Registration No. 333-210644
This prospectus relates
to the sale by the selling stockholders identified in this prospectus of up to 3,181,311 shares of our common stock, par value
$0.0001 per share, which includes (i) 2,120,882 shares issued to the selling stockholders and (ii) 1,060,429 shares issuable
upon exercise of warrants issued to the selling stockholders. The shares offered hereby were issued to or are issuable pursuant
to warrants issued to the selling stockholders in a private placement (the “Private Placement”) completed on February
25, 2016. In the Private Placement we issued 2,120,882 units to certain accredited investors, with each unit consisting of one
common share and a warrant to purchase 0.5 common shares at an exercise price of $5.06 per share.
All of the shares of
common stock offered by this prospectus are being sold by the selling stockholders. It is anticipated that the selling stockholders
will sell these shares of common stock from time to time in one or more transactions, in negotiated transactions or otherwise,
at prevailing market prices or at prices otherwise negotiated (see the section entitled “Plan of Distribution” beginning
on page 20 of this prospectus). We will not receive any proceeds from the sale of these shares by the selling stockholders.
All expenses of registration incurred in connection with this offering are being borne by us, but all selling and other expenses
incurred by the selling stockholders will be borne by the selling stockholders.
Our common stock is
traded on the Nasdaq Stock Market under the symbol “PGLC.” On April 6, 2016, the last reported sales price of our
common stock on the Nasdaq Stock Market was $3.85 per share.
RISK
FACTORS
Investing in our common
stock involves a high degree of risk. Before investing in our common stock you should carefully consider the following risks, together
with the financial and other information contained in this prospectus. If any of the following risks actually occurs, our business,
prospects, financial condition and results of operations could be adversely affected. In that case, the value of our common stock
would likely decline and you may lose all or a part of your investment.
Risks Relating to Our Business
We have no proven or probable reserves
on our properties and we do not know if our properties contain any gold or other minerals that can be mined at a profit.
The properties on which
we have the right to explore for gold and other minerals do not contain mineral reserves and we do not know if any deposits of
gold or other minerals can be mined at a profit. Whether a gold or other mineral deposit can be mined at a profit depends upon
many factors. Some but not all of these factors include: the particular attributes of the deposit, such as size, grade and proximity
to infrastructure; operating costs and capital expenditures required to start mining a deposit; the availability and cost of financing;
the price of the gold or other minerals which is highly volatile and cyclical; and government regulations, including regulations
relating to prices, taxes, royalties, land use, importing and exporting of minerals and environmental protection. We are also obligated
to pay production royalties on certain of our mineral production, including a net smelter royalty of 2% or 2.5% on production from
most of our Relief Canyon Mine property, which would increase our costs of production and make our ability to operate profitably
more difficult. We are also obligated to pay a net smelter royalty of up to 5% on production from some of our claims and lands.
We are an exploration stage company and have only recently
commenced exploration activities on our claims. We reported a net loss for the year ended December 31, 2015, and expect to
incur operating losses for the foreseeable future.
Our evaluation of our
Relief Canyon Mine property is primarily based on historical production data and on new exploration data that we have developed
since 2011, supplemented by historical exploration data. Our plans for recommencing mining and processing activities at the Relief
Canyon Mine property are in their early stages and preliminary, as are our exploration programs on the Relief Canyon expansion
properties. Accordingly, we are not yet in a position to estimate expected amounts of minerals, yields or values or evaluate the
likelihood that our business will be successful. We have not earned any revenues from mining operations. The likelihood of success
must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the
exploration of the mineral properties and commencement of mining activities that we plan to undertake. These potential problems
include, but are not limited to, unanticipated problems relating to exploration, costs and expenses that may exceed current estimates
and the requirement for external funding to continue our business. Prior to completion of our exploration stage, we anticipate
that we will incur increased operating expenses without realizing any revenues. We reported a net loss of approximately $19.1 million
for the year ended December 31, 2015. We expect to incur significant losses into the foreseeable future. Our monthly burn
rate for all costs during 2015 was approximately $1.86 million, including $635,000 for general and administrative costs (including
all employee salaries, public company expenses, consultants, and land holdings costs), $720,000 for exploration activities, and
$510,000 for purchases of mineral rights, property and equipment. We expect, based on our current preliminary budget, our monthly
burn rate for all costs in 2016 to be approximately $580,000 (including approximately $490,000 for general and administrative costs
and $90,000 for exploration, permitting, and plant recommissioning), which may increase as our plans develop. Based on our current
cash position, we expect to require additional external financing to fund operations and exploration by early to mid-2018. If,
following the completion of the thorough economic study we decide to pursue a plan to commence mining and processing at Relief
Canyon, additional external financing would be required. If we are unable to raise external funding, and eventually generate significant
revenues from our claims and properties, we will not be able to earn profits or continue operations. We have no production history
upon which to base any assumption as to the likelihood that we will prove successful, and it is uncertain that we will generate
any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will
most likely fail.
