results that included significant intercepts as follows:
Buckreef North
ØL19.5_1 (BMDD221): 3m@1.22g/t Au from 409m including 1m@2.39g/t Au from 409m; 1m@8.2g/t Au from 416m; 30.7m@5.52g/t Au from 420m including 6m@15.64g/t from 482m & 4m@6.55g/t Au from 475m and 7m@4.60g/t Au from 496m including 3m@9.17g/t Au from 500m.
ØL25_1 (BMRCD298): 3.99m@3.0g/t Au from 425m; 9m@0.47g/t Au from 468m; 2m@3.11g/t Au from 506m, including 1m@6.08g/t Au from 506m; 7m@0.56g/t Au from 533m; 57m@1.62g/t from 634m, including 2m@3.04g/t
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Au from 641m, 3m@2.32g/t Au from 650m, 6m@1.96g/t Au from 653m, 2m@6.94g/t Au from 662, 7m@3.99g/t Au from668m, 2m@4.39g/t Au from 679m and 4m@1.59g/t Au from 687m.
Grade Control (RC) Drilling
·Planning of a 3-phase grade control drilling program covering the outline of the new oxide ore starter pit was completed. Entire program comprised ~12,500m.
·Phase 1 drilling program covered the southern section of the pit and will comprise 3,325m from 133 GC holes @ 25m depth max. Actual drilling will commence in December 2019.
Resource Drilling: Buckreef Main & North Prospects
Grade Control Drilling: Buckreef Main (Oxide Ore Starter Pit)
·Completed Phases 1 & 2 grade control RC drilling covering the southern and central parts of the planned oxide ore starter pit on the Buckreef Main prospect.
·A total metreage of 10,640m was drilled during the reporting period. Drill-holes were on 5m spacing along drill fences set 10m apart. Average drilling drilling was ~25-30m and holes drilled just to intersect bedrock.
·Modelling of the mineralized zones down to bedrock is in progress and will be used to refine oxide ore starter pit mining schedule.
Diamond Core (DD) Drilling: Metallurgical Test-work
·Commenced and completed three (3) Diamond Core (DD) drill-holes for sulphide ore metallurgical test-work. The drill-holes targeted the three main contiguous zones that make up the deposit.
·A total metreage of 584.70m was drilled during the reporting period.
·The mineralized portions of the drill-core will be subsequently exported to SGS Lakefield in Canada for relevant metallurgical test-work.
Diamond Core (DD) Drilling: Deep Drilling (U/G Potential)
·Commenced with Phase 3 Diamond Core (DD) deep drilling program targeting deeper levels of the mineralization for underground potential studies. These deep diamond core holes are first pre-collared with RC down to depths ranging from 150-200m.
·A total metreage of 2,520.18m was drilled during the reporting period. The core drilling was targeting down-dip extensions of the Buckreef Main and Buckreef North sections of the deposit.
Buckreef North: L26_2 (BMRCD308) returned highlights of:
Ø50m@1.8g/t Au from 315m to 365m with highlights of 7m@3.9g/t Au from 319m, 13.4m@3.4g/t Au from 617.3m, 8m@4.9g/t Au from 621m incl. 1@6.3g/t Au at 622m &1m@6.1g/t Au at 624m.
The results confirm that the Northeast Extension is still open along strike. This last hole in Phase II extended the wide and robust mineralized shear zone in the Northeast Extension by 300m along strike.
Buckreef Main: L19_1 (BMRCD309) returned highlights of:
Ø48m@1.5 g/t Au starting at 35m, including 4m@2.5 g/t Au at 47m, 16m@3.7 g/t Au at 67 with 1m@16 g/t Au at 68m, 5m@6.6g/t Au at 78m, including 1m@16.8 g/t Au at 79m & 13.4m@3.4 g/t Au from 617.3m incl. 8m@4.9 g/t Au from 621m, 1m@6.3 g/t Au at 622m & 1m@6.1 g/t Au at 624m.
The results confirm that the down-dip extension of a wide and robust mineralized shear to at least 400m below the open pit bottom as defined in the June 2018 PFS report.
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During the 3rd quarter period of 2020 (Mar 2020-May 2020), a total 6,700.27m split as 3,711m (grade control RC), 647m RC pre-collar and 2,342.27m (diamond core). All the diamond core holes were initially pre-collared with RC as part of a cost saving and time saving measure. Detailed summaries of the work are as per each heading below.
Grade Control Drilling: Buckreef Main (Oxide Ore Starter Pit)
·Commenced Phase 3 grade control RC drilling extending north of the planned starter pit on the Buckreef Main prospect.
·A total metreage of 3,711m was drilled during the reporting period. Drill-holes were on 5m spacing along drill fences set 10m apart. Average drilling was ~25-30m and holes drilled just to intersect bedrock.
·Modelling of the mineralized zones down to bedrock is in progress and will be used to refine oxide ore starter pit mining schedule.
Diamond Core (DD) Drilling: Deep Drilling (U/G Potential)
·Continued with Phase 3 Diamond Core (DD) deep drilling program targeting deeper levels of the mineralization for underground potential studies. These deep diamond core holes are first pre-collared with RC down to depths ranging from 150-200m.
·A combined total metreage of 2,989.27m was drilled during the reporting period. The core drilling was targeting down-dip extensions of the Buckreef Main and Buckreef North sections of the deposit.
During the reporting period, published assays results received from the drilling program for two of the three main sections that make up the Buckreef deposit returned encouraging results that included significant intercepts as follows:
Buckreef North:
L19_1 (BMRCD309) returned highlights of 2m@0.47g/t Au from 585m, 3m@4.69g/t Au from 620m; 6m@4.58g/t Au from 623m, and 1.4m@1.17g/t Au from 629m. L19_2 (BMRCD310) returned highlights of 2m@1.18g/t Au from 658.63m; 0.96m@0.85g/t Au from 685.30m;0.5m@0.66g/t Au from 714m; 3.75m@1.94g/t Au from 809m; 0.58m@1.53g/t Au from 817.50m and 1m@0.82g/t Au from 880m.
The results confirm that the Northeast Extension is still open along strike though the gold grades are highly erratic at this stage. The Buckreef Main zone returned wide zones of low grade mineralization in the assays received during that reporting period.
Other major operational activities during the 3rd quarter included:
ØAwarding tender for a professional contract mining services on the proposed oxide ore starter pit to FEMA Builders Pvt Ltd.
ØAppointed Nesch Mintech Company, a Mwanza based company to revamping the defunct Carbon-In-Column (CIC) plant into functional 5tph metallurgical test-work pilot Carbon-In-Leach (CIL) process plant.
ØEngaged an in-house mining crew to supervise and direct the mining activities by consultant firm, FEMA.
ØEngaged an in-house process plant operators crew to directly run the 5tph CIL plant.
ØTopsoil stripping and waste rock stripping went well despite disruptions from the rains. 12,740 tonnes of topsoil and waste material was mined during the month.
ØThe start-up TSF design was completed and subsequently incorporated into the Environmental Management Audit Management Report for 2020 that was filed with NEMC, Mwanza branch.
ØConstructed and equipped the start-up Tailings Storage Facility (TSF1) for operations of the 5tph process plant. The TSF was subsequently registered with and certified by the Ministry of Water and Irrigation (MOWI) and Ministry of Minerals (MOM).
ØAppointed and engaged an Approved Professional Person (APP) to oversee TSF design, construction and monitoring as per Ministry of Water and Irrigation regulatory requirements.
ØCommenced mining activities on the starter pit. 30,301t of waste were mined and hauled to the topsoil dump and waste dump. 1,632t @ 4g/t Au (high-grade ore) and 873t @ 0.65g/t Au (low-grade ore) Au were mined and stockpiled on the ROMPAD.
ØThe company also successfully dry commissioned the revamped 5tph CIL pilot process plant during the quarter.
During the 4th quarter period of 2020 (June 2020-Aug 2020), the major operational activities mainly centered on continuation of deep level resource definition drilling, oxide ore starter pit mine production, 5tph pilot plant mineral processing and metallurgical test-work and construction of oxide ore Tailings Storage Facility (TSF 1) at the Buckreef Project as briefly itemized below.
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Diamond core) were drilled during the reporting period. A total of 799 half-core samples were subsequently submitted for metallurgical analysis for Au and selected base metal content.
·Through the use of both internal and external geology experts, the Company commenced a litho-structural review of existing regional and local geophysical, geochemical and geological data to identify around-the-mine exploration targets with a view to commence preliminary wide-spaced exploration drilling in the next quarter.
·The Company continued waste stripping and oxide/transition ore mining on starter pit on the Buckreef Main prospect. A total of 119,704t of waste material (topsoil, oxidized rock and saprolite) was mined during the quarter partly as a pre-stripping strategy and partly as exposing some oxide ore for the 5tph pilot plant operations.
ØHigh Grade Ore: 7,606.47t @3.54g/t Au (866.97 Ozs),
ØLow Grade Ore: 6,569.06t @ 0.95g/t Au (196.88 Ozs) &
ØMineralized Waste: 622t @ 0.22g/t Au (4Ozs).
·The 5tph Carbon-in-Leach (CIL) process plant was commissioned on the 17th June 2020, the day the Company received the permit to commence using its initial TSF for the small oxide plant.
·As of 31st August 2020, gold Dore totaling 8,832.8g with an average purity of 90.7% purity (257.7 Ozs of fine Au) was smelted and sold during the reporting quarter. The gold-in-circuit (excluding smelted Dore) was estimated to be 62.4 Ozs (the CIL closing inventory).
·Total ROMPAD stockpile balance (after plant feed reconciliation) of oxide ore materials from the starter pit as of 31st August 2020 stands at 10,937.99t @ 1.93g/t Au (631.03 Ozs) disposed as follows:
ØHigh Grade Ore: 4,119.32t @3.56g/t Au (471.48 Ozs),
ØLow Grade Ore: 6,738.67t @ 0.94 g/t Au (203.43 Ozs) &
ØMineralized Waste: 622t @ 0.22g/t Au (4Ozs).
·The Company applied for and was granted the Buckreef Chemical usage permit by the Government Laboratory Agency (Chief Government Chemist) in Mwanza.
·As part of its preparations to conduct an evaluation exercise for compensation of villagers whose property falls within the extended SML outline and also as an environmental baseline establishment, the company also conducted an aerial drone survey of the entire SML area covering 16.1km2 during the quarter.
The Company is a mineral resource company with exploration stage properties, which engages in the acquisition of interests in and the exploration of natural resource properties in the future and the possible development of those properties where warranted. The Company commits its own resources to the initial evaluation of mineral properties and in select situations, if and when warranted, the Company enters into joint venture agreements with other corporations to further the exploration of such properties for the purpose of earning income from the sale of gold and other mined materials. At present, the Company’s natural resource activities do not generate any income.
The Company’s main area of interest has been in the exploration and development of gold properties, with a primary focus on exploring for and developing gold properties in Tanzania. Tanzania remains the focus of the Company’s exploration and development activities.
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In the Company’s view, its use of a joint venture in addition to its planned direct exploration and development offers investors leverage to precious and base metal prices with lower risk and shareholder dilution. Future production royalties from any producing properties discovered by joint venture partners would provide the Company with a direct interest in the mine’s cash flow, with exposure to any benefits from new discoveries and production growth, but without the capital obligations, and environmental and social liabilities, associated with direct ownership.
Exploration Activities
The bulk of the properties excluding the Buckreef Gold Project in which the Company holds an interest are in the exploration and preliminary economic assessment stages of mining. Mineral exploration involves a high degree of risk and few properties which are explored are ultimately developed into producing mines. There is no assurance that the Company’s mineral exploration activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Company’s operations will be in part directly related to the cost and success of its exploration programs, which may be affected by a number of factors beyond the control of the Company.
By way of general description of the Company’s operating activities, the Company’s business operations involve using known or published geological and geophysical data to locate mineral resource properties meriting further exploration or development. Once identified, the Company must stake and apply for registration to title of the mineral properties, or negotiate the acquisition of such properties from any third party owners. Upon registration or acquisition of title, the Company then designs a program of preliminary exploration which can involve grid mapping, geophysical and magnetic surveying, geochemical surveying, geological mapping and sampling, grab sampling, assaying and other forms of prospecting as circumstances may require. Based on the preliminary results, mineral properties are ranked according to merit for further exploration work, which may involve further mapping, more detailed geophysical and geochemical surveying, and trenching to identify potential drill targets. If mineralization is indicated which merits further investigation, drill targets are selected and a preliminary RC drilling program commences for underground sampling and assaying. If the results are positive, then a diamond drilling program will commence mainly to check, verify and confirm the mineralization potential of the prospect.
Based on the drilling program results, the Company will develop models of the underlying geology and mineralized zones for more detailed testing. After further drilling, some mineralized zones will then be modeled using relevant geological software and ultimately be classified as inferred or indicated mineral resources. With sufficient infill drilling, these inferred or indicated mineral resources can be confirmed as a measured mineral resource, upon which a pre-feasibility study can be prepared by a qualified, independent mining engineer or geologist to determine whether mining activities are economic in the circumstances of the particular property. A pre-feasibility study must be completed under the requirements of NI 43-101 in Canada in order for mineral reserves to be designated and to confirm the appropriate mining and mineral processing method based on the geological and metallurgical studies of the ore. A final or bankable feasibility study must be completed for the designation of reserves under the SEC’s Industry Guide 7. If the bankable feasibility study is favorable, the Company can then use the feasibility study to seek out the necessary financing from a merchant banker or other financial institution for mine construction and development. The feasibility report will also be used to apply for conversion of the Prospecting License hosting the deposit into a Mining License or Special Mining License with the Ministry of Mines of Tanzania.
The map below shows the regional location of the Company’s primary properties with historical and/or a current published mineral resource estimate in Tanzania.
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The map below shows the location of mainstay prospects that make up the Company’s Buckreef Project with a published Mineral resource and Mineral reserve estimate in Geita District, Tanzania
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Highlights for the year ended August 31, 2020
Financial:
·On July 22, 2020, the Company entered into a securities purchase agreement with two institutional accredited investors to issue up to US$14.0 million in convertible debentures consisting of US$7.0 million in Tranche A Convertible Debentures and up to US$7.0 million in Tranche B Convertible Debentures.
·The Company settled US$3,927,813 of principal amount of outstanding gold loans through the issuance of 14,840,305 shares.
·The Company settled US$5,095,662 of principal amount of outstanding convertible loans through the issuance of 14,427,112 shares.
·During the nine month period ended May 31, 2020, the Company received convertible loans in the amount of $5,612,589 (US$4,144,493) and gold bullion loans in the amount of $292,241 (US$203,750), with a one year term with a right to extend by one additional year by mutual consent, carrying an 8% interest rate payable quarterly. At the sole discretion of the lender, the bullion loans may be repaid in cash or common shares of the Company or gold in specified form at the option of the lender. The convertible loans may be repaid in cash or common shares of the Company at the option of the lender. The convertible loans and gold loans may be converted into common shares of the Company at the sole discretion of the lender at an exercise price of US$0.3417 - US$0.598 per share. Interest is payable quarterly, either in cash or in shares at the option of the lender at a price of US$0.3417 - US$0.598 per share.
·During the nine month period ended May 31, 2020, the Company settled $224,513 (US$169,000) of principal amount of outstanding loans through the issuance of 504,419 shares.
·During the nine month period ended May 31, 2020, the Company settled $636,582 (US$475,000) of principal amount of outstanding loans through the issuance of 1,487,558 shares. The Company also repaid $283,393 (USD$200,000) in cash.
·On December 18, 2019, the Company announced that it completed the sale of 6,695,652 common shares raising US$3,850,000.
Buckreef Project: Mine Development and Operations
The Buckreef Project is in the Geita District of the Geita Region south of Lake Victoria, some 110km southwest of the city of Mwanza. The project area can be accessed by ferry across Smiths Sound, via tarred national road and thereafter via unpaved but well-maintained gravel roads. The Buckreef Project comprises five prospects namely Buckreef, Bingwa, Tembo, Eastern Porphyry and Buziba. The Buckreef Project encompasses three ore zones namely Buckreef South, Buckreef Main and Buckreef North. The Buckreef Project is fully-licensed for mining and extraction of gold.
During the fiscal year ended 31st August 2020, the Company focused all its work programs on the Buckreef Gold project covering four main areas viz human resources augmentation, resource definition drilling (including underground potential), oxide ore mining and pilot CIL process plant construction, commissioning and operation for oxide ore metallurgical testwork and limited bullion production. Some details of actual work done are briefly summarized below.
Human Resources
·The Company increased its workforce to boost the mining and process plant operator crews during the year ended 31st August 2020.
· The Company engaged a mining contractor firm headed by a reputable Mining Engineer with international exposure and experience on open pit start-up mining.
During the reporting period, a total 29,868.02m split as 4,868m (RC), 14,351M (Grade control RC) and 10,649.02m (diamond core including 3 metallurgical test-work drill holes) was drilled. Most of the diamond core holes were initially pre-collared with RC as part of a cost saving and time saving measure. The grade control drilling covered the planned oxide ore starter pit down to a depth of ~30m.
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Mining Buckreef South Pilot Pit
The following cumulative work on mining and process plant operations was completed up to August 31, 2020:
·No further work was conducted on the Buckreef South Pilot pit
Resource Drilling on the Buckreef Main Pit Area
The Company commenced its Phase 3 deep drilling program targeting down dip and strike extensions of the Buckreef Main zone at elevations up to 700m below the current pit bottom. In addition, some infill resource upgrade RC drill-holes were drilled as a follow up to recommendations to upgrade mineral resources. The following cumulative work on resource definition and exploration was completed up to August 31, 2020:
·4,868m RC drilling mainly as pre-collars to deep diamond core drill-holes;
·14,351m Grade control RC drilling covering the planned oxide ore starter pit down to a depth of ~30m ) and
·10,649.02m Diamond core drilling including 3 metallurgical test-work drill holes.
