As filed with the Securities and Exchange
Commission on January 18, 2018.
Registration No. 333-___________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
PERSHING GOLD
CORPORATION
(Exact name of registrant as specified in its
charter)
Nevada
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7812
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26-0657736
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Number)
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(I.R.S. Employer
Identification No.)
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1658 Cole Boulevard
Building 6-Suite 210
Lakewood, CO 80401
720-974-7254
(Address, including zip code, and telephone
number,
including area code, of registrant’s principal
executive offices)
Stephen Alfers
President and Chief Executive Officer
1658 Cole Boulevard
Building 6-Suite 210
Lakewood, CO 80401
720-974-7254
(Name, address, including zip code, and
telephone number,
including area code, of agent for service)
With copies to:
Brian Boonstra
Davis Graham & Stubbs LLP
1550 Seventeenth Street, Suite 500
Denver, Colorado 80202
303-892-9400
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box:
x
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large Accelerated Filer
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Accelerated Filer
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Non-accelerated Filer
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Smaller Reporting Company
x
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(Do not check if a
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Emerging Growth
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smaller reporting company)
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Company
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If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
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CALCULATION OF REGISTRATION
FEE
Title of Each Class of
Securities to be
Registered
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Amount to be
Registered
(1)
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Proposed Maximum
Offering Price per
Share
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Proposed Maximum
Aggregate Offering
Price
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Amount of
Registration Fee
(2)
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Common stock, par value $.0001 per share
(3)
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3,286,127
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$
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2.41
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(4)
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$
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7,919,566
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$
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985.99
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Total
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3,286,127
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$
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2.41
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(4)
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$
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7,919,566
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$
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985.99
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(1)
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Pursuant to Rule 416(b) under
the Securities Act of 1933, as amended, the shares of common stock offered hereby also include an indeterminate number of additional
shares of common stock as may from time to time become issuable by reason of stock splits or stock dividends.
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(2)
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Pursuant to Rule 457(a) under
the Securities Act of 1933, as amended, the registration fee has been calculated on the basis of the maximum offering price.
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(3)
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The shares of common stock
to be offered relate to resales by the selling stockholders of the shares of common stock issued or issuable to such selling stockholders.
The shares consist of (i) 2,347,236 shares issued to the selling stockholders in the December 2017 private placement; and
(ii) 938,891 shares issuable upon exercise of the warrants issued to the selling stockholders in the December 2017 private placement.
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(4)
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Estimated solely for the
purpose of calculating the registration fee and based upon the average high and low prices of the registrant’s common stock
as reported on the Nasdaq Global Market on January 16, 2018, in accordance with Rule 457(c) under the Securities Act.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(a), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE
AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING
AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED
JANUARY 18, 2018
3,286,127 Shares
PERSHING GOLD CORPORATION
Common Stock
PROSPECTUS
This prospectus relates to the sale by the selling
stockholders identified in this prospectus of up to 3,286,127 shares of our common stock, par value $0.0001 per share, which includes
(i) 2,347,236 shares of our common stock and (ii) 938,891 shares shares of our common stock issuable upon exercise of
warrants, each issued to the selling stockholders in a private placement (the “Private Placement”) completed on December
19, 2017. In the Private Placement we issued 2,347,236 units to certain accredited investors, with each unit consisting of one
share of common stock and a warrant to purchase 0.4 shares of common stock at an exercise price of $3.40 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 57 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 trades on the Nasdaq Global
Market (“Nasdaq”) and on the Toronto Stock Exchange (the “TSX”) under the symbol “PGLC.” On
January 17, 2018, the last reported sale price of our common stock as reported on Nasdaq was $2.43 and on the TSX was CDN$3.06.
Investing in our common stock is highly
speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties in the section
entitled “Risk Factors” beginning on page 6 of this prospectus before making a decision to
purchase our stock.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of
this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is ,
2018.
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus.
We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer
or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since
that date.
PROSPECTUS SUMMARY
The following summary highlights information
contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this
entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operation,” and our historical financial statements and related notes
included in this prospectus. As used in this prospectus, unless otherwise specified, references to the “Company,” “we,”
“our” and “us” refer to Pershing Gold Corporation and, unless otherwise specified, its subsidiaries.
Overview
We are a gold and
precious metals exploration company pursuing exploration, development and mining opportunities primarily in Nevada. We are currently
focused on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada and, if economically feasible,
commencing mining at the Relief Canyon Mine. None of our properties contain proven and probable reserves, and our activities on
all of our properties are exploratory in nature.
Business Strategy
Our business strategy
is to acquire and advance precious metals exploration properties. We seek properties with known mineralization that are in an advanced
stage of exploration and have previously undergone drilling but are under-explored, which we believe we can advance quickly to
increase value. We are currently focused on exploration of the Relief Canyon properties and, if economically feasible, commencing
mining at the Relief Canyon Mine. We also are reviewing strategic opportunities, focused primarily in Nevada.
Relief Canyon Mine Property
Our Relief Canyon
property rights currently total approximately 27,000 acres and are comprised of approximately 1,056 owned unpatented mining claims,
120 owned millsite claims, 100 leased unpatented mining claims, and 2,228 acres of leased and 3,739 acres of subleased private
lands. As currently defined by exploration drilling, most of the Relief Canyon deposit is located on property that is
subject to a 2% net smelter return production royalty, with a portion of the deposit located on property subject to net smelter
return production royalties totaling 4.5%. The rest of the property is subject, under varying circumstances, to net smelter
return production royalties ranging from 2% to 5%.
Since our acquisition
of the Relief Canyon Mine property in 2011, our exploration efforts have been focused primarily on expanding the known Relief Canyon
Mine deposit.
During the year
ended December 31, 2017, we focused primarily on engineering and other work related to the potential commencement of mining at
the Relief Canyon Mine; continuing permitting and bonding; and financing efforts. An overview of certain significant events follows:
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We drilled 14 holes, totaling
approximately 5,800 feet, at our Blackjack Project Area, located approximately nine miles south of our Relief Canyon Mine.
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In May 2017, Mine Development
Associates of Reno, Nevada (“MDA”) completed a preliminary feasibility study (“PFS”) on the Relief Canyon
Mine. The PFS indicates the possibility of a viable mine and recommended work should continue on advancing the Relief Canyon Mine
to a production decision.
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During the quarter ended
March 31, 2017, we successfully completed the environmental permitting process and have secured all necessary permits to restart
and expand the Relief Canyon Mine. As part of the permitting process we increased our statewide surface management surety bonds
with the United States Department of the Interior Bureau of Land Management (“BLM”) as required by the State of Nevada
from approximately $5.6 million to approximately $12.3 million.
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On March 29, 2017, we entered
into a Mining Sublease with Newmont USA Ltd. (“Newmont”) granting us the exclusive right to prospect, explore for,
develop, and mine minerals on certain lands within the Pershing Pass area south of the Relief Canyon Mine.
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Corporate Information
We were incorporated in Nevada on August 2,
2007 under the name “Excel Global, Inc.” and operated as a web-based service provider and consulting company.
On September 27, 2010, we changed our name to “The Empire Sports & Entertainment Holdings Co.” and commenced
the promotion and production of sports and entertainment events as our sole line of business which we operated until September 1,
2011 when we exited the sports and entertainment business. We began acquiring mining exploration properties in May 2011, and
on May 16, 2011, we changed our name to “Sagebrush Gold Ltd.” and on February 27, 2012 to “Pershing
Gold Corporation” due to our focus on exploration for gold in Pershing County, Nevada.
Our principal executive offices are located
at 1658 Cole Boulevard, Building 6-Suite 210, Lakewood, CO 80401 and our telephone number is 720-974-7254. We maintain a website
at
www.pershinggold.com
, which contains information about us. Our website and the information contained in and connected
to it are not a part of this prospectus.
THE
OFFERING
The following summary
describes the principal terms of the offering, but is not intended to be complete. See “Selling Stockholders”
and “Plan of Distribution” in this prospectus for a more detailed description of the selling stockholders, the terms
and conditions of the distribution of the shares of common stock and the shares of common stock issuable upon the exercise of warrants,
and the offering. For a more detailed description of our common stock and warrants to purchase our common stock, see “Description
of Securities.”
Common stock offered by the selling stockholders:
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3,286,127 shares of common stock, all of which were issued or are issuable to the selling stockholders in the Private Placement.
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Common stock assumed outstanding on January 16, 2018 and after this offering:
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33,544,125
(1)
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Use of proceeds:
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We will not receive any proceeds from the sale of shares in this offering by the selling stockholders.
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Nasdaq and TSX symbol:
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PGLC
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Risk factors:
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You should carefully consider the
information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors”
section beginning on page 6 of this prospectus before deciding whether or not to invest in shares of our common
stock.
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(1)
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The number of outstanding
shares before and after the offering includes the 938,891 shares issuable upon exercise of the warrants issued to the selling
stockholders in the Private Placement and excludes the following shares of common stock, none of which are being offered by this
prospectus:
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3,163,051 shares of common
stock issuable upon conversion of the Series E Convertible Preferred Stock based on a conversion price of $353.571;
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1,794,453 shares of common stock issuable upon the exercise of outstanding options;
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3,495,376 shares of common stock issuable upon the exercise of outstanding warrants; and
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1,052,850 shares of common stock issuable pursuant to restricted stock units.
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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, before making an investment decision. The risks and uncertainties
described below are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to
us or which we currently consider to be immaterial may also impair our business. 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 securities would likely decline and you may lose all or a part of your investment. The risks discussed below also include forward-looking
statements, and our actual results may differ substantially from those discussed in these forward-looking statements. Please see
the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this prospectus.
Risks Related 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% on production from most
of our Relief Canyon Mine property, with a portion of the deposit located on property subject to net smelter return production
royalties totaling 4.5%, 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 conducted exploration activities only since 2011. We reported a net loss for the year ended December 31, 2016 and in
the subsequent fiscal quarters ending with the September 30, 2017 fiscal quarter, 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 still being developed, 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 $15.6 million for the year ended December 31,
2016 and a net loss of approximately $9.1 million for the nine months ended September 30, 2017. We expect to incur significant
losses into the foreseeable future. Our monthly burn rate for all costs during the nine months ended September 30, 2017 was approximately
$0.7 million, including $0.6 million for general and administrative costs (including all employee salaries, public company expenses,
consultants, and land holdings costs) and $0.1 million for exploration activities. If we are unable to raise sufficient additional
external funding to commence mining and processing at Relief Canyon, including in this offering and future offerings and financings,
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
$11.3 million on our business and exploration during the year ended December 31, 2016. Our total costs for business and exploration in 2017 was $10.1 million. In addition to anticipated G&A
and exploration costs in 2018, in order to commence mining at Relief Canyon, based on the estimates contained in the PFS, we currently
expect to incur capital expenditures and working capital expenditures of approximately $35 million. To pursue the commencement
of production at Relief Canyon, additional external financing would be required. Such additional financing could include streaming,
royalty financing, forward sale arrangements, debt offerings (including convertible debt), additional equity financing or other
alternatives. 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. Although we entered into a non-binding term sheet with Sprott Resource Lending (“Sprott”),
as discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity
and Capital Resources,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, after further negotiations,
the Company and Sprott decided not to enter into a binding agreement.
Unanticipated problems or delays may
negatively affect our ability to commence mining and processing activities at Relief Canyon.
If we were to decide to
pursue the commencement of mining and processing activities at Relief Canyon, additional external financing, in addition to this
offering and the Private Placement, 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, streaming, royalty financing,
forward sale arrangements, or other alternatives, 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,
we must demonstrate that we will be able 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 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 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 2017 were approximately
$213,000, and we expect our annual maintenance costs to be approximately $213,000 in 2018. Our lease payments, advance royalty
and royalty payments and claim maintenance payments are described under “BUSINESS AND PROPERTIES—Business Strategy”
on page 27.
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 mine development and make exploration
and mine development 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, mine development, 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 will 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 specific federal and state 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
2017, we increased the amount of our reclamation bond with BLM and the NDEP to approximately $12.3 million. Approximately $12.2
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. Approximately $22,000 covers exploration on the Relief Canyon expansion properties. The reclamation bond was collateralized
by approximately 30% of the $12.3 million bond amount, or about $3.7 million. Approximately $65,000 of the reclamation bond remains
available for future mining or exploration operations. 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.
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 we 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.
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 and excessive dust may all result in the need for additional permits before exploration activities can commence.
If we conclude that the
Relief Canyon deposit can be profitably mined and 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 permit to expand the capacity of the leach pad and ponds
to accommodate additional material. 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. While permitting efforts have
not encountered opposition to date, 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. Additional permitting
would also be required in the future to mine below the water table, and the BLM may require an Environmental Impact Statement to
evaluate the associated impacts. Delays in or inability to obtain the necessary permits discussed above 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 (the “General Mining Law”). 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 and other environmental regulations 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 comprehensive 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) limit 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, such legislation, if enacted, 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 U.S. Forest Service (“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.
In 2009, the U.S. Environmental
Protection Agency (“EPA”) announced that it would develop financial assurance requirements under CERCLA Section 108(b)
for the hard rock mining industry. On January 29, 2016, the U.S. District Court for the District of Columbia issued an order requiring
that if the EPA intended to prepare such regulations, it had to do so by December 1, 2016. The EPA did comply with that order by
issuing draft proposed regulations on December 1, 2016. The EPA subsequently issued its proposed rule on January 11, 2017. Under
the proposed rule, owners and operators of facilities subject to the rule would have been required, among other things, to (i)
notify the EPA that they are subject to the rule; (ii) calculate a level of financial responsibility for their facility using a
formula provided in the rule; (iii) obtain a financial responsibility instrument, or qualify to self-assure, for the amount of
financial responsibility; (iv) demonstrate that they had obtained such evidence of financial responsibility; and (v) update
and maintain financial responsibility until the EPA released the owner or operator from the CERCLA Section 108(b) regulations.
As drafted, those additional financial assurance obligations could have been in addition to the reclamation bonds and other financial
assurances the Company has and would be required to have in place under current federal and state laws. If such requirements had
been retained in the final rule, they could have required significant additional expenditures on financial assurance, which could
have had a material adverse effect on the Company’s future business operations.
However, after an extended
public comment period, the EPA decided on December 1, 2017 not to adopt the proposed rule, and not to impose additional financial
assurance obligations on the hard rock mining industry. It is possible that one or more non-governmental organizations will file
lawsuits challenging that decision.
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
and any future mine development 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 and any future
mine development 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
or mine development activities on them.
Risks Relating to Our Organization and Our Common Stock
The trading price of the common stock may experience substantial
volatility.
The trading price of our common stock may experience
substantial volatility that is unrelated to our financial condition or operations. The trading price of our common stock may also
be significantly affected by short-term changes in the price of gold and other minerals. The market price of our securities is
affected by many other variables which may be unrelated to its success and are, therefore, not within our control. These include
other developments that affect the market for all resource sector-related securities, the breadth of the public market for the
common stock and the attractiveness of alternative investments. The effect of these and other factors on the market price of the
common stock is expected to make the price of the common stock volatile in the future, which may result in losses to investors.
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, $1.25 million in a
February 2016 private placement, and $3.0 million in the Private Placement. Donald Smith invested $6 million in a March 2016 private
placement. Curtailment of cash investments by significant investors 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,
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 47.0% of our voting securities, including shares of common stock issuable upon the
conversion of our Series E Preferred Stock. As of January 16, 2018, Mr. Honig, who is a director, owned 10,890,576 or approximately
29.7%, of our voting securities, Mr. Smith owned 3,251,500, or approximately 8.9%, of our voting securities, and Levon Resources
owned 1,954,366, or approximately 5.3%, of our voting securities. As of that date, our officers and directors, including Mr. Honig,
owned 12,030,100, or approximately 32.8%, 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 Nasdaq and the TSX.
The costs of preparing
and filing annual and quarterly reports and other information with the SEC 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,
2016 and December 31, 2017 were approximately $850,000 and $650,000 respectively. We estimate that these costs will be approximately $650,000 for the
year ending 2018.
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.
Public company compliance may make it
more difficult to attract and retain officers and directors.
The Sarbanes-Oxley Act
and rules implemented by the SEC have required changes in corporate governance practices of public companies. As a public
company, 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 of our common stock 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 common 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 Nasdaq, the TSX, and Frankfurt Stock Exchange, 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.
Sales, 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.
Sales of substantial amounts
of the common stock, or the availability of such securities for sale, could adversely affect the prevailing market prices for the
common stock. A decline in the market prices of the common stock could impair our ability to raise additional capital through the
sale of securities should we desire to do so. If we were to decide to pursue the commencement of production at Relief Canyon, additional
external financing would be required in addition to the amounts raised in this offering and the Private Placement. Such external
financing could include streaming, royalty financing, forward sale arrangements, debt offerings (including convertible debt), additional
equity financing or other alternatives, and may result in additional dilution to existing holders of our common stock.
In addition, 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.
The conversion of preferred stock, a
change in the conversion rate 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 January 16, 2018, we have reserved (i) 3,163,051 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
353.571 shares of common stock (following an adjustment in the conversion ratio effective December 19, 2017), (ii) 1,794,453 shares
of our common stock that are issuable upon exercise of options to purchase our common stock, (iii) 4,434,267 shares of our common
stock that are issuable upon exercise of warrants to purchase our common stock, and (iv) 1,052,850 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. In the event that we sell or otherwise dispose of our common stock an effective price less than $2.80, the conversion
rate will be adjusted and the number of shares of common stock issuable upon conversion of outstanding Series E Preferred Stock
will increase. 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 our 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.
Non-U.S. holders of our common stock,
in certain situations, could be subject to U.S. federal income tax upon sale, exchange or disposition of our common stock.
It is likely that we are,
and will remain for the foreseeable future, a U.S. real property holding corporation for U.S. federal income tax purposes because
our assets consist primarily of “United States real property interests” as defined in the Internal Revenue Code of
1986, as amended, or the Code, and applicable Treasury regulations. As a result, under the Foreign Investment in Real Property
Tax Act, or FIRPTA, certain non-U.S. investors may or may in the future be subject to U.S. federal income tax on any gain from
the disposition of shares of our common stock, in which case they would also be required to file U.S. tax returns with respect
to such gain. In general, whether these FIRPTA provisions apply depends on the amount of our common stock that such non-U.S.
investors hold. In addition, such non-U.S. investors may or may in the future be subject to withholding if, at the time they
dispose of their shares, our common stock is not regularly traded on an established securities market within the meaning of the
applicable Treasury regulations. So long as our common stock continues to be regularly traded on an established securities
market, only a non-U.S. investor who has owned, actually or constructively, more than 5% of our common stock at any time during
the shorter of (i) the five-year period ending on the date of disposition and (ii) the non-U.S. investor’s holding
period for its shares may or may in the future be subject to U.S. federal income tax on the disposition of our common stock under
FIRPTA.
FORWARD LOOKING STATEMENTS
Some information contained in this registration
statement on Form S-1 may contain forward-looking statements within the meaning of the United States Private Securities Litigation
Reform Act of 1995. These statements include, without limitation, statements relating to our planned expenditures and cash position,
business goals, planned exploration and metallurgical work, our drilling program, business strategy, planned permitting activities,
geographic surveys, plans with respect to an environmental studies to expand the Relief Canyon open-pit mines, our liquidity and
capital resources outlook and future financing requirements, and estimates and assumptions required under our financial statements.
We use the words “anticipate,” “continue,”
“likely,” “estimate,” “expect,” “may,” “could,” “will,”
“project,” “should,” “believe” and similar expressions to identify forward-looking statements.
Statements that contain these words discuss our future expectations and plans, or state other forward-looking information. Although
we believe the expectations and assumptions reflected in those forward-looking statements are reasonable, we cannot assure you
that these expectations and assumptions will prove to be correct. Our actual results could differ materially from those expressed
or implied in these forward-looking statements as a result of various factors described in this registration statement on Form S-1,
including:
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Risks relating to the future
exploration efforts to expand the Relief Canyon deposit, our ability to fund future exploration costs or purchase additional equipment,
and our ability to obtain or amend the necessary permits, consents, or authorizations needed to advance expansion of the deposit,
or recommissioning of the gold processing facility;
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Our ability to acquire additional mineral targets;
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Our ability to achieve any meaningful revenue;
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Our ability to engage or retain geologists, engineers, consultants and other key management and mining personnel necessary to successfully operate and grow our business;
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The volatility of the market price of our common stock or our intention not to pay any cash dividends in the foreseeable future;
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Changes in any federal, state or local laws and regulations or possible challenges by third parties or contests by the federal government that increase costs of operation or limit our ability to explore on certain portions of our property;
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Decreases in the market price for gold and economic and political events affecting the market prices for gold and other minerals which may be found on our exploration properties;
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The factors set forth under “Risk Factors”
beginning on page 6 of this registration statement on Form S-1; and
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Other factors described elsewhere in this registration statement on Form S-1.
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Many of these factors are beyond our ability
to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable
assumptions, such expectations may prove to be materially incorrect due to known and unknown risk and uncertainties. You should
not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this registration statement
on Form S-1. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements
to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons
acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this
registration statement on Form S-1.
USE OF PROCEEDS
The selling stockholders will receive all of
the proceeds from the sale of the shares offered by them under this prospectus. We will not receive any proceeds from the sale
of the shares by the selling stockholders covered by this prospectus.
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Our common stock commenced trading
on August 20, 2009 and was quoted on the OTC Bulletin Board under the symbol EXCX.OB from June 23, 2009 through May 31,
2011. Prior to August 20, 2009, there was no active market for our common stock. Our common stock traded under the symbol
SAGE.OB from June 1, 2011 until March 26, 2012. On March 26, 2012, our symbol was changed to PGLC.OB. On June 18,
2015 our stock underwent a 1-for-18 reverse stock split. On July 6, 2015, our stock began trading on Nasdaq under the symbol PGLC.
On November 17, 2016, our stock began trading on the TSX under the symbol PGLC.
The following table sets
forth the intraday high and low sales prices in U.S. dollars or Canadian dollars for each of the quarterly periods indicated as
reported on Nasdaq (as reported by Bloomberg) and the TSX (as reported by Bloomberg), respectively.
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|
Nasdaq
|
|
|
TSX (C$)
|
|
|
|
High
|
|
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Low
|
|
|
High
|
|
|
Low
|
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
4.99
|
|
|
|
3.12
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|
|
|
N/A
|
|
|
|
N/A
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|
Second Quarter
|
|
|
4.65
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|
|
|
3.62
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|
|
|
N/A
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|
|
|
N/A
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|
Third Quarter
|
|
|
5.02
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|
|
|
3.77
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|
|
|
N/A
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|
|
|
N/A
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|
Fourth Quarter
|
|
|
4.58
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|
|
|
3.10
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|
|
|
5.50
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|
|
|
4.20
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|
Year Ending December 31, 2017
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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First Quarter
|
|
|
3.49
|
|
|
|
2.67
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|
|
|
4.74
|
|
|
|
3.66
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|
Second Quarter
|
|
|
3.10
|
|
|
|
2.60
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|
|
|
4.15
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|
|
|
3.55
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Third Quarter
|
|
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3.23
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|
|
|
2.70
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|
|
|
4.05
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|
|
|
3.44
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|
Fourth Quarter
|
|
|
3.23
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|
|
|
2.26
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|
|
|
4.02
|
|
|
|
2.90
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|
Year Ending December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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First Quarter (through January 17, 2018)
|
|
|
2.58
|
|
|
|
2.37
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|
|
|
3.20
|
|
|
|
2.95
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|
The last reported
sales price of our common stock on Nasdaq on January 17, 2018, was $2.43 per share. The last reported sales price
of our common stock on TSX on January 17, 2018, was CDN$3.06 per share.
Holders
As of January 16, 2018,
there were 505 holders of record of our common stock.
Dividend Policy
In the past, we have not
declared or paid cash dividends on our common stock, and we do not intend to pay any cash dividends on our common stock. Rather,
we intend to retain future earnings (if any) to fund the operation and expansion of our business and for general corporate purposes.
Subject to legal and contractual limits, our board of directors will make any decision as to whether to pay dividends in the future.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion and analysis should
be read in conjunction with our consolidated financial statements and related notes included in this prospectus. In addition to
historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and
assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of
certain factors, including but not limited to those set forth under “Risk Factors,” “Forward-Looking Statements,”
and in other parts of this prospectus.
Overview
During the year ended December
31, 2016 and the nine months ended September 30, 2017, we focused primarily on the development and commencement of our 2016 drilling
program to expand the Relief Canyon Mine deposit; continuing permitting and bonding; engineering and other work related to the
potential commencement of mining at the Relief Canyon Mine; and financing efforts. An overview of certain significant events, including
certain material events subsequent to September 30, 2017, follows:
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·
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In December 2017, we completed an underwritten public offering of 2,794,500 shares of our common stock and associated warrants to purchase up to 1,117,800 shares of our common stock under our shelf registration statement at a price to the public of $2.80 per share and associated warrant for gross proceeds of approximately $7.8 million. Concurrently, we completed the Private Placement for gross proceeds of approximately $6.8 million. We intend to use the net proceeds from the offerings for advancing the Relief Canyon project and/or for general corporate purposes.
|
|
·
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For the nine months ended September 30, 2017, we drilled 14 holes, totaling approximately 5,800 feet, at our Blackjack Project Area, located approximately nine miles south of our Relief Canyon Mine.
|
|
·
|
In May 2017, we completed the PFS of the Relief Canyon Mine. The PFS indicates the possibility of a viable mine and recommended work should continue on advancing the Relief Canyon Mine to a production decision.
|
|
·
|
During the quarter ended March 31, 2017, we successfully completed the environmental permitting process and have secured all necessary permits to restart and expand the Relief Canyon Mine. As part of the permitting process we increased our statewide surface management surety bonds with the BLM as required by the State of Nevada from approximately $5.6 million to approximately $12.3 million.