Exploring for gold and other minerals
is inherently speculative, involves substantial expenditures, and is frequently non-productive.
Mineral exploration
(currently our only business), and gold exploration in particular, is a business that by its nature is very speculative. We may
not be able to establish mineral reserves on our properties or be able to mine any gold or any other minerals on a profitable basis.
Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected geological conditions, fires,
flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are just
some of the many risks involved in mineral exploration programs and the subsequent development of gold deposits.
The mining industry is capital intensive and we may be
unable to raise necessary funding.
We spent approximately
$22.4 million on our business and exploration during the year ended December 31, 2015 (of which $6.0 million was related to
the transaction with Newmont USA Limited (“Newmont”). Our estimated total cost for 2016 for exploration, permitting,
landholding, facilities recommissioning and for general and administrative costs is approximately $7.0 million. If, following the
completion of a thorough economic study, we decide to pursue the commencement of production at Relief Canyon, additional external
financing would be required. In addition, even if we do not decide to pursue the commencement of production at Relief Canyon, we
will be required to raise additional funds in order to finance our operations. We may be unable to secure additional financing
on terms acceptable to us, or at all. Our inability to raise additional funds would prevent us from achieving our business objectives
and would have a negative impact on our business, financial condition, results of operations and the value of our securities. If
we raise additional funds by issuing additional equity or convertible debt securities, the ownership of existing stockholders may
be diluted and the securities that we may issue in the future may have rights, preferences or privileges senior to those of the
current holders of our common stock. Such securities may also be issued at a discount to the market price of our common stock,
resulting in possible further dilution to the book value per share of common stock. If we raise additional funds by issuing debt,
we could be subject to debt covenants that could place limitations on our operations and financial flexibility.
If we decide to pursue the commencement
of mining and processing activities at Relief Canyon, unanticipated problems or delays may negatively affect our business and financial
condition.
If we were to decide
to pursue the commencement of mining and processing activities at Relief Canyon, additional external financing would be required.
Although the Relief Canyon Mine currently has an available leach pad and processing facility and we have senior mine and processing
personnel in place, we would be required to obtain mining equipment (which could be through purchase, lease, contract mining or
a combination of these), hire employees for the mine and the processing plant, purchase materials and supplies, commence mining,
leaching and processing activities, and continue these activities as well as the corporate activities currently conducted for a
number of months until sufficient positive cash flow is produced by gold sales to fund all of these ongoing activities. We may
suffer significant delays or cost overruns as a result of a variety of factors, such as increases in the prices of materials, mining
or processing problems, unanticipated variations in mined materials, shortages of workers or materials, transportation constraints,
adverse weather, equipment failures, fires, damage to or destruction of property and equipment, environmental problems, unforeseen
difficulties or labor issues, any of which could delay or prevent us from commencing or ramping up mining and processing. If our
start-up were prolonged or delayed or our costs were higher than anticipated, we could be unable to obtain sufficient funds to
cover the additional costs, and our business could experience a substantial setback. Prolonged problems could have a material adverse
effect on our business, consolidated financial condition or results of operations and threaten our viability.
We are a junior exploration company
with no mining activities and we may never have any mining activities in the future.