Mineral Resource and Mineral Reserve Estimates
The Buckreef prospect shear zone hosted mineral resources (Measured & Indicated) at a cut-off grade of 0.4g/t as updated now stands at 35.88Mt @ 1.77g/t with ~2.04Moz of contained gold, up from a 2018 estimate of 21.99Mt @ 1.54g/t with 1.09Moz of contained gold. The combined total mineral resources (Measured & Indicated) for the Buckreef Project as updated now stands at 38.57Mt @ 1.77g/t with ~2.19Moz of contained gold.
The Company did not conduct any mineral reserve upgrade during the reporting period. The Buckreef Project Mineral Reserve estimate is set out in the Updated Mineral Resource Estimate for the Buckreef Gold Mine Project, Tanzanian, East Africa, dated effective May 15, 2020 and filed on www.sedar.com on June 23.2020.
The Buckreef Project pit-optimized mineral reserves as at August 31, 2020, are as summarized in the table below:
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Mining
·Mining in the oxide ore starter pit commenced during the reporting period. Initial mining plan aimed at stripping the topsoil and waste material in the central section of the new pit to expose medium to high grade ores for immediate processing by the 5tph CIL process plant to achieve a first gold pour by end of June 2020.
·The mining stats for the reporting period are as follows:
§Topsoil and Waste rock: 162,745t
§High-grade Oxide Ore: 9,238.47t @3.62g/t Au &
§Low-grade oxide Ore: 7,442.06t @0.91g/t Au &
§Mineralized Waste: 627t @0.22g/t Au
Pilot Process Plant Operations
Plant feed from the ROMPAD to crusher totaled 4,049.6 @ 3.14/t Au (582.1 Ozs) while total ore milled was 4,019.6t (dry) with average blended grade of 3.14g/t Au at an average throughput rate of 2.56t/h with a mill operational utilization was 70.3% for the reporting period to 31st August 2020.
·As of 31st August 2020, gold Dore totaling 8,832.8g with an average purity of 90.7% purity (257.7 Ozs of fine Au) was smelted and sold during the reporting quarter. The gold-in-circuit (excluding smelted Dore) was estimated to be 62.4 Ozs (the CIL closing inventory).
ØHigh Grade Ore: 4,119.32t @3.56g/t Au (471.48 Ozs),
ØLow Grade Ore: 6,738.67t @ 0.94 g/t Au (203.43 Ozs) &
ØMineralized Waste: 622t @ 0.22g/t Au (4Ozs).
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·The historical ore stockpile material mined from the South as of 31st August 2020 stands at 119,674.66t @ 1.919/t Au disposed as follows:
ØHistorical Ore (Pad 1, 2 & 3): 43,114t @0.58g/t Au (806Oz after re-assaying),
ØHistorical Medium Grade Ore: 72,315.66 @1.39g/t Au (3,237.96Oz) &
ØCrusher Pad#(D1):4,245t @ 3.86g/t Au (526.62 Oz).
The drop in grade is attributed to in-situ leaching with remnant cyanide over a 4 year period and the pregnant solution was never monitored but diluted with rain water and subsequently lost to the environment over the 4 year period as well
Exploration
·No exploration work was conducted in any other license holdings during the reporting period.
Brief description of the work done and license holdings grouped by project names is summarized in the section below.
In light of the Company’s focus on the Buckreef Project, there has been no fieldwork conducted on the Buziba Project during the past fiscal year and the project is currently in the care and maintenance stage.
The Buziba Project comprises a single prospecting license (PL6545/2010) located some 25km east of the Buckreef Project in the Geita district. The project area can be accessed from Buckreef via unpaved and poorly maintained gravel roads. The Buziba Project is a pre-development stage medium grade gold deposit and principal host lithologies include basalt, co-magmatic dolerite and a suite of intrusive quartz-albite felsic porphyries.
During the reporting period, no fieldwork was conducted on the Buziba Project and such property is currently in the care and maintenance phase.
License Holding and Status (Buckreef and Buziba)
At the end of Q4 2020, the Buckreef Project technically comprises one PL and one SML covering a surface area of 21.64km2. However, due to ongoing discussions for the continuance of the original JV land-holdings, the 12 other PLs whose 8-year tenure expired are still safeguarded on the Ministry of Minerals License Portal record and the license status and statutory liabilities for the Buckreef project is as shown in the table below:
Buckreef Project PL Portfolio Status – License Status and Liabilities as of August 31, 2020
·The Company, through its JV partner, Stamico, is still in the process of negotiating with the Mining Commission to issue new Licenses to preserve the PL holdings for the JV agreement.
·The Company still has not received any information back from the Government on its request to review the proposed land compensation for villagers affected by the expanded Buckreef Special Mining Lease area.
Itetemia Property
During the reporting period, no fieldwork was conducted in the project area.
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Kigosi Project
During the reporting period, no fieldwork was conducted in the project area.
Luhala Project
During the reporting period, no fieldwork was conducted in the project area.
Exploration Projects Updates: Other PLs (JV/Discard)
No fieldwork was conducted in any of the licenses earmarked for discarding during the reporting period.
License Relinquishment
The practice within the Tanzanian Mining industry during the previous years was generally accepted that companies would half the size of their active license on 1st renewal period (at the end of the first 4 years of tenure) and 2nd renewal period (at the end of the following 3 years of tenure) periods where the company would retain half of the PL and relinquish the other half to the government but subsequently submit a new application covering the relinquished half to secure ground.
Following the gazetting of the new Mining Regulations (2017) and strict adherence to the statutory directives in the Mining Act of 2010, the relinquished half of the license area now reverts back to the government and has a 4-month grace period during which no applications are entertained by the Ministry of Mines. At the end of the 4-month period, other companies can apply for the leases and it is up to the government to award the licenses in order to maximize exploration activity by more juniors. The previous license holder is not automatically guaranteed to be awarded the relinquished license.
The total number of licenses that expired and/or forfeited to the state during the reporting period amounted to 104 PLs and the liabilities by both project and company name are as summarized in the tables below.
Table 2: TanGold Corporation Gold Projects Forfeited PL Portfolio Status – Liabilities as of 31st Aug 2020
License Liabilities Summary
·In order to maintain the existing site of mining and exploration licenses, the Company is required to pay annual license fees for both active licenses and any other licenses that have since forfeited with a debt. The Company has paid certain of its annual license fees for all active licenses except for some forfeited or lapsed licenses since October 2014.
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·Based on the new regulations that have been enacted by the Mining Commission, some of the Company’s forfeited licenses still carry an outstanding debt (incurred before and by the time of the forfeiture). The Company has cleared off all outstanding debts for licenses (current and forfeited) for Tanzam2000 as per the payment schedule agreed with the Ministry of Mines.
·The list of Company’s license holdings portfolio now comprises 31 Active & 101 Forfeited licenses. The Active licenses are made up as follows: Tancan-2, Buckreef-14 & Tanzam2000-15 split into three main categories as Retain (20), JV (1) & Discard (10).
·Cumulative annual fees liabilities for the portfolio now stand at US$294,294.75 broken as follows: Active PLs 20/21 upcoming annual rents (US$42,282) & Forfeited PLs (US$252,012.75) inclusive of penalty fees liability as of 31st August 2020.
·The Itetemia ML and Kigosi ML applications were arbitrarily cancelled by the Mining Commission without any formal communications on the outcome of the Company’s original applications submitted in November 2015 and due to a miscommunication on default letter sent to the wrong address respectively. The two court cases to resolve these issues are still being reviewed through our attorneys at the High Court of Tanzania.
Table 3: TRX All Project PL Portfolio Status – License Status and Liabilities as of 31st August 2020
·Due to some attempted invasion in and around the Buckreef Project, the Company has requested and been granted the presence of Tanzanian police at the camp site and is negotiating a Memorandum of Understanding with the Tanzanian Inspector General Police, to have a permanent security detail from the Police force as we go forward with the project development.
Exploration
The Company’s principal exploration properties are currently all located in the United Republic of Tanzania, Africa. The government of Tanzania is a stable, multi-party democracy. Mineral exploration in Tanzania is affected by local climatic, political, and economic conditions. The Company’s properties have year round access, although seasonal summer rains from December to March may result in flooding in low lying areas, which are dominated by mbuga (black organic rich laustrine flood soils). Further, most lowland areas are under active cultivation for corn, rice, beans and mixed crops by subsistence farmers. As a result, the area has been deforested by local agricultural practices for many years. The seasonal rains and deforested areas can create a muddy bog in some areas, which can make access more difficult, and could impede or even prevent the transport of heavy equipment to the Company’s mineral properties at certain times of the year between December and March.
Competition
The mining industry in which the Company is engaged is in general, highly competitive. Competitors include well-capitalized mining companies, independent mining companies and other companies having financial and other resources far greater than those of the Company. The Company competes with other mining companies in connection with the acquisition of gold and other precious metal properties. In general, properties with a higher grade of recoverable mineral and/or which are more readily mineable afford the owners a competitive advantage in that the cost of production of the final mineral product is lower. Thus, a degree of competition exists between those engaged in the mining industry to acquire the most valuable properties. As a result, the Company may eventually be unable to acquire attractive gold mining properties.
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Dependence on Suppliers
The Company is not dependent upon a single or few suppliers for its operations.
As of November 1, 2010, the Tanzania Mining Act, 2010 (“Mining Act, 2010”) came into effect. The Tanzania Ministry of Energy and Minerals announced changes to fees effective July 27, 2012.
The Company’s mineral interests in Tanzania are initially held under prospecting licenses granted pursuant to the Mining Act, 2010 for a period of up to four years, and are renewable two times for a period of up to two years each. The Company must pay annual rental fees for its prospecting licenses based on the total area of the license measured in square kilometres, multiplied by US$100/sq.km for the initial period, $150/sq.km for the first renewal and $200/sq.km for the second renewal. There is also an initial one-time “preparation fee” of US$500 per license. Upon renewal, the Company must pay a renewal fee of US$300 per license. Renewals of its prospecting licenses can take many months and even years to process by the regulatory authority in Tanzania.
All prospecting licenses in Tanzania also require the holder to expend funds which are set out in the Mining Act, 2010. At each renewal, at least 50% of the Company’s licensed area must be relinquished on prospecting licences in excess of 20 square kilometres. On relinquishing the ground, the area is automatically returned to the Mining Commissioner’s jurisdiction for a period of 4 months after which it will be declared vacant or otherwise by the Commissioner. If the Company still has an interest in the relinquished one-half portion, it must then file a new application in competition with other interested companies for the relinquished portion 4 months after the relinquishment date. If more than one application is lodged on the same day at the Mining Commissioner’s office, then the Commissioner may award the ground by tender. There is no guarantee on the timing for processing the new application and whether it will be successful.
The Company must hold a mining license or special mining licence to carry on mining activities. Pursuant to the Mining Act, 2010 a mining license is granted for a maximum initial period of 10 years. It is renewable 6 months prior to expiry for a period the applicant will state but not exceeding 10 years. A special mining licence is granted for the estimated life of the ore body indicated in the feasibility study report, or such period as the applicant may request whichever period is shorter. It is renewable for a period not exceeding the estimated life of the remaining ore body.
Prospecting and special mining and mining license holders must submit regular reports in accordance with mining regulations. Upon commercial production, the government of Tanzania imposes a royalty on the gross value of all production at the rate of 7.3% of all gold produced. The applicable regulatory body in Tanzania is the Ministry of Energy and Minerals.
An environmental impact statement and an environmental management plan must accompany special mining license, mining license and gemstone mining license applications for mineral rights. In addition to the establishment of environmental regulations, the Tanzanian Government has improved management procedures for effective monitoring and enforcement of these regulations by strengthening the institutional capacity, especially in the field offices. The Government has provided rules for the creation of reclamation funds to reinstate land to alternative uses after mining and it has developed guidelines for mining in restricted areas, such as forest reserves, national parks, sources of water and other designated areas.
The Company has the following seven subsidiaries:
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Name of Subsidiary | Jurisdiction of Incorporation | Percentage &Type of Securities Owned or Controlled by Company | |
Voting Securities Held | Non-Voting Securities | ||
Itetemia Mining Company Limited | Republic of Tanzania, Africa | 90%(1) | N/A |
Lunguya Mining Company Ltd. | Republic of Tanzania, Africa | 60%(2) | N/A |
Tancan Mining Company Limited | Republic of Tanzania, Africa | 100% | N/A |
Tanzania American International Development Corporation 2000 Limited | Republic of Tanzania, Africa | 100% | N/A |
Buckreef Gold Company Limited (BGCL) | Republic of Tanzania, Africa | 55%(3) | N/A |
Northwest Basemetals Company Limited | Republic of Tanzania, Africa | 75%(4) | N/A |
BGCL/AGC Joint Venture (6) | Republic of Tanzania, Africa | 40%(5) | N/A |
(1)The remaining 10% interest is held by State Mining Corporation.
(2)The remaining 40% interest is held by Northern Mining and Consultancy Company Ltd.
(3)The remaining 45% interest is held by State Mining Corporation.
(4)The remaining interest is held 15% by State Mining Corporation and 10% by Songshan.
(5)The remaining interest is held 60% by Allied Gold Corp. of United Arab Emirates.
(6)Joint venture letter of intent signed and subject to final approval.
D.Property, Plant and Equipment
The Company’s business is the acquisition, exploration and development of mineral properties, with a primary focus on exploring for gold properties in Tanzania. Currently, the Company is focused on the development of the Buckreef Project. Historically, the Company has funded its activities by way of the sale and issuance of its common shares and convertible loans. The Company also obtains operating funds through sales of and options to sell its various mineral property interests to other parties, retaining a royalty interest. To date, the activities of the Company within its properties with or without a known body of commercial ore, with or without established mineral reserves, have been exploratory and developmental in nature. Pre-feasibility studies have been completed and published on the Buckreef Project.
Mineral Properties
History
The Lake Victoria Goldfields (“LVG”) was discovered in 1894 by German explorers and significant exploitation began in the 1930s at the Geita Gold Mine. Several small gold mines exploiting near surface reefs, operated throughout the Rwamagaza Greenstone Belt (“RGB”), particularly near the village of Rwamagaza. By 1940, Tanzania was producing 4.5tpa of Au.
Gold bearing quartz veins were reported from the current Buckreef Mine area in 1945 and reports from the 1950s attest to ongoing production at a number of localities near Rwamagaza, including the Buckreef area. The extent of the small scale local and colonial mining activities is evident from the numerous pits and adits covering the entire Buckreef tenement; however, no production figures are available.
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Buckreef Exploration History Synopsis
Year | Operator | Work Performed |
1959 | Tanzania Mineral Resources Division (TMRD) & UNDP | UN-sponsored regional airborne geophysical survey over Rwamgaza Greenstone Belt. |
1960-1965 | Tanzania Mineral Resources Division (TMRD) & UNDP | Ground based geophysical surveys (magnetics, IP) follow up on regional targets. Discovery of Buckreef Quartz Vein and follow up drilling commenced. 13 diamond drill holes by UNDP (12 in current database, UNBR01-12) identified a “possible ore zone 107m long, 8m wide and extending to 122m depth |
1968 | Tanzania Mineral Resources Division (TMRD) | 13 diamond drill holes by Tanzanian Mineral Resources Division (MRD01-13) |
1972 | Tanzania Mineral Resources Division (TMRD) | Tanzanian government approved investment decision and Buckreef Gold Mining Company. |
Mid-1970s | Williamson Diamonds Ltd | Underground development on 30m and 61m levels by Williamson Diamonds Ltd. Indicated ore reserve of 106,000t @ 8.7g/t Au between 23m and 76m levels using minimum mining width of 1.5m |
1973-79 | Tanzania Mineral Resources Division? | Further underground development and 3 diamond drill holes (BGMDD01-03) by BGMC. |
1973-1981 | State Mining Corporation | CIP treatment plant and other facilities established with financial assistance from Swedish International Development Agency |
1982-1988 | State Mining Corporation | Gold production commenced but reached only 25-40% of forecast targets. Production figure unavailable. Review of operations by British Mining Consultants Ltd. who found Buckreef assay laboratory assays 65% higher than overseas check assays |
1990 | State Mining Corporation | Mining ceased and workings flooded. Total ore extracted estimated at approximately 100,000t @3-4g/t Au |
1992 | East African Mining Corporation | Commencement of modern exploration techniques including Aircore, RC and diamond drilling. |
1994 | East African Gold Mines Ltd | Signing of first Buckreef Gold Mine Re-Development agreement with State Mining Corporation. Additional surface and subsurface gold resources were identified. |
1995-2010 | East African Gold Mines Ltd / Gallery Gold / Iamgold | Explored 40km of contiguous strike length of the RGB encompassing geophysical surveys (IP, EM & magnetic); 52,737m of RAB & AC drilling; 80,796m RC drilling and 22,197m of Diamond drilling. Several metallurgical test-works for a CIL and/or CIC process plant conducted; Preliminary economic assessment leading to a Feasibility scoping study completed. Project returned to Stamico by IAMGOLD. |
2008- 2009 | Tanzanian Gold | Continues with exploration and starts RAB, RC and DC drilling at Kigosi on the Luhwaika and Igunda Prospects. Completed drilling at Luhwaika and Igunda Prospects. 3D modelling completed and resources declared for both. |
2010-2011 | Tanzanian Gold | Commenced RAB and RC drilling at Msonga and Commenced and subsequently ceased bulk sampling of Luhwaika quartz rubble deposit (four months later). Completed drilling at Msonga. 3D modelling completed. No resource declared on Msonga. |
2011 | Tanzanian Gold | Second Buckreef Gold mine Re-Development JV Agreement signed between Tanzanian Gold Corporation and Stamico. Commenced with detailed review of all historical exploration data and results for an updated NI 43-101 report supervised by Venmyn Rand (Pty) Ltd. |
2012-2013 | Tanzanian Gold | Additional exploration and resource drilling (33,711m diamond core & 4,459m RC) conducted. Preliminary NI 43-101 report completed by Venmyn Rand (Pty) Ltd that showed a 121% increase in mineral resources. Successfully applied for extension of the Special Mining License area (from 3.4km2 to 16.04km2). Commenced NEMC EIA certification process. |
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2014 | Tanzanian Gold | Awarded NEMC Environmental EIA certification. Metallurgical testwork for heap leach and/or CIL process plant conducted. Geotechnical test-work conducted. Construction of pilot Heap leach process plant commenced. Pilot Mining on South Pit commenced late October 2014. |
2015 | Tanzanian Gold | Pilot mining continued on South pit. Pilot heap leaching operations commenced. |
2016 | Tanzanian Gold | Force majeure declared February 2016. First gold pour from heap leach operations. Further Metallurgical testwork for CIL process plant commenced. Buckreef process plant re-dsign into CIL system commenced. Commenced application for an initial 15yr Life of Mine extension for the Special Mining License. |
2017-2018 | Tanzanian Gold | Applied for and received offer letter for a 10-year renewal of the Buckreef Special Mining License. Published NI 43-101 compliant Updated Mining Reserve Estimate and Economic Feasibility report completed by MaSS Resources (Pvt) Ltd of Tanzania. Subsequent amendment on said report by Virimai Projects (QP) as Zimbabwe published on SEDAR on July 2018 as per OSC directives. |
2019 | Tanzanian Gold | Carried out first phase of three-phase drill program. Phase I infill drilling, primarily by RC was to increase in-pit mineable reserves and has been completed. Phase II is below open pit bottom primarily by diamond drilling to explore continuity of ore zones and had commenced before fiscal year end 2019 and expected to be completed in Q1 2010. Phase III is in final planning stages and will be commenced upon completion of Phase II. Geophysical survey has been completed; new surface map has been published; new interpretation of northwest extension; and metallurgical and rock mechanics testing. |
2020 | Tanzanian Gold | Drilled 29,868.02m split as 4,868m (RC), 14,351M (Grade control RC) and 10,649.02m (diamond core including 3 metallurgical test-work drill holes). New resource model completed and an NI43-101 compliant Independent Mineral Resource Update Technical Report for the Buckreef Project published on Sedar effective June 2020. Commenced oxide ore mining on the Buckreef prospect and metallurgical and rock mechanics testing. Currently evaluating pilot plant production at site. |
Ownership
Prior Ownership
Originally, the Buckreef Project was an advanced exploration project held by Iamgold Tanzania (“IAGT”) prior to July 2009. The Agreement to Redevelop the Buckreef Gold Mine (“ARBGM”) between IAGT and the Ministry for Energy and Minerals included at that point, a single Mining Licence and 12 Prospecting Licences covering 98.19km2.