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·
|
On March 29, 2017, we entered into a Mining Sublease with Newmont granting us the exclusive right to prospect, explore for, develop, and mine minerals on certain lands within the Pershing Pass area south of the Relief Canyon Mine.
|
|
·
|
In December 2016, we completed an underwritten public offering for 2,205,883 shares of our common stock under our shelf registration statement at a price to the public of $3.40 per share for gross proceeds of approximately $7.5 million.
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|
·
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In December 2016, we hired Timothy Arnold as Vice President Operations for the Company.
|
|
·
|
In November 2016, our common stock began trading on the TSX.
|
|
·
|
In November 2016, we completed our 2016 Phase 1 Drilling Campaign which focused on increasing the resource at the Relief Canyon Mine and continuing to upgrade the Relief Canyon Mine pit economics.
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|
·
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In August 2016, the BLM approved our Environmental Assessment and Plan of Operations Modification for the Relief Canyon Mine expansion. This approval expands our pit boundary and deepening of the pit and also increases permissible drilling areas around the existing pits.
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·
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In June 2016, MDA completed a PEA for our Relief Canyon Mine property. The work done to date as presented in the PEA prepared by MDA provides the economic data to support further efforts to advance the project.
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·
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In June 2016, we filed a shelf registration statement on Form S-3, which was subsequently declared effective, and on which we registered for sale up to $100.0 million of certain of our securities from time to time and at prices and on terms that we may determine.
|
|
·
|
In March 2016, we completed a private placement and raised approximately $6.0 million in net proceeds, after expenses and legal fees, through the issuance of a total of 1,850,000 shares of our common stock and warrants to purchase 925,000 shares of our common stock at an exercise price of $4.35 per share.
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|
·
|
In February 2016, we completed two private placements and raised approximately $8.1 million in gross proceeds, or $7.4 million in net proceeds after commissions, expenses and legal fees, through the issuance of a total of 2,488,529 shares of our common stock and warrants to purchase 1,322,019 shares of our common stock at an exercise price of $5.06 per share.
|
Preliminary Feasibility Study and Mineralized
Material Estimate
On May 26, 2017,
MDA
completed a PFS on the Relief Canyon Mine. The PFS included an estimate of mineralized material at the Relief Canyon Mine deposit,
calculated at a cut-off grade of 0.005 ounces of gold per ton for oxide material, 0.01 ounces of gold per ton for mixed material
and 0.02 ounces of gold per ton for sulfide material. Silver grades were only available for a portion of the deposit. The database
used for the mineralized material estimate described below includes 419 core holes and 676 reverse circulation holes for a total
of 482,755 feet, of which 415 core holes and 89 reverse circulation holes were drilled by the Company from 2011 to September 2016.
Tons
|
|
|
Average gold grade
(ounces per ton)
|
|
|
41,876,000
|
|
|
|
0.019
|
|
Tons
|
|
|
Average silver grade
(ounces per ton)
|
|
|
17,576,000
|
|
|
|
0.117
|
|
“Mineralized
material” as used in this registration statement on Form S-1, although permissible under the Securities and Exchange Commission
(“SEC”) Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that
any part of the Relief Canyon deposit will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” Investors
are cautioned not to assume that all or any part of the mineralized material will be confirmed or converted into reserves or that
mineralized material can be economically or legally extracted.
The PFS indicates the possibility
of a viable mine and recommended work should continue on advancing the project to a production decision. The recommended advancement
work would include additional drilling to improve the knowledge of the deposit, and obtaining silver assays for continuous mineralized
intervals from past core drilling and new drilling so that more silver values can be added to the economic analysis for the mine.
We would also need to arrange financing for the project before any production decision could be made. See “Liquidity and
Capital Resources” below.
Permitting
We have all of the state
and federal permits necessary to start mining and heap-leach processing operations. We have planned a two-phase permitting and
development scenario for the project. Phase I, which has been fully authorized under our permits, is the re-purposing of previously
approved disturbance for expanded mining to a pit bottom elevation of 5,080 feet, partial backfilling of the Phase I pit to approximately
20 feet above the historical groundwater elevation to eliminate a pit lake, expanded exploration operations, full build-out of
the heap leach pad to accommodate leaching of the Phase I ore, and construction of a new waste rock storage facility. Phase II
would include additional mine expansion activities and would allow mining further below the water table. We will use the mine plan
in the PFS as the basis for the Phase II permit applications, and anticipate we will submit the Phase II permit applications in
the first quarter of 2018.
Results of Operations
Three and Nine months ended September 30,
2017 and 2016
Net Revenues
We are an exploration stage company with no
operations, and we generated no revenues for the three and nine months ended September 30, 2017 and 2016.
Operating Expenses
Total operating expenses for the nine months
ended September 30, 2017 as compared to the nine months ended September 30, 2016 were approximately $9.1 million and $10.0 million,
respectively. The $0.9 million decrease in operating expenses for the nine months ended September 30, 2017 is comprised of a $0.8
million decrease in exploration expenses on our Relief Canyon properties to approximately $1.0 million from $1.8 million in the
prior period due to decreased direct drilling activities during the current period; a decrease of approximately $0.4 million in
compensation to approximately $3.1 million from $3.5 million in the prior period as a result of decreased stock-based compensation
offset by increases in consulting fees of approximately $0.2 million to approximately $1.7 million from $1.5 million as a result
of consulting costs associated with the completion of the PFS and increased consulting in connection with services related to permitting;
an increase of $0.1 million in general and administrative expenses to approximately $3.2 million from $3.1 million in the prior
period, primarily due to increased public company expenses and legal costs.
Total operating expenses for the three months
ended September 30, 2017 as compared to the three months ended September 30, 2016 were approximately $2.5 million and $3.6 million,
respectively. The $1.1 million decrease in operating expenses for the three months ended September 30, 2017 is comprised of a $1.1
million decrease in exploration expenses on our Relief Canyon properties to approximately $0.2 million from $1.3 million in the
prior period due to decreased direct drilling activities during the current period; a decrease in compensation of approximately
$0.1 million to approximately $0.8 million from $0.9 million due to decreased stock-based compensation offset by an increase in
consulting fees of approximately of $0.1 million to approximately $0.5 million from $0.4 million as a result of consulting costs
associated with the completion of the PFS.
Loss from Operations
We reported a loss from operations of $9.1
million and $10.0 million for the nine months ended September 30, 2017 and 2016, respectively. The increase in operating loss was
due primarily to the increase in operating expenses described above. We reported a loss from operations of $2.5 million and $3.6
million for the three months ended September 30, 2017 and 2016, respectively.
Other Income (Expenses)
Total other income (expense) was approximately
($800) and ($4,200) for the nine months ended September 30, 2017 and 2016, respectively. The change in other income (expense) is
primarily attributable to an increase in foreign currency loss offset by an increase in other income. Total other income (expense)
was approximately $2,600 and ($280) for the three months ended September 30, 2017 and 2016, respectively. The change in other income
(expense) is primarily attributable to an increase in interest income.
Net Loss
As a result of the operating expense and other
income (expense) discussed above, we reported a net loss of approximately ($9.1) million for the nine months ended September 30,
2017 as compared to a net loss of ($10.0) million for the nine months ended September 30, 2016. As a result of the operating expense
and other income (expense) discussed above, we reported a net loss of approximately ($2.5) million for the three months ended September
30, 2017 as compared to a net loss of ($3.6) million for the three months ended September 30, 2016.
Years Ended December 31, 2016 and December 31,
2015
Net Revenues
We are an exploration stage
company with no operations, and we generated no revenues for the years ended December 31, 2016 and 2015.
Operating Expenses
Total operating expenses
for the year ended December 31, 2016 as compared to the year ended December 31, 2015, were $15.6 million and $19.1 million, respectively.
The $3.5 million decrease in operating expenses for the year ended December 31, 2016 is comprised largely of (i) a $3.8 million
decrease in exploration expenses on our Relief Canyon properties to approximately $4.8 million from $8.6 million in the prior period
due to less direct drilling activities during the current year, (ii) a decrease of $0.6 million in general and administrative expenses
to approximately $4.1 million from $4.7 million in the prior period, primarily due to decrease in travel, insurance and marketing
expenses, (iii) a $0.1 million increase in consulting fees to approximately $1.4 million from $1.3 million in the prior period
primarily due to an increase in investor relations services, and (iv) an increase of $0.7 million in compensation and related taxes
to approximately $5.3 million from $4.6 million primarily due to an increase in stock based compensation in connection with restricted
stock grants to employees and an increase in salary levels of certain employees.
Loss from Operations
We reported loss from operations
of $15.6 million and $19.1 million for the year ended December 31, 2016 and 2015, respectively. The decreases in operating loss
were due primarily to the decreases in operating expenses described above.
Other Expenses
Total other expense, net
was approximately ($2,600) and ($2,600) for the year ended December 31, 2016 and 2015, respectively.
Net Loss
As a result of the operating
expense and other income (expense) discussed above, we reported a net loss of ($15.6) million for the year ended December 31, 2016
as compared to a net loss of ($19.1) million for the year ended December 31, 2015.
Liquidity and Capital Resources
On December 19, 2017, we completed an underwritten
public offering for 2,794,500 shares of our common stock and associated warrants to purchase up to 1,117,800 shares of our common
stock under our shelf registration statement, at a price to the public of $2.80 per share and associated warrant, for gross proceeds
of approximately $7.8 million. Concurrently, we completed the Private Placement of 2,347,236 shares of our common stock and associated
warrants to purchase 938,891 shares of our common stock for gross proceeds of approximately $6.8 million. After expenses, the net
proceeds to the Company from the public offering and Private Placement were approximately $13.4 million.
At September 30, 2017, our cash, cash equivalents
and restricted cash equivalents totaled $5.7 million. Our cash, cash equivalents and restricted cash equivalents decreased during
the nine months ended September 30, 2017 by $8.3 million from our cash, cash equivalents and restricted cash equivalents balance
at December 31, 2016 of $14.0 million. The decrease in cash and cash equivalents was primarily the result of cash used in operations
of $8.2 million that was comprised of costs to complete the PFS, exploration expenditures on our Relief Canyon properties, and
general and administrative expenses, including consultant fees, compensation costs, legal fees and public company expenses.
Our cash, cash equivalents and restricted cash equivalents increased
in the period subsequent to September 30, 2017 due to the following:
|
·
|
$13.4 million in net proceeds
from the December 2017 equity financings;
|
|
·
|
$2.4 million on general and
administrative expenses (including employee salaries, public company expenses, consultants, land holding costs and annual insurance
premium renewals);
|
|
·
|
$0.1 million on permitting
and the continuation of studies to evaluate mining the Relief Canyon Mine below the water table.
|
At the end of fiscal year 2017, we had approximately
12.9 million in cash and cash equivalents and $3.7 million in restricted cash equivalents. We expect to require additional financing
to fund our current operations in the first fiscal quarter of 2019. There is no assurance that we will be able to obtain additional
financing on acceptable terms or at all.
The actual amount we spend for fiscal year
2018 may vary significantly from the amounts specified above if we decide to advance the Relief Canyon Mine toward production in
2018. Based on the estimates contained in the PFS, we currently expect to incur capital expenditures and working capital expenses
of approximately $35 million. The Company is evaluating various sources of additional financing. No development decision with respect
to the Relief Canyon Mine is expected to be made unless and until the Company is able to solidify its financing plans. Our ability
to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control. The additional
funds necessary to fund the development of the Relief Canyon Mine may not be available to us on acceptable terms or at all.
Recent Accounting Pronouncements
In February 2016, FASB issued ASU 2016-02,
“Leases (Topic 842)”. The new standard requires lessees to apply a dual approach, classifying leases as either finance
or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification
will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term
of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater
than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing
guidance for operating leases. The new guidance will be effective for fiscal years beginning after December 15, 2018, and interim
periods within those annual periods and is applied retrospectively. Early adoption is permitted. We do not believe the guidance
will have a material impact on our consolidated financial statements.
In March 2016, FASB issued ASU 2016-09, “Compensation
- Stock Compensation (Topic 718)” (“ASU 2016-09”) as part of FASB's simplification initiative focused on improving
areas of GAAP for which cost and complexity may be reduced while maintaining or improving the usefulness of information disclosed
within the financial statements. ASU 2016-09 focuses on simplification specifically with regard to share-based payment transactions,
including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash
flows. The guidance in ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within
those annual periods. Early adoption is permitted. Our adoption did not have a material impact on our consolidated results of operations,
financial position and related disclosures.
In August 2016, FASB issued ASU 2016-15, “Statement
of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task
Force)” (“ASU 2016-15”). ASU 2016-15 addresses the following eight specific cash flow issues: Debt prepayment
or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that
are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business
combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies
(including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization
transactions; and separately identifiable cash flows and application of the predominance principle. This guidance became effective
for us beginning on January 1, 2018. We do not believe the guidance will have a material impact on our consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, “Statement
of Cash Flows (Topic 230): Restricted Cash,” or “ASU 2016-18”. ASU 2016-18 is intended to clarify how
entities present restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total
of cash and cash equivalents and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers
between cash and cash equivalents and restricted cash in the statement of cash flows. When cash and cash equivalents and restricted
cash are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in
the statement of cash flows to the related captions in the balance sheet. This reconciliation can be presented either on the face
of the statement of cash flows or in the notes to the financial statements. ASU 2016-18 is effective for fiscal
years beginning after December 15, 2017 and is to be applied retrospectively. Early adoption is permitted, including adoption
in an interim period. We adopted ASU 2016-18 for the three-month period ended September 30, 2017 and our adoption did not have
a material impact on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, “Intangibles
– Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates Step 2 from the goodwill
impairment test. When an indication of impairment was identified after performing the first step of the goodwill impairment test,
Step 2 required that an entity determine the fair value at the impairment testing date of its assets and liabilities (including
unrecognized assets and liabilities) using the same procedure that would be required in determining the fair value of assets acquired
and liabilities assumed in a business combination. Under the amendments in ASU No. 2017-04, an entity would perform its annual,
or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value. An entity
would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value.
In addition, an entity must consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting
unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a SEC filer should adopt
the amendments in ASU No. 2017-04 for its annual, or any interim, good will impairment tests in fiscal years beginning after
December 15, 2019. We do not believe the guidance will have a material impact on our consolidated financial statements.
In May
2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation”. The update provides guidance about
which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC
Topic 718. An entity shall account for the effects of a modification described in ASC paragraphs 718-20-35-3 through 35-9, unless
all the following are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately
before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting conditions
of the original award immediately before the original award is modified; and (3) The classification of the modified award as an
equity instrument or a liability instrument is the same as the classification of the original award immediately before the original
award is modified. The provisions of this update become effective for annual periods and interim periods within those annual periods
beginning after December 15, 2017. We do
not believe the guidance will have a material impact on our consolidated financial
statements.
In July 2017, the FASB issued ASU 2017-11 “Earnings
Per Share (Topic 260)”. The amendments in the update change the classification of certain equity-linked financial instruments
(or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified
instruments. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per
share (“EPS”) in accordance with Topic 260, Earnings Per Share, to recognize the effect of the down round feature when
it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS.
Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance
for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including
related EPS guidance (in Topic 260). For public business entities, the amendments in Part I of this update are effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the guidance will have
a material impact on our consolidated financial statements.
Other accounting standards that have been issued
or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated
financial statements upon adoption. We do not discuss recent pronouncements that are not anticipated to have an impact on or are
unrelated to our financial condition, results of operations, cash flows or disclosures.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial
condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally
accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.
Management believes the following critical
accounting policies affect the significant judgments and estimates used in the preparation of the financial statements.
Principles of Consolidation
The consolidated financial statements are prepared
in accordance with U.S. generally accepted accounting principles and present the financial statements of the Company and our wholly-owned
subsidiaries. In the preparation of our consolidated financial statements, intercompany transactions and balances are eliminated.
Use of Estimates
In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date
of the consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly
from those estimates. Significant estimates made by management include, but are not limited to, the useful life of property
and equipment, amounts and timing of closure obligations, the assumptions used to calculate fair value of restricted stock units,
options and warrants granted, stock-based compensation, beneficial conversion on preferred stock, capitalized mineral rights,
asset valuations, timing of the performance criteria of restricted stock units and the fair value of common stock issued.
Stock-Based Compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost
of employee and director services received in exchange for an award of equity instruments over the period the employee or director
is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement
of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third parties, compensation expense is determined
at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date
is reached, the total amount of compensation expense remains uncertain.
Effective for the fiscal year-ended December
31, 2016, we early adopted ASU 2016-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2016-09”),
which makes several modifications to Topic 718. Upon adoption of ASU 2016-09, we recognize the effect of forfeitures in compensation
cost as they occur, rather than estimating forfeitures as of the award date. Any previously recognized compensation cost will be
reversed in the period of forfeiture.
Property and Equipment
Property and equipment are carried at cost.
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses
are included in income in the year of disposition. We examine the possibility of decreases in the value of fixed assets when events
or changes in circumstances reflect the fact that their recorded value may not be recoverable. Depreciation is calculated on a
straight-line basis over the estimated useful life of the assets, generally from one to twenty-five years.
Mineral Property Acquisition and Exploration
Costs
Costs of lease, exploration, carrying and retaining
unproven mineral lease properties are expensed as incurred. We have chosen to expense all mineral exploration costs as incurred
given that we are still in the exploration stage. Once we have identified proven and probable reserves in our investigation of
our properties and upon development of a plan for operating a mine, we would enter the development stage and capitalize future
costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized,
using the units-of-production method over proven and probable reserves. When we have capitalized mineral properties, these properties
will be periodically assessed for impairment of value and any diminution in value. To date, we have not established the commercial
feasibility of any exploration prospects; therefore, all costs are being expensed.
ASC 930-805 states that mineral rights consist
of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include
mineral rights. Acquired mineral rights are considered tangible assets under ASC 805. ASC 805 requires that mineral rights be recognized
at fair value as of the acquisition date. As a result, our direct costs to acquire mineral rights are initially capitalized as
tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims and mill sites. If
proven and probable reserves are established for the property and it has been determined that a mineral property can be economically
developed, costs will be amortized using the units-of-production method over proven and probable reserves. For mineral rights in
which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each
reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Long-Lived Assets
We review for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15,
“Impairment or Disposal of Long-Lived Assets”. An impairment is considered to exist when the sum of expected undiscounted
future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between
the asset’s estimated fair value and its carrying amount.
Asset Retirement Obligations
Asset retirement obligations, consisting primarily
of estimated mine reclamation and closure costs at our Relief Canyon property, are recognized in the period incurred and when a
reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations, which are initially estimated based
on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. Corresponding asset
retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s
remaining useful life. Asset retirement obligations are periodically adjusted to reflect changes in the estimated present value
resulting from revisions to the estimated timing or amount of reclamation and closure costs. We review and evaluate the asset retirement
obligations annually or more frequently at interim periods if deemed necessary.
Off-Balance Sheet Arrangements
Since our inception, we have not engaged in
any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.
Contractual Obligations
Not applicable.
BUSINESS AND PROPERTIES
Overview
We are a gold and precious
metals exploration company pursuing exploration, development and mining opportunities primarily in Nevada. We are currently focused
on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada and, if economically feasible, commencing
mining at the Relief Canyon Mine. None of our properties contain proven and probable reserves, and our activities on all of our
properties are exploratory in nature.
Our principal offices are
located in Lakewood, Colorado at 1658 Cole Boulevard, Building No. 6, Suite 210, Lakewood, Colorado 80401 and we have
an exploration office at 1055 Cornell, Lovelock, Nevada 89419. Our telephone number is 720-974-7254.
Corporate Structure
We were incorporated in
Nevada on August 2, 2007 under the name Excel Global, Inc., and we changed our name to Pershing Gold Corporation on February 27,
2012. We operate our business directly and also through our wholly-owned subsidiary, Gold Acquisition Corp., a Nevada corporation.
Gold Acquisition Corp. owns and is conducting exploration on the Relief Canyon Mine property in northwestern Nevada. Pershing Gold
Corporation owns directly and is conducting exploration on the Relief Canyon properties adjacent to the Relief Canyon Mine property,
which we refer to as the “Relief Canyon expansion properties”. We also have a subsidiary that holds a royalty interest
and a wholly-owned subsidiary formed for potential purchases of exploration targets.
Business Strategy
Our business strategy is
to acquire and advance precious metals exploration properties. We seek properties with known mineralization that are in an advanced
stage of exploration and have previously undergone drilling but are under-explored, which we believe we can advance quickly to
increase value. We are currently focused on exploration of the Relief Canyon properties and, if economically feasible, commencing
mining at the Relief Canyon Mine. We also are reviewing strategic opportunities, focused primarily in Nevada.
Relief Canyon Mine Properties
We acquired the Relief
Canyon Mine property in August 2011. The property then consisted of approximately 1,100 acres of unpatented mining claims and millsites
and included three open-pit mines and a processing plant that could be used to process material from the Relief Canyon Mine or
from other mining operations. We refer to this property as the “Relief Canyon Mine” property.
We significantly expanded
our Relief Canyon property position in 2012 with the acquisition of approximately 23,000 additional acres of unpatented mining
claims and leased and subleased lands around the Relief Canyon Mine and south of the Relief Canyon Mine. We refer to our
current expanded property position as the “Relief Canyon properties.” In early 2015, we acquired 74 mining claims near
the Relief Canyon Mine and on which the processing facilities are located that we had previously leased from Newmont, and entered
into a new mining lease directly with the owner of approximately 1,600 acres that we had previously subleased from Newmont. See
“Relief Canyon Properties – Property History – Title and Ownership Rights” and “–Newmont Leased
Property.” Most of the property on which the mine and processing facilities are located is subject to a 2% net smelter return
royalty payable to Battle Mountain Gold (now RG Royalties, LLC) or Newmont. In March 2017, we entered into a mining sublease with
Newmont which further consolidated our land holdings in the Pershing Pass area south of the Relief Canyon Mine.
Since we acquired the Relief
Canyon Mine property in 2011, we have drilled a total of 496 drill holes comprising approximately 282,000 feet at the Relief Canyon
properties. Our exploration efforts have been focused primarily on expanding the known Relief Canyon Mine deposit. Our 2011-2013
exploration drilling programs expanded the deposit. We began a drilling program in 2014 which we completed in early 2015. In this
program, we drilled a total of 134 core holes, for approximately 74,000 feet, for the purpose of extending and upgrading the current
deposit. The 2014 drill results included some gold intercepts at significantly higher grades than the average historic grade of
the Relief Canyon Mine deposit of approximately one gram of gold per ton. We conducted the 2015 drilling program from May 2015
through December 2015, which demonstrated that the high-grade zone in the North Target Area has continued south under the North
Pit and that the higher-grade L Zone of the Relief Canyon Mine deposit is geologically open to the west, south and southwest.
In July 2016, we commenced
Phase 1 of our 2016 drilling program at the Relief Canyon Mine property. Phase 1 was completed in November 2016, and included 22
core holes, totaling approximately 15,000 feet. In November 2016, we commenced Phase 2 drilling and completed this drilling in
December 2016, which included nine core holes totaling approximately 8,000 feet.
Preliminary Feasibility Study and Mineralized
Material Estimate
On May 26, 2017,
MDA
completed a PFS on the Relief Canyon Mine. The PFS included an estimate of mineralized material at the Relief Canyon Mine deposit,
calculated at a cut-off grade of 0.005 ounces of gold per ton for oxide material, 0.01 ounces of gold per ton for mixed material
and 0.02 ounces of gold per ton for sulfide material. Silver grades were only available for a portion of the deposit. The database
used for the mineralized material estimate described below includes 419 core holes and 676 reverse circulation holes for a total
of 482,755 feet, of which 415 core holes and 89 reverse circulation holes were drilled by the Company from 2011 to September 2016.
Tons
|
|
|
Average gold grade
(ounces per ton)
|
|
|
41,876,000
|
|
|
|
0.019
|
|
Tons
|
|
|
Average silver grade
(ounces per ton)
|
|
|
17,576,000
|
|
|
|
0.117
|
|
“Mineralized
material” as used in this registration statement on Form S-1, although permissible under the Securities and Exchange Commission
(“SEC”) Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that
any part of the Relief Canyon deposit will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” Investors
are cautioned not to assume that all or any part of the mineralized material will be confirmed or converted into reserves or that
mineralized material can be economically or legally extracted.