Our primary business
is exploring for gold and, to a lesser extent, other minerals. If we discover commercially exploitable gold or other deposits,
we will not be able to make any money from mining activities unless the gold or other deposits are actually mined, or we sell our
interest. Accordingly, we will need to seek additional capital through debt or equity financing, find some other entity to mine
our properties or operate our facilities on our behalf, enter into joint venture or other arrangements with a third party, or sell
or lease the property or rights to mine to third parties. Mine development projects typically require a number of years and significant
expenditures during the development phase before production is possible. Such projects could experience unexpected problems and
delays during development, construction and mine start up. Mining operations in the United States are subject to many different
federal, state and local laws and regulations, including stringent environmental, health and safety laws. If and when we assume
operational responsibility for mining on our properties, it is possible that we will be unable to comply with current or future
laws and regulations, which can change at any time. It is possible that changes to these laws will be adverse to any potential
mining operations. Moreover, compliance with such laws may cause substantial delays and require capital outlays in excess of those
anticipated, adversely affecting any potential mining operations. Our future mining operations, if any, may also be subject to
liability for pollution or other environmental damage. It is possible that we will choose to not be insured against this risk because
of high insurance costs or other reasons.
We have a short operating history,
have a history of losses and may never achieve any meaningful revenue.
We acquired all of
our property interests since August 2011. Our operating history consists of our exploration activities. We have no income-producing
activities from mining or exploration, and have a history of losses stemming from the acquisition of the rights to explore on our
property and conducting our exploration activities. Exploring for gold and other minerals or resources is an inherently speculative
activity and there is no assurance we will be able to develop an economically feasible operating plan for the Relief Canyon Mine.
There is a strong possibility that we will not find any other commercially exploitable gold or other deposits on our property.
Because we are an exploration company, we may never achieve any meaningful revenue.
We must make annual lease payments, advance royalty and
royalty payments and claim maintenance payments or we will lose our rights to our property.
We are required under
the terms of the leases covering some of our property interests to make annual lease payments and advance royalty and royalty payments
each year. We are also required to make annual claim maintenance payments to the U.S. Bureau of Land Management (“BLM”)
and pay a fee to Pershing County in order to maintain our rights to explore and, if warranted, to develop our unpatented mining
claims. If we fail to meet these obligations, we will lose the right to explore for gold and other minerals on our property. Our
total annual property maintenance costs payable to the BLM and Pershing County for all of the unpatented mining claims and millsites
in the Relief Canyon area in 2015 were approximately $224,000, and we expect our annual maintenance costs to be approximately $234,000
in 2016. Our lease payments, advance royalty and royalty payments and claim maintenance payments are described above under “Our
Business”.
Our business is subject to extensive
environmental regulations that may make exploring, mining or related activities prohibitively expensive, and which may change at
any time.
All of our operations
are subject to extensive environmental regulations that can substantially delay exploration and make exploration expensive or prohibit
it altogether. We may be subject to potential liabilities associated with the pollution of the environment and the disposal of
waste products that may occur as the result of exploring and other related activities on our properties, including our plan to
process gold at our processing facility. We may have to pay to remedy environmental pollution, which may reduce the amount of money
that we have available to use for exploration or other activities, and adversely affect our financial position. If we are unable
to fully remedy an environmental problem, we might be required to suspend operations or to enter into interim compliance measures
pending the completion of the required remedy. If a decision is made to mine our properties and we retain any operational responsibility
for doing so, our potential exposure for remediation may be significant, and this may have a material adverse effect upon our business
and financial position. We have not purchased insurance for potential environmental risks (including potential liability for pollution
or other hazards associated with the disposal of waste products from our exploration activities) and such insurance may not be
available to us on reasonable terms or at a reasonable price. All of our exploration and, if warranted, development activities
may be subject to regulation under one or more local, state and federal environmental impact analyses and public review processes.
It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation
could have significant impact on some portion of our business, which may require our business to be economically re-evaluated from
time to time. These risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements
beyond our financial capability. Inasmuch as posting of bonding in accordance with regulatory determinations is a condition to
the right to operate under all material operating permits, increases in bonding requirements could prevent operations even if we
are in full compliance with all substantive environmental laws. We have been required to post a substantial bond under various
laws relating to mining and the environment and may in the future be required to post a larger bond to pursue additional activities.