In July 2009, IAGT applied to surrender all licenses relating to the ARBGM, effective October 25, 2009 and the Commissioner for Minerals withdraw all license applications relating to the ARBGM.
Current Ownership, Property and Location
On December 16, 2010, the Company signed a binding Heads of Agreement with Stamico setting forth the key terms to develop the Buckreef Project for which the Company paid Stamico US $3,000,000. On October 25, 2011, Tanzam, a wholly owned subsidiary of the Company, entered into a Definitive Joint Venture Agreement for Re-Development of the Buckreef Gold Mine with Stamico. Under the Joint Venture Agreement, Tanzam holds a 55% interest and Stamico holds the remaining 45% interest in the joint venture company called Buckreef Gold Company Limited (“BGC Ltd.”).
Through Tanzam, the Company has 100% control over all aspects of the joint venture. In accordance with the joint venture agreement, the Company has to arrange financing, incur expenditures, make all decisions and operate the mine in the future. The Company’s obligations and commitments include completing a preliminary economic assessment, feasibility study and mine development. Stamico’s involvement is to contribute the licenses and rights to the property.
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The joint venture agreement contains an obligation clause regarding the commissioning date for the plant. The clause becomes effective only in the event the property is not brought into production before a specified future date which was originally estimated to be in December 2015. The Company shall be entitled to extend the date for one additional year: ( i) for the extension year, on payment to Stamico of US$500,000; (ii) for the second extension year, on payment to Stamico of US$625,000; and (iii) for each subsequent extension year, on payment to Stamico of US$750,000.
During November 2016, the Company received a letter from Stamico regarding the status of a payment since they allege the property was not brought into production before the specified date. The Company responded that no penalty was due because that it has certain reasons why the commission date was not met or, in the alternative, may have been met. After a series of discussions during November 2016, the Company and Stamico resolved this issue, and the Company made payment of US$172,330 to Stamico and the Company will pay US$382,818 to Stamico in 24 equal installments out of proceeds of future production. As at August 31, 2020, US$230,012 remains accrued to be paid over 6 instalments through April 2021.
The Company has recognized a non-controlling interest (NCI) in respect of Stamico’s 45% interest in its consolidated financial statements based on the initial payment by the Company to Stamico and will be adjusted based on annual exploration and related expenditures. Stamico has a free carried interest and does not contribute to exploration expenses.
There is a supervisory board made up of four directors of Tanzam and three directors of Stamico, whom are updated with periodic reports and review major decisions. Amounts paid to Stamico and subsequent expenditures on the property are capitalized by the Company to mineral properties or inventory for costs directly related to the extraction and processing of ore and reported under BGC Ltd.
The Buckreef Project is located in north central Tanzania immediately to the south of Lake Victoria, in the Mwanza Provincial District. The Buckreef Project is situated 110km southwest of Mwanza, in the Geita District and is accessed by ferry across Smiths Sound and then via unpaved roads and an airstrip. The Buckreef Project comprises five gold deposits located within two geographically separated areas approximately 25km apart, termed the Buckreef Mining Area (“BRMA”) and the Buziba-Busolwa Mining Area (“BZMA”) and the individual gold deposits within these mining areas have been termed Prospects, as summarized below:
·BRMA: includes the Buckreef Project, the Bingwa Prospect, Eastern Porphyry Prospect and the Tembo Prospect; and
·BZMA: includes the Buziba Prospect
An extended mining right was granted to Tanzam (Special Mining Licence 04/1992) encompassing the Buckreef, Bingwa, Eastern Porphyry and Tembo Prospect areas. The Buziba Prospect is held under a prospecting licence which is in the process of being converted into either a retention licence or a special mining. Within the BZMA small-scale miners operate under numerous primary mining licences adjacent to our main prospect.
Geology and Mineralisation
The BRMA and BZMA gold deposits are classified as low to medium grade orogenic gold deposits hosted by mafic volcanic sequences of the eastwest trending Archaean RGB within the L of the Tanzanian Craton. The BRMA gold deposits are hosted by a major steeply dipping, northeast-southwest trending brittle-ductile shear zone and subsidiary shears, with an early phase of iron rich carbonate alteration, re-brecciation, felsite intrusion and a later phase of auriferous quartz veining.
The BZMA deposit is located 25km east of the Buckreef Prospect in the RGB. The principal host lithologies include magnesium rich basalt, co-magmatic dolerite and a suite of quartz-albite felsic porphyries that have intruded the mafic sequence. Gold mineralisation is associated with quartz vein arrays that occur in altered shear zones in mafic lithologies and as extensive stock works in the felsic porphyries.
Regional Geological Setting
The Buckreef Project is situated within the LVG of northern Tanzania, which consists of a number of eastwest trending, linear, Archaean greenstone belts, which are separate granite-gneiss terrains within the Tanzanian Craton of east Africa. The LVG is the third largest gold producing region of Africa, surpassed only by the Witwatersrand Basin in South Africa and the Tarkwa region of Ghana. Numerous gold occurrences have been identified in the LVG, and new discoveries continue to be made. Since 1998, when the first mine, Golden Pride was commissioned, four additional large scale mines namely, Geita, Bulyanhulu, North Mara, and Tuluwaka have come into production.
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The greenstone belts comprise mafic volcanics, pyritic sediments, tuffs, iron formation, chert, and felsic volcanics, collectively known as the Nyanzian Group. The metamorphic grade of the Nyanzian Group is lower to middle greenschist facies, and two major deformational episodes have been identified. Amphibolite facies metamorphic rocks are exposed in the western portions of the belt near Tulawaka Mine, but in general higher grade metamorphic complexes are rare.
The greenstone belt sequences have geological and structural similarities to major gold districts in the Canadian Shield (Val d´Or, Kirkland Lake) and the Yilgarn Craton in Western Australia (Kalgoorlie, Laverton, Leonora, Kambalda and Southern Cross).
Gold mineralisation within the LVG occurs in a number of styles including:
·quartz veins within minor brittle lineaments, most commonly worked on a small scale by artisanal workers, due to their limited extent and erratic gold distribution;
·mineralisation within major ductile shear zones;
·mineralisation associated with replacement of iron formation and ferruginous sediments; and
·Felsic (porphyry) hosted mineralisation, such as within the RGB.
Regardless of the geological environment, it is accepted that structural control on the emplacement of the mineralisation is critical. The following structural features have proven to be important foci of gold mineralisation:
·structural lineaments trending at 120º;
·flexures and splays to the 120º trend (such as at Golden Pride);
·structural lineaments at 70º (such as at Golden Ridge); and
·Granite-greenstone contacts (such as at the Ushirombo and RGB).
Local Geological Setting
The Buckreef Project area covers the eastern portion of the eastwest trending RGB, which forms part of the Sukumaland Greenstone Belt. The Sukumaland Greenstone Belt is oval shaped and is defined by two intermittently exposed belts of meta-volcanic and meta-sedimentary rocks that surround a core of granitoids and gneisses. The inner belt comprises an older, Lower Nyanzian sequence characterised by basaltic and andesitic lavas and tuffs, whilst the outer, younger, Upper Nyanzian succession consists of iron formation and tuffs. The understanding of the geology in the region has been hampered by the lack of outcrop (less than 2%). Isotopic dating suggests that the sequences are approximately 2.6Ga in age and although no contact between the outer and inner belts is exposed, a general trend of younging outwards is considered valid.
Within the Sukumaland Greenstone Belt, the RGB consists of a sequence of eastwest trending, poorly outcropping basaltic flows and overall the RGB varies in width from 5km to 10km. The mafic sequences consist of komatiitic basalts to the south and tholeitic basalts in the north, separated by the Rwamagaza Shear Zone. The basalts display well preserved volcanic features such as varioles, pillows, and flow top breccias Aeromagnetic data and minor outcrop, indicate the presence of a number of elongate discontinuous, serpentinised, sheared ultramafic bodies which parallel the flow stratigraphy and which could represent either intrusive bodies or the cumulate portions of thick, magnesium rich basaltic lava flows.
Two main clusters of felsic intrusions occur throughout the region and comprise large batholithic granites and porphyry intrusions. The RBG could possibly form part of a much larger mafic belt that has been dissected by the intrusion of large batholithic granites. Aeromagnetic surveys over the Project area indicate the presence of granites at depth. The RBG mafic-ultramafic sequence is strained to varying degrees, with the highest strain occurring in the central area of the Buckreef Project tenements, where the belt is thinnest. In this area, the dominant rock type is mafic schist. Toward the thicker (less attenuated) eastern and western parts, the schists form thinner more discrete zones of high strain separating areas of relatively unstrained ultramafic lithologies. The granitoids are generally unstrained and hence assumed to be post peak deformation. A large portion of the basalts to the southeast of Nyarugusu are hornfelsed, suggesting the presence of granite at shallow depths beneath them.
The tectonic evolution of the RGB is very poorly understood. Aeromagnetic data reveals several generations of crosscutting, late stage, brittle-ductile faults and shears, which offset flow stratigraphy and have locally been intruded by the felsic porphyries
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and by a late stage dolerite dykes. Early formed ductile structures are not easily defined in aeromagnetic data and there is evidence of shear zones that parallel the stratigraphy. The Project host rocks comprise meta-basalt, which is generally un-deformed but metamorphosed to lower greenschist facies grades. At Buckreef Prospect interflow units of predominantly pelitic and cherty sediments occur, as well as a variety of porphyritic textured, dyke and vein like felsic intrusions along crosscutting structures or sub-parallel to flow stratigraphy.
The RGB has been subjected to a phase of laterite development, with formation of predominantly iron rich ferricrete caps, which were subsequently extensively eroded and only isolated remnants of laterite remain in situ. The high rainfall and sub-tropical climate has resulted in deep laterisation and although there is evidence of localised gold enrichment in the shallow oxidation profiles in both BRMA or BZMA areas, major zones of supergene gold enrichment are not developed in either area. The RGB in general is covered by a thin layer of elluvial regolith, which is amenable to standard soil sampling techniques.
A non-penetrative deformation fabric is developed at Buziba, which dips steeply to the south, sub-parallel to the stratigraphy. Individual zones in which this fabric is well developed cannot be traced for distances of more than a few hundred metres on drill sections, but a number of such zones occur throughout the 200m of thickness of stratigraphy, which hosts the mineralisation.
Exploration Status and Project History
The Buckreef Gold Mine was an underground mine operated by the Tanzanian State during the late 1980s to early 1990s. A brief description of the historical work conducted during periods 1992-2011 (pre-Tanzanian Gold Royalty) and 2011-2019 (Tanzanian Gold era) is summarized in two sections below.
Pre-TRX era Project History
Apart from the state, several previous owners of the project undertook numerous exploration programs including aeromagnetic, helicopter borne IP, ground magnetic and soil geochemistry surveys, as well as extensive RC, Air Circulation (“AC”) and diamond drilling programs. Prior custody of the project set out below.
·1994: Signing of Buckreef Redevelopment Agreement (of the project undertook numerous exploration programs including aeromagnetic, helicopter borne IP, and ground magnetic).
·1996: Spinifex Gold of Australia acquires East Africa Mines Ltd.
·2003: Gallery Gold of Australia acquires Spinifex Gold
·2006-2010: IAMGOLD Corporation (Canada) acquire Gallery Gold (project incorporated Buckreef, Buziba, Mawe Meru & Busolwa).
·2010: IAMGOLD Corporation surrendered project back to Stamico after decision to relocate and concentrate on projects in Mali.
·2010: October, TRX Corporation (Canada) signs MOU with Stamico to acquire Buckreef Project.
The technical and scientific information herein has been reviewed, verified and approved by Andrew Cheatle, P.Geo., who is a “qualified person” as defined by NI 43-101. Mr Cheatle is a Director of Tanzanian Gold Corporation. He is a graduate of the Royal School of Mines, Imperial College, London and a professionally registered geoscientist with Professional Geoscientists of Ontario (PGO), registration number 0166.
Iamgold, the most recent historic owner of the project, verified the historic drilling data, undertook additional exploration and defined JORC compliant Mineral Resources in 2006. Historic metallurgical testwork programs were undertaken on both the BRMA and BZMA mineralisation types. The testwork on BMRA material indicated that oxide and transitional material are amenable to treatment using typical CIL processing techniques and fresh material may benefit from flotation and a finer grind with recoveries anticipated to be in the low 90%s. The testwork results for BZMA mineralisation indicated that it is amenable to treatment using gravity and CIL processing techniques. Metallurgical recoveries for BZMA mineralisation were anticipated to be in the low to mid 90%s. Heap leaching testwork indicated that, at a 25mm to 50mm crushing size fraction in oxide mineralisation, a 75% recovery could be anticipated, whilst transitional and fresh mineralisation recoveries were lower, at 35% to 50%.
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TRX era Project History and Development
The Company acquired the rights to the Buckreef Project early in 2011 and undertook further exploration work that mainly involved mineral resource confirmation drilling, mineral resource drilling, metallurgical and geotechnical diamond drilling programs as tabulated briefly below.
2011:
·October, TRX Corporation (Canada) acquire Buckreef Gold (project incorporated Buckreef, Buziba) through definitive JV Agreement (55/45% equity) with Stamico.
·TRX engaged Hellman & Schofield (Pty) Limited of Australia to prepare an independent NI 43-101 Preliminary Economic Assessment (PEA)-: pathfinder study
2012:
•TRX engaged Venmyn Independent Projects (Pty) Limited of South Africa to prepare an independent NI 43-101 Preliminary Economic Assessment (PEA)-: pathfinder study evaluating all historical technical and economic parameters of the Buckreef Project (Buckreef, Buziba, Busolwa).
•TRX successfully enlarges SML area from 4km2 to 16km2 to encompass Bingwa and Tembo prospects
2013:
•TRX commences infill exploration & additional resource definition drilling on four main prospects as follows:
·Buckreef Project: 684 drill-holes for 97,287m;
·Tembo Prospect: 74 drill-holes for 5,713m;
·Bingwa Prospect: 136 drill-holes for 12,537m &
·Eastern porphyry: 80 drill-holes for 10,814m.
·TRX engaged ENATA Resources to commence a National Environmental Management Council (NEMC) compliant Environmental Impact Assessment report. Final certification received in 0ctober 2014.
·TRX institutes bulk sample heap leach metallurgical test-work on ores from Bingwa and Tembo using SGS of South Africa.
2014:
•TRX engages Venymn to produce an updated NI 43-101 compliant Independent Technical and Valuation Report.
•ITVR incorporated new technical parameters, exploration results, Mineral Resources to update preliminary mine design, preliminary process design, environmental fatal flaw review and economic analysis on the 2012 PEA report.
•TRX engages contractors to construct Carbon-in-Column process plant and 4 heap leach pads.