The PFS indicates the possibility
of a viable mine and recommended work should continue on advancing the project to a production decision. The recommended advancement
work would include additional drilling to improve the knowledge of the deposit, and obtaining silver assays for continuous mineralized
intervals from past core drilling and new drilling so that more silver values can be added to the economic analysis for the mine.
Permitting
We have all of the state
and federal permits necessary to start mining and heap-leach processing operations. We have planned a two-phase permitting and
development scenario for the project. Phase I, which has been fully authorized under our permits, is the re-purposing of previously
approved disturbance for expanded mining to a pit bottom elevation of 5,080 feet, partial backfilling of the Phase I pit to approximately
20 feet above the historical groundwater elevation to eliminate a pit lake, expanded exploration operations, full build-out of
the heap leach pad to accommodate leaching of the Phase I ore, and construction of a new waste rock storage facility. Phase II
would include additional mine expansion activities and would allow mining further below the water table. We will use the mine plan
in the PFS as the basis for the Phase II permit applications, and anticipate we will submit the Phase II permit applications in
the first quarter of 2018.
Production Decision and Financing
We are considering two
alternative mining scenarios in our economic assessment of advancing the project to production: self-mining, with our own manpower
and equipment, and contract mining by mining contractors who supply the manpower and equipment to deliver material to the Company’s
processing facilities.
If we were to decide to
pursue the commencement of production at the Relief Canyon Mine property, 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 are actively
pursuing discussions with potential counterparties for the remaining financing that will be needed to commence production at Relief
Canyon. This additional external financing could include streaming, royalty financing, forward sale arrangements, debt offerings
(including convertible debt), or other similar arrangements. It may also include further sales of equity securities. There are
no assurances that we will be successful in raising sufficient financing to commence production at Relief Canyon.
We would also need to arrange
financing for the project before any production decision could be made. See “Liquidity and Capital Resources” above.
If approved by the Board of Directors, we would expect to move forward financing for the project. We currently anticipate that
initial gold production may occur within approximately six to nine months from investment decision and obtaining full financing
for the project, although the actual time period required will be dependent on various factors outlined in the pre-feasibility
study.
Relief Canyon Properties
Location, Access and Facilities
The Relief Canyon properties
are located about 100 miles northeast of Reno, Nevada. The nearest town is Lovelock, Nevada, approximately 15 miles west-southwest
of the Relief Canyon Mine property, which can be reached from both Reno and Lovelock on U.S. Interstate 80. The Relief Canyon Mine
property is reached from Lovelock by travelling approximately seven miles northeast on I-80 to the Coal Canyon Exit (Exit No. 112),
then about 10 miles southeast on Coal Canyon Road (State Route 857, a paved road maintained by Pershing County) to Packard Flat,
and then north on a gravel road for two miles. All of the Relief Canyon properties can be accessed by unpaved roads from the Relief
Canyon Mine property.
Through our wholly-owned
subsidiary, Gold Acquisition Corp., we own 254 unpatented mining claims and 120 millsite claims, and lease approximately 1,600
acres of fee land, at the Relief Canyon Mine property. The Relief Canyon Mine property includes the Relief Canyon Mine and gold
processing facility, currently on care and maintenance status. The Relief Canyon Mine includes three open pit mines, heap leach
pads comprised of six cells, two solution ponds and a cement block constructed adsorption desorption-recovery (“ADR”)
solution processing circuit. The ADR type process plant consists of four carbon columns, an acid wash system, a stripping vessel,
and electrowinning cells. The process facility was completed in 2008 and Firstgold Corp. produced a small amount of gold there
in 2009. See “Relief Canyon Properties – Property History.” The facilities are generally in good condition.
When the Relief Canyon
Mine was in production in the late 1980s and early 1990s, previous operators used conventional heap leach processing methods in
which ore removed from the open-pit mines was crushed, stacked on heap leach pads and sprinkled with a dilute sodium cyanide solution
to dissolve gold and silver from the ore. The “pregnant” gold and silver bearing solution was piped to the gold
recovery plant and processed using a conventional ADR gold and silver recovery system. In the ADR system, the pregnant solution
flowed through a series of carbon columns where the gold and silver were adsorbed onto activated carbon. The next step in
the process involved stripping the gold from the gold-bearing carbon in electrowinning cells and then recovering the gold in an
on-site refinery. The resulting gold and silver doré was then sent to a third party facility for further processing
into saleable gold and silver products. Following removal of the gold and silver, the cyanide solution was recycled to the
heap leach pads in a closed-loop system.
The Company plans to add
mercury pollution control equipment to the process plant to allow for onsite stripping of the gold-bearing carbon, which would
require additional environmental permits and additional capital. If the Company elects not to add the mercury pollution control
equipment, or if there are permitting problems or delays, the Company could ship gold-laden carbon from the carbon columns to a
third-party refinery for further processing.
Adequate line power is
available to the site to operate the existing process facility and ancillary facilities. There is a backup generator onsite that
could provide the required power for the heap leach pumping system in the event of power outages. Another generator will be used
to provide power for the crushing and conveying system. Sufficient water rights to operate the facility have been appropriated
with two operating and permitted wells.
The maps below show the
location of the Relief Canyon properties:
Figure 1: Relief Canyon properties, excluding
the Coal Canyon project
Figure 2: Coal Canyon
Project
Rock Formation and Mineralization
The Relief Canyon properties
are located in Pershing County, Nevada at the southern end of the Humboldt Range. The range is underlain by a sequence of late
Paleozoic to Mesozoic-aged volcanic and sedimentary rocks. Gold-bearing rocks at the Relief Canyon properties are primarily developed
within breccia zones along the contact between the Grass Valley and Cane Springs Formations.
Property History
Gold was first discovered
on the property by the Duval Corp. in 1979. Subsequent exploration was performed by various companies including Lacana Mining,
Santa Fe Gold Corp., and Pegasus Gold Inc., and gold was produced from the property during the late 1980s and early 1990s. Firstgold
Corp. acquired the property in 1995, explored periodically from 1995 until 2009, and produced a small amount of gold in 2009. Firstgold
Corp. filed for bankruptcy protection in January 2010, and in August 2011, pursuant to an order of the bankruptcy court,
the Company (through our wholly owned subsidiary, Gold Acquisition Corp.) purchased 100% of the Relief Canyon Mine property and
related assets.
Title and Ownership Rights
Our property rights currently
total approximately 29,000 acres and are comprised of approximately 1,056 owned unpatented mining claims, 120 owned millsite claims,
143 leased unpatented mining claims, and 4,127 acres of leased and 3,739 acres of subleased private lands. In January 2015, we
acquired certain mining claims from Newmont, entered into a new mining lease on private, or fee, lands that we previously subleased
from Newmont, and amended the 2006 Minerals Lease and Sublease with Newmont with respect to certain other portions of the Relief
Canyon properties. These transactions, which did not increase the size of our Relief Canyon property position, are described below.
In March 2017, we entered into a mining sublease with Newmont which added 960 acres of land in the Pershing Pass area. In July
2017, 36 additional unpatented claims were located in the Pershing Pass area, adding 640 acres to our holdings. We also control
options to purchase two 40 acre parcels of fee land in the same vicinity.
In order to maintain ownership
of the unpatented mining claims and millsites at the Relief Canyon properties, we are required to make annual claim maintenance
payments of $155 per mining claim or millsite to the BLM and to record in the county records an affidavit of payment of claim maintenance
fees and notice of intent to hold and pay state and county fees of $10.50 per claim or millsite. Our total property maintenance
costs for all of the unpatented mining claims and millsites for the Relief Canyon properties in 2017 was approximately $211,000,
and we expect our costs to be approximately $220,000 in 2018, which covers the cost of the additionally acquired claims noted above
and an increase in the state and county fee to $12.00 per claim. The BLM is required by statute to adjust the claim maintenance
fees for inflation every five years, or more frequently if the Secretary of Interior determines an adjustment to be reasonable.
Those fees were most recently adjusted in 2014.
January 2015 Acquisition
In January 2015, we acquired
74 unpatented mining claims totaling approximately 1,300 acres that we had previously leased from Newmont. We also entered
into a new mining lease directly with New Nevada Resources, LLC and New Nevada Lands, LLC for approximately 1,600 acres of fee,
or private, land that we had previously subleased from Newmont. The new lease has a primary term of twenty years that can be extended
for so long thereafter as mining, development or processing operations are being conducted on the land on a continuous basis. The
lease contains customary terms and conditions, including annual advance royalty payments commencing at $1.00 per acre and increasing
after five years by the greater of five percent or an amount determined from the Consumer Price Index, and a 2.5% net smelter returns
production royalty.
The claims that we acquired
from Newmont and the fee land subject to our new lease are located near, and include portions of, the pit and the land on which
the Relief Canyon Mine property processing facilities are located. These areas are shown in the map above as owned claims
and leased fee. These properties also include lands to the south and west of the current mine pits that the Company believes are
prospective for potential expansion of the Relief Canyon Mine deposit, and lands that could in the future be used for new or expanded
mine support facilities, including potential waste rock storage. As a result of these transactions, the claims we purchased from
Newmont and the private lands we leased from New Nevada Resources, LLC and New Nevada Lands, LLC are no longer subject to Newmont’s
joint venture rights discussed below.
Newmont Leased Property
Pursuant to a 2006 Mineral
Lease and Sublease with Newmont, we hold 137 unpatented lode mining claims owned by Newmont, comprising approximately 2,235 acres,
and approximately 2,770 acres of privately-owned fee minerals leased by Newmont. We refer to this as the “Newmont Leased”
property.
As part of the January
2015 transactions with Newmont, Newmont and the Company entered into an amendment (the “Third Amendment”) of the 2006
Minerals Lease and Sublease. The amendment removed from the 2006 Minerals Lease and Sublease the claims we purchased from Newmont
and the private lands we leased directly from New Nevada Resources, LLC and New Nevada Lands, LLC. Pursuant to the Third Amendment
the Company agreed to a $2.6 million work commitment on the properties remaining subject to the 2006 Minerals Lease and Sublease
to be expended by January 2022. As of December 15, 2016, the most recent cost reporting date, the Company had incurred and can
credit approximately $2.6 million in exploration expenditures against the remaining $2.5 million work commitment and future rental
payment obligations. Because we have satisfied the work commitment through 2022, we are not required to make annual rental payments
for those years. Starting in 2023, if we elect not to, or fail to, incur at least $0.5 million in exploration expenditures per
year, the annual rental payment to Newmont would be approximately $0.1 million. We are also required to reimburse Newmont for advance
royalty payments made by Newmont to the lessor each year under Newmont’s underlying lease with New Nevada Resources. The
reimbursement amount was approximately $2,500 for each of 2013 through 2016.
In connection with the
January 2015 transactions with Newmont, Newmont and New Nevada Resources, LLC entered into a new Mining Lease (the “2015
Newmont Lease”) covering about 2,770 acres of private lands included in the Company’s Relief Canyon properties, shown
on the map above as subleased fee land. The 2015 Newmont Lease has a primary term of twenty years that can be extended for as long
thereafter as mining, development or processing operations are being conducted on a continuous basis. The 2015 Newmont Lease contains
customary terms and conditions, including an advance royalty and a 2.5% net smelter returns production royalty payable to New Nevada
Resources LLC. We continue to hold our rights to the private lands covered by the 2015 Newmont Lease pursuant to our 2006 Minerals
Lease and Sublease with Newmont.
Newmont Joint Venture Rights
Under the 2006 Minerals
Lease and Sublease, if we decide to commence mine construction activities in anticipation of mining on any portion of the properties
covered thereby, we are required to notify Newmont and provide Newmont with a copy of a positive feasibility study covering the
property on which we intend to commence production, as well as additional information. Newmont has the right at any time until
we deliver a positive feasibility study on the Newmont Leased property that is subject to the Newmont area of interest, as shown
on the map above, and for a period of 90 days thereafter either (i) to elect to enter into a joint venture agreement
with us covering all of the Newmont Leased properties and governing the development of the Newmont Leased properties going forward,
which we refer to as the “Venture Option”, in which case Newmont is required to reimburse us for 250% of the expenditures
incurred since March 29, 2006, and with respect to which Newmont would have a 51% participating interest and we would have
a 49% participating interest, or (ii) if Newmont does not elect the Venture Option, to convey the Newmont Leased properties
to us, reserving the 3% to 5% sliding scale net smelter returns royalty tied to gold price, and to receive a $1.5 million
production bonus on the commencement of commercial production. The 5% net smelter royalty would apply if the monthly average gold
price is equal to or greater than $400 per ounce. In addition, we would also be required pay a 2.5% net smelter returns royalty
to the underlying lessor, New Nevada Resources, LLC on approximately 2,770 acres of the Newmont Leased properties.
Coal Canyon Project
In December 2017, we entered
into two mining leases at Coal Canyon, which is west of the Relief
Canyon Mine (see Figure 2, above). One such mining lease with Good Springs Exploration, LLC and Clancy Wendt (collectively “Lessor”)
covers 43 unpatented mining claims which added 800 acres to our property holdings. The lease contains customary terms and conditions, with a primary term of ten years,
which may be extended, annual advance royalty payments to Lessor starting at $20,000 per year, capping at $50,000, which payments
are recoupable against a 3% net smelter return production royalty, which royalty can be bought down by one percent point of net
smelter return for a payment of one million dollars, and also includes a conditional purchase option for $350,000.
A second mining lease with
New Nevada Resources, LLC and New Nevada Lands, LLC (collectively “Owner”) covers 1,899 acres of fee land. The lease
contains customary terms and conditions, with a primary term of twenty years, which may be extended, with annual advance royalty
payments to Owner starting at $10 per acre capping at $25 per acre, which payments are recoupable against a 3% net smelter return
production royalty. This royalty can be reduced by one percent of net smelter return in exchange for a payment of $1 million, and
also includes a conditional purchase option at a price of $500 per acre.
Royalties
As currently defined by
exploration drilling, most of the Relief Canyon deposit is located on property that is subject to a 2% net smelter
return production royalty, with a portion of the deposit located on property subject to net smelter return production royalties
totaling 4.5%. The rest of the property is subject, under varying circumstances, to net smelter return production royalties
ranging from 2% to 5%.
The map below shows the
royalties payable on the properties on which the current Relief Canyon Mine pits and processing facilities are located and the
surrounding properties the Company now owns or leases directly from New Nevada Resources, LLC and New Nevada Lands, LLC, as the
result of the transactions with Newmont described above.
Figure 3: Relief Canyon royalties.
Pershing Pass Property
With the various noted
property additions, the Pershing Pass property consists of over 765 unpatented mining claims (746 owned, 19 leased) covering approximately
12,900 acres, and a mining lease covering approximately 635 acres of fee land. The Pershing Pass property includes approximately
490 unpatented lode mining claims covering approximately 9,700 acres that we acquired from Silver Scott Mines in March 2012
and approximately 283 unpatented lode mining claims covering about 5,660 acres owned directly by Victoria Resources (US) Inc.,
a wholly-owned subsidiary of Victoria Gold Corp., prior to our purchase (collectively, “Victoria”). Victoria has reserved
a 2% net smelter return production royalty on the 221 claims that are located outside the area of interest related to the Newmont
Leased property, discussed above. The Pershing Pass property also includes 17 unpatented mining claims acquired from
a third party in April 2012 subject to a 2% net smelter return royalty, 17 unpatented mining claims that we located in mid-2012,
and approximately 635 acres of private lands that we leased in December 2012. The primary term of the lease is ten
years, ending in December 2022, which may be extended as long as mineral exploration, development or mining work continues on the
property. Production from the private lands covered by the lease is subject to a 2% net smelter return royalty on all metals produced
other than gold, and to a royalty on gold indexed to the gold price, ranging from 2% at gold prices of less than $500 per ounce
to 3.5% at gold prices over $1,500 per ounce. Prior to one year after commencement of commercial production, we can repurchase
up to 3% of the royalty on gold production at the rate of $600,000 for each 1%.
In September 2013,
we entered into a lease agreement and purchase option for 19 unpatented mining claims (approximately 400 acres) in the Pershing
Pass property. The lease grants us exclusive rights to conduct mineral exploration, development and mining and an exclusive option
to purchase the claims. The primary term of the lease is ten years, which may be extended as long as mineral exploration, development,
or mining work continues on the property. Production from the lease is subject to a 1% net smelter return royalty on precious metals
and a one-half percent net smelter royalty on all other metals produced from the lease. Prior to production, we are required to
pay a $10,000 annual advance minimum royalty payment to Nevada Select Royalties, Inc. The advance minimum royalty remains at $10,000
per year until September 2023 when the advance royalty payment increases to $12,500 per year. The advance royalty payment
increases to $15,000 per year in September 2028 and then $20,000 per year in September 2033. The advance minimum royalty
payments are due on or before the anniversary dates of the lease agreement. If we decide to exercise the purchase option, which
is exercisable at any time, we can acquire the 19 unpatented mining claims for $250,000.
Newmont Pershing Pass Sublease
The March 2017 mining sublease
with Newmont added 960 acres of fee land to our property holdings at Pershing Pass.
Under
the terms of the sublease, Pershing Gold has the exclusive right to prospect, explore for, develop, and mine minerals on these
areas. The sublease has an initial term of ten years and may be extended by Pershing Gold until December 3, 2034 and so long
thereafter as any mining, development, or processing operations are being conducted continuously. The subleased fee lands
are owned by New Nevada Resources, LLC (“NNR”) and New Nevada Lands, LLC (“NNL”), and leased by Newmont
under a December 2014 Mining Lease. The underlying 2014 lease contains customary terms and conditions, with a primary term of twenty
years, which may be extended, annual advance royalty payments to NNR and NNL, which payments are recoupable against a 2.125% NSR
production royalty payable to NNR and NNL.
The
sublease calls for Pershing Gold to make minimum work expenditures for the first four years of the sublease, followed by annual
advance minimum royalty payments to Newmont to maintain the sublease in good standing. The sublease may be terminated any
time after the required minimum work commitment of $500,000 has been satisfied within the first two years of the sublease. The
sublease creates a 2.0% net smelter return production royalty on all minerals, excluding industrial minerals, which have a 0.875%
net smelter return produced from the subleased fee lands in favor of Newmont. The Newmont 2.0% net smelter return is in addition
to the 2.125% net smelter return payable to NNR and NNL. The sublease also creates a 2.0% NSR royalty in favor of Newmont on minerals
(excepting industrial minerals) produced from our claims located in Section 10 and 16 adjacent to the subleased fee lands.
Environmental Permitting Requirements
Various levels of governmental
controls and regulations address, among other things, the environmental impact of mineral mining and exploration operations and
establish requirements for reclamation of mineral mining and exploration properties after exploration operations have ceased. With
respect to the regulation of mineral mining and exploration, legislation and regulations in various jurisdictions establish performance
standards, air and water quality emission limits and other design or operational requirements for various aspects of the operations,
including health and safety standards. Legislation and regulations also establish requirements for reclamation and rehabilitation
of mining properties following the cessation of operations and may require that some former mining properties be managed for long
periods of time after mining activities have ceased.
Our activities are subject
to various levels of federal and state laws and regulations relating to protection of the environment, including requirements for
closure and reclamation of mineral exploration properties. Some of the laws and regulations include the Clean Air Act, the Clean
Water Act, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Emergency Planning
and Community Right-to-Know Act, the Endangered Species Act, the Federal Land Policy and Management Act, the National Environmental
Policy Act, the Resource Conservation and Recovery Act, and related state laws in Nevada. Additionally, much of our property is
subject to the federal General Mining Law of 1872, which regulates how mining claims on federal lands are located and maintained.
The State of Nevada, where
we focus our mineral exploration efforts, requires mining projects to obtain a Nevada State Reclamation Permit pursuant to the
Mined Land Reclamation Act (the “Nevada MLR Act”), which establishes reclamation and financial assurance requirements
for all mining operations in the state. New and expanding facilities are required to provide a reclamation plan and financial assurance
to ensure that the reclamation plan is implemented upon completion of operations. The Nevada MLR Act also requires reclamation
plans and permits for exploration projects that will result in more than five acres of surface disturbance on private lands.
We have an approved
Plan of Operations from the BLM and a Reclamation Permit from the NDEP that authorizes exploration drilling at the Relief Canyon
Mine property. These permits also authorize commencement of mining within the existing open pits and in a previously disturbed
area around the north end of the pits, and use of the heap leach mineral processing facilities. In March 2015, we submitted requests
to the BLM and the NDEP to amend the Plan of Operations and the Reclamation Permit to allow us to expand the mine above the water
table. In August 2016, the BLM approved our Environmental Assessment and Plan of Operations Modification, authorizing us to
expand the pit boundary, deepen the pit, and increase the permissible drilling areas around the existing pits at the Relief
Canyon Mine property. In December 2016, the NDEP approved our reclamation permit. Like the Plan of Operations, the state reclamation
permit authorizes expansion and deepening of the pit and increases the permitted area of drilling. We estimate the annual
cost of holding these permits to total approximately $40,000. NDEP issued the Water Pollution Control Permit Major Modification
and Renewal, the Class I Air Quality Operating Permit to Construct, and the revised Class II air quality operating
permits in February 2017.
With the approval of
the Environmental Assessment and Plan of Operations Modification, we were required to increase our reclamation bond with BLM and
the NDEP from approximately $5.6 million to approximately $12.3 million, which is currently approximately $76,000 in excess of
the current requirement to cover reclamation of land disturbed in our exploration and mining operations. This bond is provided
through third-party insurance underwriters, collateralized by approximately 30% of the $12.3 million bond amount, or about $3.7
million.
Approximately $12.2
million of our reclamation bond with BLM and the NDEP 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, with an additional $10,500 covering generative exploration properties located away from the
Relief Canyon Mine. The remaining approximately $76,000 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.
Additional permitting
would be required in the future to mine below the water table. BLM may require an Environmental Impact Statement to evaluate the
impacts associated with mining below the water table. In fiscal year 2017, we plan to spend approximately $2.1 million on permitting
and bonding to expand the open-pit mines at the Relief Canyon Mine property above the water table and the continuation of studies
for expansion below the water table (this includes the $1.4 million already contributed to increase the reclamation bond collateral
in March 2017).
As discussed above,
we have an authorized Plan of Operations from the BLM and a Reclamation Permit from the NDEP, which authorize expansion of the
pit, mineral processing, and our 2017 drilling program at Relief Canyon. We may need to secure a new or modified NDEP Reclamation
Permit in order to conduct exploration activities on some of the private lands subleased from Newmont. We plan to apply for additional
required permits to conduct our exploration programs as necessary. These permits would be obtained from either the BLM or the NDEP.
Obtaining such permits will require the posting of additional bonds for subsequent reclamation of disturbances caused by exploration.
Delays in the granting of permits or permit amendments are not uncommon, and any delays in the granting of permits may adversely
affect our exploration activities.
Our current exploration
permit costs are minimal, although future exploration activities may require amendments to these permits. We have a Notice of Intent
from BLM for exploration drilling on our unpatented mining claims in the Pershing Pass area of the Relief Canyon expansion properties,
located to the south of the Relief Canyon Mine property. A Notice of Intent includes information regarding the company submitting
the notice, maps of the proposed disturbance, equipment to be utilized, the general schedule of operations, a calculation of the
total disturbance anticipated, and a detailed reclamation plan and budget. We have provided a $10,500 reclamation bond to ensure
reclamation of our Pershing Pass exploration activities on public lands based on the estimated third-party costs to reclaim and
re-vegetate the disturbed acreage. It is not necessary to file a Notice of Intent prior to work on private land. Measurement of
land disturbance is cumulative, and once five acres total of public lands have been disturbed and remain unreclaimed in one project
area, a Plan of Operations must be filed and approved by the BLM before additional work can take place, and a Reclamation Permit
must be obtained from the NDEP. Both the Plan of Operations and the NDEP Reclamation Permit require a cash bond and a reclamation
plan. Future exploration at Pershing Pass could require a Plan of Operations and a NDEP Reclamation Permit.
We do not anticipate
discharging water into active streams, creeks, rivers and lakes because there are no bodies of water near the Relief Canyon project
area. We also do not anticipate disturbing any endangered species or archaeological sites or causing damage to our property. Re-contouring
and re-vegetation of disturbed surface areas would be completed pursuant to the applicable permits. The cost of reclamation work
varies according to the degree of physical disturbance. It is difficult to estimate the future cost of compliance with environmental
laws since the full nature and extent of our future activities cannot be determined at this time.
Other Exploration
We conducted generative
exploration on the Relief Canyon expansion properties in 2012 and 2013. Since then, we have generated geological mapping over approximately
three-quarters of our broader land holdings and conducted other exploratory work, including exploratory drilling at three targets
in the expansion properties: Buffalo, Buffalo Pediment and the Blackjack Project Area. We intend to continue to focus our expenditures
on the Relief Canyon Mine property. Because the Relief Canyon expansion properties are at an early stage of exploration, it would
take at least several years to perform sufficient exploration drilling to determine whether these properties contain mineable reserves
that could be put into production in the future. Although we are not currently planning to resume exploration efforts with respect
to the Relief Canyon expansion properties, we may in the future increase our exploration efforts depending on results and available
funding.