For example, we must provide BLM and the Nevada Division of Environmental Protection Bureau of Mining Regulation and Reclamation
(“NDEP”) additional financial assurance (reclamation bonds) to guarantee reclamation of any new surface disturbance
required for drill roads, drill sites, or mine expansion. In March 2015, we increased the amount of our reclamation bond with BLM
and the NDEP to approximately $5.6 million, which is currently approximately $108,000 in excess of the current coverage requirement,
to reclaim land disturbed in our exploration and mining operations. Approximately $5.5 million of our reclamation bond covers both
exploration and mining at the Relief Canyon Mine property, including the three open-pit mines and associated waste rock disposal
areas, the mineral processing facilities, ancillary facilities, and the exploration roads and drill pads, and approximately $12,500
covers exploration on the Relief Canyon expansion properties. The remaining $108,000 of financial assurance can be used to satisfy,
or partially satisfy, future bonding requirements for exploration or mining. Our preliminary estimate of the likely amount of additional
financial assurance for future exploration is approximately $100,000, although we expect periodic increases due to effects of inflation.
Our preliminary estimate of the likely amount of additional financial assurance to recommence mining operations is $600,000, which
may increase as our mining plans are finalized and reviewed by the applicable agencies.
The government licenses and permits
which we need to explore on our property may take too long to acquire or cost too much to enable us to proceed with exploration.
In the event that we conclude that the Relief Canyon Mine deposit can be profitably mined, or discover other commercially exploitable
deposits, we may face substantial delays and costs associated with securing the additional government licenses and permits that
could preclude our ability to develop the mine. For example, we seek to amend the permits for our existing gold processing facility,
which may be delayed.
Exploration activities
usually require the granting of permits from various governmental agencies. For example, exploration drilling on unpatented mining
claims requires a permit to be obtained from the BLM, which may take several months or longer to grant the requested permit. Depending
on the size, location and scope of the exploration program, additional permits may also be required before exploration activities
can be undertaken. Prehistoric or Indian graves, threatened or endangered species, archeological sites or the possibility thereof,
difficult access, excessive dust and important nearby water resources may all result in the need for additional permits before
exploration activities can commence.
In addition, we plan
to seek amendments to our permits for our Relief Canyon gold processing facility to add a gold recovery (stripping) system to the
facility. If we conclude that the Relief Canyon deposit can be profitably mined, we would seek amendments to the BLM Plan of Operations
and the NDEP reclamation permit to increase the size of the Relief Canyon open pit-mines and waste rock storage areas. If the minable
material exceeds 21 million tons, the current capacity of the leach pad, we would also need to seek an amendment of the processing
facility to expand the capacity of the leach pad and ponds to accommodate additional material. If there are delays in obtaining
the permit to add the gold recovery system, we would sell gold-loaded carbon to another facility that would recover/strip the gold.
We estimate the annual cost of holding these permits will be approximately $35,000, and the cost to amend these permits to authorize
potential future mining including mining beneath the water table will total about $1.2 million, which is based on preliminary estimates
and may increase as our mining plans are finalized. As with all permitting processes, there is substantial uncertainty about when
and if the permits will be issued. There is the risk that unexpected delays and excessive costs may be experienced in obtaining
required permits. The needed permits may not be granted or could be challenged by third parties, which could result in protracted
litigation that could cause substantial delays, or may be granted in an unacceptable timeframe or cost too much. Additionally,
proposed mineral exploration and mining projects can become controversial and be opposed by nearby landowners and communities,
which can substantially delay and interfere with the permitting process. Delays in or inability to obtain necessary permits would
result in unanticipated costs, which may result in serious adverse effects upon our business.
The value of our property and any
other deposits we may seek or locate is subject to volatility in the price of gold.
Our ability to obtain
additional and continuing funding, and our profitability if and when we commence mining or sell our rights to mine, will be significantly
affected by changes in the market price of gold and other mineral deposits. Gold and other minerals prices fluctuate widely and
are affected by numerous factors, all of which are beyond our control. The price of gold may be influenced by:
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fluctuation in the supply of, demand and market price for gold;
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mining activities of our competitors;
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sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions;
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currency exchange rates;
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inflation or deflation;
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fluctuation in the value of the United States dollar and other currencies;
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global and regional supply and demand, including investment, industrial and jewelry demand; and
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political and economic conditions of major gold or other mineral-producing countries.