•TRX completes 10,000m of Grade control drilling targeting oxide & transition ore on the pilot Buckreef South Prospect (delineated 5 major mineralized zones with a proved reserve of 206,551t @1.54g/t containing 10,225ozs Au within the original mineralization envelope).
•TRX commences pilot mining on Buckreef South (Oct. 2014).
2015/2016:
·TRX continues pilot mining, commences CIC process plant and heap leach pad operation.
·TRX commences the CIC pilot heap leaching on 3 loaded pads in April 2016. Leaching operations run for 9 months and subsequently stopped due to unfavourable un-agglomerated ore conditions.
·Process plant failure leads to Process Plant re-design planning (Emisha Mining Solution engaged).
·Renewal application for SML04/92 submitted (MEM).
2017:
·TRX receives offer letter for the renewal of the Buckreef SML and pays all statutory dues as requested. License extended for further 10-years to 2027.
·TRX smelts 6.6kg of gold dore from the Carbon-in-Column process plant.
·TRX submits 4-tonne bulk sample for further detailed metallurgical testwork with a laboratory in South Africa. TRX engages MaSS Resources Pvt Ltd. of Tanzania to commence and complete an NI 43-101 compliant Mining and Economic Feasibility study. The Report titled “Updated Independent Technical Mining Reserve Estimate and Economic Feasibility
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Study on the Buckreef Gold Mine Project, Tanzania, East Africa” is published on SEDAR with effective date April 27, 2017.)
·Emisha Mining Solutions continues with detailed CIL process plant designs.
·TRX hosts the new Minister of Mines, Hon. Angellah Kairuki at Buckreef Mine site.
·Buckreef mega-pit site area marked, cleared and surveyed as part of mine development.
·Mining and pit pre-development work on the ground halted while awaiting issuance of renewed SML certificate
2018:
·Detailed planning for 10,000m of close-spaced grade control drilling on the Buckreef main pit finalized.
·The Company engaged Virimai Projects Pvt Ltd. of Zimbabwe to complete Ontario Securities Commission recommended amendments to the NI 43-101 compliant Mining and Economic Feasibility study. Report entitled “ITR Mineral Reserve Estimation and Pre-Feasibility Study for the Buckreef Gold Mine Project” published on SEDAR with effective date June 26, 2018. This report supercedes all previous ITRs on the Buckreef Project.
·The Company commenced detailed planning for additional deep drilling (diamond core) and resource upgrade drilling (RC) on the main Buckreef Project.
·The Company was in constant engagement with the Ministry of Mines pertaining to the issuance of the renewed SML certificate.
·Mining and pit pre-development work on the ground still on halt while awaiting issuance of renewed SML certificate
2019:
·Under completed Phase I and partially completed Phase II of three phase drill program, the Company has drilled 10,592m (34,751 ft) to September 25, 2019 (34,751 ft), consisting of 6,446m RC and 4,145m diamond drilling. For further details and assay results, please refer to Plan of Operations – Exploration.
·Geophysical survey has been completed.
·Resource-geology model nearing completion.
·New surface map has been published.
·New interpretation of northwest extension.
·Metallurgical and rock mechanics testing.
·Currently evaluating pilot plant production at site.
2020:
·The Company drilled 29,868.02m split as 4,868m (RC), 14,351M (Grade control RC) and 10,649.02m (diamond core including 3 metallurgical test-work drill holes). For further details and assay results, please refer to Plan of Operations – Exploration.
·New resource model completed and an NI43-101 compliant Independent Mineral Resource Update Technical Report for the Buckreef Project published on Sedar effective June 2020. New Mineral resources reported for the Buckreef Prospect only.
·Commenced oxide ore mining on the Buckreef prospect
·Metallurgical and rock mechanics testing progressed well.
·Currently evaluating pilot plant production at site.
Mineral Resource and Mineral Reserve Estimates: Virimai Projects June 2020
The Company commissioned Virimai Projects Pvt Ltd of Zimbabwe to carry out an NI43-101 compliant ITR to incorporate Phase 1 and 2 resource drilling data into the Buckreef Prospect resource model during the reporting period. This exercise subsequently led to the publication of report entitled “Updated Mineral Resource Estimate for the Buckreef Gold Mine Project, Tanzania, East Africa” published in June 2020.
Virimai Projects did not conduct any Mineral Reserve Estimation on this new resource.
The updated Mineral Resource projections as summarized in the table below.
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NI 43-101 Compliant Re-stated Mineral Resource Estimate for BRMA as at June 30, 2020
Source: Virimai Projects 2020
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
Mineral Resources reported inclusive of Mineral Reserves
Estimates over variable widths to 1m to 40m
Specific Gravity ranges 2.0 to 2.8
Inconsistencies in totals are due to rounding
55% attributable to the Company
The Company did not conduct any mineral reserves optimization on the recently published mineral resource during the reporting period. Having taken into account a number of economic costing and engineering refinements, optimizations and alternatives, Virimai Projects declared an open-pit optimized Mineral Reserve estimate of 19.08Mt grading at 1.54g/t (excluding the existing mined stockpile) and containing 943,851 troy ounce gold for the Buckreef Project as summarized in the table below.
NI 43-101 Compliant Pit Optimized Mineral Reserve Estimate for BRMA as at June 26, 2018
Source: Virimai Projects 2018
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
Mineral Resources reported inclusive of Mineral Reserves
Cut-off Grade: Oxide/Trans 0.38 g/t Au & Fresh rock 0.41g/t Au
Estimates over variable widths to 1m to 40m
Specific Gravity ranges 2.0 to 2.8
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Inconsistencies in totals are due to rounding
55% attributable to the Company
The major highlights from the Technical Mining Feasibility report include the following:
·Conventional open pit mining methods selected in pit designs.
·Over LoM, a total of 19.08Mt of ore with a strip ratio of 8.1:1 will be mined.
·Pre-existing stockpile (ROMPAD) ore totaling 119,726t grading 1.89g/t to be used for process plant commissioning.
·0.944Moz of gold mined over the open-pit life of the project.
·Recoveries of 89% for primary ore and 93%for saprolite ore, utilizing a simple EDS comminution, flotation and leaching process with gravity recovery circuit for free Au component collection.
·0.822Moz of gold will be produced over the open-pit life of the project.
·Initial capital cost outlay estimated at US$76.5 Million and sustaining capital of US$22.95 Million, including closure costs.
·Cash operating costs of $735/oz produced.
·Generation of a positive after-tax NPV of $130.96 million at a 5% discount rate and an IRR of 74%
The Company has incurred total net costs (after recoveries, if any) of $8,733,232 on the Buckreef Project for the year ended August 31, 2020.
Property Description and Location
The Kigosi Project area is principally located within the Kigosi Game Reserve controlled area. Through prospecting and mining option agreements, the Company has options to acquire interests in several Kigosi prospecting licenses. A comprehensive report summarizing exploration work done and results to date was submitted to the Director of Wildlife and Nature Conservation as part of the requisite and mandatory requirements for an application to renew the Kigosi game reserve access permit. It is a statutory requirement to have an access permit to conduct any exploration activities in an area designated as a forest and/or game reserve. On May 31, 2012, the Company was granted a two year permit from the Ministry of Wildlife and Nature Conservation to enter the Kigosi Game Reserve and continue with exploration activities. The Company is evaluating various alternatives for advancing the Kigosi Project by focusing on an area of near surface mineralization.
In December 2012, the Kigosi Access Agreement between the Company (through its subsidiary Tanzam) and the Director of Wildlife, Wildlife Division, Ministry of Natural Resources and Tourism was signed, and in February 23, 2013, the Company (through Tanzam), was awarded the Environmental Impact Assessment Certificate for the Kigosi gold project. Stamico has a 15% carried interest in the Kigosi Project.
On May 30, 2013 the Company announced it had been granted a Mineral Rights and Mining Licence through its wholly owned subsidiary, Tanzam. The Mineral Rights and Mining Licence covers the entire area applied for of 9.91 square kilometres of the Kigosi Project. The area remains subject to a Game Reserve Declaration Order. Upon repeal or amendment of that order by the Tanzanian government, the Company will be legally entitled to exercise its rights under the Mineral Rights and Mining Licence.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The property is accessed via air from the city of Dar Es Salaam on the Indian Ocean coast to the city of Mwanza on the southern shoreline of Lake Victoria. From Mwanza, a moderately maintained tar road accesses the town of Ushirombo, via the towns of Shinyanga and Kahama, around the southern part of the Lake, referred to as Smith Sound. This trip is approximately 400 km and takes some 5 hours. From the town of Ushirombo one keeps heading east along the main Burundi tar road for approximately 6 km, where a dirt track allows access into the Kigosi Game Reserve.
The southern bulk of the Kigosi Project area is wholly located within the northern sector of the Kigosi game reserve with a third of the licenses being located in the adjacent Nikonga-Ushirombo Forestry reserves further north. As per legal and mandatory requirements, the Company acquired respective renewable permits from the Departments of Game Reserves and Forestry Reserves of the Ministry of Wildlife and Tourism to conduct exploration activities in both the game and forestry reservation areas throughout the year. Access to the main Kigosi exploration camp via the dirt track has been substantially improved by the Company to allow access by four wheel drive vehicles during the rainy season.
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The exploration camp at Kigosi is predominantly a tented facility with larger semi-permanent structures employed for offices and storage facilities. Previous construction included the installation of metal containers which will be utilized as living and office quarters. Communications at the camp are via satellite, internet and telephone.
The access track passes over the Shiperenge River, a tributary to the Nikonga River and both are perennial rivers, typically dry in the winter months and overflowing during the October-May rainy season. Three large ponds located on the Nikonga River were the only close source of water until the Company drilled a highly productive water borehole located some 5km northwest of the camp. Drinking water for the camp is pumped via pipeline from the borehole to the camp. The Nikonga and Shiperenge rivers have played a major part in structuring the physiographic landscape in the area. These rivers drain southwards into the Moyowosi and Njingwe Swamps. Small undulating granite hills form the topographic highs, and generally trend northwest. These hills make up approximately 5% of the project area. The climate is typical of an African tropical climate, being hot during the day and cooling down in the evenings. Winters are very mild, but a blanket is needed in the early hours of the mornings. Kigosi falls within a malaria area, and precautions are necessary. Tsetse flies are also present in some parts of the project area. The region is heavily forested, but has only limited wildlife, chiefly small gazelle and baboons.
Geology and Mineralization
The Kigosi-Miyabi granite-greenstone belt and the Ushirombo greenstone belt, form part of two of the greenstone belts within the Nyanzian Archaean greenstone terrain in northwestern Tanzania. These belts host small-scale artisanal workings at Luhwaika and Igunda within the core project area at Kigosi and further to the southeast. The Ushirombo Greenstone Belt has been extensively explored by geologists and small scale miners. It consists predominantly of mafic volcanics with lesser meta-sedimentary rocks across an east-west trending belt some 50 kilometres in strike. Gold mineralization generally occurs in narrow quartz veins. The Kigosi-Miyabi Greenstone Belt has been less explored, mainly because of the location within the Kigosi Game Reserve.
Several prominent regional scale NW trending structural lineaments, interpreted as regional shear zones, appear to be the major conduits and controls for the localization of gold mineralization in the Kigosi area. There is also a prominent NNW trending set of regional scale lineaments that are believed to be deep seated sources of the gold bearing fluids.
The Company previously discovered three previously undocumented shear-zone hosted gold mineralized targets and it has also established the presence of a surface to sub-surface horizon of unconsolidated residual in-situ auriferous vein quartz rubble on the Kigosi Property, forming a part of the Company’s Lake Victoria Goldfield Properties held through its subsidiary, Tanzam.
The Kigosi Mineral Resource estimate September 2009 includes Mineral Resources from several prospects each with primary mineralisation in shears and secondary mineralisation in alluvial gravels. No cut-off grade was applied to the shear hosted mineralisation and a cut-off of 0.1g/t Au was applied in the case of the gravels just as nominal indicator of the presence of mineralisation. The Kigosi prospect is an early exploration project and no specific costing exercises have been yet been conducted that could be used in an economic cut-off grade calculation. Nonetheless, the effect of introducing and changing cut-off grades was provided in the document as an indicative exercise. The parameters pertaining to prospects for economic extraction in the Victoria Goldfields are well known, and the grades and style of mineralisation reported for the Kigosi prospect were considered relative to this benchmark.
Luhwaika Quartz Rubble Deposit
A brief summary of the work done on the Luhwaika Quartz Rubble Deposit and the Msonga Prospect are briefly summarized. Historical summaries for Luhwaika and Igunda Prospects are also briefly described.
During a previous detailed vertical RC-drilling program on the Luhwaika Prospect, the Company established the presence of a consistent and sizeable near-surface quartz-rubble bed with a potentially significant economic potential. The Luhwaika Prospect is host to a potentially economic quartz rubble deposit which is likely a direct result of surface collapse and erosion of the Luhwaika Main and West reefs. Artisanal mining activity has concentrated on this loose quartz rubble deposit which is easily accessible for mining. High grade quartz rubble has so far been identified in three areas: the Luhwaika West reef, the Luhwaika Main reef and the Luhwaika East area. The Company completed a detailed bulk sampling program on this potentially economic quartz rubble bed.
Bulk Sampling Program
The Company initiated a pit bulk sampling campaign between September 2010 and February 2011. The nature of this exploration was the collection of composite channel sampling from the pit side walls as a way of providing an indication of the in-situ grade. The bulk sample itself was fed through a mobile modular gravity separation plant located at the main camp. The extent of the
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exploration was on a small scale and included 43 excavated and channel sampled pit bulk samples. Only 18 of these pit bulk samples underwent the full excavation, channel sampling and pilot plant testing within the four month period. The objective of the pit bulk sampling campaign was to provide confidence in the gold grades for the already finalised resource model for the quartz rubble deposit and to ascertain the free gold recoverability using a rudimentary pilot plant as a low cost exercise.
The Company utilised an in-house geologist and field assistants to carry out the pit bulk sampling. Excavation was conducted with a small excavator and a single dump truck. Excavation was monitored by the geologist to ensure uniformity of the excavation and to stop the hole once the mottled zone had been reached. The mottled zone was also dug out as part of the bulk sample to a further depth of ~0.5m below the quartz rubble.
The location of the bulk sampling pits was defined by the then Senior VP, Mr. R. Van Der Westhuizen, based on the earlier RAB drilling and various other requirements. The pit co-ordinates were emailed to the field geologist who then located the pit using a hand-held GPS and staked the limits on an east-west orientation. A 5.0m x 2.5m x 2.5m pit was measured out with tape and staked. The sizing of each pit was targeted to yield approximately 80t of bulk sample. No specific grid size or spacing was used for the pit location.
Luhwaika Prospect
Gold mineralization at the Luhwaika Prospect occurs in a series of sub-parallel and variably auriferous shear zones. The geological setting of the Luhwaika Gold Prospect shows many characteristics that are typical of classic mesothermal lode gold deposits.
At Luhwaika, two principal shear zones have been identified: the Luhwaika Main and Luhwaika West reefs. These reefs carry significant gold mineralization as evidenced by strike extensive small-scale mining and exploration shafts, and more recent drill results. The gold mineralization in the Luhwaika Main reef is structurally controlled, consisting mostly of lodes of laminated quartz veins impregnated in strongly sheared and altered quartz sericite schist with occasional massive tabular whitish-grey quartz vein blow-outs. These veins are shear hosted, with lesser extensional veins noted in outcrop in the granite host rock.
The Luhwaika West reef, located 100-200m in the hanging-wall and sub-parallel to the Luhwaika Main reef, consists mainly of shear-zone hosted tabular quartz veins that often contain irregular hematite filled fracture surfaces.
Igunda Prospect
The structural setting of the Igunda Gold Prospect is similar to that of the Luhwaika Prospect with the exception that the former is hosted in mafic greenstone rocks intruded by lenses of felsic granitoids including quartz-feldspar porphyry. At Igunda, two principal shear zones have been identified: the Igunda A and B reefs. Closely associated with the reefs are sub parallel quartz feldspar porphyry units.
Gold mineralization is structurally controlled and the Igunda Reefs are localized in two sub-vertical dipping northwest striking shear zones, dipping steeply (75º – 85º) to the northeast. Gold mineralization also occurs in the host wall rock up to over a meter and is not confined to the veins.
Msonga Prospect
Drilling
The Msonga Prospect is situated in the far northeast of the Kigosi license area. The earlier geochemical and structural studies covering this area had identified the presence of a substantial (7 km long) Au-in-soil anomaly hosted in mafic greenstone rocks. Dominant regional structures in the area (Ushirombo greenstone belt) generally trend east-west and are associated with the development of swarms of auriferous quartz veins such as those being currently mined by small-scale miners in the Katente area at Ushirombo. The Msonga Prospect is located ~3-5km along strike from these artisanal workings, and as such it was considered conceivable that the Msonga Prospect represented a similar setting to the Igunda Prospect (i.e., a greenstone and shear zone hosted gold deposit).
During the period mid-2009 to early-2011, the Company conducted a single phase of widely spaced RAB drilling covering the 7km-long Au-in-soil anomaly outline. From early 2010 to June 2011, the Company conducted two phases of RC drilling. The first phase of RC drilling comprised short vertical RC drill-holes mainly investigating the area’s potential for gold mineralization in a distinctive auriferous surficial lateritic quartz rubble deposit. The second phase of RC drilling comprised inclined RC drill-holes to mainly investigate the east-west strike extension of the auriferous quartz veins associated with the nearby Katente Prospect. A total of 148 inclined RC holes were drilled on the Msonga Prospect.
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Subsequent modelling and krigging was conducted on the deposit. However, no mineral resources could be declared for Msonga Prospect due to the very low average grade, the paucity of sampling and a lack of geological control for mineralisation. The current targets at Msonga prospect are therefore, classified as minor gold occurrences only.