We intend to continue
to acquire additional mineral targets in Nevada and elsewhere in locations where we believe we have the potential to quickly expand
and advance known mineralization and the potential to discover new deposits. If, through our exploration program, we discover an
area that potentially may be profitably mined for gold, we would focus on determining whether that is feasible, including further
delineation of the location, size and economic feasibility of a potential orebody. We will require external funding to pursue our
exploration programs. There is no assurance we will be able to raise capital on acceptable terms or at all.
Employees
We currently have 19
full-time employees and one part-time employee. We believe that our relations with our employees are good. In the future, if our
activities grow, we may hire personnel on an as-needed basis. For the foreseeable future, we plan to engage geologists, engineers
and other consultants as necessary.
Competition
We compete with other
exploration companies for the acquisition of a limited number of exploration rights, and many of the other exploration companies
possess greater financial and technical resources than we do. The mineral exploration industry is highly fragmented, and we are
a very small participant in this sector. Many of our competitors explore for a variety of minerals and control many different properties
around the world. Many of them have been in business longer than we have and have established more strategic partnerships and relationships. We
also compete with other exploration companies for the acquisition and retention of skilled technical personnel.
Our competitive position
depends upon our ability to acquire and explore new and existing gold properties. However, there is significant competition
for properties suitable for gold exploration. Failure to achieve and maintain a competitive position could adversely impact our
ability to obtain the financing necessary for us to acquire gold properties. As a result, we may be unable to continue
to acquire interests in attractive properties on terms that we consider acceptable. We will be subject to competition and unforeseen
limited sources of supplies in the industry in the event spot shortages arise for supplies such as explosives, and certain equipment
such as drill rigs, bulldozers and excavators that we will need to conduct exploration. If we are unsuccessful in securing the
products, equipment and services we need we may have to suspend our exploration plans until we are able to secure them.
Market for Gold
In the event that
gold is produced from our property, we believe that wholesale purchasers for the gold would be readily available. Readily
available wholesale purchasers of gold and other precious metals exist in the United States and throughout the world. Among
the largest are Handy & Harman, Engelhard Industries and Asahi Refining. Historically, these markets are liquid and
volatile. In 2017 and through January 17, 2018, the London Fix AM high and low gold fixes were $1,343 and $1,149 per
troy ounce, respectively, which represents an approximate 2% decrease and 7% increase in gold prices as compared to
the high and low gold price in 2016, respectively. Wholesale purchase prices for precious metals can be affected by a
number of factors, all of which are beyond our control, including but not limited to:
|
·
|
fluctuation in the supply
of, demand and market price for gold;
|
|
·
|
mining activities of our competitors;
|
|
·
|
sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions;
|
|
·
|
currency exchange rates;
|
|
·
|
inflation or deflation;
|
|
·
|
fluctuation in the value of the United States dollar and other currencies; and
|
|
·
|
political and economic conditions of major gold or other mineral-producing countries.
|
Gold ore is typically
mined and leached to produce pregnant solutions, which are processed through a series of steps to recover gold and produce doré.
Gold doré is then sold to refiners and smelters for the value of the minerals that it contains, less the cost of further
refining and smelting. Refiners and smelters then sell the gold on the open market through brokers who work for wholesalers including
the major wholesalers listed above.
Financial Results
We reported a net loss of approximately
$(15.6) million for the year ended December 31, 2016. We reported a net loss of approximately $(9.1) million for the
nine months ended September 30, 2017. We expect to incur significant losses into the foreseeable future and our monthly “burn
rate” for 2018 is expected to be approximately $0.9 million (including approximately $6.6 million for general and administrative
costs and $4.4 million for exploration, permitting and additional work at the Relief Canyon Mine). In February 2016 we completed
private placements of units comprised of our common stock and warrants for a total of approximately $8.1 million in gross proceeds,
in December 2016 we completed a public offering for gross proceeds of $7.5 million, in March 2016 we completed a private placement
for gross proceeds of $6 million, and in December 2017 we completed a concurrent public offering and the Private Placement of units
comprised of common stock and warrants for gross proceeds of approximately $14.6 million. We will require additional external financing
to fund operations and exploration of the Relief Canyon Project. 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.
Legal Proceedings
None.
MANAGEMENT
The following table sets forth information
regarding the members of our Board of Directors and our executive officers. All directors hold office for one-year terms until
the election and qualification of their successors. Officers are appointed by the Board of Directors and serve at the discretion
of the Board.
Name
|
|
Age
|
|
Position
|
Stephen Alfers
|
|
72
|
|
Chief Executive Officer, President and Chairman
|
Debra Struhsacker
|
|
64
|
|
Senior Vice President
|
Timothy Janke
|
|
66
|
|
Chief Operating Officer
|
Eric Alexander
|
|
51
|
|
Vice President Finance and Controller
|
Barry Honig
|
|
46
|
|
Director
|
Edward Karr
|
|
48
|
|
Director
|
Alex Morrison
|
|
54
|
|
Director
|
Pamela Saxton
|
|
65
|
|
Director
|
Stephen Alfers
. Mr. Alfers
has served as our Chief Executive Officer and Chairman since February 2012 and as our President since August 2012. Mr. Alfers served
as the President and Chief of U.S. Operations of Franco-Nevada Corporation from January 2010 to September 2011 and its Vice President
(Legal) from December 2007 to December 2009. Mr. Alfers is the founder and, since 2007, the President of Alfers Mining Consulting,
which performs consulting services from time to time for mining and exploration companies and investors in these industries, including
providing continuing services from time to time for Franco-Nevada Corporation, with Mr. Alfers serving as an officer and director
of certain of the U.S. subsidiaries of Franco-Nevada Corporation. Mr. Alfers served as the President and Chief Executive Officer
of NewWest Gold Corporation, a publicly traded Canadian corporation listed on the Toronto Stock Exchange, from 2006 to 2007. Mr.
Alfers also served on the board of directors of NewWest Gold Corporation from 2005 to 2007. Mr. Alfers served as President and
Chief Executive Officer of the NewWest Resources Group from 2001 to 2005 and as President and Chief Executive Officer of NewWest
Gold Corporation, a privately-held Delaware Corporation, from 2005 to 2006. Mr. Alfers founded Alfers & Carver LLC, a boutique
natural resources law firm, in 1995, and served as its managing partner from 1995 to 2001. Mr. Alfers received a J.D. from the
University of Virginia, an M.A. in Monetary Policy and Public Finance from the University of Denver and a B.A. in Economics from
the University of Denver. Mr. Alfers was chosen to be a director of the Company based on his extensive mining industry and operational
experience, and his mining industry legal expertise. Mr. Alfers is currently the chair of the Technical Committee.
Debra
Struhsacker
.
Ms. Struhsacker joined the Company in September 2013 as its Corporate Vice President and was named
Senior Vice President in September 2014. From June 2006 until joining the Company, Ms. Struhsacker was the principal of her own
consulting business, providing management, coordination and execution of environmental permitting strategies and other environmental,
regulatory, governmental and community relations issues consulting services to mining companies. She has provided consulting services
to the Company at the Relief Canyon Project since October 2011. She served as Vice President, U.S. Governmental and Regulatory
Affairs for Kinross Gold USA, Inc., a subsidiary of Kinross Gold Corporation, from July 2003 to May 2006, and was engaged in her
own consulting business from April 1991 until June 2003. Ms. Struhsacker has over 25 years of experience in hardrock mining and
environmental issues, including related public policy issues, permitting and reclamation. She has a B.A. in Geology and French
from Wellesley College and a M.S. in Geology from the University of Montana. Ms. Struhsacker is a certified professional geologist
(Wyoming and American Institute of Professional Geologists).
Timothy Janke
.
Mr. Janke joined the Company in August 2014 as its Chief Operating Officer. Since November 2010, Mr. Janke has been the president
of his own consulting business, providing mine operating and evaluation services to several mining companies. Beginning in July
2012, he provided consulting services at the Relief Canyon Project, advising the Company on mine start-up plans and related activities.
From June 2010 to August 2014, Mr. Janke served as Vice President and Chief Operating Officer of Renaissance Gold, Inc. and its
predecessor, Auex Ventures, Inc. He was General Manager-Projects for Goldcorp Inc. and its predecessor Glamis Gold, Inc. from July
2009 to May 2010, Vice President and General Manager of the Marigold Mine from February 2006 to June 2009, and its Manager of Technical
Services from September 2004 to January 2006. Mr. Janke has served as a director for Renaissance Gold since August 2011 and as
a director for US Gold since April 2016. Mr. Janke has over 40 years of engineering and operational experience in the mining industry.
He has a B.S. in Mining Engineering from the Mackay School of Mines.
Eric Alexander
.
Mr. Alexander joined the Company in September 2012 as its Vice President Finance and Controller and was appointed as the Company’s
principal financial officer and principal accounting officer in November 2012. Prior to joining the Company, Mr. Alexander was
the Corporate Controller for Sunshine Silver Mines Corporation, a privately held mining company with exploration and pre-development
properties in Idaho and Mexico, from March 2011 to August 2012. He was a consultant to Hein & Associates LLP from August 2012
to September 2012 and a Manager with Hein & Associates LLP from July 2010 to March 2011. He served from July 2007 to May 2010
as the Corporate Controller for Golden Minerals Company (and its predecessor, Apex Silver Mines Limited), a publicly traded mining
company with operations and exploration activities in South America and Mexico. He has over 25 years of corporate, operational
and business experience, and 12 years of mining industry experience. In addition to working in the industry, he has also held the
position of Senior Manager with the public accounting firm KPMG LLP, focusing on mining and energy clients. Mr. Alexander has a
B.S. in Business Administration (concentrations in Accounting and Finance) from the State University of New York at Buffalo and
is also a licensed CPA.
Barry Honig
.
Mr. Honig has served as a director since September 2010, serving as Co-Chairman from September 2010 to September 2011 and as Chairman
from September 2011 to February 2012. Since January 2004, Mr. Honig has been the President of GRQ Consultants, Inc., acting as
a private investor and consultant to early stage companies. Mr. Honig’s expertise includes early stage company capital restructuring,
debt financing, capital introductions, and mergers and acquisitions. In addition, Mr. Honig served as director and co-Chairman
of Chromadex Corporation from October 2011 to February 2015, and as director and co-Chairman of InterCLICK, Inc. from August 2007
through December 2011. Mr. Honig also served as CEO and Chairman of the board of directors of Majesco Entertainment from September
2015 to December 2016, and has served on the board of directors of Levon Resources Ltd. from July 2015 to November 2017. Mr. Honig was selected
to serve as a director due to his extensive knowledge of the capital markets, his judgment in assessing business strategies and
accompanying risks, and his expertise with emerging growth companies. Mr. Honig is a member of the Compensation Committee and the
Technical Committee.
Edward Karr
.
Mr. Karr was appointed to the Board of Directors in June 2015. Mr. Karr is an international entrepreneur and the founder of several
investment management and investment banking firms based in Geneva, Switzerland. Since April 2016, he has been President and CEO
of U.S. Gold Corp., a junior exploration company. From 2005 to June 2015, Mr. Karr was the Chief Executive Officer of RAMPartners
SA, an investment advisory firm based in Geneva, Switzerland. Mr. Karr was also Managing Director of Strategic Asset Management
SA and Managing Director of Strategic Swiss Advisors Sàrl, both Swiss asset management companies, from February 2013 to
December 2015.
Mr. Karr served as a director of
Spherix
Corporation
from November 2012 to December 2014 and he
served as a Director of Majesco Entertainment from September 2015 to December
2016. He is currently on the boards of Levon Resources Ltd. and U.S. Gold Corp. (formerly Dataram Corporation), and serves as chairman
of the audit committee of Levon Resources Ltd. Mr. Karr previously worked for Prudential Securities in the United States. He has
been in the financial services industry for over twenty years. Before his entry into the financial services arena, Mr. Karr was
affiliated with the United States Antarctic Program and spent thirteen consecutive months working in Antarctica, receiving the
Antarctic Service Medal. Mr. Karr studied at Embry-Riddle Aeronautical University, Lansdowne College in London, England and received
a B.S. in Economics/Finance with Honors (magna cum laude) from Southern New Hampshire University. He is an Executive Committee
member, past President and current Nominating Committee Chair of the American International Club of Geneva. Mr. Karr was selected
to serve as a director due to his experience in capital markets and financial expertise. Mr. Karr is currently a member of the
Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee.
Alex Morrison
.
Mr. Morrison has served as a director since November 2012. Mr. Morrison is a mining executive, chartered professional accountant
(chartered accountant) and certified public accountant with over 30 years of experience in the mining industry. He currently serves
on the boards of Detour Gold Corporation, Gold Resource Corporation, Gold Standard Ventures Corp., and Taseko Mines Limited. Mr.
Morrison has held senior executive positions at a number of mining companies, most recently serving as Vice President and Chief
Financial Officer of Franco-Nevada Corporation from 2007 to 2010. From 2002 to 2007, Mr. Morrison held increasingly senior positions
at Newmont Mining Corporation, including Vice President, Operations Services and Vice President, Information Technology. Prior
to 2002, Mr. Morrison was Vice President and Chief Financial Officer of NovaGold Resources, Inc. and Vice President and Controller
of Homestake Mining Company and held senior financial positions at Phelps Dodge Corporation and Stillwater Mining Company. In addition,
from time to time between 2007 and the present, Mr. Morrison has performed financial consulting services for mining companies.
Mr. Morrison began his career with PricewaterhouseCoopers LLP after obtaining his B.A. in Business Administration from Trinity
Western University. Mr. Morrison was selected to serve as a director due to his extensive mining resource and business experience
and his financial expertise. Mr. Morrison is currently the chair of the Audit Committee, the Compensation Committee, and the Corporate
Governance and Nominating Committee and a member of the Technical Committee.
Pamela Saxton
.
Ms.
Saxton has served as a director since October 2017. Ms. Saxton is a business executive with over 35 years of experience in domestic
and international public company finance roles, primarily in mining, software and oil and gas. Ms. Saxton has held senior executive
finance positions at several mining and oil and gas companies, most recently serving as Executive Vice President and Chief Financial
Officer of Thompson Creek Metals Company Inc. from August 2008 to October 2016. Prior to 2008, Ms. Saxton was Vice President Finance—U.S.
Operations of Franco-Nevada Corporation, Vice President and Chief Financial Officer of New West Gold Corporation, Vice President
and Controller of Amax Gold Inc. and Assistant Controller of Cyprus Amax Minerals Inc. Ms. Saxton also was the Vice President and
Controller-Payments Division of Western Union/First Data Corporation and served as Vice President of Finance, Corporate Controller
and Chief Accounting Officer for J.D. Edwards & Company. Ms. Saxton began her career with Arthur Andersen & Company after
receiving her Bachelor of Science in Accounting from the University of Colorado. Since September 1987, she has served as a Trustee
and since January 2017 serves as Vice President for the Viola Vestal Coulter Foundation, which provides scholarships to various
colleges and universities, with a focus on mining. She is also the Past Chair of the Board for the Colorado Association of Commerce
and Industry, a state chamber of commerce. Ms. Saxton was selected to serve as a director due to her extensive mining, financial
and governance and compliance expertise. Ms. Saxton serves as a member of the Audit Committee and Corporate Governance and Nominating
Committee.
Director or Officer Involvement in Certain Legal Proceedings
Our directors and executive officers were
not involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years.
Family Relationships
There are no family relationships among
the executive officers and directors.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table
summarizes the compensation through December 31, 2017 of each of our named executive officers.
Name and Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
(1)
|
|
|
Option
Awards
($)
|
|
|
Stock
Awards
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Stephen Alfers
Chief Executive
Officer, President and
Chairman
|
|
|
2016
|
|
|
|
425,000
|
|
|
|
324,500
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
749,500
|
|
|
|
|
2017
|
|
|
|
425,000
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
475,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debra Struhsacker
Senior Vice President
|
|
|
2016
|
|
|
|
241,875
|
(3)
|
|
|
129,051
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
370,926
|
|
|
|
|
2017
|
|
|
|
270,000
|
|
|
|
25,313
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
295,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Alexander
Vice President Finance
and Controller
|
|
|
2016
|
|
|
|
183,750
|
|
|
|
90,288
|
(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
274,038
|
|
|
|
|
2017
|
|
|
|
183,750
|
|
|
|
23,888
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
207,638
|
|
(1) Bonuses in 2016 reflect bonuses earned
in 2016 but paid in 2017. Bonuses in 2017 reflect bonuses earned in 2017 but paid in 2018.
(2) Mr. Alfers’ bonus consists of
(a) $175,000 in cash, and (b) the grant date fair market value of 50,000 restricted stock units when granted on March 21, 2017
and valued at $149,500, calculated in accordance with FASB ASC Topic 718.
(3) Reflects an increase in Ms. Struhsacker’s
base salary from $225,000 per year to $270,000 per year on August 16, 2016.
(4) Ms. Struhsacker’s bonus consists
of (a) $57,000 in cash, and (b) the grant date fair market value of 21,900 restricted stock units when granted on February 3, 2017
and valued at $72,051, calculated in accordance with FASB ASC Topic 718.
(5) Mr. Alexander’s bonus consists
of (a) $35,500 in cash, and (b) the grant date fair market value of 16,653 restricted stock units when granted on February 3, 2017
and valued at $54,788, calculated in accordance with FASB ASC Topic 718.
Agreements with Executive Officers
Stephen Alfers
We entered into an
amended and restated employment agreement (the “Alfers Employment Agreement”) with Mr. Alfers on June 28, 2015 that
provides that Mr. Alfers will serve as our Chief Executive Officer until December 31, 2018, subject to renewal. Pursuant to the
terms of the agreement, Mr. Alfers will be entitled to a base salary of $425,000 per year, subject to adjustment by the Board of
Directors. Mr. Alfers will also receive an annual bonus if the Company meets or exceeds certain criteria adopted by the Board of
Directors. The annual target bonus amount for Mr. Alfers shall equal 100% of his annualized base salary for that year
if target levels of performance for that year are achieved, with greater or lesser amounts paid for performance above and below
such target.
Upon
Mr. Alfers’ termination without “Cause” or upon Mr. Alfers’ resignation for “Good Reason”,
in either case where such termination is outside of a “Change in Control Period”, the Company shall pay to Mr. Alfers,
in addition to any “Accrued Obligations” (in each case, as defined in the Alfers Employment Agreement), a lump sum
payment in an amount equal to two times the sum of (i) Mr. Alfers’ base salary plus (ii) the average of the actual bonus
amounts paid to Mr. Alfers’ in the two years prior to termination. Additionally, any remaining unvested restricted shares
of Company common stock granted to Mr. Alfers on February 9, 2012 in conjunction with his Original Employment Agreement (as defined
below) would fully and immediately vest. Any other unvested equity awards shall be forfeited as of the date of termination (unless
otherwise provided in the applicable award agreement or equity plan), and vested equity awards shall be treated as provided in
the applicable award agreement or equity plan.
Upon
Mr. Alfers’ termination without Cause within six months prior to or twenty-four months following a Change in Control (as
defined in the Alfers Employment Agreement and with such period to be referred to as a “Change in Control Period”)
or upon Mr. Alfers’ resignation for Good Reason during a Change in Control Period, the Company shall pay to Mr. Alfers, in
addition to any Accrued Obligations, a lump sum payment in an amount equal to two times the sum of (i) Mr. Alfers’ base salary
plus (ii) the average of the actual bonus amounts paid to Mr. Alfers’ in the two years prior to termination. Additionally,
any unvested equity awards that were granted prior to such Change in Control shall fully and immediately vest (unless otherwise
provided in the applicable award agreement or equity plan).
Mr.
Alfers’ bonus amounts are subject to claw-back rights in the event of certain restatements of the Company’s financial
information for a period of three years.
In
connection with the Alfers Employment Agreement, Mr. Alfers was awarded restricted stock units pursuant to a Restricted Stock Unit
Grant Agreement dated June 28, 2015 (the “2015 RSU Agreement”). Under the terms of the 2015 RSU Agreement, Mr. Alfers
was granted a total of 700,000 restricted stock units. 300,000 restricted stock units are time-based units (the “Time-Based
RSUs”) that are subject to vesting upon Mr. Alfers’ continuous employment through December 31, 2018 (“Employment
Term End Date”). If Mr. Alfers’ employment is terminated prior to the Employment Term End Date (i) by the Company other
than for Cause, (ii) by Mr. Alfers’ resignation for Good Reason, or (iii) as a result of Mr. Alfers’ death or Disability
(as defined in the Alfers Employment Agreement), all Time-Based RSUs shall become fully vested immediately prior to such termination.
Such Time-Based RSUs shall also become fully vested upon a Change in Control (as defined in the Company’s 2013 Equity Incentive
Plan). Each Time-Based RSU that becomes fully vested will entitle Mr. Alfers to receive one share of common stock as soon as practicable
following the vesting event.
The
remaining 400,000 restricted stock units (the “Performance RSUs”) are subject to vesting upon the attainment of certain
performance-based milestones set forth in the 2015 RSU Agreement and shall become fully vested upon a Change in Control. For each
fully vested Performance RSU, Mr. Alfers will be entitled to receive one share of common stock upon the earlier of December 31,
2018, Mr. Alfers’ separation from service or death, or a 409A Change in Control (as defined in the 2015 RSU Agreement), all
as set forth in the RSU Agreement. In June 2016, 120,000 Performance RSUs vested upon the attainment of certain performance-based
milestones and in March 2017, 60,000 additional Performance RSUs vested upon the attainment of certain other performance-based
milestones.
On February 5, 2015,
the Company and Mr. Alfers entered into a Third Amendment to the Restricted Stock Agreement dated May 13, 2013, as amended
on December 23, 2013 and June 11, 2014 (as amended, the “Alfers 2013 RS Agreement”). Pursuant to this amendment,
the vesting of 72,098 shares of restricted stock, of a total of 216,251 restricted shares that were granted pursuant to the Alfers
2013 RS Agreement, was deferred from June 18, 2015 to March 14, 2016.
On February 5, 2015,
the Company and Mr. Alfers entered into a Third Amendment to the Amended and Restated Restricted Stock Agreement dated May 13,
2013, as amended on December 23, 2013 and June 11, 2014 (as amended, the “Alfers 2013 A&R RS Agreement”).
Pursuant to this amendment, the vesting of 20,514 shares of restricted stock, of a total of 61,527 restricted shares that were
granted pursuant to the Alfers 2013 A&R RS Agreement, was deferred from June 18, 2015 to March 14, 2016.
On February 5, 2015,
the Company and Mr. Alfers entered into a Third Amendment to the Executive Employment Agreement dated February 9, 2012, as
amended on February 8, 2013 and December 23, 2013 (as amended, the “Alfers Original Employment Agreement”). Pursuant
to this amendment, the vesting of 166,667 shares of restricted stock, of a total of 666,667 restricted shares that were granted
pursuant to the Alfers Original Employment Agreement, was deferred from February 9, 2015 to February 9, 2016. The Alfers Original
Employment Agreement was superseded by the Alfers Employment Agreement.
The Company and Mr. Alfers
entered into a Restricted Stock Unit Grant Agreement dated March 21, 2017 (the “Alfers Bonus RSU Agreement”) pursuant
to which Mr. Alfers was awarded 50,000 restricted stock units (the “Bonus RSUs”) as a discretionary bonus for his performance
in 2016. The Bonus RSUs were fully vested on the date of grant. The common stock underlying the Bonus RSUs will be issued upon
the earlier of December 31, 2018, Mr. Alfers’ separation from service or death, or a 409A Change in Control (as defined in
the Alfers Bonus RSU Agreement). Each Bonus RSU entitles Mr. Alfers to receive one share of common stock within 30 days of the
aforementioned events.
Debra Struhsacker
We entered into an
offer letter with Ms. Struhsacker on September 23, 2013 pursuant to which Ms. Struhsacker was hired to serve as the Company’s
Corporate Vice President and is entitled to an annual base salary, subject to adjustment at the sole discretion of the Chief Executive
Officer with the approval of the Board of Directors (the “Struhsacker Offer Letter”). In September 2014, Ms. Struhsacker
was promoted to Senior Vice President.
In connection with
the Struhsacker Offer Letter, we also entered into a severance compensation agreement with Ms. Struhsacker on September 19, 2013
(the “Struhsacker Severance Compensation Agreement”). Upon a Qualifying Termination (as defined in the Struhsacker
Severance Compensation Agreement) occurring on or within twelve months following a Change in Control (as defined in the Struhsacker
Severance Compensation Agreement), we are required to pay Ms. Struhsacker a lump-sum severance payment equal to one and a half
times the sum of (i) Ms. Struhsacker’s base salary, plus (ii) the greater of Ms. Struhsacker’s Annual Bonus Amount
or Ms. Struhsacker’s Assumed Bonus Amount (both as defined in the Struhsacker Severance Compensation Agreement).
On August 15, 2016,
the Company and Ms. Struhsacker entered into an Extension Severance Compensation Agreement extending the term of the Struhsacker
Severance Compensation Agreement to March 18, 2017 and increasing Ms. Struhsacker’s salary to $270,000. On January 11, 2017,
the Company and Ms. Struhsacker entered into a Second Extension Severance Compensation Agreement extending the term of the Struhsacker
Severance Compensation Agreement to December 31, 2017.