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The price of gold and
other minerals have fluctuated widely in recent years, and a decline in the price of gold or other minerals could cause a significant
decrease in the value of our property, limit our ability to raise money, and render continued exploration and development of our
property impracticable. If that happens, then we could lose our rights to our property or be compelled to sell some or all of these
rights. Additionally, the future development of our mining properties beyond the exploration stage is heavily dependent upon gold
prices remaining sufficiently high to make the development of our property economically viable.
Our property title may be challenged.
We are not insured against any challenges, impairments or defects to our mining claims or title to our other properties.
Our property is comprised
primarily of unpatented lode mining claims and millsites located and maintained in accordance with the federal General Mining Law
of 1872. Unpatented lode mining claims and millsites are unique U.S. property interests and are generally considered to be subject
to greater title risk than other real property interests because the validity of unpatented mining claims and millsites is often
uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations with which the owner of
an unpatented mining claim or millsite must comply in order to locate and maintain a valid claim. Moreover, if we discover mineralization
that is close to the claim boundaries, it is possible that some or all of the mineralization may occur outside the boundaries on
lands that we do not control. In such a case we would not have the right to extract those minerals. We do not have title reports
or opinions covering all of our Relief Canyon properties. The uncertainty resulting from not having title opinions for all of our
Relief Canyon properties or having detailed claim surveys on all of our properties leaves us exposed to potential title defects.
Defending challenges to our property title would be costly, and may divert funds that could otherwise be used for exploration activities
and other purposes.
In addition, unpatented
lode mining claims and millsites are always subject to possible challenges by third parties or contests by the federal government,
which, if successful, may prevent us from exploiting any discovery of commercially extractable gold. Challenges to our title may
increase our costs of operation or limit our ability to explore on certain portions of our property. We are not insured against
challenges, impairments or defects to our property title.
Possible amendments to the General
Mining Law could make it more difficult or impossible for us to execute our business plan.
In recent years, the
U.S. Congress has considered a number of proposed amendments to the General Mining Law, as well as legislation that would make
comprehensive changes to the law. Although no such legislation has been adopted to date, there can be no assurance that such legislation
will not be adopted in the future. If adopted, such legislation, if it includes concepts that have been part of previous legislative
proposals, could, among other things, (i) adopt the limitation on the number of millsites that a claimant may use, discussed
below, (ii) impose time limits on the effectiveness of plans of operation that may not coincide with mine life, (iii) impose
more stringent environmental compliance and reclamation requirements on activities on unpatented mining claims and millsites, (iv) establish
a mechanism that would allow states, localities and Native American tribes to petition for the withdrawal of identified tracts
of federal land from the operation of the General Mining Law, (v) allow for administrative determinations that mining would
not be allowed in situations where undue degradation of the federal lands in question could not be prevented, (vi) impose
royalties on gold and other mineral production from unpatented mining claims or impose fees on production from patented mining
claims, and (vii) impose a fee on the amount of material displaced at a mine. Further, it could have an adverse impact on earnings
from our operations, could reduce estimates of any reserves we may establish and could curtail our future exploration and development
activity on our unpatented claims.
Our ability to conduct
exploration, development, mining and related activities may also be impacted by administrative actions taken by federal agencies.
With respect to unpatented millsites, for example, the ability to use millsites and their validity has been subject to greater
uncertainty since 1997. In November of 1997, the Secretary of the Interior (appointed by President Clinton) approved a Solicitor’s
Opinion that concluded that the General Mining Law imposed a limitation that only a single five-acre millsite may be claimed or
used in connection with each associated and valid unpatented or patented lode mining claim. Subsequently, however, on November 7,
2003, the new Secretary of the Interior (appointed by President Bush) approved an Opinion by the Deputy Solicitor which concluded
that the mining laws do not impose a limitation that only a single five-acre millsite may be claimed in connection with each associated
unpatented or patented lode mining claim. Current federal regulations do not include the millsite limitation. There can be no assurance,
however, that the Department of the Interior will not seek to re-impose the millsite limitation at some point in the future.