Kigosi Exploration History
The exploration history of the Kigosi Property from 2006 to 2020 is summarized as follows:
Kigosi Exploration History Synopsis
Year | Operator | Work Performed |
1990 | Barth | Production of the regional geological map of granite-greenstone belt south of Lake Victoria |
Early 1990s | Pangea Goldfields Inc/ Iscor | Rotary Air Blast (RAB) drilling in Msonga prospect area (Kigosi North). No records available |
Early 1990s | Artisinal Miners | First evidence of artisanal working in the Kigosi area. No records available for gold extracted by the artisanals. |
1994 | Tan Range | Acquires gold properties for exploration in Tanzania. |
1998 | AngloGold | Acquired rights to nine licenses associated with the Kigosi area. |
1999 | Geodass | Conducted regional geophysical survey (airborne magnetics, radiometric and VLF-EM) over Ushirombo greenstone belt, including the Kigosi area. |
1999 | Tan Range | Helicopter visit to Luhwaika and Igunda artisanal workings. Signed option agreement with Anglo for the Kigosi North Property. |
2003 | Geoscientific and Exploration Services Ltd (Geoscientific) | Conducted a regional LandSat interpretation on the Kigosi Project area. |
2003 | J Klein (Independent Consultant | Reviewed and interpreted 1999 geophysical survey data |
2003 | AngloGold Ashanti | Detailed regional airborne geophysical survey and soil sampling survey |
2004 | AngloGold Ashanti & Tan Range | Follow up of anomalies with soil and termite mound sampling. Identification of Msonga, Bungoni, Luhwaika and Igunda Prospect area. Geological and regolith mapping conducted. Limited sampling from pits, streams and trenches. |
2005-2006 | AngloGold Ashanti & Tan Range | Temporary suspension of exploration activities due to permitting issues for access into Kigosi Game reserve area. JV arrangement maintained. |
2007 | Tan Range/ Tanzanian Gold | JV agreement with AngloGold Ashanti terminated & Tan Range changes name to Tanzanian Royalty Exploration Corp. Commenced with exploration at Kigosi in September. Exploration included biogeochemistry and induced polarisation surveys. |
2008- 2009 | Tanzanian Gold | Continues with exploration and starts RAB, RC and DC drilling at Kigosi on the Luhwaika and Igunda Prospects. Completed drilling at Luhwaika and Igunda Prospects. 3D modelling completed and resources declared for both. |
2010-2011 | Tanzanian Gold | Commenced RAB and RC drilling at Msonga and Commenced and subsequently ceased bulk sampling of Luhwaika quartz rubble deposit (four months later). Completed drilling at Msonga. 3D modelling completed. No resource declared on Msonga. |
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2013 | Tanzanian Gold | Applied for and granted Mining License (ML496/2013) covering Luhwaika and Igunda Prospects |
2014-2016 | Tanzanian Gold | Kigosi game reserve access permitting issues forced a stop to all activities on the project. |
2017-2018 | Tanzanian Gold | Evacuation of Luhwaika base camp while access negotiations are pursued. |
2019 - 2020 | Tanzanian Gold | Care and maintenance. |
The Company has incurred total net costs (after recoveries, if any) of $nil on the Kigosi Project for the year ended August 31, 2020. The Kigosi Project is currently in the care and maintenance stage.
During 2019, the Company received a notice of cancellation of mining license relating to the Kigosi Mining License for failure to satisfy the issues raised in the default notice. The notice sent by the government did not follow due process under Tanzanian law and, as such, the Company filed an appeal to this notification subsequent to year-end and the Company remains confident that they will be successful in the appeal. In light of the Company’s focus on the Buckreef Project, the Company recorded a write off of $12,769,216 related to the Kigosi property pending the result of the appeal for the year ended August 31, 2019 (August 31, 2018 - $nil, August 31, 2017 - $124,717).
Property Description and Location
The Lunguya Property is located in the Kahama District of Tanzania. The Lunguya Property is situated in the Lake Victoria Greenstone Belts, approximately 100 kms by air to the southwest of Mwanza and about 15 kms south of Bulyanhulu. With respect to Lunguya PL 1766/01, in January, 2003, a Shareholder’s Agreement was entered into wherein a new company, Lunguya Mining Company Limited (“LMC”), was created to form a joint venture between Northern Mining and Consultancy Company Limited (“NMCCL”), Tanzam and LMC. Tanzam has a 60% shareholding and NMCCL has the remaining 40% shareholding in LMC.
In February 2010, the Company entered into an Option and Royalty Agreement with Joseph Magunila and Partners (“JMP”) over an area in the Kahama District of the Shinyanga Region in Tanzania 100% owned by JMP. The agreement grants the Company an option to acquire up to 90% of JMP’s interest and/or, at the sole discretion of the Company, to enter into a mining and exploration services agreement. The Company paid US$90,000 for this option.
In late 2015, the Option and Royalty Agreement between Joseph Magunila and the company became null and void as the Company relinquished its interest in the Primary Mining Licenses.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The Lunguya Property can be reached by plane from Mwanza to an airstrip accommodating Bulyanhulu or by road via Geita up to the Bulyanhulu/Kahama road intersection. From Kahama, the property is located approximately 8 kms to the south, toward Lunguya village. Secondary roads and trails traverse the property. The Nyamakwenge Reef, located in the northeastern part of the property, can be accessed using a 12 kms dirt tract passing to the north of the property. Climate and elevation are similar to the Luhala Property.
Very little outcrop (less than 1%) has been identified at Lunguya. The entire property is flat and covered largely by granitic sands and grey orange laterities derived from granitic sources. Like Luhala, Lunguya is actively cultivated, but also is being actively mined by a few score artisanal miners along the trend of the Nyamakwenge Reefs. No significant infrastructure, power or water is available on site. However, the entire infrastructure of the region including electricity, air transport, health clinics, schools, and improved road networks, have been greatly improved due to the proximity to Barrick’s Bulyanhulu mine, some 20 kms to the north.
History
Lunguya Exploration History Synopsis
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Year | Operator | Work Performed |
1999-2001 | Tan Range | Acquire prospecting licenses. Review of regional aeromagnetic data as part of regional prosctive target identification |
2002 | Tan Range | Regional scale soil surveys. 4 regional anomalies identified |
2003-2004 | Tan Range | Follow up detailed soil surveys, ground IP surveys, Biogeochemistry (BGC) surveys identified Luhawika North (Bulynhulu replica?) Shilela, Nyikoboko & Nyaamakwenge prospects. |
2005-2006 | Tan Range | Phase 1 auger drilling, RAB/RC/Core drilling on selected targets on 3 of the 4 prospects. |
2007-2008 | Tanzanian Gold | Conducted detailed ground magnetics and IP surveys on Shilela, Nyamakwenge & Nyikoboko prospects |
2009 | Tanzanian Gold | Signed Option & Royalty Agreement on Primary Mining Licenses covering the Nyamakwenge prospect |
2010-2012 | Tanzanian Gold | Detailed RC and diamond core drilling on Nyamakwenge prospect (Reef and gravel resource definition-internal report). Lost main license over Luhwaika North (Buly-type?) prospect inadvertently. |
2013-2015 | Tanzanian Gold | No field work conducted. JV agreement on Nyamakwenge terminated in late 2015. |
2016-2020 | Tanzanian Gold | No field work done. Review of project conducted internally. |
Geology
The very limited outcrop exposures on the Lunguya concession necessitate development of a geological and interpretive environment largely based on geophysical interpretations.
Regionally, Lunguya is located near the eastern terminus of the inner volcanic arc, lower Nyanzian, of the Sukumaland Greenstone belt. The succession is dominated by tholeiitic volcanic rocks containing lesser felsic tuffaceous rocks and argillaceous horizons cut by thin quartz porphyry dykes and sills. The thick, banded iron formation and felsic flows characteristic of the outer arc Upper Nyanzian sequence are absent. Most of the map scale granite – greenstone contacts strike north-south. No information is available with respect to the orientation of sub-surface contacts.
At Lunguya, all currently known, auriferous structural zones track at an oblique angle, the eastern granodiorite-mafic volcanic contact. Auriferous veins strike at 020° to 030° with the dominant intrusive volcanic contact trending at approximately 360°. On the property scale, two 330° trending fault structures are interpreted to offset the Lunguya vein into two fault repeated vein segments, having strike lengths of approximately 180 and 300 m. A few score artisanal miners have exploited these veins to a depth not exceeding 30m vertical subsurface. A second set of auriferous reefs, the Nyikoboko Reefs, are located 12 kilometres to the south. This area is associated with a smaller set of largely inactive artisanal dumps and workings.
Based on the aeromagnetic data a model has been proposed whereby a large NS trending shear zone is believed to exist below a thick black cotton soil (mbuga) cover. The thin veins associated with the Nyikoboko and Nyamakwengwe reefs probably represent secondary structures from the main shear. This idea has been tested using biogeochemistry.
Mineralization
Lunguya is a mineralized brittle ductile strain zone, developing internal to a major granite-greenstone contact. Gold is associated with one fault offset vein which is likely broken into two segments, the Western and Eastern reefs. Lesser veins are also present. Initial sampling of artisanal vein waste dumps indicated the presence of well mineralized dump samples. The site contained greater than 200 of these small pits-shafts ranging from 1 to 20m deep.
Diamond drill and RC programs at Lunguya have demonstrated geological continuity of the Nyamakwenge West and East Reefs but weaker continuity of grade. The difficulty in obtaining representative gold grades from small core samples of vein material containing coarse particulate gold is a well-documented phenomenon. Widths in these boreholes are approximately true widths and the boreholes have been collared roughly perpendicular to the strike and dip of the mineralized structural zones.
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Exploration
In November 2010, the Company announced positive results from laboratory test work on surface quartz rubble collected from its Lunguya Primary Mining Licenses (PMLs) in northern Tanzania. The laboratory test work was intended to establish the mineralogical (physical) characteristics of gold contained within an extensive auriferous (gold bearing) quartz rubble bed identified at Lunguya, along with suitable gravity-based recovery methods to extract gold from the quartz rubble which is essentially broken and fractured surface rock.
Chemical analysis of sample material returned values of 3.58g/t, 5.75g/t, 2.33g/t and 3.31g/t, giving an average "head grade" for gold of 3.74g/t. (The "head grade" refers to the average grade of the material submitted for processing and analysis).
Bulk samples were collected from random pits within the Lunguya PML in February 2010. RC drilling began at Lunguya in June 2011. The program was intended to confirm evidence of reef mineralization identified during the 2002 RC and diamond drilling program in the area. A total of 14 drill holes consisting of 1,247m were completed during the month. A number of narrow, parallel, moderate dipping shear structures hosted in granite were intersected. The shears are possibly related to those hosting gold mineralization in the area.
The RC drilling program continued at Lunguya in August 2011, demonstrating the continuity of Nyamakwenge reefs to the southwest of the prospect. Two sets of quartz vein in sheared granite were identified during the drilling program in 2002, with their thickness ranging from 1 – 8m thick. During 2011 RC program another two sets of quartz reefs were identified, with their thickness ranging from 2 to 20m. These two new sets of quartz reef have similar characteristics with the first sets of quartz veins identified.
During the year ended August 31, 2020, no direct property work was conducted on the Lunguya property. The Lunguya Property is currently in the care and maintenance stage.
The Lunguya Property is without known mineral reserves and any exploration program is an exploratory search for ore.
Itetemia Property
Property Description and Location
The Itetemia Property is located in the Mwanza Region of the Lake Victoria Greenstone Region, Tanzania, approximately 90 kilometres by air southwest of the city of Mwanza, situated on the south shore of Lake Victoria.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The property is accessed via local roads from Geita or by plane from Mwanza to an airstrip accommodating the neighbouring Bulyanhulu Mine, owned by Barrick. The Barrick airstrip is 3.75 km west of the western boundary of the Itetemia prospecting license, and approximately 4 km northeast of the Nyamykonze village. Local resources are available at Mwanza, located on the southern shore of Lake Victoria.
The topography in the region and on the property consists of large flat-lying areas surrounded by numerous small hills. The hills have elevations of up to 100 m above local terrain. The hills are thickly vegetated and access is only possible along cut lines. Little outcrop exists on the property. The climate is similar to the rest of the region. The rainy season starts in November and lasts to the middle of April, but precipitation is irregular from one season to another. The dry seasons are usually hot. Mwanza, located along the southern shore of Lake Victoria, can, and has, provided limited supplies for mining and exploration operations in the area. Dwellers in the area of the Itetemia Property, such as the neighbouring Nyamykonze village, are traditionally subsistence farmers and ranchers, and have limited mining experience from the Bulyanhulu operation and numerous small scale activities. Water for the purpose of mining and processing is not readily available in the region; however, a pipeline from Lake Victoria built by Barrick for its Bulyanhulu Mine, provides an adequate supply.
The large, relatively flat terrain surrounding the known gold mineralization may be suitable for potential tailings and waste rock storage and for heap leach pads and a potential processing plant. Electric power is available via the national grid within 5 km; due to the unreliability of such power, alternative forms of residual or back-up power would be necessary for mining or processing operations, such as diesel power generation used by Barrick at its Bulyanhulu mine.
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Ownership
Prior Ownership
With respect to one Itetemia prospecting license, the interest of the Company was acquired from Stamico pursuant to a joint venture agreement dated July 12, 1994 (the “Stamico Venture Agreement”). The Stamico Venture Agreement obligated the Company to make two initial payments of TSh$1,000,000 and US$7,200 to Stamico, both of which were satisfied.
The Company’s Interest
Through prospecting and mining option agreements, the Company has options to acquire interests in several Itetemia Property prospecting licenses. The prospecting licenses comprising the Itetemia Property are indirectly held by the Company through the Company’s subsidiaries, Tancan or Tanzam. In the case of one prospecting license, Tancan acquired its interest pursuant to the Stamico Venture Agreement, as amended June 18, 2001 and July 2005, which provides, among other things, that:
1.Tancan had to pay Stamico, on execution of the Stamico Venture Agreement, the sum of US$7,200 (as an advance against the 2% gross revenue royalty) and TSh1,000,000.
2.Tancan and Stamico were to form a joint venture company for the purpose of holding the prospecting license that shall be held 10% by Stamico (with no obligation to contribute) and 90% by Tancan, which was effected through the formation of Itetemia Mining Co.
3.Stamico is entitled to acquire an additional 20% interest in the joint venture company by paying a sum equal to 20% of the cost of placing the property into commercial production based on the feasibility study, if and when submitted to the Government of Tanzania for such purpose.
4.Tancan shall assist Stamico in raising the required capital to exercise the right referred to in (3) above.
5.Tancan was to expend the sum of US$25,000 in the first year and US$50,000 annually thereafter in relation to the training of Tanzanian personnel.
6.Upon commencement of commercial production, Stamico shall receive a 2% gross revenue royalty, which shall be increased to a 2.5% gross revenue royalty should a mine on the Itetemia prospecting license produce recoverable gold in excess of 12 grams per tonne.
7.Tancan shall pay to Stamico, as an advance against the 2% gross revenue royalty, the sum of US$7,200 on or before every anniversary of the Stamico Venture Agreement up until the development phase, upon and after which the annual sum of US$10,000 shall be paid as an advance against such royalty.
8.Tancan shall show preference to Stamico for the provision of local materials and services during the period of mining operations.
9.As amended July 2005, Tancan had to pay to Stamico the sum of US$15,000 on or before July 12 of 2006 and 2007, and ending upon commercial production, provided that commercial production commences by December 31, 2007, failing which the aforementioned payment shall be revisited. As expected, commercial production did not commence by December 31, 2007. In 2008, the annual option fee was renegotiated to US$25,000 per annum until commercial production.
10.Tancan may assign its rights under the agreement, subject to the prior written consent of Stamico.
The Itetemia prospecting licences are adjacent to Barrick’s Bulyanhulu gold mine.
History
The exploration history of the Itetemia Property from 2006 to 2020 is summarized as follows:
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Itetemia Exploration History Synopsis
Year | Operator | Work Performed |
2006 | Tancan | In-house evaluation. 4-hole diamond drill program |
2007 | Sloane | Planned 2000 m RC drill program and 3000 m infill diamond drilling program. |
2008 | Sloane | First phase drill program consisted of 10 Reverse Circulation (RC) aggregating 1,489m. Eight diamond drill holes were drilled totalling 2,286.5m. |
2009 | Sloane | Data analysis |
2010 | Sloane | Data analysis |
2013 | Company | In-house evaluation |
2014 | Company | Digital Terrain Model (DTM) survey pickups using GPS to create topographical survey over the resource area for resource modelling, completion of study, which was contracted to MaSS Resources Company Ltd., submission of the Final Itetemia Gold Project (IGP) Study by MaSS Resources company, Environmental Impact Assessment (EIA) study on the Itetemia Gold Project (IGP), which was contracted to Efficient Consultants environmental experts. The EIA study is ongoing and completed activities include - Visit to site, conducting consultative meetings with stake holders, consultation with OSHA officials & Lake zone mines officer, project registration with NEMC, submission of brief project report to NEMC for project screening, preparation of Scoping Project Report and Terms of Reference (ToR) for management approval before submission and the submission of the Scoping Report to NEMC for approval. |
2015 | Company | EIA study report approved and ESIA certificate issued. Application to convert PL into Mining License procedures have commenced |
2016 - 2020 | Company | Itetemia Mining License Application no/01722 submitted on 4th November 2015 still under review by the Ministry of Energy and Minerals. No fieldwork conducted pending resolution on application. |
Geology
The Lake Victoria area contains 12 Archean Nyanzian greenstone belts which are surrounded by and have been interrupted by numerous granitic intrusions. The Nyanzian belts comprise a volcano-sedimentary sequence composed of mafic to felsic volcanics (lavas and tuffs), BIF and shales. The greenstone belts have been grouped into locally distinct geographic regions. One of these regions is the Southwest Mwanza Region which includes a large area south of the town of Mwanza, located on the south shore of Lake Victoria. There are five greenstone belts in the Southwest Mwanza Region, one of which is the Ushirombo belt. The Ushirombo belt is an east-west trending belt, the eastern end of which is located approximately 25 km west of the southern end of Smith Sound on Lake Victoria. The eastern end of the belt is arcuate in shape and trends northerly tangential to the northwestern flank of the Siga Hills.