On February 6, 2015,
the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated February
12, 2013 (the “Struhsacker February 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 13,889 shares
of restricted stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker February 2013 Restricted
Stock Grant Agreement, was deferred from February 12, 2015 to February 12, 2016. On December 10, 2015, the Company and Ms. Struhsacker entered
into a Second Amendment to the Struhsacker February 2013 RSG Agreement, pursuant to which the vesting of 13,889 shares of restricted
stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker February 2013 RSG Agreement,
was deferred from February 12, 2016 to February 12, 2017.
On December 10, 2015,
the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December
16, 2013 (the “Struhsacker December 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 1,852 shares of
restricted stock, of a total of 5,556 restricted shares that were granted pursuant to the Struhsacker December 2013 RSG Agreement,
was deferred from December 16, 2015 to March 14, 2016.
On December 10, 2015,
the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December
11, 2014 (the “Struhsacker December 2014 RSG Agreement”). Pursuant to this amendment, the vesting of 4,908 shares of
restricted stock, of a total of 14,723 restricted shares that were granted pursuant to the Struhsacker December 2014 RSG Agreement,
was deferred from December 11, 2015 to March 14, 2016.
Eric Alexander
We entered into a revised
offer letter with Mr. Alexander on November 21, 2012, amended on February 8, 2013, pursuant to which Mr. Alexander joined the Company
as our Vice President Finance and Controller and is entitled to an annual base salary of $175,000, subject to
adjustments
at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors
(the “Alexander
Offer Letter”)
.
In addition, in connection with his appointment as the Company’s
principal financial officer and principal accounting officer, the Company granted Mr. Alexander 11,112 shares of restricted stock,
vesting over three years. The amendment deferred vesting of certain of the restricted shares, of which 3,704 vested in equal tranches
on March 14, 2014 and November 30, 2014, and a final tranche of 3,704 shares vested on November 30, 2015, subject to acceleration
under certain events, including upon a Change in Control as defined in the Company’s 2012 Equity Incentive Plan.
In connection with
the Alexander Offer Letter, we also entered into a severance compensation agreement with Mr. Alexander on November 21, 2012 that
was amended on November 19, 2015 (as amended, the “Alexander Severance Compensation Agreement”). Pursuant to the Alexander
Severance Compensation Agreement, Mr. Alexander will be entitled to receive certain benefits if he incurs a separation from service
(as defined in the Alexander Severance Compensation Agreement) during the term of the agreement which is initiated by the Company
for any reason other than Cause, death, or Disability (as such terms are defined in the Alexander Severance Compensation Agreement)
or is initiated by Mr. Alexander for Good Reason (as defined in the Alexander Severance Compensation Agreement). These benefits
depend on whether the separation occurs prior to or after a Change in Control (as defined in the Alexander Severance Compensation
Agreement). If the separation occurs prior to a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment
equal to Mr. Alexander’s base salary plus the average of the annual cash bonuses paid to Mr. Alexander in the two years prior
to separation. If the separation occurs within 12 months following a Change in Control, the Company shall pay Mr. Alexander a lump-sum
severance payment equal to (x) 1.125 times (y) the sum of (a) Mr. Alexander’s base salary plus (b) the greater of (i) the
average annual cash bonus paid to Mr. Alexander in the two years prior to separation or (ii) the target bonus amount established
for Mr. Alexander in the fiscal year in which the separation occurs or, if none, an amount equal to 80% of Mr. Alexander’s
base salary. On September 15, 2016, the Company and Mr. Alexander entered into a Second Amended Severance Compensation Agreement
extending the term of the Alexander Severance Compensation Agreement to March 18, 2017. On January 11, 2017, the Company and
Mr. Alexander entered into a Third Amended Severance Compensation Agreement further extending the term of the Alexander Severance
Compensation Agreement to December 31, 2017. On December 21, 2017, the Company and Mr. Alexander entered into a Fourth Amended
Severance Compensation Agreement further extending the term of the Alexander Severance Compensation Agreement to December 31, 2018.
On February 6, 2015,
the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated February 12, 2013
(the “Alexander February 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 18,519 shares of restricted
stock, of a total of 55,556 restricted shares that were granted pursuant to the Alexander February 2013 RSG Agreement, was deferred
from February 12, 2015 to February 12, 2016. On December 10, 2015, the Company and Mr. Alexander entered into a Second
Amendment to the Alexander February 2013 RSG Agreement, pursuant to which the vesting of 18,518 shares of restricted stock, of
a total of 55,556 restricted shares that were granted pursuant to the Alexander February 2013 RSG Agreement, was deferred from
February 12, 2016 to February 12, 2017.
On December 10, 2015,
the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 16, 2013 (the
“Alexander December 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 3,704 shares of restricted stock,
of a total of 11,112 restricted shares that were granted pursuant to the Alexander December 2013 RSG Agreement, was deferred from
December 16, 2015 to March 14, 2016.
On December 10, 2015,
the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 11, 2014 (the
“Alexander December 2014 RSG Agreement”). Pursuant to this amendment, the vesting of 1,667 shares of restricted stock,
of a total of 5,000 restricted shares that were granted pursuant to the Alexander December 2014 RSG Agreement, was deferred from
December 11, 2015 to March 14, 2016.
Indemnification Agreements
The Company has entered
into indemnification agreements with its directors and executive officers providing for indemnification against all expenses, judgments,
fines and amounts paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action,
suit, alternative dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made
a party by reason of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted
by Nevada law. The indemnification agreements also provide for the advancement of expenses (including attorneys’ fees) incurred
by the indemnitee in connection with any action, suit, alternative dispute resolution mechanism or proceeding (subject to the terms
and conditions set forth therein). The indemnification agreements contain certain exclusions, including proceedings initiated by
the indemnitee unless such advancement is specifically approved by a majority of our disinterested directors. The Company expects
that it will enter into similar indemnification agreements with any new directors and executive officers.
Outstanding Equity Awards at Fiscal Year-End
The following table
provides information on the holdings of equity awards of our named executive officers at December 31, 2017. This table includes
unexercised and unvested options and equity awards. Vesting schedules are subject to acceleration or forfeiture in certain circumstances,
including a change of control.
|
|
Option
awards
|
|
|
Stock
awards
|
|
Name
|
|
Number
of
securities
underlying
unexercised
options (#)
Exercisable
|
|
|
Number
of
securities
underlying
unexercised
options (#)
Unexercisable
|
|
|
Equity
incentive
plan
awards:
number of
securities
underlying
unexercised
unearned
options
(#)
|
|
|
Option
exercise
price
($)
|
|
|
Option
expiration
date
|
|
|
Number
of shares
or units
of stock
that have
not vested
(#)
|
|
|
Market
value
of shares
or units of
stock
that have
not
vested
($)
(1)
|
|
|
Equity
incentive
plan
awards:
number
of
unearned
shares,
units or
other
rights
that have
not vested
(#)
|
|
|
Equity
incentive
plan
awards:
market
or
payout
value
of
unearned
shares,
units
or
other
rights
that
have not
vested
($)
(1)
|
|
Stephen Alfers
|
|
|
555,556
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
8.82
|
|
|
|
2/9/22
|
|
|
|
300,000
|
(2)
|
|
$
|
720,000
|
|
|
|
220,000
|
(3)
|
|
$
|
528,000
|
|
|
|
|
277,778
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
6.12
|
|
|
|
6/18/22
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Debra Struhsacker
|
|
|
22,223
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
8.10
|
|
|
|
3/6/22
|
|
|
|
10,950
|
(4)
|
|
$
|
26,280
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
22,223
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
6.12
|
|
|
|
6/18/22
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Eric Alexander
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,327
|
(5)
|
|
$
|
19,985
|
|
|
|
—
|
|
|
|
—
|
|
(1) The market value of stock awards is
calculated at $2.40 per share, the closing price of our common stock on December 29, 2017.
(2) Includes 300,000 restricted stock units
which vest on December 31, 2018.
(3) Includes 220,000 restricted stock units
which vest upon the attainment of certain performance-based milestones.
(4) Includes 10,950 restricted stock units
which vest on February 3, 2018.
(5) Includes 8,327 restricted stock units
which vest on February 3, 2018.
Director Compensation
The following table
sets forth compensation paid to our non-employee directors in 2017.
Name
|
|
Fees
Earned
or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry Honig
|
|
$
|
33,000
|
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,000
|
|
Edward Karr
|
|
$
|
35,000
|
(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,000
|
|
Alex Morrison
|
|
$
|
70,500
|
(3)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70,500
|
|
Pamela Saxton
|
|
$
|
6,167
|
(4)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,167
|
|
(1) Amount represents Mr.
Honig’s $25,000 annual retainer for service on the Board of Directors and $8,000 for attendance at eight Board of
Director and committee meetings. Mr. Honig elected to receive such payments in the form of restricted stock units. In
satisfaction of these fees, the Company issued an aggregate of 11,989 fully-vested restricted stock units (the “Honig
Retainer RSUs”) on April 28, 2017, June 30, 2017, September 29, 2017, December 29, 2017 calculated based on (x) the
dollar amount of the director fees earned for the relevant fiscal quarter,
divided by
(y) the fair market value of one
share of the Company’s stock as of the end of the relevant fiscal quarter, with the result rounded up to the nearest
whole number. The Honig Retainer RSUs were granted as follows: (a) 3,610 units for director services rendered between January
1, 2017 and March 31, 2017, (b) 3,316 units for director services rendered between April 1, 2017 and June 30, 2017, (c) 2,458
units for director services rendered between July 1, 2017 and September 30, 2017, and (d) 2,605 units for director services
rendered between on October 1, 2017 and December 31, 2017. Amount does not reflect the value of 2,351 shares of restricted
common stock and 7,618 restricted stock units issued to Mr. Honig on April 28, 2017 for service to the Board of Directors and
committees in the fourth quarter of fiscal year 2015 and fiscal year 2016, respectively. See footnote (2) to the Summary
Compensation Table on page 43 of this prospectus for additional information regarding these
calculations.
(2) Amount represents Mr.
Karr’s $25,000 annual retainer for service on the Board of Directors and $10,000 for attendance at ten Board of
Director and committee meetings. Mr. Karr elected to receive such payments in the form of restricted stock units. In
satisfaction of these fees, the Company issued an aggregate of 12,744 fully vested restricted stock units (the “Karr
Retainer RSUs”) on April 28, 2017, June 30, 2017, September 29, 2017, December 29, 2017 calculated based on (x) the
dollar amount of the director fees earned for the relevant fiscal quarter,
divided by
(y) the fair market value of one
share of the Company’s stock as of the end of the relevant fiscal quarter, with the result rounded up to the nearest
whole number. The Karr Retainer RSUs were granted as follows: (a) 3,610 units for director services rendered between January
1, 2017 and March 31, 2017, (b) 3,316 units for director services rendered between April 1, 2017 and June 30, 2017, (c) 2,797
units for director services rendered between July 1, 2017 and September 30, 2017, and (d) 3,021 units for director services
rendered between on October 1, 2017 and December 31, 2017. Amount does not reflect the value of 8,850 restricted stock units
issued to Mr. Karr on April 28, 2017 for service to the Board of Directors and committees in earned in fiscal year 2016. See
footnote (2) to the Summary Compensation Table on page 43 of this prospectus for additional information regarding
these calculations.
(3) Amount represents Mr. Morrison’s
$25,000 annual retainer for service on the Board of Directors, $15,000 retainer as the chair of the Audit Committee, $10,000 retainer
as chair of the Compensation Committee, $7,500 retainer as chair of the Corporate Governance and Nominations Committee, $13,000
for attendance at 13 Board of Director and committee meetings.
(4) Amount represents the pro-rated portion
of Ms. Saxton’s $25,000 annual retainer for two months of service on the Board of Directors in 2017 and $2,000 for attendance
at two Board of Director and committee meetings.
Our directors who are
also our employees receive no fees for board service. Mr. Alfers is the only director who is also an employee. The compensation
for all non-employee directors includes a $25,000 annual cash retainer and a $1,000 cash fee for attendance at each Board of Directors
meeting. Directors receive a $1,000 cash fee for attendance at all committee meetings, and the chairs of the Technical, Audit,
Compensation and Corporate Governance and Nominating committees receive annual cash retainers of $15,000, $15,000, $10,000 and
$7,500 respectively. Non-employee directors on the Technical Committee receive a fee of $150 per hour up to a maximum of $1,000
per day for Technical Committee service that occurs other than at a meeting of the Technical Committee. As an employee director,
Mr. Alfers will not receive an annual cash retainer or hourly fees for his role as chairman of the Technical Committee. Directors
may elect to receive restricted stock units in lieu of cash. Non-employee directors are also eligible to receive annual grants
of restricted stock units in such amounts and with such vesting provisions as are determined annually by the Compensation Committee
and the Board of Directors. These equity grants related to 2017 service have not yet been granted. For each vested restricted
stock unit, the non-employee director is entitled to receive one unrestricted share of common stock upon termination of the director’s
service on our Board of Directors. Our directors are also eligible to receive other equity awards, including stock options, under
our equity incentive plans, as determined from time to time by the Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table
sets forth information with respect to the beneficial ownership of our voting securities as of January 16, 2018 by:
|
·
|
each person known by us to beneficially own more than 5.0% of any class of our voting securities;
|
|
·
|
each of our named executive officers; and
|
|
·
|
all of our directors and executive officers as a group.
|
All information is
taken from or based upon ownership filings made by such persons with the SEC or upon information provided by such persons to us.
Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment
power with respect to all shares beneficially owned. Percentage computations are based on 33,544,125 shares of our common stock
outstanding as of January 16, 2018.
|
|
Common Stock
(1)
|
|
Name of Beneficial Owner
(2)
|
|
Shares
Beneficially
Owned
|
|
|
Percent of
Class
|
|
5% Owners
|
|
|
|
|
|
|
|
|
Levon Resources Ltd.
(3)
|
|
|
1,954,366
|
|
|
|
5.8
|
%
|
Donald Smith Value Fund, L.P.
(4)
|
|
|
4,176,500
|
|
|
|
12.1
|
%
|
|
|
|
|
|
|
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Stephen Alfers
|
|
|
1,605,870
|
(5)
|
|
|
4.7
|
%
|
Debra Struhsacker
|
|
|
101,369
|
(6)
|
|
|
*
|
%
|
Eric Alexander
|
|
|
73,809
|
(7)
|
|
|
*
|
%
|
Barry Honig
|
|
|
12,070,247
|
(8)
|
|
|
32.2
|
%
|
Alex Morrison
|
|
|
56,617
|
(9)
|
|
|
*
|
%
|
Edward Karr
|
|
|
233,114
|
(10)
|
|
|
*
|
%
|
Pamela Saxton
|
|
|
—
|
(11)
|
|
|
*
|
%
|
|
|
|
|
|
|
|
|
|
Executive Officers and Directors as a Group (eight** persons)
|
|
|
14,121,236
|
|
|
|
36.9
|
%
|
* Less than one percent (1.0%).
** Group of executive officers and directors
includes Tim Janke. Mr. Janke beneficially owns 75,836 shares.
|
(1)
|
Shares of common stock beneficially
owned and the respective percentages of beneficial ownership of common stock includes for each person or entity shares issuable
on the exercise of all options and warrants and the conversion of other convertible securities beneficially owned by such person
or entity that are currently exercisable or can, at the option of the holder, become exercisable or convertible within 60 days
following January 16, 2018. Such shares, however, are not included for the purpose of computing the percentage ownership
of any other person.
|
|
(2)
|
The address of these persons,
unless otherwise noted, is c/o Pershing Gold Corporation, 1658 Cole Blvd., Bldg. 6, Suite 210, Lakewood, CO 80401.
|
|
(3)
|
The address of Levon Resources
Ltd. is Suite 900, 570 Granville St., Vancouver, British Columbia, Canada V6C 3P1.
|
|
(4)
|
The address of Donald Smith
Value Fund, L.P. is 152 West 57
th
Street, 22
nd
Floor, New York, NY 10019.
|
|
(5)
|
Includes: (i) 737,178 unrestricted
shares of common stock; (ii) options to purchase 555,556 shares of common stock with an exercise price of $8.82 per share, which
are fully vested; (iii) options to purchase 277,778 shares of common stock with an exercise price of $6.12 per share, which are
fully vested; and (iv) 100 shares of Series E Preferred Stock, which are convertible into 35,358 shares of common stock. Excludes:
(i) 180,000 shares of common stock underlying vested restricted stock units granted in June 2015 which are issuable upon the earlier
of Mr. Alfers’ separation from service or December 31, 2018; (ii) 50,000 shares of common stock underlying vested restricted
stock units granted in March 2017 which are issuable upon the earlier of Mr. Alfers’ separation from service or December
31, 2018; (iii) 300,000 shares of common stock underlying unvested restricted stock units granted to Mr. Alfers which are issuable
upon Mr. Alfers’ continued employment through December 31, 2018; and (iv) 220,000 unvested restricted stock units granted
to Mr. Alfers which vest upon the satisfaction of certain performance vesting conditions or Mr. Alfers’ continued employment
through December 31, 2018 and, once vested, are issuable upon the earlier of Mr. Alfers’ separation from service or December
31, 2018, in each case subject to acceleration and forfeiture in certain circumstances. Mr. Alfers has no voting rights with respect
to the restricted stock units until the underlying shares are issued.
|
|
(6)
|
Includes: (i) 56,923 unrestricted
shares of common stock; and (ii) options to purchase 44,446 shares of common stock, which are fully vested. Excludes: (i) 26,950
shares of common stock underlying vested restricted stock units which are issuable upon Ms. Struhsacker’s resignation from
the Company (subject to acceleration and forfeiture in certain circumstances); and (ii) 10,950 shares of common stock underlying
unvested restricted stock units granted to Ms. Struhsacker which are issuable upon Ms. Struhsacker’s resignation from the
Company (subject to acceleration and forfeiture in certain circumstances). Ms. Struhsacker has no voting rights with respect to
the restricted stock units until the underlying shares are issued.
|
|
(7)
|
Includes: (i) 73,809 unrestricted
shares of common stock. Excludes: (i) 15,076 shares of common stock underlying vested restricted stock units which are issuable
upon Mr. Alexander’s resignation from the Company (subject to acceleration and forfeiture in certain circumstances); and
(ii) 8,327 shares of common stock underlying unvested restricted stock units granted to Mr. Alexander which are issuable upon
Mr. Alexander’s resignation from the Company (subject to acceleration and forfeiture in certain circumstances). Mr. Alexander
has no voting rights with respect to the restricted stock units until the underlying shares are issued.
|
|
(i)
|
2,339,781 unrestricted shares of common stock, options to purchase 744,446 shares of common stock, which are fully vested, and 854 shares of Series E Preferred Stock, which are convertible into 301,950 shares of common stock, and 39,186 shares of common stock underlying vested restricted stock units which are deemed beneficially owned by Mr. Honig and are issuable upon Mr. Honig’s resignation from the Board of Directors (including (i) 9,579 units which vested on December 11, 2015; (ii) 5,000 units which vested on February 3, 2017; (iii) 11,228 units which vested on April 28, 2017; (iv) 3,316 units which vested on June 30, 2017; (v) 2,458 units which vested September 30, 2017; (vi) 2,605 units which vested December 29, 2017; and (vii) 5,000 restricted stock units which vest on February 3, 2018), all of which are held directly by Mr. Honig;
|
|
(ii)
|
3,888,034 unrestricted shares of common stock, 4,230 shares of Series E Preferred Stock convertible into 1,495,608 shares of common stock, and 396,039 warrants, all of which are held by GRQ Consultants, Inc. 401K (“GRQ 401K”);
|
|
(iii)
|
75,218 unrestricted shares of common stock held by GRQ Consultants, Inc. (“GRQ Consultants”);
|
|
(iv)
|
1,763,522
unrestricted shares of common stock and 2,070 shares of Series E Preferred Stock, which are convertible into 731,892 shares of common stock, all of which are held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig (“GRQ Roth 401K”); and
|
|
(v)
|
89,148 unrestricted shares of common stock and 581 shares of Series E Preferred Stock, which are convertible into 205,425 shares of common stock, all of which are held by GRQ Consultants, Inc. Defined Benefit Plan (“GRQ Defined”).
|
|
(vi)
|
Mr. Honig is the trustee of GRQ 401K, GRQ Roth 401K and GRQ Defined and President of GRQ Consultants, and, in such capacities, has voting and dispositive power over the securities held by GRQ 401K, GRQ Roth 401K, GRQ Defined and GRQ Consultants.
|
|
(9)
|
Includes 56,617 shares of
common stock underlying vested restricted stock units which are deemed beneficially owned by Mr. Morrison and are issuable upon
Mr. Morrison’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances).
Excludes 18,518 shares of common stock underlying unvested restricted stock units granted to Mr. Morrison which are issuable upon
Mr. Morrison’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances).
Mr. Morrison has no voting rights with respect to the restricted stock units until the underlying shares are issued.
|
|
(10)
|
Includes: (i) 185,316 unrestricted
shares of common stock; and (ii) 47,798 shares of common stock underlying vested restricted stock units which are deemed beneficially
owned by Mr. Karr and issuable upon Mr. Karr’s resignation from the Board of Directors (subject to acceleration and forfeiture
in certain circumstances). Excludes 1,852 shares of common stock underlying unvested restricted stock units granted to Mr. Karr
which are issuable upon Mr. Karr’s resignation from the Board of Directors (subject to acceleration and forfeiture in certain
circumstances). Mr. Karr has no voting rights with respect to the restricted stock units until the underlying shares are issued.
|
|
(11)
|
Excludes 8,621 shares of
common stock underlying unvested restricted stock units granted to Ms. Saxton which are issuable upon Ms. Saxton’s resignation
from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Ms. Saxton has no voting rights
with respect to the restricted stock units until the underlying shares are issued.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Review of Related Person Transactions
Our Audit Committee
is responsible for assisting the Board of Directors with the review and approval of transactions with related parties. We annually
request each of our directors and executive officers complete a directors’ or officers’ questionnaire, respectively,
that elicits information about related party transactions. The Audit Committee and legal counsel annually review all transactions
and relationships disclosed in the directors’ and officers’ questionnaires, and the Board of Directors makes a formal
determination regarding each director’s independence. If a transaction were to present a conflict of interest, the Board
of Directors would determine the appropriate response.
Related Person Transactions
We have entered into agreements and arrangements
with our executive officers and directors that are more fully described above under “Executive Compensation — Agreements
with Executive Officers”, “Executive Compensation — Indemnification Agreements”, and “Director
Compensation”.
Transactions or Relationships with or
involving Mr. Honig
In April 2015, we sold
to Mr. Honig 427,351 units of the Company’s securities for a purchase price of $5.85 per unit, or $2,500,000 in the aggregate,
as part of a private placement, with each unit comprised of one share of common stock and a 24-month warrant to purchase 0.4 of
a share of the Company’s common stock. The sale was completed on equivalent terms to other investors purchasing in the private
placement.
In February 2016, we
sold to Mr. Honig 367,647 shares of our common stock for a purchase price of $3.40 per share, or approximately $1,250,000 in the
aggregate, as part of a private placement. The terms of the private placement were reviewed and approved by the Audit Committee.
In December 2017, we
sold to Mr. Honig 990,099 units of the Company’s securities for a purchase price of $3.03 per unit, or $3,000,000 in the
aggregate, as part of the Private Placement, with each unit comprised of one share of common stock and a 24-month warrant to purchase
0.4 of a share of the Company’s common stock. The sale was completed on equivalent terms to other investors purchasing in
the Private Placement, except that the unit price for all other investors in the Private Placement was $2.80. The terms of Mr.
Honig’s participation in the Private Placement were reviewed and approved by the Audit Committee.
Transactions or Relationships with or involving Mr. Smith
On
March 24, 2016, the Company entered into a subscription agreement with the Donald Smith Value Fund, L.P. The Subscription Agreement
provided for the sale to Donald Smith Value Fund, L.P. of 1,850,000 units for $3.25 per unit, with each unit consisting of one
share of common stock and one thirty-month warrant to purchase 0.5 of a share of common stock at an exercise price of $4.35. The
transaction was completed and the shares were issued on March 28, 2016. Immediately following the sale, Mr. Smith beneficially
owned approximately 7.1% of our outstanding common stock. No other investors purchased shares in the private placement.
Transactions or Relationships with or involving Jonathan
Honig
In December 2017, we
sold to Jonathan Honig 535,714 units of the Company’s securities for a purchase price of $2.80 per unit, or $1,500,000 in
the aggregate, as part of the Private Placement, with each unit comprised of one share of common stock and a 24-month warrant to
purchase 0.4 of a share of the Company’s common stock. The sale was completed on equivalent terms to other investors purchasing
in the Private Placement except for Barry Honig, as discussed above. The terms of Jonathan Honig’s participation in the Private
Placement were reviewed and approved by the Audit Committee. Jonathan Honig is a sibling of Barry Honig.