In addition, a consortium
of environmental groups has filed a lawsuit in the United District Court for the District of Columbia against the Department of
the Interior, the Department of Agriculture, the BLM, and the USFS, asking the court to order the BLM and USFS to adopt the five-acre
millsite limitation. That lawsuit also asks the court to order the BLM and the USFS to require mining claimants to pay fair market
value for their use of the surface of federal lands where those claimants have not demonstrated the validity of their unpatented
mining claims and millsites. If the plaintiffs in that lawsuit were to prevail, that could have an adverse impact on our ability
to use our unpatented millsites for facilities ancillary to our exploration, development and mining activities, and could significantly
increase the cost of using federal lands at our properties for such ancillary facilities.
Market forces or unforeseen developments
may prevent us from obtaining the supplies and equipment necessary to explore for gold and other minerals.
Gold exploration, and
mineral exploration in general, is a very competitive business. Competitive demands for contractors and unforeseen shortages of
supplies and/or equipment could result in the disruption of our planned exploration activities. Current demand for exploration
drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable
at scheduled times for our exploration program. Fuel prices are extremely volatile as well. We will attempt to locate suitable
equipment, materials, manpower and fuel if sufficient funds are available. If we cannot find the equipment and supplies needed
for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled
manpower become available. Any such disruption in our activities may adversely affect our exploration activities and financial
condition.
Our directors and executive officers
lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines.
Most of our directors
and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and
in developing mines. Accordingly, although our Senior Vice President has significant experience and expertise in environmental
permitting and regulatory matters for developing and operating mines and our Chief Operating Officer has significant experience
with mine operations, our management may not be fully aware of many of the other specific requirements related to working within
this industry. Their decisions and choices may not take into account standard engineering or managerial approaches that mineral
exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable
harm due to some of our management’s lack of experience in the mining industry.
We may not be able to maintain the
infrastructure necessary to conduct exploration activities.
Our exploration activities
depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors that affect
capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance
or provision of such infrastructure could adversely affect our exploration activities and financial condition.
Our exploration activities may be
adversely affected by the local climate or seismic events, which could prevent us from gaining access to our property year-round.
Earthquakes, heavy
rains, snowstorms, and floods could result in serious damage to or the destruction of facilities, equipment or means of access
to our property, or may otherwise prevent us from conducting exploration activities on our property. There may be short periods
of time when the unpaved portion of the access road is impassible in the event of extreme weather conditions or unusually muddy
conditions. During these periods, it may be difficult or impossible for us to access our property, make repairs, or otherwise conduct
exploration activities on them.
Risks Relating to Our Organization and
Common Stock
We have relied on certain stockholders to provide significant
investment capital to fund our operations.
We have in the past
relied on cash infusions primarily from Frost Gamma Investments Trust (“Frost Gamma”) and one of the Company’s
directors, Barry Honig. During the year ended December 31, 2012, Frost Gamma provided approximately $4.6 million in consideration
for the issuance of certain of our securities. In the year ended December 31, 2013, Mr. Honig provided approximately
$5.6 million to us in consideration for the issuance of shares of the Company’s Series E Preferred Stock. Additionally,
Mr. Honig and Frost Gamma provided approximately $1.9 million and $150,000, respectively, to us in consideration for the issuance
of shares of common stock and warrants to purchase shares of common stock in July 2014 private placements. Mr. Honig invested
$150,000 in a private placement of our common stock in October 2014, $2.5 million in an April 2015 private placement, and $1.25
million in a February 2016 private placement. Curtailment of cash investments by Frost Gamma or Barry Honig could detrimentally
impact our cash availability and our ability to fund our operations.
Our principal stockholders, officers
and directors own a substantial interest in our voting securities, and investors may have limited voice in our management.