The Itetemia Property is underlain by the northerly trending eastern portion of the Ushirombo Nyanzian greenstone belt. Granite underlies the eastern and northern portions of the property. The greenstone/granite contact trends northerly through the east-central portion of the Itetemia prospecting license and through the central portion of the Itetemia East prospecting license onto the Itetemia Village license; at which point, the contract tends westerly through the Mwingilo license cutting the northeast corner of the Ngula license. Sixty percent of the Itetemia, Itetemia North and Ngula licenses are underlain by the Nyanzian greenstone belt. The remaining 40% is underlain by granite. Granite variably underlies 90 to 100% of the Itetemia East, Itetemia Village and Mwingilo prospecting licenses. The Mbuga soil covers 10 to 40% of the property.
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Mineralization
The sulphide mineralization encountered on the Itetemia Property comprises massive to semi-massive, stringers, veins and veinlets, disseminated and nodular mineralization. The types of mineralization are (i) sulphides associated with volcanism activity; (ii) remobilized sulphides associated with deformation (shear hosted); and (iii) sulphides associated with sedimentation. The gold and metallic contents associated with this mineralization are variable and the relation between the grades and the mineralized type is not well known at this stage.
The massive to semi-massive sulphide mineralization seems to be related to volcanism. It occurs in two areas on the Property. One area is located in the northern part of the licenses and has been intersected by the hole ITDD-06. More than 30 m. of sulphides were intersected at the contact between a QFP and an argillite horizon separating two pillowed basalts. The sulphide content ranges from 10 to 90% pyrrhotite, 2 to 5% pyrite, trace to 5% sphalerite, trace to 1% copper.
The Golden Horseshoe Reef mineralization occurs as massive sulphide veins locally ranging from 15-30 cm wide. Sulphides dominantly appear in veins/veinlets less than 5 cm wide in felsic volcanic rocks. Five to thirty percent pyrite-pyrrhotite is common over sections of 1 to 15 m along the holes. They are sub-concordant and parallel to the schistosity. The strong shearing at the Golden Horseshoe Reef probably represents a remobilization of the sulphides.
Exploration
The majority of the exploration work in 2007 consisted of RC and diamond drilling, along with limited ground geophysics. Exploration crews were mobilized to the Itetemia Property in August 2007 and drilling commenced in mid-September. The first phase drill program completed 10 RC holes aggregating 1,489m and eight diamond drill holes totaling 2,286.5m. The drill program targeted the shallowest part of the previously established Golden Horseshoe Reef with a view to developing an open pit resource with a notional floor level of 200m below surface. In support of preparation of a resource estimate, drill holes were sited to provide data at grid points at or below 50 x 50m spacing. A number of deeper holes were also sited to test the extent of the mineralized body at depth and along strike.
The Company is reviewing various alternatives for advancing its Itetemia Property. Previous studies have indicated that the Golden Horseshoe Reef (GHR) represents a small, yet robust, medium-grade, near surface gold deposit that warrants further feasibility investigations.
During the period ended August 31, 2020, no direct property work was conducted on the Itetemia property.
The Company has incurred total net costs (after any recoveries, if any) of $nil on the Itetemia Property for the year ended August 31, 2020. The Itetemia property is currently in the care and maintenance stage.
During fiscal 2019 the Company received a notice of rejection of the mining license application for the Itetemia Property, for failure to have complied with certain regulations. The notice sent by the government did not follow due process under Tanzanian law and, as such, the Company filed an appeal to this notification subsequent to year-end and the Company remains confident, as confirmed by legal counsel, that the mining application was filed correctly and they were not in default of the claims listed in the rejection notification. In light of the Company’s focus on the development of the Buckreef Project, the Company recorded a write off of $6,059,044 related to the Itetemia Property for the year ended December 31, 2019 (August 31, 2018 - $nil).
Property Description and Location
The Luhala property is located in Misungwi District of Mwanza Region of Tanzania. It lies approximately 70 kilometres south of the city of Mwanza. The Luhala prospecting licenses are in good standing with respect to required filings and payments with the Government of Tanzania.
The target on the Luhala property is gold stockwork mineralization associated with felsic rock units in dilatational structures.
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Accessibility, Climate, Local Resources, Infrastructure and Physiography
Access to the Luhala Property is via the main Mwanza – Shinyanga road, which is a single lane, good to excellent quality, asphalt highway. To access the property, one drives approximately 45km to the south of Mwanza, where a dirt road from a junction at the settlement of Manawa, leads southwest to the town of Misasi. The property has year round access, although seasonal winter rains, December to March, may result in flooding in low lying areas which are dominated by mbuga (black organic rich lacustrine flood soils). Most lowland areas are under active cultivation, corn, rice, beans and mixed crops, by subsistence farmers. Low scrub and thorn bushes cover the small hills. The area has been, for many years, deforested by local agricultural practices.
At Luhala, the mean elevation is approximately 1,200 m above sea level, with a series of small sub-rounded hills, rising up to one hundred meters above the surrounding plain. These hills are typically formed by either resistive iron formations or felsic volcanic rocks. Mafic volcanic rocks weather recessively and are typically only exposed in trenches through well formed laterite profiles. Laterite development is extensive with brick-red laterites overlying weak mottled zones and saprolites at a depth of approximately 3-5m. Deep weathering penetrates 45 - 60m vertically within the subsurface.
An enthusiastic and competent labor force is available through the surrounding villages, and local people have been routinely hired during the trenching, drilling and soil sampling programs conducted on this property. However, no other significant infrastructure is available.
History
Luhala has had a significantly more protracted exploration history than Lunguya, beginning with the initial exploration by the then Tanganyikan Geological Survey in 1947. The exploration history of Luhala since 2006 to 2020 is summarized as:
Luhala Exploration History Synopsis
Year | Operator | Work Performed |
2006 | Tancan | Diamond drilling, RC drilling |
2007 | Sloane | Follow-up exploration planning |
2008 | Sloane | Data analysis |
2009 | Sloane | Data analysis |
2010 | Sloane | Data analysis |
2013 | Company | In-house evaluation |
2014 | Company | Continued in-house evaluation |
2015 | Company | Continued in-house evaluation/property maintenance |
2016-2020 | Company | No fieldwork conducted. Property maintenance observed. |
Geology
Luhala is found within the eastern portion of the Buhungukira Belt, a local place name assigned to one of the eight greenstone belts in the Lake Victoria District. These rocks are believed to be the eastern continuation of the Geita Greenstone Belt and consist of dominantly Upper Nyanzian rock sequences.
In the Luhala area, the predominant structural grain is dominated by an early deformational event which has deformed all supracrustal rocks into tight, south to southwest plunging, west overturned, synforms and antiforms. The short limbs of these folds may have east-west strikes and modest, 40 degree south dips. The long limbs of these folds have north to northeast strikes and generally much steeper, 60 – 80 degree, and east dips.
At Luhala, three principal mineralized zones have been identified. These include Kisunge Hill, Shilalo South, and Shilalo West. All of the three principal mineralized areas are linked by a common southwest plunging antiform, the limbs of which are separated by 500 to 800m and converge just south of Line 6200 E and 3800 N. Mineralization to Kisunge Hill is associated with a chert – felsic volcanic contact. As Shilalo South, structurally controlled gold mineralization closely tracks the position of a massive to locally well-bedded chert or cherty iron formation. The results of diamond drilling in Shilalo West strongly outline
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the importance of the felsic volcanic - chert – structural sites and gold association. For example, borehole LSD – 08A is collared in the hangingwall to the Shilalo West mineralized zone, traverses the host rhyolite-chert lithology, and terminates in the footwall. This borehole intersected significant gold mineralization of 3.55 g/t Au over 5 m near the hangingwall contact of the felsic volcanic rocks, and is mineralized repeatedly at over one gram ranges throughout much of the felsic host interval, which in this borehole is over 35m thick.
The felsic volcanic rock package at Shilalo West once again presents an excellent structural site for the development of dilatant sites and gold mineralization. As of Shilalo South, a well defined planar, brittle-ductile structural zone was not identified at Shilalo West. Gold distribution is likely related to the presence of extensional and shears extensional veinlets, which are developed within the felsic volcanic rocks at or near, the felsic volcanic “red tuff” contact.
Exploration
During the year ended August 31, 2020, no site-based exploration work was conducted on the Luhala Property.
At Luhala, three principal mineralized zones have been identified: Kisunge Hill, Shilalo South, and Shilalo West. Gold mineralization is associated with zones of diffuse silicification, localized around small scale fractures within competent chert and felsic volcanic rock units.
Mineralization
At Luhala, gold mineralization is associated with zones of diffuse silicification, localized around small cm and mm scale fractures within competent chert and felsic volcanic rock units. Major discordant vein structures are not identified and planar high strain zones are absent.
No specific gravity data have been calculated for any of the rocks cored in these intervals and without strong cross sectional control, no reliable resource estimates for any of the principal mineralized zones at Kisunge, Shilalo South and Shilalo West may be calculated.
Historical Drilling
The Phase 7 drill program at Luhala was completed in August 2006 and consisted of nine diamond drill holes aggregating 991m. All the holes tested the eastern limb of the Kisunge Main Zone. Among the better intercepts reported from this program was 3.07m @ 6.87 g/t. Within this intercept was a 1.44m interval averaging 10.95 g/t. Invaluable structural information was obtained from the Phase 7 diamond drilling program which will be utilized in the planning process for follow-up exploration.
The Company has incurred total net costs (net of recoveries, if any) of $nil for the year ended August 31, 2020. The Luhala Property is currently in the care and maintenance stage.
During the year ended August 31, 2019, the Company recorded a write off of $3,401,492 related to the property to reflect the Company’s intention to focus on and develop the Buckreef Project (August 31, 2018 - $nil).
The Luhala Property is without known mineral reserves and any exploration program is an exploratory search for ore.
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Item 6. Directors, Senior Management and Employees
A.Directors and Senior Management
The following is a list of the Company’s current directors and officers. The directors named below were elected or re-elected by the Company’s shareholders on February 28, 2019, with the exception of Andrew Cheatle, who was appointed as a director on October 28, 2020. There are no family relationships between the directors and officers.
Name, Municipality of Residence and Position With the Company | Principal occupation or employment and, if not a previously elected director, occupation during the past 5 years | Served as a Director Continuously Since |
Jeffrey Duval | Acting CEO of the Company; licensed General Engineering Contractor | Officer only |
James E. Sinclair | Executive Chairman and Director, former CEO of the Company | April 30, 2002 |
Dr. Norman Betts | Associate Professor, Faculty of Business Administration, University of New Brunswick and a Chartered Accountant Fellow | January 4, 2005 |
William Harvey | Clinical Psychologist | April 30, 2002 |
Rosalind Morrow | Lawyer; Partner, Borden Ladner Gervais LLP | October 20, 2003 |
Ulrich E. Rath | Formerly President and CEO and Director of Chariot Resources Ltd. | October 7, 2003 |
Andrew Cheatle | Mining Executive, Capital Markets; Principal Geoscientist | October 29, 2020 |
Marco Guidi | Chartered Professional Accountant, currently serving as Chief Financial Officer, Controller and Accountant for a number of junior mining companies. | Officer only |
Donna M. Moroney | President and Owner of Wiklow Corporate Services Inc. | Officer only |
Peter Zizhou Tanzanian General Manager | General Manager | Officer only |
Directors and Senior Management
Jeffrey Duval, Acting Chief Executive Officer
Jeffrey Duval, Mr. Duval is a licensed General Engineering Contractor with over a quarter-century of experience working with several construction firms in the US southwest. His experience in corporate executive management, project development and project management, excavation, movement of material, earthworks, and related skills is a valuable asset to the Company as it aggressively moves to monetize the in-ground assets on its various licenses. Mr. Duval’s management
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skills, efforts and involvement were instrumental in the Company furthering its planned objectives over the past 12 months. Mr. Duval, age 57, devotes 100% of his time in the roll of Acting Chief Executive Officer for the Company.
James E. Sinclair, Executive Chair and Director
Mr. Sinclair is the Executive Chair and a director of the Company. He was also previously served as CEO. Mr. Sinclair, age 76, devotes his full time to the business and affairs of the Company.
Mr. Sinclair is a precious metals specialist, commodities and foreign currency trader, and a respected minerals industry executive. He founded the Sinclair Group of Companies in 1977 which offered full brokerage services in stocks, bonds, and other investment vehicles. The companies, which operated branches in New York, Kansas City, Toronto, Chicago, London and Geneva, were sold in 1983. From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for a $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker. He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation and Global Arbitrage, a derivative dealer in metals and currencies.
Mr. Sinclair has authored numerous magazine articles and three books dealing with a variety of investment subjects including precious metals, trading strategies and geopolitical events, and their relationship to world economics and the markets. He maintains a high public profile and his commentary on gold and other financial issues garners extensive media attention at home and abroad. Mr. Sinclair is Executive Chairman of the Advisory Board to the Singapore Precious Metals Exchange, a physical metal exchange.
Dr. Norman Betts, Ph.D., Director
Dr. Betts is an associate professor, Faculty of Business Administration, University of New Brunswick (UNB) and a Chartered Accountant Fellow (FCA). Dr. Betts serves as a Chair of the board of directors of Starfield Resources Inc. and as a director and member of the audit committees of Tembec Inc., New Brunswick Power Corporation, Export Development Canada and Adex Mining Inc. He is also a co-chair of the board of trustees of the UNB Pension Plan for Academic Employees. He is a former Finance Minister and Minister of Business New Brunswick with the Province of New Brunswick. He was awarded a PhD in Management from the School of Business at Queen’s University in 1992. Dr. Betts, age 63, devotes approximately 10% of his time to the business and affairs of the Company.
Dr. William Harvey, B.A., Ph.D., Director
Dr. Harvey is a Clinical Psychologist, who for over thirty years has served as a consultant and technical expert on matters relating to substance abuse prevention and mental health promotion to a wide variety of private and governmental programs and agencies in the United States. These include the National Institute of Drug Abuse, the National Institute of Alcoholism and Alcohol Abuse, the Office of Juvenile Justice & Delinquency Prevention, and the National Mental Health Association. He was an Adjunct Professor in the Department of Sociology at Washington University, and a Senior Research Scientist at the Missouri Institute of Mental Health, University of Missouri. He continues to be involved in the formulation of new programs and policies aimed at the betterment of society. Dr. Harvey will continue to expand the role which the Company has at the local level to ensure that stakeholder interests are addressed. Dr. Harvey, age 87, devotes approximately 10% of his time to the business and affairs of the Company.
Rosalind Morrow, B.A., B.Ed., A.R.C.T, LL.B., Director
A graduate of Trinity College, Toronto, the Royal Conservatory of Music of Toronto, the University of Toronto Faculty of Education (French immersion specialist) and the University of Toronto Law School, Ms. Morrow specializes in corporate and securities law with a particular emphasis on financings, including government and structured finance, corporate governance and mergers and acquisitions. She has advised Canadian and international corporations on a number of major projects in the financial, communications and resource sectors. Ms. Morrow is a former member of the Securities Advisory Committee to the Ontario Securities Commission. Since the inception of the program in 2001, Ms. Morrow has been lead external counsel to Canada Mortgage and Housing Corporation on over $250 billion in fully underwritten global bond issuances under its Canada Mortgage Bond Program, and during the financial crisis has represented the Canadian federal government on its $125 billion Insured Mortgage Purchase Program, the Canadian equivalent of the U.S. TARP Program. A past president of the Women’s Law Association of Ontario and recipient of its President’s Award, Ms. Morrow served on the Board of Governors of Trent University where she was a member of its Executive Committee and Chair of its Nominating and Governance Committee. In 2018, Ms. Morrow chaired Trent University’s Special Review Committee on colleges. She is a director and past Chair of The Toronto and Region Conservation Foundation, the charitable arm of the
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Toronto and Region Conservation Authority, one of the largest environmental organizations in North America, dedicated to the preservation of a green environment in the Toronto region. Ms. Morrow, age 66, devotes approximately 10% of her time to the business and affairs of the Company.
Ulrich E. Rath, Director
Mr. Rath has a wide range of experience in the mining industry, and has specific experience in North America, South America including Argentina, Chile and Peru and in South Africa. Mr. Rath was the President and CEO and Director of Chariot Resources Ltd., a junior resource company focused on the exploration, acquisition and development of copper and precious metal mineral deposits in the Andes region of Latin America. In June 2010, Mr. Rath facilitated the sale of Chariot Resources following a global auction. The sale was approved by over 98% of the shareholders of Chariot Resources. As the former President, CEO and Director of Chimera Gold Corp. (previously known as EAGC Ventures), Ulrich Rath was responsible for facilitating the $US67 million acquisition of gold operations in the East Rand region of South Africa that now produce more than 200,000 ounces gold per annum. Subsequently, the Board of Chimera agreed to a 1:1 merger with Bema Gold Corp. He was formerly CEO and director of Compania Minera Milpo, a medium sized Peruvian zinc mining company. Mr. Rath was also formerly Vice-President, Corporate Development, for Rio Algom Ltd. from December 1992 to October 1998. Rio Algom Ltd. was a U.S. reporting issuer, whose common shares were listed on the American Stock Exchange. Mr. Rath, age 71, devotes approximately 10% of his time to the business and affairs of the Company.