Director Independence
We currently have five
directors serving on our Board of Directors: Messrs. Alfers, Honig, Karr, and Morrison, and Ms. Saxton. Mr. Barr served on the
Board of Directors from June 24, 2016 until his death on April 9, 2017. We have determined Messrs. Morrison, Honig, Karr, and Ms.
Saxton are, and Mr. Barr was, independent in accordance with the definition of independence set forth in the rules of Nasdaq. Each
director who is a member of a committee subject to independence standards under the rules of Nasdaq is independent under such standards.
In reaching these determinations, the Board of Directors considered payments for consulting services made to Mr. Barr and Mr. Karr
prior to their appointments to the Board of Directors, a grant of 12,500 restricted stock units to Mr. Karr in December 2015, payments
for consulting services made to Mr. Morrison prior to the formation of the Audit Committee and the Company’s uplisting to
Nasdaq, fees paid to Mr. Morrison and Mr. Barr for their service on the Technical Committee, Mr. Honig’s status as a significant
stockholder, Mr. Karr’s position and Mr. Honig’s former position on the board of directors of Levon Resources, a significant
stockholder of the Company, and Mr. Karr’s role as president and chief executive officer of U.S. Gold Corp. Tim Janke, one
of the Company’s executive officers, is a director of U.S. Gold Corp. and has represented to the Company he is not a member
of the compensation committee or similar body of U.S. Gold Corp.
SELLING STOCKHOLDERS
Up to 3,286,127 shares of common stock are
being offered by this prospectus, all of which are being registered for sale for the account of the selling stockholders and all
of which were issued to the selling stockholders in the Private Placement. These shares consist of the following:
|
·
|
2,347,236 shares issued to
the selling stockholders in the Private Placement; and
|
|
·
|
938,891 shares issuable upon exercise of the warrants issued to the selling stockholders in the Private Placement.
|
The Private Placement was exempt under the
registration provisions of the Securities Act.
The 3,286,127 shares of common stock referred
to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale
from time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or
a portion of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another
effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements
or amendments to this prospectus.
The table below sets forth certain information
regarding the selling stockholders and the shares of our common stock offered by them in this prospectus. Unless otherwise indicated
in the footnotes to the table below: (i) subject to community property laws where applicable, the selling stockholders, to
our knowledge, have sole voting and investment power with respect to the shares beneficially owned by them; (ii) none of the
selling stockholders are broker-dealers, or are affiliates of a broker-dealer; and (iii) the selling stockholders have not
had a material relationship with us within the past three years.
Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission. The selling stockholders’ percentage of ownership of our outstanding
shares in the table below is based upon 33,544,125 shares of common stock assumed to be outstanding as of January 16, 2018, and
includes the 938,891 shares issuable upon exercise of the warrants and registered for resale in this registration statement on
Form S-1.
|
|
Ownership Before Offering
|
|
|
Ownership After Offering (+)
|
|
SELLING STOCKHOLDER
|
|
Number of
shares of
common stock
beneficially
owned
|
|
|
Total
number of
shares
offered
|
|
|
Shares of
common
stock
offered
|
|
|
Warrant
shares
offered
|
|
|
Number of
shares of
common stock
beneficially
owned
|
|
|
Percentage of
common stock
beneficially
owned
|
|
Stetson Capital Investments, Inc.
(1)
|
|
|
297,999
|
|
|
|
249,999
|
|
|
|
178,571
|
|
|
|
71,428
|
|
|
|
48,000
|
|
|
|
*
|
%
|
GRQ Consultants, Inc. 401K
(2)
|
|
|
5,779,681
|
|
|
|
1,386,138
|
|
|
|
990,099
|
|
|
|
396,039
|
|
|
|
4,393,543
|
|
|
|
13.1
|
%
|
Andrew Schwartzberg
|
|
|
124,999
|
|
|
|
124,999
|
|
|
|
89,285
|
|
|
|
35,714
|
|
|
|
0
|
|
|
|
*
|
%
|
ATG Capital LLC
(3)
|
|
|
174,999
|
|
|
|
124,999
|
|
|
|
89,285
|
|
|
|
35,714
|
|
|
|
50,000
|
|
|
|
*
|
%
|
Jonathan Honig
|
|
|
1,749,999
|
|
|
|
749,000
|
|
|
|
535,714
|
|
|
|
214,285
|
|
|
|
1,000,000
|
|
|
|
*
|
%
|
Richard Molinsky
|
|
|
71,389
|
|
|
|
49,999
|
|
|
|
35,714
|
|
|
|
14,285
|
|
|
|
21,390
|
|
|
|
*
|
%
|
Moishe Hartstein
(4)
|
|
|
49,999
|
|
|
|
49,999
|
|
|
|
35,714
|
|
|
|
14,285
|
|
|
|
0
|
|
|
|
*
|
%
|
Erick Richardson
|
|
|
124,999
|
|
|
|
124,999
|
|
|
|
89,285
|
|
|
|
35,714
|
|
|
|
0
|
|
|
|
*
|
%
|
Brian M. Herman
(5)
|
|
|
56,999
|
|
|
|
49,999
|
|
|
|
35,714
|
|
|
|
14,285
|
|
|
|
7,000
|
|
|
|
*
|
%
|
Melechdavid Inc.
(6)
|
|
|
274,999
|
|
|
|
124,999
|
|
|
|
89,285
|
|
|
|
35,714
|
|
|
|
150,000
|
|
|
|
*
|
%
|
Alpha Capital Anstalt
(7)
|
|
|
124,999
|
|
|
|
124,999
|
|
|
|
89,285
|
|
|
|
35,714
|
|
|
|
0
|
|
|
|
*
|
%
|
Newport Vacations Manager, LLC
(8)
|
|
|
124,999
|
|
|
|
124,999
|
|
|
|
89,285
|
|
|
|
35,714
|
|
|
|
0
|
|
|
|
*
|
%
|
TOTAL
|
|
|
—
|
|
|
|
3,286,127
|
|
|
|
2,347,236
|
|
|
|
938,891
|
|
|
|
—
|
|
|
|
—
|
|
* represents less than 1%.
(+) Represents
the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumptions that
(a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) that
no other shares of our common stock beneficially owned by the selling stockholders are acquired or are sold prior to completion
of this offering by the selling stockholders.
|
(1)
|
As the president of Stetson Capital Investments, Inc., John Stetson has voting and investment power over shares of the Company
held by this selling stockholder.
|
|
(2)
|
Barry Honig (a director of the Company) has voting and investment power over shares of the Company held by this selling stockholder.
For additional information on the beneficial ownership of GRQ Consultants Inc. 401K and Mr. Honig, please see the section —“
Security
Ownership of Certain Beneficial Owners and Management
”.
|
|
(3)
|
As the managing member of ATG Capital LLC, John O’Rourke has voting and investment power over shares of the Company held
by this selling stockholder.
|
|
(4)
|
Moishe Hartstein is an affiliate of a broker-dealer; however, Mr. Hartstein represented that he purchased these shares of common
stock in the ordinary course of business, not for resale, and, at the time of purchase, had no agreements or understandings, directly
or indirectly, with any person to distribute such shares of common stock.
|
|
(5)
|
Brian Herman is an affiliate of a broker-dealer; however, Mr. Herman represented that he purchased these shares of common stock
in the ordinary course of business, not for resale, and, at the time of purchase, had no agreements or understandings, directly
or indirectly, with any person to distribute such shares of common stock.
|
|
(6)
|
As the sole owner of Melechdavid, Inc., Mark Groussman has voting and investment power over shares of the Company held by this
selling stockholder.
|
|
(7)
|
As the controlling director of Alpha Capital Anstalt, Konrad Ackermann has voting and investment power over shares of the Company
held by this selling stockholder.
|
|
(8)
|
As the manager of Newport Vacations Manager, LLC, Dr. Robert M. Cornfeld has voting and investment power over shares of the
Company held by this selling stockholder.
|
DESCRIPTION OF SECURITIES
We are authorized to
issue 200,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of preferred stock. As of January
16, 2018, we have the following issued and outstanding securities on a fully diluted basis:
|
·
|
33,544,125 shares of common
stock;
|
|
·
|
8,946 shares of Series E Convertible Preferred Stock, which are convertible into 3,163,501 shares of common stock;
|
|
·
|
Warrants to purchase 4,434,267 shares of common stock;
|
|
·
|
Options to purchase 1,794,453 shares of common stock; and
|
|
·
|
Restricted stock units, which entitle the holders to receive 1,052,850 shares of common stock upon vesting and upon the satisfaction of certain specified conditions.
|
C
ommon Stock
The holders of our
common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably
such dividends, if any, as may be declared by our board of directors out of legally available funds; however, the current policy
of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up,
the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. The
holders of our common stock will have no preemptive, subscription, redemption or conversion rights. The rights, preferences and
privileges of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any
series of preferred stock, which may be designated solely by action of our board of directors.
Our common stock is listed on Nasdaq and
on the TSX under the symbol “PGLC.”
Warrants
We currently have issued and outstanding
warrants to purchase 4,434,267 shares of common stock, all currently exercisable, as follows:
|
·
|
Warrants to purchase 22,223
shares at $8.10 per share, expiring March 6, 2022;
|
|
·
|
Warrants to purchase 8,334 shares at $5.40 per share, expiring November 7, 2018;
|
|
·
|
Warrants to purchase 1,060,429 shares at $5.06 per share, expiring August 25, 2018;
|
|
·
|
Warrants to purchase 261,590 shares at $5.06 per share, expiring August 25, 2018;
|
|
·
|
Warrants to purchase 925,000 shares at $4.35 per share, expiring September 28, 2018;
|
|
·
|
Warrants to purchase 100,000 shares at $3.45 per share, expiring January 16, 2019;
|
|
·
|
Warrants to purchase 938,891 shares at $3.40 per share, expiring December 19, 2019
(1)
; and
|
|
·
|
Warrants to purchase 1,117,800 shares at $3.40 per share, expiring December 19, 2019.
|
(1)
The shares issuable upon exercise of these warrants
are offered pursuant to this prospectus.
The selling stockholders may exercise the
warrants included in this prospectus on a cashless basis if the shares of common stock underlying the warrants are not then registered
pursuant to an effective registration statement.
Registration Rights
In connection with the Private Placement,
we entered into registration rights agreements with the selling stockholders dated December 11, 2017 providing for the registration
of the resale of those shares.
Transfer Agent
The transfer agent for our common stock
in the United States is Computershare Investor Services, Inc. located at 462 South 4th Street, Suite 1600, Louisville, Kentucky
40233-5000.
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
There have been no changes in or disagreements
with our accountants since our formation that are required to be disclosed pursuant to Item 304 of Regulation S-K, except those
that have been previously reported in our filings with the Securities and Exchange Commission.
Indemnification of Directors and Officers
Nevada Revised Statutes Sections
78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must
have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests.
In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was
unlawful.
Under Revised Statutes
Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes
he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the
standards.
Our Articles of Incorporation
provide that our officers and directors shall be indemnified and held harmless to the fullest extent legally permissible under
the laws of the State of Nevada against all expenses, liability and loss (including attorneys’ fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by them in connection with any civil, criminal, administrative
or investigative action, suit or proceeding related to their service as an officer or director. Such right of indemnification shall
be a contract right which may be enforced in any manner desired by such person. We must pay the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of the final disposition
of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right
of indemnification shall not be exclusive of any other right which such directors or officers may have or hereafter acquire.
Our Articles of Incorporation
provide that we may adopt bylaws to provide at all times the fullest indemnification permitted by the laws of the State of Nevada,
and may purchase and maintain insurance on behalf of any of officers and directors. The indemnification provided in our Articles
of Incorporation shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to
the benefit of the heirs, executors and administrators of such person.
Our Bylaws provide
that a director or officer shall have no personal liability to us or our stockholders for damages for breach of fiduciary duty
as a director or officer, except for damages for breach of fiduciary duty resulting from (a) acts or omissions which involve
intentional misconduct, fraud, or a knowing violation of law, or (b) the payment of dividends in violation of Nevada Revised
Statutes Section 78.3900.
The Company has entered into indemnification
agreements with its directors and executive officers providing for indemnification against all expenses, judgments, fines and amounts
paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action, suit, alternative
dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made a party by reason
of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted by Nevada law.
These agreements are more fully described herein under “Executive Compensation — Indemnification Agreements”.
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors, officers and persons controlling us, we have been advised that
it is the Securities and Exchange Commission’s opinion that such indemnification is against public policy as expressed in
the Securities Act, and is, therefore, unenforceable.
PLAN OF DISTRIBUTION
This prospectus relates to the sale by the
selling stockholders identified in this prospectus of up to 3,286,127 shares of our common stock, par value $0.0001 per share,
which includes (i) 2,347,236 shares issued to the selling stockholders in the Private Placement and (ii) 938,891 shares
issuable upon exercise of the warrants issued to the selling stockholders in the Private Placement.
Each selling stockholder of the securities
and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered
hereby on the Nasdaq or any other stock exchange, market or trading facility on which the securities are traded or in private transactions.
These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling
securities:
|
•
|
ordinary brokerage transactions and transactions in which
the broker-dealer solicits purchasers;
|
|
•
|
block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
|
|
•
|
purchases by a broker-dealer as principal and resale by
the broker-dealer for its account;
|
|
•
|
an exchange distribution in accordance with the rules of
the applicable exchange;
|
|
•
|
privately negotiated transactions;
|
|
•
|
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a
part;
|
|
•
|
in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities
at a stipulated price per security;
|
|
•
|
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
•
|
a combination of any such methods of sale; or
|
|
•
|
any other method permitted pursuant to applicable law.
|
The selling stockholders may also sell securities
under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated,
but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary
brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance
with FINRA IM-2440.
In connection with the sale of the securities
or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The selling stockholders
may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities
to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions
with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders and any broker-dealers
or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities
Act. Each selling stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly
or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and
markups which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees
and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because selling stockholders may be deemed
to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling stockholders
have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities
by the selling stockholders.
The Company has agreed to keep this prospectus
effective until the earlier of (i) the date on which the securities may be resold by the selling stockholders without registration
and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to
be in compliance with the current public information under Rule 144(c) under the Securities Act or any other rule of similar effect
or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule
of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they
have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.
Under applicable rules and regulations under
the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making
activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement
of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the
common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders
and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).
LEGAL MATTERS
Davis Graham & Stubbs LLP will
pass upon the validity of the shares of common stock offered by the selling stockholders under this prospectus.
EXPERTS
The consolidated financial statements of
Pershing Gold for the fiscal years ended December 31, 2015 and December 31, 2016 included in this prospectus have been so included
in reliance on the report of KBL, LLP, an independent registered public accounting firm, given on the authority of said firm as
experts in auditing and accounting.
The estimates of our
mineralized material with respect to the Relief Canyon Mine deposit included in this prospectus have been so included in reliance
upon the preliminary feasibility study prepared by Mine Development Associates Inc.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange
Commission a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act,
with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information
about us and our shares of common stock that the selling stockholders are offering in this prospectus.
We file annual, quarterly and current
reports and other information with the Securities and Exchange Commission under the Securities Exchange Act. Our Securities and
Exchange Commission filings are available to the public over the Internet at the Securities and Exchange Commission’s website
at http://www.sec.gov. Access to these electronic filings is available as soon as practicable after filing with the Securities
and Exchange Commission. You may also read and copy any document we file at the Securities and Exchange Commission’s public
reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference rooms and their copy charges. You may also request a copy of those filings, excluding
exhibits, from us at no cost. Any such request should be addressed to us at: Pershing Gold Corporation, 1658 Cole Blvd., Bldg.
6, Suite 210, Lakewood, CO 80401, Attention: Corporate Secretary or by calling 720-974-7254. Our SEC filings are also available
through the “Investor Relations” section of our website at
www.pershinggold.com
.
GLOSSARY OF SELECTED MINING TERMS
The following is a glossary of selected
mining terms used in this registration statement on Form S-1 that may be technical in nature:
“
Base metal
” means a
classification of metals usually considered to be of low value and higher chemical activity when compared with the precious metals
(gold, silver, platinum, etc.). This nonspecific term generally refers to the high-volume, low-value metals copper, lead,
tin, and zinc.
“
Deposit
” means an informal
term for an accumulation of mineral ores.
“
Doré
” means a
mixture of gold and silver that is produced from the refinery furnace.
“
Exploration stage
”
means
a
U.S. Securities and Exchange Commission descriptive category applicable to public mining companies engaged in the search for mineral
deposits and ore reserves and which are not either in the mineral development or the ore production stage.
“
Feasibility study
” means
an engineering study designed to define the technical, economic, and legal viability of a mining project with a high degree of
reliability.
“
Formation
” means a distinct
layer of sedimentary rock of similar composition.
“
Grade
”
means
the metal content of ore, usually expressed in troy ounces per ton (2,000 pounds) or in grams per ton or metric tonnes that contain
2,204.6 pounds or 1,000 kilograms.
“
Heap leach
” means a
mineral processing method involving the crushing and stacking of an ore on an impermeable liner upon which solutions are sprayed
to dissolve metals, i.e. gold, copper, etc.; the solutions containing the metals are then collected and treated to recover the
metals.
“
Lode
”
means
a
classic vein, ledge, or other rock in place between definite walls.
“
Millsite
”
means
a
specific location of five acres or less on
public lands that are non-mineral in character. Millsites may be located
in connection with a placer or lode claim for mining and milling purposes or as an independent/custom mill site that is independent
of a mining claim.
“
Mineralization
” means
the concentration of metals within a body of rock.
“
Mineralized material
”
is a body that contains mineralization which has been delineated by appropriately spaced drilling and/or underground sampling to
estimate a sufficient tonnage and average grade of metal(s). Such a deposit does not qualify as a reserve until a comprehensive
evaluation based upon unit cost, grade, recoveries, and other material factors concludes legal and economic feasibility of extraction
at the time of reserve determination.
“
Mining
” means the process
of extraction and beneficiation of mineral reserves or mineral deposits to produce a marketable metal or mineral product. Exploration
continues during the mining process and, in many cases, mineral reserves or mineral deposits are expanded during the life of the
mine operations as the exploration potential of the deposit is realized.
“
Mining claim
” means
a mining interest giving its holder the right to prospect, explore for and exploit minerals within a defined area.
“
Net smelter return royalty
”
means a defined percentage of the gross revenue from a resource extraction operation, less a proportionate share of transportation,
insurance, and smelting/refining costs.
“
Open pit
” means a mine
working or excavation open to the surface.
“
Ore
” means material
containing minerals that can be economically extracted.
“
Outcrop
” means that
part of a geologic formation or structure that appears at the surface of the earth.
“
Precious metal
” means
any of several relatively scarce and valuable metals, such as gold, silver, and the platinum-group metals.
“
Probable reserves
” means
reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but
the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance,
although lower than that for proven reserves, is high enough to assume continuity between points of observation.
“
Production stage
” means
a project that is actively engaged in the process of extraction and beneficiation of mineral reserves or mineral deposits to produce
a marketable metal or mineral product.
“
Proven reserves
” means
reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade
and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement
are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are
well-established.
“
Reclamation
” means the
process of returning land to another use after mining is completed.
“
Recovery
” means that
portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage.
“
Reserves
” means that
part of a mineral deposit that could be economically and legally extracted or produced at the time of reserve determination.
“
Sampling
” means selecting
a fractional part of a mineral deposit for analysis.
“
Sediment
” means solid
fragmental material that originates from weathering of rocks and is transported or deposited by air, water, or ice, or that accumulates
by other natural agents, such as chemical precipitation from solution or secretion by organisms, and that forms in layers on the
Earth’s surface at ordinary temperatures in a loose, unconsolidated form.
“
Sedimentary
” means formed
by the deposition of sediment.
“
Unpatented mining claim
”
means
a mineral claim staked on federal or, in the case of severed mineral rights, private land (where the U.S. government has retained
ownership of the locatable minerals) to which a deed from the U.S. government has not been received by the claimant. Unpatented
claims give the claimant the exclusive right to explore for and to develop the underlying minerals and the right to use the surface
for such purpose. However, the claimant does not own title to either the minerals or the surface, and the claim must include a
discovery of valuable minerals to be valid and is subject to the payment of annual claim maintenance fees that are established
by the governing authority of the land on which the claim is located.
“
Vein
” means a fissure,
fault or crack in a rock filled by minerals that have traveled upwards from some deep source.
“
Waste
” means rock lacking
sufficient grade and/or other characteristics of ore.
INDEX
TO FINANCIAL STATEMENTS
CONTENTS
AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND DECEMBER 31, 2015
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Consolidated Balance Sheets - As of December 31, 2016 and 2015
|
F-3
|
|
|
Consolidated Statements of Operations - For the Years Ended December 31, 2016 and 2015
|
F-4
|
|
|
Consolidated Statements of Changes in Stockholders’ Equity - For the Years Ended December 31, 2016 and 2015
|
F-5
|
|
|
Consolidated Statements of Cash Flows – For the Years Ended December 31, 2016 and 2015
|
F-6
|
|
|
Notes to Consolidated Financial Statements
|
F-7
|
|
|
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017
|
|
|
|
Consolidated Balance Sheets - As of September 30, 2017 and December 31, 2016
|
F-25
|
|
|
Consolidated Statements of Operations - For the Three Months Ended September 30, 2017 and 2016 and the Nine Months Ended September 30, 2017 and 2016
|
F-26
|
|
|
Consolidated Statements of Cash Flows - For the Nine Months Ended September 30, 2017 and 2016
|
F-27
|
|
|
Notes to Consolidated Financial Statements
|
F-28
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors
Pershing Gold Corporation and Subsidiaries
We have audited the accompanying consolidated
balance sheets of Pershing Gold Corporation and Subsidiaries as of December 31, 2016 and 2015 and the related consolidated
statements of operations, changes in stockholders’ equity, and cash flows for the years ended December 31, 2016 and
2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Pershing Gold Corporation and
Subsidiaries as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years ended December 31,
2016 and 2015 in conformity with U.S. generally accepted accounting principles.