Our principal
stockholders, Frost Gamma, Barry Honig, Donald Smith, and Levon Resources Ltd. (“Levon Resources”), as well as
our officers and directors, own, in the aggregate, in excess of approximately 51.8% of our voting securities, including
shares of common stock issuable upon the conversion of our Series E preferred stock. As of April 7, 2016, Frost Gamma owned
3,037,369, or approximately 10.5%, of our voting securities, Mr. Smith owned 1,850,000, or approximately 6.4%, of our voting
securities, Levon Resources owned 1,954,366, or approximately 6.8%, of our voting securities, and Mr. Honig, who is a
director, owned 6,911,394, or approximately 23.9%, of our voting securities. As of that date, our officers and directors,
including Mr. Honig, own 8,123,974, or approximately 28.1%, of our voting securities. Additionally, the holdings of our
officers and directors may increase in the future upon exercise of options, warrants or convertible securities they may hold
or be granted in the future or if they otherwise acquire additional shares of our common stock, including through grants
under our employee benefit plans.
As a result of their
ownership and positions, our principal stockholder, directors and executive officers collectively may be able to influence all
matters requiring stockholder approval, including the following matters:
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election of our directors;
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amendment of our articles of incorporation or bylaws; and
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effecting or preventing a merger, sale of assets or other corporate transaction.
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In addition, their
stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the
Company, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
We are subject to the information
and reporting requirements of the Securities and Exchange Act of 1934, as amended (the “
Exchange Act
”), and
other federal securities laws, as well as the listing rules of the Nasdaq stock market.
The costs of preparing
and filing annual and quarterly reports and other information with the Securities and Exchange Commission and furnishing audited
reports to stockholders will cause our expenses to be higher than they would have been if we were privately held. These costs for
the years ended December 31, 2014 and December 31, 2015 were approximately $900,000 and $950,000 respectively. We estimate
that these costs will be approximately $950,000 for the year ending 2016.
It may be time consuming,
difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the Sarbanes-Oxley
Act of 2002 (the “
Sarbanes-Oxley Act
”). We may need to hire additional financial reporting, internal controls
and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.
If we fail to establish and maintain
an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any
inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading
price of our common stock and our ability to file registration statements pursuant to registration rights agreements and other
commitments.
Effective internal
control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports
or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed,
and our business and reputation with investors may be harmed. As a result of our small size, any current internal control deficiencies
may adversely affect our financial condition, results of operation and access to capital. Although as of December 31, 2015,
management has concluded that our internal control over financial reporting is effective, there can be no assurance that our internal
control over financial reporting will remain effective.
Public company compliance may make
it more difficult to attract and retain officers and directors.
The Sarbanes-Oxley
Act and rules implemented by the Securities and Exchange Commission have required changes in corporate governance practices
of public companies. As a public company, our compliance costs increased in 2015 and we expect these rules and regulations
to further increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we
also expect that these rules and regulations may make it more difficult and expensive for us to obtain director and officer
liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve
on our board of directors or as executive officers, and to maintain insurance at reasonable rates, or at all.
Our stock price may be volatile.
The market price of
our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which
are beyond our control, including the following:
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results of our operations and exploration efforts;
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fluctuation in the supply of, demand and market price for gold;
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our ability to obtain working capital financing;
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additions or departures of key personnel;
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limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;
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our ability to execute our business plan;
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sales of our common stock and decline in demand for our common stock;
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regulatory developments;
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economic and other external factors;
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investor perception of our industry or our prospects; and
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period-to-period fluctuations in our financial results.
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In addition, the securities
markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance
of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
As a result, you may be unable to resell your shares at a desired price.
Volatility in the price of our common
stock may subject us to securities litigation.
As discussed above,
the market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect
that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs
have often initiated securities class action litigation against a company following periods of volatility in the market price of
its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs
and liabilities and could divert management's attention and resources.
We have not paid cash dividends in
the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.
We have never paid
cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common
stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board
of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your
investment will only occur if our stock price appreciates.
There is currently a limited trading
market for our common stock and we cannot ensure that one will ever develop or be sustained.