Andrew Cheatle, Director
Mr. Cheatle is a purpose driven C-suite leader, executive and director within the mining industry. His track record of achieving company growth, turnarounds, and capital raising is combined with a strong understanding of equity & project financing, technical assessments, mergers & acquisitions, capital markets, ESG requirements and geopolitical risk. He draws on his vast global network of other CEO’s, investors, industry experts, government and civil society for maximum benefit to each undertaking; in particular he has a strong network of and relationships with investors and capital funds based in London, Toronto and Zurich. As a sought-after trusted advisor to executive boards, investment funds / mining analysts and ministerial level government officials, his gravitas is demonstrated through receiving awards, high profile positions and engagement with leading contemporaries in thought leadership. This is coupled with a public persona comfortable interacting with stakeholders from investors, grass-roots level (such as artisanal miners), through to speaking with audiences at the World Bank and the United Nations. A graduate of the Royal School of Mines, Imperial College, London, he has worked across multiple commodities and specialising in gold. He is based in both London (UK) and Toronto (Canada). Mr. Cheatle, age 57, devotes approximately 10% of his time to the business and affairs of the Company.
Marco Guidi, B.Com (Hons), CPA, CA, Chief Financial Officer
Mr. Guidi is a Chartered Professional Accountant and holds an Honours Bachelor degree in Business Administration from Wilfrid Laurier University. Mr. Guidi began his career with an accounting firm where he was as an audit supervisor specializing in serving the audit and tax needs of clients in a variety of industries. He has worked with publicly listed junior mining companies, technology companies, and privately-owned and entrepreneurial companies. In 2010, Mr. Guidi transitioned out of public accounting and is currently serving as Chief Financial Officer, Controller and Accountant for a number of junior mining companies. Mr. Guidi, age 36, devotes 30% of his time to the business and affairs of the Company.
Donna M. Moroney, Corporate Secretary
Ms. Moroney has over 30 years of extensive experience in regulatory and corporate compliance in both Canada and the United States, and as a senior officer for various public companies, and has instructed and provided training in regulatory compliance. As President and owner of Wiklow Corporate Services Inc. since 2008, she assists companies in the resource, financial and technology sectors in maintaining the securities and exchange demands on public companies, as well as keeping them up-to-date on relevant issues, policies and working practices. Ms. Moroney assists companies reporting in the U.S. in preparing registration statements, quarterly and annual financial filings and other various facets of meeting U.S. securities requirements. Ms. Moroney, age 60, devotes 25% of her time to the business and affairs of the Company.
Peter Zizhou, General Manager
Mr. Zizhou is a holder of BSc (General-Geology/Geography), BSc (Hons-Geology) and MSc (Exploration Geology) degrees acquired from the University of Zimbabwe over the period 1988-2002. He is a registered Professional Natural Scientist (Geology) with the South African Council for Scientific Professions (SACNASP-REG NO. 400028/08). He commenced his career in 1992, conducting regional field mapping for the Geological Survey of Zimbabwe. Mr. Zizhou
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subsequently joined the gold mining and exploration private sector with Kinross Gold (Zimbabwe) Corporation and subsequently with Caledonia Resources attaining the position of Exploration Manager by 2004. In 2007, he relocated to Tanzania, where he joined the Company as a Senior Exploration Geologist but subsequently rose through the ranks as Exploration Manager (2009) and finally as General Manager (2010). As GM, he successfully steered the Company through the preliminary economic assessment study of the Buckreef Project on behalf of the Company with external consultants. At the same time, he instituted a resource drilling program on several prospects associated with the Buckreef Project, the results of which are currently posted on the Company website. After brief stints (2012-2014) with Kinross Gold Corporation-Mauritania), AngloGold Ashanti (Geita Gold Mine, Tanzania) and Mawarid Mining Tanzania, he rejoined the Company as General Manager (Operations) and successfully conducted pilot mining on the Buckreef South Pit as well as assist with the recently published Mining Pre-Feasibility Report on the Buckreef Project. Mr. Zizhou, age 53, works full-time for the Company.
Cease Trade Orders
No director or executive officer of the Company (or any personal holding corporation of such persons) is, or was within the ten years prior to the date hereof, a director, chief executive officer or chief financial officer of any company, including the Company, that:
(i)was subject to an order (as defined below) that was issued while the director or executive officer was acting in the capacity as director, chief executive officer, or chief financial officer; or
(ii)was subject to an order (as defined below) that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer, or chief financial officer.
For the purposes of the above disclosure, “order” means:
(i)a cease trade order;
(ii)an order similar to a cease trade order; or
(iii)an order that denied the relevant company access to any exemption under securities legislation;
that was in effect for a period of more than thirty consecutive days.
Penalties or Sanctions
Within the past 10 years no directors or executive officers of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company (or any personal holding corporation of such persons), has been subject to:
(a)any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority or has entered into a settlement agreement with a Canadian securities regulatory authority; or
(b)any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.
Personal Bankruptcies
Other than as set out below, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to materially affect control of the Company (or any personal holding corporation of such persons):
(i)is at the date hereof, or has been within the last ten years, a director or executive officer of any company that while the person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets; or
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(ii)has, within the last ten years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.
On March 7, 2013 Starfield Resources Inc. (“Starfield”) filed a notice of intention to make a proposal to its creditors while it undertook a sale and investment solicitation process in respect of its assets, undertakings and properties. Starfield was delisted from the TSX for failure to meet continued listing requirements on April 18, 2013. Norman Betts was a director of Starfield at that time.
Conflicts of Interest
Except as otherwise stated in this Annual Report, there is no existing material conflict of interest between the Company or its subsidiaries and a director or executive officer of the Company or its subsidiaries. However, certain directors and officers of the Company are and may continue to be involved in the mining and mineral exploration industry through their direct and indirect participation in corporations, partnerships or joint ventures which are potential competitors. Situations may arise in connection with potential acquisitions and investments where the other interests of these directors and officers may conflict with the interests of the Company. As required by law, each of the directors of the Company is required to act honestly, in good faith and in the best interests of the Company. Any conflicts which arise shall be disclosed by the directors and officers in accordance with the Business Corporations Act (Alberta) and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed on them by law.
Compensation Discussion and Analysis
The adequacy and form of director and officer compensation is reviewed on an annual basis by the Audit and Compensation Committee of the Board of Directors (the “Board”) of the Company. The Audit and Compensation Committee recommends to the Board any adjustments to the compensation payable to directors, officers, and senior staff. The Audit and Compensation Committee is comprised of three directors: Norman Betts (Chair), William Harvey and Ulrich Rath, all of whom are independent for the purposes of National Instrument 58-101 – Corporate Governance.
The Audit and Compensation Committee meet to discuss salary matters as required. Its recommendations are reached primarily by comparison of the remuneration paid by the Company with publicly available information on remuneration paid by other reporting issuers that the Audit and Compensation Committee feels are similarly placed within the same stage of business development as the Company. No consultant or advisor has been retained by the Company to assist in determining compensation.
In assessing the compensation of its executive officers, the Company does not have in place any formal objectives, criteria or analysis; instead, it relies mainly on the recommendations of the Audit and Compensation Committee and Board discussion. The Company’s executive compensation program has three principal components: base salary, incentive bonus plan, and equity compensation plans.
Base salaries for all employees of the Company are established for each position based on market information obtained through the recruitment process from recruitment consultants and candidates on an ad hoc basis. The Audit and Compensation Committee familiarizes itself with this market information, but does not employ a statistical or formal benchmarking approach in making its compensation recommendations. Individual qualifications and experience, together with the Company’s pay scale and any market information obtained, are considered in determining base compensation levels.
Equity compensation plans are designed to provide an incentive to the directors, officers, employees and consultants of the Company to achieve the longer-term objectives of the Company; to give suitable recognition to the ability and industry of such persons who contribute materially to the success of the Company; and to attract and retain persons of experience and ability, by providing them with the opportunity to acquire an increased proprietary interest in the Company. The Company awards equity based compensation to its executive officers and employees, based upon the Board’s review of the recommendations of the Audit and Compensation Committee. Previous awards of such equity compensation are taken into account when considering new grants. The Company does not currently have an incentive stock option plan and none is contemplated.
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Implementation of a new incentive equity based compensation plans and amendments to the existing plans are the responsibility of the Company’s Board. The Company’s equity compensation plans are discussed in more detail below, under the sub-heading, “Omnibus Equity Incentive Plan”.
The Company's Code of Ethics and Business Conduct prohibits directors and NEOs (defined below) from entering into transactions to hedge or offset a decrease or protect the value of equity securities of the Company granted as compensation or otherwise directly or indirectly held.
The Company has no other forms of compensation, although payments may be made from time to time to individuals or companies they control for the provision of consulting services. Such consulting services are paid for by the Company at competitive industry rates for work of a similar nature by reputable arm’s length services providers.
The Company is required, under applicable securities legislation in Canada to disclose to its shareholders details of compensation paid to its named executive officers (a “named executive officer” or “NEO”). A named executive officer as defined in Form 51-102F6 – Statement of Executive Compensation, prescribed by National Instrument 51-102 - Continuous Disclosure Obligations, means an individual who, at any time during the year, was:
(a)the Company’s chief executive officer (“CEO”);
(b)the Company’s chief financial officer (“CFO”);
(c)each of the Company’s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year and whose total compensation will be, individually, more than $150,000 for that financial year; and
(d)each individual who would be a NEO under paragraph (c) but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end of the most recently completed financial year.
The following tables set forth particulars concerning the compensation of the named executive officers for the Company’s last three fiscal years ended August 31, 2020, 2019 and 2018:
Summary Compensation Table
Name and Principal Position | Year | Salary ($) | Share-based awards ($) | Option-based awards ($) | Non-equity incentive plan compen- sation ($) | Pension Value ($) | All other compen-sation ($) (4) | Total compen-sation ($) | |
Annual incentive plans (RSU) | Long term incen- tive plans (ESOP) | ||||||||
Jeffrey Duval, | 2020 | 267,085 (1) | Nil | Nil | Nil | Nil | Nil | 770,000 | 1,037,085 |
James Sinclair, | 2020 | 207,794 (1) | Nil | Nil | Nil | Nil | Nil | 1,001,000 | 1,208,794 |
Marco Guidi, | 2020 | 77,500 | Nil | Nil | Nil | Nil | Nil | 57,750 | 135,250 |
Donna M. Moroney, (6) | 2020 | 74,000 | Nil | Nil | Nil | Nil | Nil | 57,750 | 131,750 |
2020 | 217,874 | Nil | Nil | Nil | Nil | Nil | 77,000 | 294,874 | |
(1) | US$ exchange average for the year = $1.3449. |
(2) | US$ exchange average for the year = $1.3255. |
(3) | US$ exchange average for the year = $1.2771. |
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(4) | Consists of bonus compensation shares issued at a price of C$0.77 per share. |
(5) | Valued using the Black-Scholes model with the following variables: volatility – 84%, life – 9 years, risk free rate – 0.95%, dividend yield – 0%. |
(6) | Donna Moroney resigned as Corporate Secretary on August 29, 2017 was reappointed as Corporate Secretary on April 1, 2019. |
Compensation is determined by the Audit and Compensation Committee as set out under “Compensation Discussion and Analysis”. Salary compensation is not tied to a named executive officer’s individual performance, however the grant of restricted share units (“RSUs”) may be. The grant date fair value of RSUs is based on the closing price of the Company’s shares on the Toronto Stock Exchange (the “TSX”) on the date of grant. See “Omnibus Equity Compensation Plan” below for more information.
Incentive Plan Awards
Outstanding share-based awards and option-based awards
Option-based Awards | Share-based Awards | ||||||
Name | Year | Number of securities underlying unexercised options (#) | Option exercise price ($) | Option expiration date | Value of unexercised in-the-money RSUs ($) | Number of shares or units of shares that have not vested (#) | Market or payout value of share-based awards that have not vested ($) |
Jeffrey Duval, | 2020 | Nil | Nil | N/A | Nil | N/A | N/A |
James Sinclair, | 2020 | Nil | N/A | N/A | Nil | N/A | N/A |
Marco Guidi, | 2020 | Nil | N/A | N/A | Nil | N/A | N/A |
Donna M. Moroney, | 2020 | Nil | N/A | N/A | Nil | N/A | N/A |
Peter Zizhou, | 2020 | Nil Nil | N/A | N/A | Nil | N/A | N/A |
Incentive plan awards – Value vested or earned during the year
Name | Option-based awards – Value vested during the year ($) | Share-based awards – Value vested during the year ($) (1) | Non-equity incentive plan compensation – Value earned during the year ($) |
Jeffrey Duval, | Nil | 770,000 | Nil |
James Sinclair, | Nil | 1,001,000 | Nil |
Marco Guidi | Nil | 57,750 | Nil |
Donna M. Moroney, | Nil | 57,750 | Nil |
Peter Zizhou, | Nil | 77,000 | Nil |
(1) | Consists of bonus compensation shares issued at a price of C$0.77 per share. |
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Long Term Incentive Plan Awards to NEOs
The Company has made long-term incentive plan awards during the fiscal year ended August 31, 2020 to NEOs of the Company. See “Restricted Stock Unit Plan” and “Employee Share Ownership Plan” below.
Director Compensation
Director Compensation Table
The following table sets forth the value of all compensation provided to directors not including those directors who are also NEOs, for the Company’s most recently completed financial year:
Name | Fees Earned | Stock Options granted (1) | Cash Compensation Election | All Other Compensation | Total |
Norman Betts | 57,532 | Nil | Nil | 92,400 | 149,932 |
William Harvey | 56,719 | Nil | Nil | 77,000 | 133,719 |
Rosalind Morrow | 68,750 | Nil | Nil | 77,000 | 145,750 |
Ulrich Rath | 274,003 | Nil | Nil | 770,000 | 1,044,003 |
Andrew Cheatle (2) | N/A | N/A | N/A | N/A | N/A |
(1) | Consists of bonus compensation shares issued at a price of C$0.77 per share. |
(2) | ·Mr. Cheatle was appointed as a director on October 28, 2020. |
Effective September 1, 2020, annual compensation for outside directors is $70,000 per year, plus $6,875 per year for serving on Committees, plus $3,437.50 per year for serving as Chair of a Committee. The Board approved that at the election of each individual director, annual compensation may be received in cash, paid quarterly, or by the issuance of common shares in the capital stock of the Company, paid in quarterly instalments based on the five day VWAP as of the last day of each quarter, or a combination of both.
Omnibus Equity Incentive Plan
Effective June 26, 2019, the Company adopted the Omnibus Equity Incentive Plan of the company dated June 26, 2019 (the “Omnibus Plan”), which Omnibus Plan was approved by the shareholders at a meeting held on August 16, 2019.
The purposes of the Omnibus Plan are (a) to advance the interests of the Company by enhancing the ability of the Company and its subsidiaries to attract, motivate and retain employees, officers, directors, and consultants, which either of directors or officers may be consultants or employees, (b) to reward such persons for their sustained contributions and (c) to encourage such persons to take into account the long-term corporate performance of the Company.
The Omnibus Plan provides for the grant of :
·options (“Options”), which may be granted by an agreement evidencing the Options granted under the Omnibus Plan (an “Option Agreement”);
·restricted share units (“RSU”), which may be granted by an agreement evidencing the RSUs granted under the Omnibus Plan (a “RSU Agreement”);
·deferred share units (“DSU”), which may be granted by an agreement evidencing the DSUs granted under the Omnibus Plan (a “DSU Agreement”);
·performance share units (“PSU”), which may be granted by an agreement evidencing the PSUs granted under the Omnibus Plan (a “PSU Agreement”).
Options
An Option entitles a holder thereof to purchase a common share at an exercise price set at the time of the grant, which exercise price must in all cases be not less than the Market Price on the date of grant (the “Exercise Price”). Market Price
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is defined as the greater of the volume weighted average trading price of the common shares on the TSX or NYSE American for the five trading days immediately preceding the date of grant (or, if such common shares are not then listed and posted for trading on the TSX or NYSE American, on such stock exchange on which the common shares are listed and posted for trading as may be selected for such purpose by the Board); provided that, for so long as the common shares are listed and posted for trading on the TSX or NYSE American, the Market Price shall not be less than the market price, as calculated under the policies of the TSX or NYSE American and further provided that with respect to an award made to a U.S. Taxpayer (as defined in the Omnibus Plan), such participant and the number of common shares subject to such Omnibus Plan Award shall be identified by the Board or the Committee (as defined in the Omnibus Plan) prior to the start of the applicable five trading day period (“Market Price”). In the event that such Shares are not listed and posted for trading on any exchange, the Market Price shall be the fair market value of such common shares as determined by the Board in its sole discretion and, with respect to an Omnibus Plan Award made to a U.S. Taxpayer, in accordance with Section 409A of the Code (as defined in the Omnibus Plan).
The term of each Option will be fixed by the Plan Administrator, but may not exceed 10 years from the grant date.
Restricted Share Units
An RSU is a unit equivalent in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one common share for each RSU after a specified vesting period determined by the Plan Administrator, in its sole discretion. Upon settlement, holders will receive (a) one fully paid and non-assessable common share in respect of each vested RSU, (b) subject to the approval of the Plan Administrator, a cash payment, or (c) a combination of common shares and cash as contemplated by paragraphs (a) and (b). The cash payment is determined by multiplying the number of RSUs redeemed for cash by the Market Price on the date of settlement.
The number of RSUs granted at any particular time will be calculated by dividing (i) the amount of any compensation that is to be paid in the RSUs, as determined by the Plan Administrator, by (ii) the Market Price of a common share on the date of grant.