/s/ KBL, LLP
|
|
New York, New York
|
|
March 28, 2017
|
|
PERSHING GOLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in United States dollars)
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
11,722,102
|
|
|
$
|
3,237,384
|
|
Restricted
cash
|
|
|
2,250,000
|
|
|
|
2,250,000
|
|
Other
receivables
|
|
|
-
|
|
|
|
70,145
|
|
Prepaid
expenses and other current assets
|
|
|
1,139,760
|
|
|
|
899,228
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
15,111,862
|
|
|
|
6,456,757
|
|
|
|
|
|
|
|
|
|
|
NON - CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
4,310,980
|
|
|
|
5,321,895
|
|
Mineral
rights
|
|
|
22,786,912
|
|
|
|
22,786,912
|
|
Reclamation
bond deposit
|
|
|
25,000
|
|
|
|
25,000
|
|
Deposit
|
|
|
3,884
|
|
|
|
3,884
|
|
|
|
|
|
|
|
|
|
|
Total
Non - Current Assets
|
|
|
27,126,776
|
|
|
|
28,137,691
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
42,238,638
|
|
|
$
|
34,594,448
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
2,150,195
|
|
|
$
|
538,161
|
|
Note
payable - current portion
|
|
|
-
|
|
|
|
17,319
|
|
Deferred
rent - current portion
|
|
|
6,738
|
|
|
|
5,217
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
2,156,933
|
|
|
|
560,697
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
Deposit
|
|
|
1,750
|
|
|
|
-
|
|
Deferred
rent - long term portion
|
|
|
4,512
|
|
|
|
10,771
|
|
Asset
retirement obligation
|
|
|
895,085
|
|
|
|
783,539
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
3,058,280
|
|
|
|
1,355,007
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY :
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value;
50,000,000 authorized
|
|
|
|
|
|
|
|
|
Convertible
Series A Preferred stock ($0.0001 Par Value; 2,250,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding
as of December 31, 2016 and 2015)
|
|
|
-
|
|
|
|
-
|
|
Convertible
Series B Preferred stock ($0.0001 Par Value; 8,000,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding
as of December 31, 2016 and 2015)
|
|
|
-
|
|
|
|
-
|
|
Convertible
Series C Preferred stock ($0.0001 Par Value; 3,284,396 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding
as of December 31, 2016 and 2015)
|
|
|
-
|
|
|
|
-
|
|
Convertible
Series D Preferred stock ($0.0001 Par Value; 7,500,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding
as of December 31, 2016 and 2015)
|
|
|
-
|
|
|
|
-
|
|
Convertible
Series E Preferred stock ($0.0001 Par Value; 15,151 Shares Authorized;
|
|
|
|
|
|
|
|
|
8,946
and 9,375 shares issued and outstanding; liquidation preference of $9,742,194 and
|
|
|
|
|
|
|
|
|
$10,209,375
as of December 31, 2016 and 2015)
|
|
|
1
|
|
|
|
1
|
|
Common stock ($0.0001
Par Value; 200,000,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
28,389,378 and 21,723,049
shares issued and outstanding as of December 31, 2016 and 2015)
|
|
|
2,839
|
|
|
|
2,173
|
|
Additional
paid-in capital
|
|
|
195,705,344
|
|
|
|
170,529,953
|
|
Accumulated
deficit
|
|
|
(156,527,826
|
)
|
|
|
(137,292,686
|
)
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
|
|
39,180,358
|
|
|
|
33,239,441
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
$
|
42,238,638
|
|
|
$
|
34,594,448
|
|
See accompanying notes to consolidated financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in United States dollars)
|
|
For the Years Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Compensation and related taxes
|
|
|
5,337,910
|
|
|
|
4,555,151
|
|
Exploration cost
|
|
|
4,792,786
|
|
|
|
8,618,648
|
|
Consulting fees
|
|
|
1,410,307
|
|
|
|
1,258,458
|
|
General and administrative expenses
|
|
|
4,091,967
|
|
|
|
4,689,033
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
15,632,970
|
|
|
|
19,121,290
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(15,632,970
|
)
|
|
|
(19,121,290
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
|
Interest expense and other finance costs, net of
interest income of $2,801 and $730, respectively
|
|
|
(2,605
|
)
|
|
|
(2,643
|
)
|
|
|
|
|
|
|
|
|
|
Total other income (expenses) - net
|
|
|
(2,605
|
)
|
|
|
(2,643
|
)
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(15,635,575
|
)
|
|
|
(19,123,933
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(15,635,575
|
)
|
|
$
|
(19,123,933
|
)
|
|
|
|
|
|
|
|
|
|
Preferred deemed dividend
|
|
|
(3,599,565
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common stockholders
|
|
$
|
(19,235,140
|
)
|
|
$
|
(19,123,933
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.75
|
)
|
|
$
|
(0.90
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding - basic and diluted
|
|
|
25,483,353
|
|
|
|
21,165,083
|
|
See accompanying notes to consolidated financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,
2016 and 2015
(in United States dollars)
|
|
Preferred
Stock - Series A
|
|
|
Preferred
Stock - Series B
|
|
|
Preferred
Stock - Series C
|
|
|
Preferred
Stock - Series D
|
|
|
Preferred
Stock - Series E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.0001
Par Value
|
|
|
$0.0001
Par Value
|
|
|
$0.0001
Par Value
|
|
|
$0.0001
Par Value
|
|
|
$0.0001
Par Value
|
|
|
Common Stock
$0.0001
Par Value
|
|
|
Additional
Paid-in
|
|
|
Treasury
|
|
|
Accumulated
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stock
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
9,425
|
|
|
$
|
1
|
|
|
|
19,745,170
|
|
|
$
|
1,975
|
|
|
$
|
158,018,742
|
|
|
$
|
-
|
|
|
$
|
(118,168,753
|
)
|
|
$
|
39,851,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,962,501
|
|
|
|
196
|
|
|
|
10,461,646
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,461,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
in connection with the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
conversion of preferred
stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50
|
)
|
|
|
-
|
|
|
|
9,822
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
for vested restricted stock grants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,556
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
in connection with vested restricted common stock grants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,025,258
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,025,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
in connection with stock warrant grant
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,309
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,123,933
|
)
|
|
|
(19,123,933
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,375
|
|
|
|
1
|
|
|
|
21,723,049
|
|
|
|
2,173
|
|
|
|
170,529,953
|
|
|
|
-
|
|
|
|
(137,292,686
|
)
|
|
|
33,239,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,544,412
|
|
|
|
654
|
|
|
|
19,794,822
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,795,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
in connection with the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
conversion of preferred
stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(429
|
)
|
|
|
-
|
|
|
|
130,669
|
|
|
|
13
|
|
|
|
(13
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,323
|
|
|
|
1
|
|
|
|
55,598
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
in connection with restricted common stock unit grants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,725,417
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,725,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common
stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,075
|
)
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock deemed
dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,599,565
|
|
|
|
-
|
|
|
|
(3,599,565
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,635,575
|
)
|
|
|
(15,635,575
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2016
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
8,946
|
|
|
$
|
1
|
|
|
|
28,389,378
|
|
|
$
|
2,839
|
|
|
$
|
195,705,344
|
|
|
$
|
-
|
|
|
$
|
(156,527,826
|
)
|
|
$
|
39,180,358
|
|
See accompanying notes to consolidated financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in United States dollars)
|
|
For the Years Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(15,635,575
|
)
|
|
$
|
(19,123,933
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,097,066
|
|
|
|
1,125,758
|
|
Accretion
|
|
|
38,923
|
|
|
|
46,148
|
|
Stock-based compensation
|
|
|
2,311,410
|
|
|
|
2,049,567
|
|
Asset retirement obligations settled
|
|
|
-
|
|
|
|
(18,737
|
)
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Other receivables
|
|
|
70,145
|
|
|
|
(70,145
|
)
|
Prepaid expenses and other current assets
|
|
|
(240,532
|
)
|
|
|
(104,479
|
)
|
Accounts payable and accrued expenses
|
|
|
1,081,640
|
|
|
|
(176,130
|
)
|
Deferred rent
|
|
|
(4,738
|
)
|
|
|
15,988
|
|
Deposit
|
|
|
1,750
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(11,279,911
|
)
|
|
|
(16,255,963
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of mineral rights
|
|
|
-
|
|
|
|
(6,000,000
|
)
|
Purchase of property and equipment
|
|
|
(13,528
|
)
|
|
|
(91,909
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
(13,528
|
)
|
|
|
(6,091,909
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock, net of issuance costs
|
|
|
19,795,476
|
|
|
|
10,461,842
|
|
Payments on notes payable
|
|
|
(17,319
|
)
|
|
|
(24,423
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
19,778,157
|
|
|
|
10,437,419
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
8,484,718
|
|
|
|
(11,910,453
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS- beginning of year
|
|
|
3,237,384
|
|
|
|
15,147,837
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS- end of year
|
|
$
|
11,722,102
|
|
|
$
|
3,237,384
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
5,406
|
|
|
$
|
3,373
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock deemed dividend
|
|
$
|
3,599,565
|
|
|
$
|
-
|
|
Increase (decrease) in asset retirement obligations
|
|
$
|
72,623
|
|
|
$
|
(42,477
|
)
|
See accompanying notes to consolidated
financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 1 — ORGANIZATION AND
DESCRIPTION OF BUSINESS
Pershing Gold Corporation (the “Company”),
formerly named Sagebrush Gold Ltd., was incorporated under the laws of the State of Nevada on August 2, 2007. The Company
is a gold and precious metals exploration company pursuing exploration, development, and mining opportunities primarily in Nevada.
The Company is currently focused on exploration of its Relief Canyon properties in Pershing County in northwestern Nevada. None
of the Company’s properties contain proven and probable reserves, and the Company’s activities on all of its properties
are exploratory in nature.
On August 30, 2011, the Company, through
its wholly-owned subsidiary, Gold Acquisition Corp. (“Gold Acquisition”), acquired the Relief Canyon Mine property
(“Relief Canyon”) located in Pershing County, near Lovelock, Nevada.
A wholly-owned subsidiary, Pershing Royalty
Company, a Delaware corporation, was formed on May 17, 2012 to hold royalty interests in two gold exploration properties.
On July 5, 2016 a wholly-owned subsidiary, Blackjack Gold Corporation, a Nevada corporation, was formed for potential purchases
of exploration targets.
On June 17, 2015, the Board of Directors of
the Company approved a reverse stock split of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”), at a ratio of 1-for-18 (the “Reverse Stock Split”) which became effective on June 18, 2015. In connection
with the Reverse Stock Split, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation,
as amended, with the Nevada Secretary of State to reduce the number of shares of Common Stock the Company is authorized to issue
from 800,000,000 to 200,000,000. All share and per share values of the Company’s Common Stock for all periods presented in
the accompanying consolidated financial statements are retroactively restated for the effect of the Reverse Stock Split in accordance
with Staff Accounting Bulletin Topic 4C: Equity Accounts – Change in Capital Structure (“SAB Topic 4C”).
NOTE 2 — SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation and Principle of Consolidation
The consolidated financial statements are prepared
in accordance with U.S. generally accepted accounting principles (“US GAAP”) and present the consolidated financial
statements of the Company and its majority-owned subsidiaries as of December 31, 2016. In the preparation of the consolidated
financial statements of the Company, intercompany transactions and balances have been eliminated.
Use of Estimates
In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date
of the consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly
from those estimates. Significant estimates made by management include, but are not limited to, the useful life of property
and equipment, the valuation of deferred tax assets and liabilities, including valuation allowance, amounts and timing of closure
obligations, the assumptions used to calculate fair value of restricted stock units, options and warrants granted, stock-based
compensation, beneficial conversion on preferred stock, capitalized mineral rights, asset valuations, timing of the performance
criteria of restricted stock units and the fair value of common stock issued.
Cash and cash equivalents
The Company considers all highly liquid investments
with an original maturity of three months or less when acquired to be cash equivalents. The Company places its cash with high credit
quality financial institutions. The Company’s accounts at these institutions are insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $250,000. At December 31, 2016, the Company had bank balances exceeding the FDIC insurance
limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institutions, the Company
evaluates at least annually the rating of the financial institutions in which it holds deposits.
Restricted Cash
Restricted cash consists of cash and investments
which are held as collateral under a surface management surety bond issued on the Company’s behalf.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Fair Value of Financial Instruments
The Company adopted Accounting Standards Codification
(“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities
measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally
accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value
and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s
financial position or operating results, but did expand certain disclosures.
ASC 820 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs
and minimize the use of unobservable inputs.
These inputs are prioritized below:
Level 1:
|
Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
|
Level 2:
|
Observable market-based inputs or unobservable inputs that are corroborated by market data.
|
Level 3:
|
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
|
The Company analyzes all financial instruments
with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting
standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on
the lowest level of input that is significant to the fair value measurement.
The carrying amounts reported in the consolidated
balance sheets for cash and cash equivalents, other receivables, prepaid expenses, accounts payable and accrued expenses approximate
their estimated fair market values based on the short-term maturity of these instruments.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets of
$1,139,760 and $899,228 at December 31, 2016 and 2015, respectively, consist primarily of costs paid for future services which
will occur within a year. Prepaid expenses principally include prepayments for consulting, public relations, and business advisory
services, insurance premiums, drilling services, mining claim fees and mineral lease fees which are being amortized over the terms
of their respective agreements. Included in other current assets are deferred financing costs of $312,415 and $0 at December 31,
2016 and 2015, respectively. The Company defers these costs until such time that the associated financing is completed. Upon completion
and recognition of the proceeds, any deferred financing costs will be reported as a direct deduction from the amount of the proceeds
received. If it is determined that the contemplated financing will not be completed any amounts deferred will be expensed.
Mineral Property Acquisition and Exploration
Costs
Costs of leasing, exploration, carrying and
retaining unproven mineral lease properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred
as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties
and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production
is established.
When a property reaches the production stage,
the related capitalized costs are amortized using the units-of-production method over the estimated life of the proven and probable
reserves. If in the future the Company has capitalized mineral properties, these properties will be periodically assessed for impairment.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs
are being expensed.
ASC 930-805, “Extractive Activities-Mining:
Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract,
and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights
are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the
acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral
rights include costs associated with acquiring patented and unpatented mining claims.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Mineral Property Acquisition and Exploration
Costs (continued)
ASC 930-805-30-1 and 30-2 provide that in fair
valuing mineral assets, an acquirer should take into account both:
·
The value beyond proven and probable reserves (“VBPP”)
to the extent that a market participant would include VBPP in determining the fair value of the assets.
·
The effects of anticipated fluctuations in the future market price
of minerals in a manner that is consistent with the expectations of market participants.
Property and equipment
Property and equipment are carried at cost.
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses
are included in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful
life of the assets, generally one to twenty-five years.
Impairment of long-lived assets
The Company accounts for the impairment or
disposal of long-lived assets according to ASC 360, “Property, Plant and Equipment”. The Company continually monitors
events and changes in circumstances that could indicate that the carrying amounts of long-lived assets, including mineral rights,
may not be recoverable. Long-lived assets in the exploration stage are monitored for impairment based on factors such as the Company’s
continued right to explore the area, exploration reports, assays, technical reports, drill results and the Company’s continued
plans to fund exploration programs on the property, and whether sufficient work has been performed to indicate that the carrying
amount of the mineral property cost carried forward as an asset will not be fully recovered. The tests for long-lived assets in
the exploration stage are monitored for impairment based on factors such as current market value of the long-lived assets and results
of exploration, future asset utilization, business climate, mineral prices and future undiscounted cash flows expected to result
from the use of the related assets.
Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to
be generated by the asset. When necessary, impaired assets are written down to estimated fair value based on the best information
available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows.
Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary
significantly from such estimates. The Company recognizes an impairment loss when the sum of expected undiscounted future cash
flows is less than the carrying amount of the asset. The Company did not record any impairment of its long-lived assets at December
31, 2016 and 2015, respectively.
Asset Retirement Obligations
Asset retirement obligations (“ARO”),
consisting primarily of estimated mine reclamation and closure costs at the Company’s Relief Canyon property, are recognized
in the period incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations,
which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to
accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived
asset and depreciated over the asset’s remaining useful life. Asset retirement obligations are periodically adjusted to reflect
changes in the estimated present value resulting from revisions to the estimated timing or amount of reclamation and closure costs.
The Company reviews and evaluates its asset retirement obligations annually or more frequently at interim periods if deemed necessary.
Income taxes
The Company accounts for income taxes pursuant
to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other
things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Income taxes (continued)
The Company follows the provision of ASC 740-10
related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits
of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10,
the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution of
appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
Tax positions that meet the more likely than
not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized
upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed
the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance
sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The Company has adopted ASC 740-10-25, “Definition
of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for
the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon
the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than
not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The
federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally
for three years after they are filed.
Stock-based Compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment Topic of ASC 718, “Compensation — Stock Compensation” (“ASC
718”), which requires recognition in the consolidated financial statements of the cost of employee and director services
received in exchange for an award of equity instruments over the period the employee or director is required to perform the services
in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director
services received in exchange for an award based on the grant-date fair value of the award.
Effective for fiscal year-ended
December 31, 2016, the Company early adopted ASU 2016-09, “Compensation - Stock Compensation (Topic 718)” (“ASU
2016-09”). The Company has elected to recognize the effect of forfeitures in compensation cost as forfeitures occur. Any
previously recognized compensation cost will be reversed in the period of forfeiture.
Pursuant to ASC Topic 505-50, “Equity
Based Payments to Non-employees”, for share-based payments to consultants and other third-parties, compensation expense is
determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement
date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense
based on the fair value of the award at the reporting date.
Related party transaction
Parties are considered to be related to the
Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common
control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Foreign currency transactions
The Company accounts for foreign currency transactions
in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”) and more specifically the guidance in
subsection ASC 830-20, “Foreign Currency Transactions”. The U.S. dollar is the functional and reporting currency for
the Company and its subsidiaries. Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars
at exchange rates in effect at the balance sheet date, with the resulting gains or losses upon settlement reported in foreign exchange
gain (loss) in the computation of net income (loss).
Recent Accounting Pronouncements
In May 2014, FASB issued ASU No. 2014-09, “Revenue
from Contracts with Customers (Topic 606)” related to revenue from contracts with customers. This ASU was further amended
in August 2015, March 2016, April 2016, May 2016 and December 2016 by ASU No. 2015-14, No. 2016-08, No. 2016-10, No. 2016-12 and
No. 2016-20, respectively. The new standard provides a five-step approach to be applied to all contracts with customers and also
requires expanded disclosures about revenue recognition. In August 2015, the effective date was deferred to reporting periods,
including interim periods, beginning after December 15, 2017 and will be applied retrospectively. Early adoption is not permitted.
The Company does not expect the impact of these revenue recognition updates to be material on the Company’s consolidated
financial statements.
In April 2015, FASB issued ASU 2015-03, “Interest
– Imputation of Interest” (Subtopic 835-30) which focuses on simplifying the presentation of debt issuance costs. The
amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet
as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement
guidance for debt issuance costs are not affected by the amendments in this update. The ASU is effective for periods beginning
after December 15, 2015 for public companies. The Company’s adoption did not have a material impact on the Company’s
consolidated results of operations, financial position and related disclosures.
In November 2015, FASB issued ASU 2015-17,
“Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which requires entities to present deferred
tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. ASU 2015-17 simplifies the current guidance
in ASC Topic 740, “Income Taxes”, which requires entities to separately present deferred tax assets and liabilities
as current and noncurrent in a classified balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15,
2016, and interim periods within those annual periods. Early adoption is permitted for all entities as of the beginning of an interim
or annual reporting period. The Company does not expect the impact of ASU 2015-17 to be material on the Company’s consolidated
financial statements.
In February 2016, FASB issued ASU 2016-02,
“Leases” (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance
or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification
will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term
of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater
than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing
guidance for operating leases. The new guidance will be effective for fiscal years beginning after December 15, 2018, and interim
periods within those annual periods and is applied retrospectively. Early adoption is permitted. The Company is currently in the
process of assessing the impact the adoption of this guidance will have on the Company’s consolidated financial statements.
In March 2016, FASB issued ASU 2016-09, “Compensation
- Stock Compensation (Topic 718)” (“ASU 2016-09”) as part of FASB's simplification initiative focused on improving
areas of GAAP for which cost and complexity may be reduced while maintaining or improving the usefulness of information disclosed
within the financial statements. ASU 2016-09 focuses on simplification specifically with regard to share-based payment transactions,
including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash
flows. The guidance in ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within
those annual periods. Early adoption is permitted. The Company’s adoption did not have a material impact on the Company’s
consolidated results of operations, financial position and related disclosures.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent Accounting Pronouncements (continued)
In August 2016, FASB issued ASU 2016-15, “Statement
of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task
Force)” (“ASU 2016-15”). ASU 2016-15 addresses the following eight specific cash flow issues: Debt prepayment
or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that
are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business
combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies
(including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization
transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective
for the Company on January 1, 2018. The Company does not believe the guidance will have a material impact on its consolidated financial
statements.
In November
2016, the FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash,”or ASU2016-18.
ASU 2016-18 is intended to clarify how entities present restricted cash in the statement of cash flows. The guidance
requires entities to show the changes in the total of cash and cash equivalents and restricted cash in the statement of cash flows.
As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of
cash flows. When cash and cash equivalents and restricted cash are presented in more than one line item on the balance sheet, the
new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet.
This reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. ASU 2016-18 is
effective for fiscal years beginning after December 15, 2017 and is to be applied retrospectively. Upon the adoption of the
new guidance, the Company will change the presentation of restricted cash in our current statement of cash flows to conform to
the new requirements.
Other accounting standards that have been issued
or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated
financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact
on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
NOTE 3 — MINERAL PROPERTIES
The Company’s Relief Canyon property
rights currently total approximately 25,000 acres and are comprised of approximately 948 owned unpatented mining claims, 120 owned
millsite claims, 172 leased unpatented mining claims, and 2,235 acres of leased and 2,770 acres of subleased private lands. Most
of the property on which the Relief Canyon deposit is located is subject to a 2% net smelter return production royalty, with a
portion of that property subject to net smelter return production royalties totaling 4.5%. The rest of the property is subject,
under varying circumstances, to net smelter return production royalties ranging from 2% to 5%.
Pershing Pass Property
The Pershing Pass property consists of over
700 unpatented mining claims covering approximately 12,000 acres and a mining lease of private lands covering approximately 600
acres. Out of the total unpatented mining claims, 17 unpatented mining claims are subject to a 2% net smelter return royalty
and 19 unpatented mining claims are leased with a purchase option.
The primary term of the mining lease of private
lands is ten years ending in January 2023, which may be extended as long as mineral exploration, development or mining continue
on the property. Production from the private lands covered by the lease is subject to a 2% net smelter return royalty on all metals
produced other than gold, and to a royalty on gold indexed to the gold price, ranging from 2% at gold prices of less than $500
per ounce to 3.5% at gold prices over $1,500 per ounce. Prior to one year after commercial production begins, the Company can repurchase
up to 3% of the royalty on gold production at the rate of $600,000 for each 1%.
In September 2013, the Company entered into
a lease agreement and purchase option for 19 unpatented mining claims (approximately 400 acres) in the Pershing Pass Property.
Production from the lease is subject to a 1% net smelter return royalty on precious metals and a 0.5% net smelter royalty on all
other metals produced from the leased property. Prior to production, and starting in September 2016, the Company is required
to pay a $10,000 annual advance minimum royalty payment until September 2023. The annual advance minimum royalty payment increases
to $12,500 in September 2023, to $15,000 in September 2028 and to $20,000 in September 2033. The Company has the
right to buy the leased claims at any time for $250,000.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 3 — MINERAL PROPERTIES (continued)
Newmont Properties
On April 5, 2012, the Company purchased
from Victoria Gold Corp. and Victoria Resources (US) Inc. (collectively, “Victoria”) their interest in approximately
13,300 acres of mining claims and private lands adjacent to the Company’s original landholdings at the Relief Canyon Mine
in Pershing County, Nevada.
Approximately 8,900 acres of the lands that
the Company acquired from Victoria were a leasehold interest comprised of unpatented mining claims and private lands subject to
a 2006 Mineral Lease and Sublease with Newmont USA Ltd. (“Newmont”), which the Company refers to as the Newmont Leased
property. At that time, the Newmont Leased property consisted of 155 unpatented lode mining claims owned by Newmont comprising
approximately 2,800 acres, approximately 4,900 acres of privately-owned fee minerals leased by Newmont from the owners, and
62 unpatented mining claims that were owned by Victoria within the Newmont Leased property and area of interest.
On January 14, 2015, the Company entered into
an Asset Purchase Agreement with Newmont (the “Asset Purchase Agreement”) pursuant to which the Company acquired for
$6.0 million, 74 unpatented mining claims totaling approximately 1,300 acres that the Company had previously leased from Newmont,
and entered into a new mining lease directly with New Nevada Resources, LLC and New Nevada Lands, LLC for approximately 1,600 acres
of fee, or private, land that the Company had previously subleased from Newmont.
As part of the January 2015 transactions completed
pursuant to the Asset Purchase Agreement, a subsidiary of the Company entered into a Mining Lease (the “2015 Mining Lease”)
with New Nevada Resources, LLC and New Nevada Lands, LLC (the “Owners”), covering certain fee lands (the “Leased
Properties”) included in the Company’s Relief Canyon properties. The 2015 Mining Lease has a term of twenty years and
for as long thereafter as any mining, development or processing operations are being conducted on a continuous basis. The 2015
Mining Lease contains customary terms and conditions, including an advance royalty and a 2.5% net smelter returns production royalty
on the Leased Properties payable to the Owners.
Newmont Leased Property
As part of the Asset Purchase Agreement transactions,
Newmont and the Company entered into an amendment of the 2006 Minerals Lease and Sublease (the “Third Amendment”),
pursuant to which the Company agreed to a $2.6 million work commitment on the properties remaining subject to the 2006 Minerals
Lease and Sublease to be expended by the seventh anniversary of the effective date of the Third Amendment. Upon the eighth anniversary
of the effective date of the Third Amendment, the Company shall pay an annual rental payment of $10.00 per acre if the Company
does not incur $500,000 in qualified expenditures during the preceding year. Expenditures incurred in excess of the annual work
commitment or rental payment obligation may be carried forward as credits against future annual work commitment obligations or
rental payment obligations. As of December 15, 2016, the most recent cost reporting date, the Company can credit approximately
$2.6 million in exploration expenditures already incurred against the remaining $2.5 million work commitment and future rental
payment obligations.
Also as part of the transactions completed
pursuant to the Asset Purchase Agreement, Newmont and the Owners entered into a new Mining Lease (the “2015 Newmont Lease”)
covering about 2,770 acres of private lands included in the Company’s Relief Canyon properties (the “Subleased Properties”)
and subleased by the Company from Newmont pursuant to the 2006 Minerals Lease and Sublease. The 2015 Newmont Lease has a term of
twenty years and for as long thereafter as any mining, development or processing operations are being conducted on a continuous
basis. The 2015 Newmont Lease contains customary terms and conditions, including an advance royalty and a 2.5% net smelter returns
production royalty on the Subleased Properties payable to the Owners. The Company continues to hold rights to the Subleased Properties
pursuant to its 2006 Minerals Lease and Sublease with Newmont.
General
The Company has posted a statewide surface
management surety bond with the United States Department of the Interior Bureau of Land Management (“BLM”) as required
by the State of Nevada in an amount of approximately $5.6 million, which is approximately $30,000 in excess of the coverage requirement
as of December 31, 2016, to reclaim land disturbed in its exploration and mining operations. The surface management surety bond
is provided through a third-party insurance underwriter. When the bond was issued in November 2013, the Company was required to
place $2,250,000, or 45% of the original $5.0 million bond, in a collateral account. The funds deposited in the collateral account
are classified as restricted cash on the Company’s balance sheet.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 3 — MINERAL PROPERTIES (continued)
In March 2017, the Company increased its statewide
surface management surety bond with the BLM from approximately $5.6 million to $12.3 million, in connection with the approval of
the Company’s Plan of Operations Modification. The Company was required to deposit approximately $1.4 million in additional
collateral reducing the overall collateral percentage to 30% of the total $12.3 million reclamation bond, or approximately $3.7
million of total collateral.