Although the Company’s
common stock is currently quoted on the Nasdaq Global Market, there is limited trading activity. The Company can give
no assurance that an active market will develop, or if developed, that it will be sustained. If an investor acquires
shares of the Company’s common stock, the investor may not be able to liquidate the Company’s shares should there be
a need or desire to do so. Only a small percentage of our common stock is available to be traded and is held by a small number
of holders and the price, if traded, may not reflect our actual or perceived value. There can be no assurance that there will be
an active market for our shares of common stock either now or in the future. The market liquidity of our common stock is limited
and may be dependent on the market perception of our business, among other things. We may, in the future, take certain steps, including
utilizing investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any
steps that we might take to bring us to the awareness of investors may require we compensate consultants with cash and/or stock.
There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on
our trading volume. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects
the value of the business and trading may be at an inflated price relative to the performance of our Company due to, among other
things, availability of sellers of our shares. If a market should develop, the price may be highly volatile. Because there may
be a low price for our shares of common stock, many brokerage firms or clearing firms may not be willing to effect transactions
in the securities or accept our shares for deposit in an account. Even if an investor finds a broker willing to effect a transaction
in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling
costs may exceed the selling price. Further, many lending institutions will not permit the use of low priced shares of common stock
as collateral for any loans.
Offers or availability for sale of
a substantial number of shares of our common stock may cause the price of our common stock to decline.
If our stockholders
sell substantial amounts of our common stock in the public market or upon the expiration of any statutory holding period, under
Rule 144, or upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as
an “overhang” in anticipation of which the market price of our common stock could decline. The existence of an overhang,
whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing through
the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
Conversion of preferred stock and exercise of options
or warrants may result in substantial dilution to existing stockholders.
Conversions of
our Series E Preferred Stock presently owned by our principal shareholders and others and exercise of options and
warrants would have a dilutive effect on our common stock. As of April 7, 2016, we have reserved (i) 2,825,007 shares
of our common stock that are issuable upon conversion of our Series E Preferred Stock at a conversion rate of one share
of Series E Preferred Stock for approximately 304.615 shares of common stock (following an adjustment in the conversion ratio
effective February 25, 2016), (ii) 1,802,787 shares of our common stock that are issuable upon exercise of options to
purchase our common stock, (iii) 5,057,598 shares of our common stock that are issuable upon exercise of warrants to purchase
our common stock, and (iv) 842,770 shares of our common stock that are issuable pursuant to restricted stock units upon
vesting and/or upon termination of service or in connection with a change of control. Further, any additional financing that
we secure is likely to require the sale of additional common stock and the granting of rights, preferences or privileges
senior to those of our common stock and will result in additional dilution of the existing ownership interests of our common
stockholders.
Our issuance of additional shares
of common stock or securities convertible into common stock in exchange for services or to repay debt would dilute the proportionate
ownership and voting rights of existing stockholders and could have a negative impact on the market price of our common stock.
Our board of directors
may generally issue shares of common stock or securities convertible into common stock to pay for debt or services, without further
approval by our stockholders based upon such factors that our board of directors may deem relevant at that time. We have, in the
past, issued securities for debt to reduce our obligations. We have also issued securities as payment for services. It is likely
that we will issue additional securities to pay for services and reduce debt in the future. We cannot give you any assurance that
we will not issue additional shares of common stock or securities convertible into common stock under circumstances we may deem
appropriate at the time.
Our articles of incorporation allow
for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect
the rights of the holders of our common stock.
Our board of directors
has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has
the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize
the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the
right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption
of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could
authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible
into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing
stockholders.
The elimination of monetary liability
against our directors, officers and employees under our articles of incorporation and the existence of indemnification rights to
our directors, officers and employees may result in substantial expenditures by our Company and may discourage lawsuits against
our directors, officers and employees.
Our articles of incorporation
contain provisions which eliminate the liability of our directors for monetary damages to our Company and stockholders. Our bylaws
also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements
with our directors, officers and employees. The foregoing indemnification obligations could result in our Company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to
recoup. These provisions and resultant costs may also discourage our Company from bringing a lawsuit against directors, officers
and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders
against our directors, officers and employees even though such actions, if successful, might otherwise benefit our Company and
stockholders.
Anti-takeover provisions may impede
the acquisition of our Company.
Certain provisions
of the Nevada General Corporation Law have anti-takeover effects and may inhibit a non-negotiated merger or other business combination.
These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval
of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage a future
acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium for their shares. As a
result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so.