Deferred Share Units
A DSU is a unit equivalent in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one common share for each DSU on a future date, generally upon termination of service with the Company. Upon settlement, holders will receive (a) one fully paid and non- assessable common share in respect of each vested DSU, (b) subject to the approval of the Plan Administrator, a cash payment, or (c) a combination of common shares and cash as contemplated by paragraphs (a) and (b). The cash payment is determined with reference to the Market Price in the same manner as with RSUs.
The number of DSUs granted at any particular time will be calculated by dividing (i) the amount of any compensation that is to be paid in the DSUs, as determined by the Plan Administrator, by (ii) the Market Price of a common share on the date of grant.
Performance Share Units
A PSU is a unit equivalent in value to a common share credited by means of a bookkeeping entry in the books of the Company which entitles the holder to receive one common share for each PSU on a future date, generally upon the achievement of certain performance goals within the Company as determined by the Plan Administrator. Upon settlement, holders will receive (a) one fully paid and non- assessable common share in respect of each vested PSU, (b) subject to the approval of the Plan Administrator, a cash payment or (c) a combination of common shares and cash as contemplated by paragraphs (a) and (b). The cash payment is determined with reference to the Market Price in the same manner as with RSUs.
Dividend Equivalents
RSUs, PSUs and DSUs shall be credited with dividend equivalents in the form of additional RSUs, PSUs and DSUs, as applicable. Dividend equivalents shall vest in proportion to, and settle in the same manner as, the awards to which they relate. Such dividend equivalents shall be computed by dividing: (a) the amount obtained by multiplying the amount of the dividend declared and paid per common share by the number of RSUs, PSUs and DSUs, as applicable, held by the participant on the Record Date for the payment of such dividend, by (b) the Market Price at the close of the first business day immediately following the dividend record date, with fractions computed to three decimal places.
The Options, RSUs, DSUs, and PSUs granted pursuant to the Omnibus Plan are collectively referred to as “Omnibus Plan Awards” in this Circular.
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The Omnibus Plan provides for the grant of other share-based awards to participants (“Other Share-Based Awards”), which awards would include the grant of common shares. All Other Share-Based Awards will be granted by an agreement evidencing the Other Share-Based Awards granted under the Omnibus Plan.
Subject to adjustments as provided for under the Omnibus Plan, the maximum number of shares issuable pursuant to Omnibus Plan Awards outstanding at any time under the Plan shall not exceed 10% of the aggregate number of common shares outstanding from time to time on a non-diluted basis; provided that the acquisition of common shares by the Company for cancellation shall not constitute non-compliance with the Omnibus Plan for any Omnibus Plan Awards outstanding prior to such purchase of common shares for cancellation.
For more particulars about the Omnibus Plan we refer you to the Company’s Management Information Circular dated June 26, 2019 or the copy of the Omnibus Plan included with this Form 20-F Annual Report.
The Omnibus Plan replaces all previous equity compensation plans of the Company, including the Restricted Stock Unit Plan and Stock Option Plan.
RSUs Granted to Directors and Named Executive Officers During the Fiscal Year Ended August 31, 2019:
During the fiscal year ended August 31, 2019, there were no were no RSUs granted to directors and Named Executive Officers, nor did any RSUs vest.
Outstanding RSUs
There are no RSUs outstanding as of August 31, 2019.
Pension Plan Benefits
The Company has not set aside or accrued any funds for pension, retirement or similar benefits.
Equity Compensation Plan Information
The following table provides information regarding compensation plans under which securities of the Company are authorized for issuance in effect as of the end of the Company’s most recently completed financial year end:
| Number of securities to be issued upon exercise of outstanding Stock Options | Weighted average exercise price of outstanding Stock Options | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Plan Category | (a) | (b) | (c) |
Equity compensation plans approved by security holders (Omnibus Equity Compensation Plan) | 7,352,000 | $0.41 CAD | 7,022,512 |
Total | 7,352,000 | $0.41 CAD | 7,022,512 |
Termination and Change of Control Benefits
There are currently no contracts for outside management services. There are currently no employment contracts in place whereby any person is entitled to termination or change of control benefits.
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The directors of the Company serve a one year term and are elected at the annual general meeting of shareholders. At the last annual general meeting, held on February 27, 2020, the shareholders elected James Sinclair, William Harvey, Rosalind Morrow, Norman Betts and Ulrich Rath as directors. The officers of the Company are elected by the Board and serve at the pleasure of the Board.
The Company has an audit committee consisting of Ulrich Rath, William Harvey and Norman Betts. The roles and responsibilities of the audit committee have been specifically defined as described below under Audit Committee Information, and include responsibilities for overseeing management reporting on internal control. The audit committee has direct communication channels with the external auditors.
The Company also has a compensation committee. The audit committee and compensation committee is collectively referred to as the “Audit and Compensation Committee”.
The adequacy and form of director and officer compensation is reviewed on an annual basis by the Audit and Compensation Committee of the Board of Directors of the Company. The Audit and Compensation Committee recommends to the Board any adjustments to the compensation payable to directors, officers, and senior staff. The Audit and Compensation Committee is comprised of three directors: Norman Betts (Chair), William Harvey and Ulrich Rath, all of whom are independent for the purposes of National Instrument 58-101 – Corporate Governance. The Audit and Compensation Committee meet to discuss salary matters as required. Its recommendations are reached primarily by comparison of the remuneration paid by the Company with publicly available information on remuneration paid by other reporting issuers that the Audit and Compensation Committee feels are similarly placed within the same stage of business development as the Company.
The Company also has a nominating committee (the “Nominating Committee”) comprised of Ulrich Rath, William Harvey and Norman Betts. The Nominating Committee considers the size of the Board each year when it considers the number of directors to recommend to shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the Board’s duties effectively and to maintain a diversity of view and experience. When a vacancy on the Board arises, the independent directors of the Nominating Committee will be encouraged to bring forward any potential nominees that have the necessary skills and knowledge to serve on the Company’s Board.
The Company has a technical committee (“Technical Committee”) currently comprised of Ulrich Rath, Peter Zizhou and Jeff Duval. The Technical Committee has approved a Technical Committee Manual defining Composition and Terms of Reference. Among other things, the Technical Committee reviews with management any exploration, geological, mining, metallurgical and other technical issues and reviews technical and financial issues associated with new and existing projects that require Board approval with respect to their technical and financial impact on the Company. The Technical Committee reports directly to the Board of Directors.
Audit Committee Information
Under National Instrument 52-110 – Audit Committees (“NI 52-110”) reporting issuers are required to provide disclosure with respect to its Audit Committee including the text of the Audit Committee’s Charter, composition of the Committee, and the fees paid to the external auditor. Accordingly, the Company provides the following disclosure with respect to its Audit Committee:
1.The Audit and Compensation Committee’s Charter
1.0Purpose of the Committee
1.1The purpose of the Audit and Compensation Committee is to assist the Board in its oversight of the integrity of the Company's financial statements and other relevant public disclosures, the Company's compliance with legal and regulatory requirements relating to financial reporting, the external auditors' qualifications and independence and the performance of the internal audit function and the external auditors.
2.0Compensation
2.1The adequacy and form of director and officer compensation is reviewed on an annual basis by the Board. The Audit and Compensation Committee recommends to the Board any adjustments to the compensation payable to directors,
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officers, and senior staff. The Audit and Compensation Committee meet to discuss salary and bonus incentive matters as required.
3.0Members of the Audit and Compensation Committee
3.1All of the members of the Audit and Compensation Committee must be "financially literate" as defined under NI 52-110, Audit Committees, having sufficient accounting or related financial management expertise to read and understand a set of financial statements, including the related notes, that present a breadth and level of complexity of the accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company's financial statements.
3.2The Audit and Compensation Committee shall consist of no less than three Directors.
3.3All of the members of the Audit and Compensation Committee shall be "independent" as defined under NI 52-110.
4.0Relationship with External Auditors
4.1The external auditors are the independent representatives of the shareholders, but the external auditors are also accountable to the Board of Directors and the Audit and Compensation Committee.
4.2The external auditors must be able to complete their audit procedures and reviews with professional independence, free from any undue interference from the management or directors.
4.3The Audit and Compensation Committee must direct and ensure that the management fully co-operates with the external auditors in the course of carrying out their professional duties.
4.4The Audit and Compensation Committee will have direct communications access at all times with the external auditors.
4.5The Audit and Compensation Committee will ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law.
4.6The Audit and Compensation Committee will recommend to the Board of Directors policies for the Company’s hiring of employees or former employees of the external auditors who participated in any capacity in the audit of the Company.
5.0Non-Audit Services
5.1The external auditors are prohibited from providing any non-audit services to the Company, without the express written consent of the Audit and Compensation Committee. In determining whether the external auditors will be granted permission to provide non-audit services to the Company, the Audit and Compensation Committee must consider that the benefits to the Company from the provision of such services, outweighs the risk of any compromise to or loss of the independence of the external auditors in carrying out their auditing mandate.
5.2Notwithstanding section 5.1, the external auditors are prohibited at all times from carrying out any of the following services, while they are appointed the external auditors of the Company:
(i)acting as an agent of the Company for the sale of all or substantially all of the undertaking of the Company; and
(ii)performing any non-audit consulting work for any director or senior officer of the Company in their personal capacity, but not as a director, officer or insider of any other entity not associated or related to the Company.
6.0Appointment of Auditors
6.1The external auditors will be appointed each year by the shareholders of the Company at the annual general meeting of the shareholders.
6.2The Audit and Compensation Committee will nominate the external auditors for appointment, such nomination to be approved by the Board of Directors.
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7.0Evaluation of Auditors
7.1The Audit and Compensation Committee will review the performance of the external auditors on at least an annual basis, and notify the Board and the external auditors in writing of any concerns in regards to the performance of the external auditors, or the accounting or auditing methods, procedures, standards, or principles applied by the external auditors, or any other accounting or auditing issues which come to the attention of the Audit and Compensation Committee.
8.0Remuneration of the Auditors
8.1The remuneration of the external auditors will be determined by the Board of Directors, upon the annual authorization of the shareholders at each general meeting of the shareholders.
8.2The remuneration of the external auditors will be determined based on the time required to complete the audit and preparation of the audited financial statements, and the difficulty of the audit and performance of the standard auditing procedures under generally accepted auditing standards and generally accepted accounting principles of Canada.
9.0Termination of the Auditors
9.1The Audit and Compensation Committee has the power to terminate the services of the external auditors, with or without the approval of the Board of Directors, acting reasonably.
10.0Funding of Auditing and Consulting Services
10.1Auditing expenses will be funded by the Company. The auditors must not perform any other consulting services for the Company, which could impair or interfere with their role as the independent auditors of the Company.
11.0Role and Responsibilities of the Internal Auditor
11.1At this time, due to the Company's size and limited financial resources, the Chief Financial Officer of the Company shall be responsible for implementing internal controls and performing the role as the internal auditor to ensure that such controls are adequate.
12.0Oversight of Internal Controls
12.1The Audit and Compensation Committee will have the oversight responsibility for ensuring that the internal controls are implemented and monitored, and that such internal controls are effective.
13.0Continuous Disclosure Requirements
13.1At this time, due to the Company's size and limited financial resources, the Chief Financial Officer of the Company is responsible for ensuring that the Company's continuous reporting requirements are met and in compliance with applicable regulatory requirements.
14.0Other Auditing Matters
14.1The Audit and Compensation Committee may meet with the Auditors independently of the management of the Company at any time, acting reasonably.
14.2The Auditors are authorized and directed to respond to all enquiries from the Audit and Compensation Committee in a thorough and timely fashion, without reporting these enquiries or actions to the Board of Directors or the management of the Company.
15.0Annual Review
15.1The Audit and Compensation Committee Charter will be reviewed annually by the Board of Directors and the Audit and Compensation Committee to assess the adequacy of this Charter.
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16.0Independent Advisers
16.1The Audit and Compensation Committee shall have the power to retain legal, accounting or other advisors to assist the Committee.
17.0Reports of Fraud and Misconduct
17.1The Audit and Compensation Committee will review, investigate and evaluate all reports of fraud and misconduct. Refer to the Company’s Whistle Blower Policy and Procedures.
18.0Changes in Accounting Policies
18.1The Audit and Compensation Committee will review and maintain Accounting Policies including the selection, documentation and changes in Accounting Policies.
19.0Nominating Committee
19.1The Nominating Committee considers the size of the Board of Directors each year when it considers the number of directors to recommend to shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the Board’s duties effectively and to maintain a diversity of view and experience. When a vacancy on the Board arises, the independent directors of the Nominating Committee will be encouraged to bring forward any potential nominees that have the necessary skills and knowledge to serve on the Company’s Board.
2.Composition of the Audit and Compensation Committee
Following are the members of the Audit and Compensation Committee:
Norman Betts (Chair) | Independent (1) | Financial expert (3) |
Ulrich Rath | Independent (1) | Financially literate (2) |
William Harvey | Independent (1) | Financially literate (2) |
(i)A member of an audit committee is independent if the member has no direct or indirect material relationship with the Company, which could, in the view of the Board of Directors, reasonably interfere with the exercise of a member’s independent judgment.
(ii)An individual is financially literate if he has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
(iii)An Audit Committee Financial Expert must possess five attributes: (i) an understanding of GAAP and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; (iii) experience preparing auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions.
3.Relevant Education and Experience
Dr. Betts is the Chair of the Committee. He is the former Minister of Finance of New Brunswick and current Associate Professor of Business Administration, University of New Brunswick; Mr. Rath was the President and CEO of a Canadian resource company; and Dr. William Harvey is a psychologist and businessman.
4.Reliance on Certain Exemptions
At no time since the commencement of the Company’s most recently completed financial year has the Company relied on the exemption in Section 2.4 of NI 52-110 (De Minimis Non-audit Services), Section 3.3(2) (Controlled Companies), Section 3.6 (Temporary Exemption for Limited and Exceptional Circumstances), or an exemption from NI 52-110, in whole or in part, granted under Part 8 of National Instrument 52-110. Nor has the Company relied on Section 3.8 (Acquisition of Financial Literacy) of NI 52-110.
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5.Audit and Compensation Committee Oversight
At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit and Compensation Committee to nominate or compensate an external auditor not adopted by the Board of Directors.
6.Pre-Approval Policies and Procedures
The Audit and Compensation Committee is authorized by the Board of Directors to review the performance of the Company’s external auditors and approve in advance the provision of services other than auditing and to consider the independence of the external auditors, including a review of the range of services provided in the context of all consulting services bought by the Company. The Audit and Compensation Committee is authorized to approve in writing any non-audit services or additional work which the Chairman of the Audit and Compensation Committee deems is necessary, and the Chairman will notify the other members of the Audit and Compensation Committee of such non-audit or additional work and the reasons for such non-audit work for the Committee’s consideration, and if thought fit, approval in writing.
7.External Auditor Service Fees
The fees billed by the Company’s external auditors in each of the last two fiscal years for audit and non-audit related services provided to the Company or its subsidiaries are as follows:
Audit Fees | Audit Related Fees | Tax Fees | All Other Fees | |
2020 | $152,750 | $24,000 | Nil | Nil |
2019 | $147,329 | Nil | Nil | Nil |
The Company employs 11 full time employees located in Buckreef, Tanzania, and one full time employee located in Dar es Salaam, Tanzania. [See disclosure below regarding Sinclair Financial of providing certain administrative services]
The Company also hires employees on a part time or temporary basis as dictated by the exploration activities on its properties. The full time and temporary employees and consultants of the Company can be grouped according to main category of activity and geographic location as follows:
Location | Category | Full Time Employees | Temporary Employees | Full Time Consultants | Part Time Consultants |
Buckreef, Tanzania | Administration | 5 | Nil | Nil | Nil |
Exploration | 8 | 14 | Nil | Nil | |
Dar es Salaam, Tanzania | Administration | 4 | Nil | Nil | Nil |
Exploration | Nil | Nil | Nil | Nil | |
Connecticut | Administration | 3 | Nil | Nil | Nil |
The following table sets forth the share ownership of our directors and named executive officers, held by such persons as of August 31, 2020.
Name of Owner | Number of Shares Owned | Percentage (1) |
Betts, Norman | 245,799 | <1% |
Duval, Jeff | 1,120,000 | <1% |
Guidi, Marco | 125,000 (2) | <1% |
Harvey, William | 257,924 | <1% |
Morrow, Rosalind | 769,784 | <1% |
Rath, Ulrich E. | 1,229,034 (3) | <1% |
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Sinclair, James E. | 3,847,392 (4) | 1.92% |
Moroney, Donna | 75,000 (5) | <1% |
Zizhou, Peter | 100,000 | <1% |
All directors and named executive officers as a group | 4,039,033 | 3.92% |
(1)Calculation based on 199,975,122 shares of common shares outstanding as of August 31, 2020.
(2)125,000 shares held by ITCA Consulting Inc.
(3)57,031 shares held by Focus-Rath & Associates.
(4)579,022 shares held by the Estate of Barbara M. Sinclair, James E. Sinclair, Executor.
(5)75,000 shares held by Wiklow Corporate Services Inc.
The voting rights attached to the common shares owned by our officers and directors do not differ from those voting rights attached to shares owned by people who are not officers or directors of our Company.
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Exhibit No.Name
12.1Certification of the Principal Executive Officer under the Sarbanes-Oxley Act
12.2Certification of the Principal Financial Officer under the Sarbanes-Oxley Act
15.4Consent of Crundwell Metallurgy (Crundwell)
15.5Consent of Virimai Projects (Virimai)
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SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing this Amendment No.1 to Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
DateFebruary 8, 2021
TANZANIAN GOLD CORPORATION | ||
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By: | /s/ Stephen Mullowney |
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| Stephen Mullowney, |
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| Chief Executive Officer |
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| (Principal Executive Officer”)
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