As of December 31, 2016, based on management’s
review of the carrying value of mineral rights, management determined that there is no evidence that the cost of these acquired
mineral rights will not be fully recovered and accordingly, the Company determined that no adjustment to the carrying value of
mineral rights was required. As of the date of these consolidated financial statements, the Company has not established any proven
or probable reserves on its mineral properties and has incurred only acquisition and exploration costs.
Mineral properties consisted of the following:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Relief Canyon Mine — Gold Acquisition
|
|
$
|
8,501,071
|
|
|
$
|
8,501,071
|
|
Relief Canyon Mine — Newmont Properties
|
|
|
13,709,441
|
|
|
|
13,709,441
|
|
Pershing Pass Property
|
|
|
576,400
|
|
|
|
576,400
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,786,912
|
|
|
$
|
22,786,912
|
|
NOTE 4 — PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
|
|
Estimated Life
|
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Furniture and fixtures
|
|
|
5 years
|
|
|
$
|
56,995
|
|
|
$
|
56,995
|
|
Office and computer equipment
|
|
|
1 - 5 years
|
|
|
|
416,363
|
|
|
|
402,835
|
|
Land
|
|
|
—
|
|
|
|
358,886
|
|
|
|
358,886
|
|
Building and improvements
|
|
|
5 - 25 years
|
|
|
|
820,182
|
|
|
|
812,967
|
|
Site costs
|
|
|
10 years
|
|
|
|
1,412,624
|
|
|
|
1,400,197
|
|
Crushing system
|
|
|
20 years
|
|
|
|
2,505,012
|
|
|
|
2,482,976
|
|
Process plant and equipment
|
|
|
10 years
|
|
|
|
3,517,809
|
|
|
|
3,486,864
|
|
Vehicles and mining equipment
|
|
|
5 - 10 years
|
|
|
|
699,025
|
|
|
|
699,025
|
|
|
|
|
|
|
|
|
9,786,896
|
|
|
|
9,700,745
|
|
Less: accumulated depreciation
|
|
|
|
|
|
|
(5,475,916
|
)
|
|
|
(4,378,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,310,980
|
|
|
$
|
5,321,895
|
|
For the years ended December 31, 2016
and 2015, depreciation expense amounted to $1,097,066 and $1,125,758, respectively.
NOTE 5 — NOTES PAYABLE
In August 2012, the Company issued a note
payable in the amount of $92,145 in connection with the acquisition of mining equipment. As of December 31, 2016, the note payable
was paid in full. The note payable bore interest at approximately 7% per annum and was secured by a lien on the mining equipment.
The note was paid in 48 equal monthly payments of $2,226 through August 2016. Notes payable — short and long term portion
consisted of the following:
|
|
December 31, 2016
|
|
|
December 31, 2015
|
|
Total notes payable
|
|
$
|
-
|
|
|
$
|
17,319
|
|
Less: current portion
|
|
|
-
|
|
|
|
(17,319
|
)
|
Long term portion
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company recognized interest expense of $488 and $2,287 for the
year ended December 31, 2016 and 2015, respectively.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 6 — ASSET RETIREMENT OBLIGATIONS
In conjunction with the permit approval permitting
the Company to resume mining in the existing open pits at the Relief Canyon Mine during the third quarter of 2014, the Company
has recorded an asset retirement obligation based upon the reclamation plan submitted in connection with the permit.
The following table summarizes activity in
the Company’s ARO:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Balance, beginning of year
|
|
$
|
783,539
|
|
|
$
|
798,605
|
|
Accretion expense
|
|
|
38,923
|
|
|
|
46,148
|
|
Reclamation obligations settled
|
|
|
-
|
|
|
|
(18,737
|
)
|
Additions and changes in estimates
|
|
|
72,623
|
|
|
|
(42,477
|
)
|
Balance, end of year
|
|
$
|
895,085
|
|
|
$
|
783,539
|
|
NOTE 7 — STOCKHOLDERS’ EQUITY
On June 17, 2015, the Board of Directors of
the Company approved a reverse stock split of the Company’s Common Stock at a ratio of 1-for-18 (the “Reverse Stock
Split”) which became effective on June 18, 2015. In connection with the Reverse Stock Split, the Company filed a Certificate
of Amendment to its Amended and Restated Articles of Incorporation, as amended, with the Nevada Secretary of State to reduce the
number of shares of Common Stock the Company is authorized to issue from 800,000,000 to 200,000,000. All share and per share values
of the Company’s Common Stock for all periods presented in the accompanying consolidated financial statements are retroactively
restated for the effect of the Reverse Stock Split in accordance with SAB Topic 4C.
Preferred Stock
The Company is authorized within the limitations
and restrictions stated in the Amended and Restated Articles of Incorporation to provide by resolution or resolutions for the issuance
of 50,000,000 shares of Preferred Stock, par value $0.0001 per share in such series and with such designations, preferences and
relative, participating, optional or other special rights and qualifications, limitations or restrictions as the Company’s
Board of Directors establishes.
Series A Convertible Preferred Stock
As of December 31, 2016 and 2015, 2,250,000
shares of Series A Preferred Stock, $0.0001 par value were authorized with none outstanding.
Series B Convertible Preferred Stock
As of December 31, 2016 and 2015, 8,000,000
shares of Series B Preferred Stock, $0.0001 par value were authorized with none outstanding.
Series C Convertible Preferred Stock
As of December 31, 2016 and 2015, 3,284,396
shares of Series C Preferred Stock, $0.0001 par value, were authorized with none outstanding.
9% Series D Convertible Cumulative
Preferred Stock
As of December 31, 2016 and 2015, 7,500,000
shares of Series D Preferred Stock, $0.0001 par value, were authorized with none outstanding.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 7 — STOCKHOLDERS’ EQUITY (continued)
Series E Convertible Preferred Stock
As of December 31, 2016 and 2015, 15,151 shares
of Series E Preferred Stock, $0.0001 par value, were authorized and 8,946 and 9,375 shares issued and outstanding, respectively.
During September 2015, a certain holder of
the Company’s Series E Preferred Stock converted 50 shares into 9,822 shares of Common Stock of the Company in accordance
with the Series E Preferred Stock certificate of designation.
During February 2016 a holder of Series E Preferred
Stock converted one Series E share into 292 shares of the Company’s Common Stock.
During March 2016 a holder of Series E Preferred
Stock converted 100 Series E shares into 30,461 shares of the Company’s Common Stock.
During June 2016 holders of Series E Preferred
Stock converted 328 Series E shares into 99,916 shares of the Company’s Common Stock.
Preferred Deemed Dividend
In connection with a February 4, 2016 private
placement of shares of the Company’s Common Stock (as discussed below), the conversion price for the Series E Preferred Stock
was reduced effective February 4, 2016 from $5.04 to $3.40 per share of Series E Preferred Stock. Following this adjustment, each
share of Series E Preferred Stock was convertible into the number of shares of common stock obtained by dividing the Series E Original
Issue Price, of $990.00, by the adjusted conversion price, resulting in each share of Series E Preferred Stock being convertible
into approximately 291.176 shares of common stock. A total of 9,375 shares of Series E Preferred Stock remained outstanding at
the time of adjustment, and as a result of the adjustment, were convertible into approximately 2,729,780 shares of common stock
in the aggregate, compared to 1,841,528 shares of Common Stock prior to the adjustment. The adjusted conversion price generated
additional value to the convertibility feature of the Series E Preferred Stock. Accordingly, the Company recorded a preferred deemed
dividend of approximately $3.02 million for the additional value of the beneficial conversion feature in February 2016, the period
of the adjustment.
Additionally, in connection with a February
25, 2016 private placement of shares of the Company’s Common Stock and warrants to purchase shares of the Company’s
Common Stock (as discussed below), the conversion price for the Series E Preferred Stock was further reduced effective February
25, 2016 from $3.40 to $3.25 per share of Series E Preferred Stock. Following this adjustment, each share of Series E Preferred
Stock is convertible into the number of shares of Common Stock obtained by dividing the Series E Original Issue Price, of $990.00,
by the adjusted conversion price, resulting in each share of Series E Preferred Stock being convertible into approximately 304.615
shares of Common Stock. A total of 9,374 shares of Series E Preferred Stock remained outstanding at the time of adjustment, and
as a result of the adjustment, are convertible into approximately 2,855,469 shares of Common Stock in the aggregate, compared to
2,729,489 shares of Common Stock prior to the adjustment. The adjusted conversion price generated additional value to the convertibility
feature of the Series E Preferred Stock. Accordingly, the Company recorded an additional preferred deemed dividend of approximately
$580,000 for the additional value of the beneficial conversion feature in February 2016, the period of the adjustment.
Common Stock
Sale of Common Stock
In April 2015, the Company raised approximately
$11.5 million in gross proceeds through a private placement to certain accredited investors of a total of 1,962,501 Units priced
at $5.85 per Unit, with each Unit comprised of one share of the Company’s Common Stock and a 24-month warrant to purchase
0.4 of a share of Common Stock at an exercise price of $7.92. Net proceeds totaled approximately $10.5 million after commissions
and legal fees. A total of 1,962,501 shares of Common Stock and warrants to acquire 785,045 shares of Common Stock were issued
in the private placement, with 30 month warrants to acquire an additional 120,187 shares of Common Stock at an exercise price of
$5.85 issued to broker-dealers acting on behalf of the Company in the placement.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 7 — STOCKHOLDERS’ EQUITY (continued)
Sale of Common Stock (continued)
On February 4, 2016, the Company issued 367,647
shares of the Company’s Common Stock. The gross proceeds for this issuance totaled approximately $1.25 million. The shares
were issued pursuant to subscription agreements entered into on February 4, 2016 between the Company and two accredited investors
affiliated with Barry Honig, one of the Company’s directors.
On February 25, 2016, the Company issued 2,120,882
Units, with each Unit comprised of one share of Common Stock and a 30-month warrant to purchase 0.5 of a share of Common Stock
at an exercise price of $5.06, for a total of 2,120,882 shares of Common Stock and warrants to acquire an additional 1,060,429
shares of Common Stock. The Company received gross proceeds of approximately $6.9 million, and net proceeds of approximately $6.1
million after commissions and legal and other fees and expenses.
On March 28, 2016, the Company issued 1,850,000
Units, with each Unit comprised of one share of Common Stock and a 30-month warrant to purchase 0.5 of a share of Common Stock
at an exercise price of $4.35, for a total of 1,850,000 shares of Common Stock and warrants to acquire an additional 925,000 shares
of Common Stock. The Company received net proceeds of approximately $6.0 million after legal fees and expenses.
In connection with these private placements,
certain FINRA broker-dealers acted on behalf of the Company and were paid aggregate cash commissions of approximately $695,000
and reimbursed for expenses of approximately $25,000 and were granted a 30-month warrant to acquire an aggregate of 261,590 shares
of Common Stock at an exercise price of $5.06.
Additionally, the Company paid a total of approximately
$229,000 of legal fees and expenses in connection with the February 2016 and March 2016 private placements.
On December 2, 2016, the Company entered into
an Underwriting Agreement (the “Underwriting Agreement”) with Laidlaw & Company (UK) Ltd. (“Laidlaw”
or the “Underwriter”) pursuant to which, among other things, the Company agreed to issue and sell to the Underwriter,
in an underwritten public offering (the “Offering”), an aggregate of 2,205,883 shares of the Company’s Common
Stock at a public offering price of $3.40 per share of Common Stock.
Net proceeds from the Offering were approximately $6.6 million,
after deducting approximately $859,000 of underwriting discounts and commissions and legal fees and other expenses in connection
with the Offering. The Company intends to use the net proceeds from the Offering for advancing its Relief Canyon project, capital
expenditures, working capital and general corporate purposes.
Common stock for services
In March 2016, the Company issued an aggregate
of 9,480 shares of its Common Stock to two consultants in connection with services rendered. The Company valued these common shares
at the fair value ranging from $3.70 to $3.90 per common share or $35,599 based on the quoted trading price on the grant date.
In connection with issuance of these common shares, the Company recorded stock-based consulting of $35,599 for the year ended December
31, 2016.
In May 2016, the Company issued an aggregate
of 4,843 shares of its Common Stock to a consultant in connection with services rendered. The Company valued these common shares
at the fair value of $4.12 per common share or $20,000 based on the quoted trading price on the grant date. In connection with
issuance of these common shares, the Company recorded stock-based consulting of $20,000 for the year ended December 31, 2016.
In December 2016, the Company issued 1,000
shares of Common Stock upon the vesting of 1,000 restricted stock units to a former employee. The Company cancelled 2,000 forfeited
restricted stock units and an aggregate of 11,111 shares of Common Stock due to forfeiture. Additionally, the Company cancelled
an aggregate of 12,964 shares of Common Stock due to forfeiture from the termination of a consultant agreement.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 7 — STOCKHOLDERS’ EQUITY (continued)
Restricted Stock Units
On June 8, 2015 and June 9, 2015, the Company
granted an aggregate of 66,668 restricted stock units to certain of the Company’s non-employee members of the board of directors.
The fair market value on the date of grant was approximately $406,000. The restricted stock units vest over a three-year period.
For each vested restricted stock unit, the holder will be entitled to receive one unrestricted share of the Company's Common Stock
upon the holder's termination of service on the Company's board of directors or upon a change in control. On September 4, 2015,
as a result of the death of one of the non-employee members of the board of directors, 5,556 restricted stock units vested in full,
and accordingly stock-based compensation was recognized as of December 31, 2015 reflecting the full vesting of the restricted stock
units. As a result of the vesting, the Company issued 5,556 shares of Common Stock in September 2015.
On June 28, 2015, the Company granted an aggregate
of 700,000 restricted stock units to Mr. Stephen Alfers, the Company’s Chief Executive Officer and President. Under the terms
of the agreement, 300,000 restricted stock units (the “Initial RSUs”) are subject to vesting upon Mr. Alfers’
continuous employment through December 31, 2018, with earlier vesting upon certain events, such as a change in control. The remaining
400,000 restricted stock units (the “Incentive RSUs”) are subject to vesting upon the attainment of certain performance-based
milestones set forth in the agreement and become fully vested upon a change in control. For each fully vested restricted stock
unit, Mr. Alfers will be entitled to receive one share of Common Stock upon the earlier of December 31, 2018, Mr. Alfers’
separation from service or death, or a change in control. The fair market value on the date of grant of Mr. Alfers’ restricted
stock units was approximately $1,755,000 and $2,340,000 for the Initial RSU’s and Incentive RSU’s, respectively. Compensation
expense will be recognized on the Incentive RSU’s as the targets are obtained.
On December 9, 2015, the Company granted 12,500
restricted stock units to one of the Company’s non-employee members of the board of directors. The fair market value on the
date of grant was approximately $45,750. The restricted stock units vest immediately. For each vested restricted stock unit, the
holder will be entitled to receive one unrestricted share of the Company's Common Stock upon the holder's termination of service
on the Company's board of directors or upon a change in control.
On December 23, 2015, the Company granted an
aggregate of 50,000 restricted stock units to employees of the Company. The fair market value on the date of grant was approximately
$175,000. The shares granted to employees vest one third on the date of grant and one third at the end of each of the years ending
one and two years after the date of issuance. For each vested restricted stock unit, the holder will be entitled to receive one
unrestricted share of the Company's Common Stock upon the holder's termination of employment under certain circumstances or upon
a change in control.
In June 2016, 120,000 Incentive RSUs vested
upon the attainment of certain performance-based milestones. Accordingly, stock-based compensation expense of $702,000 was recognized
during the year ended December 31, 2016.
On June 24, 2016, the Company granted 5,995
restricted stock units to one of the Company’s non-employee members of the Company’s Board of Directors. The fair market
value on the date of grant was $25,239. The restricted stock units vest over a three-year period. For each vested restricted stock
unit, the holder will be entitled to receive one unrestricted share of the Company's Common Stock upon the holder's termination
of service on the Company's Board of Directors or upon a change in control.
In February 2017, the Company granted an
aggregate of 116,229 restricted stock units to employees and directors of the Company in connection with employee bonus compensation
and annual equity awards to non-employee directors for fiscal 2016. The fair market value on the date of grant was approximately
$382,000. The restricted stock units granted to employees and directors vest 50% on the date of grant and the balance vest over
a one-year period from the date of issuance. For each vested restricted stock unit, the holder will be entitled to receive one
restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a
change in control.
In March 2017, the Company granted 50,000
restricted stock units to the CEO of the Company in connection with bonus compensation for fiscal 2016. The fair market value
on the date of grant was approximately $149,500. The restricted stock units granted to the CEO vested upon grant. The Common Stock
underlying the restricted stock units will be issued upon on the earlier of a change in control or other acceleration or December
31, 2018.
As of December 31, 2016, the Company recognized
a liability equivalent to the fair value of approximately $530,000 which has been included in accounts payable and accrued expenses.
Consequently, the Company recognized stock based compensation of approximately $530,000 during the year ended December 31, 2016
in connection with these transactions.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 7 — STOCKHOLDERS’ EQUITY (continued)
Restricted Stock Units (continued)
During the year ended December 31, 2016 and
2015, the Company recorded total stock-based compensation expense in connection with restricted stock and restricted stock unit
awards of $2,255,811 and $2,025,258, respectively. At December 31, 2016, there was a total of $2,896,941 of unrecognized
compensation expense in connection with restricted stock and restricted stock unit awards.
A summary of the status of the restricted stock
units as of December 31, 2016 and 2015, and of changes in restricted stock units outstanding during the year ended December 31,
2016 and 2015, is as follows:
|
|
Restricted
Stock Units
|
|
|
Weighted
Average
Grant-Date
Fair Value
Per Share
|
|
Balance at December 31, 2014
|
|
|
19,158
|
|
|
$
|
5.20
|
|
Granted
|
|
|
829,168
|
|
|
|
5.69
|
|
Vested and converted
|
|
|
(5,556
|
)
|
|
|
5.94
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
Balance at December 31, 2015
|
|
|
842,770
|
|
|
|
5.60
|
|
Granted
|
|
|
5,995
|
|
|
|
4.21
|
|
Vested and converted
|
|
|
(1,000
|
)
|
|
|
3.50
|
|
Forfeited
|
|
|
(2,000
|
)
|
|
|
3.50
|
|
Balance at December 31, 2016
|
|
|
845,765
|
|
|
$
|
5.68
|
|
Common Stock Options
A summary of the Company’s stock options
as of December 31, 2016 and 2015 and changes during the period are presented below:
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted Average
Remaining
Contractual Life
(Years)
|
|
Balance at December 31, 2014
|
|
|
1,811,121
|
|
|
$
|
7.20
|
|
|
|
7.15
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance at December 31, 2015
|
|
|
1,811,121
|
|
|
|
7.20
|
|
|
|
6.15
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
(16,668
|
)
|
|
|
7.20
|
|
|
|
—
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance outstanding at December 31, 2016
|
|
|
1,794,453
|
|
|
$
|
7.21
|
|
|
|
5.20
|
|
Options exercisable at end of year
|
|
|
1,794,453
|
|
|
$
|
7.21
|
|
|
|
|
|
Options expected to vest
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted during the period
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 7 — STOCKHOLDERS’ EQUITY (continued)
Common Stock Warrants
A summary of the Company’s outstanding
stock warrants as of December 31, 2016 and 2015 and changes during the period then ended is as follows:
|
|
Number of
Warrants
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Balance at December 31, 2014
|
|
|
2,114,188
|
|
|
$
|
7.74
|
|
|
|
1.83
|
|
Granted
|
|
|
913,566
|
|
|
|
7.62
|
|
|
|
1.62
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
—
|
|
Forfeited
|
|
|
(217,175
|
)
|
|
|
(9.00
|
)
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance at December 31, 2015
|
|
|
2,810,579
|
|
|
|
7.55
|
|
|
|
1.07
|
|
Granted
|
|
|
2,247,019
|
|
|
|
7.62
|
|
|
|
2.50
|
|
Cancelled
|
|
|
(746,432
|
)
|
|
|
7.20
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance at December 31, 2016
|
|
|
4,311,166
|
|
|
$
|
6.16
|
|
|
|
0.98
|
|
Warrants exercisable at December 31, 2016
|
|
|
4,311,166
|
|
|
$
|
6.16
|
|
|
|
0.98
|
|
Weighted average fair value of warrants granted during the year ended December 31, 2016
|
|
|
|
|
|
$
|
4.77
|
|
|
|
|
|
On January 28, 2015, the Company issued four-year
warrants to purchase 8,334 shares of Common Stock to a consultant. The warrants vested on March 1, 2015 and are exercisable at
$5.40 per share. The 8,334 warrants were valued on the grant date at approximately $2.88 per warrant or a total of approximately
$24,300 using a Black-Scholes option pricing model with the following assumptions: stock price of $5.40 per share (based on the
quoted trading price on the date of grant), volatility of 72%, expected term of 4 years, and a risk- free interest rate of 1.25%.
The Company recognized stock-based consulting expense of approximately $24,300 during the year ended December 31, 2015.
In April 2015, in connection with the private
placement, the Company issued 24-month warrants to purchase shares of Common Stock at an exercise price of $7.92 per share, for
a total of 785,045 shares of Common Stock. The Company also issued 30-month warrants to purchase 120,187 shares of Common Stock
at an exercise price of $5.85 to broker-dealers acting on behalf of the Company in the private placement.
In December 2015, 217,175 warrants to purchase
shares of the Company’s common stock at a price of $9.00 per share were forfeited as the warrants were not exercised prior
to their expiration date.
On February 25, 2016, the Company granted 1,060,429
30-month warrants to purchase shares of Common Stock at an exercise price of $5.06 per share in connection with a private placement
sale. The warrants are exercisable six months and a day after issuance and will expire on August 25, 2018. The Company also granted
30-month warrants to acquire an aggregate of 261,590 shares of Common Stock at an exercise price of $5.06 to a certain FINRA broker-dealer
who acted on behalf of the Company.
On March 28, 2016, the Company granted 925,000
30-month warrants to purchase shares of Common Stock at an exercise price of $4.35 per share in connection with a private placement
sale.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 8 — NET LOSS PER COMMON SHARE
Net loss per common share is calculated in
accordance with ASC Topic 260, “Earnings Per Share”. Basic loss per share is computed by dividing net loss available
to common stockholder, adjusted for preferred dividends, by the weighted average number of shares of Common Stock outstanding during
the period. The computation of diluted net loss per share does not include anti-dilutive Common Stock equivalents in the weighted
average shares outstanding. The following table sets forth the computation of basic and diluted loss per share:
|
|
For the
year ended
December 31,
2016
|
|
|
For the
year ended
December 31,
2015
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net loss available to common stockholders
|
|
$
|
(19,235,140
|
)
|
|
$
|
(19,123,933
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
Denominator for basic and diluted loss per share (weighted-average shares)
|
|
|
25,483,353
|
|
|
|
21,165,083
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.75
|
)
|
|
$
|
(0.90
|
)
|
The following were excluded from the computation
of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s loss from continuing operations
and loss from discontinued operations. In periods where the Company has a net loss, all dilutive securities are excluded.
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Common stock equivalents:
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
1,794,453
|
|
|
|
1,811,121
|
|
Stock warrants
|
|
|
4,311,166
|
|
|
|
2,810,579
|
|
Restricted stock units
|
|
|
845,765
|
|
|
|
842,770
|
|
Convertible preferred stock
|
|
|
2,725,092
|
|
|
|
1,841,528
|
|
Total
|
|
|
9,676,476
|
|
|
|
7,305,998
|
|
NOTE 9 — COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases its corporate facility and
certain office equipment under operating leases with expiration dates through 2018. In April 2015, the Company executed a new operating
lease agreement for its corporate facility in Lakewood, Colorado. The lease is for a period of 39 months commencing in May 2015
and expires in July 2018. The Company recognized total deferred rent of $11,250 ($6,738 current portion and $4,512 long -term portion)
in connection with this lease agreement as of December 31, 2016. The Company recognized total deferred rent of $15,988 ($5,217
current portion and $10,771 long- term portion) in connection with this lease agreement as of December 31, 2015. Rent expense
was $62,020 and $62,364 for the years ended December 31, 2016 and 2015, respectively.
Future minimum rental payments required under operating leases are
as follows:
2017
|
|
$
|
83,343
|
|
2018
|
|
|
45,455
|
|
|
|
$
|
128,798
|
|
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 9 — COMMITMENTS AND CONTINGENCIES
(continued)
Mining Leases
As more fully discussed in Note 3 — Mineral
Properties, the Company leases certain mineral properties included in its Pershing Pass Property. The future minimum lease payments
under these mining leases are as follows:
2017
|
|
$
|
25,000
|
|
2018
|
|
|
25,000
|
|
2019
|
|
|
25,000
|
|
2020
|
|
|
25,000
|
|
2021
|
|
|
25,000
|
|
Thereafter
|
|
|
42,500
|
|
|
|
$
|
167,500
|
|
The Company incurred mining lease payments
of $16,458 and $10,000 for the years ended December 31, 2016 and 2015, respectively.
Credit Facility
On November 29, 2016, the Company entered into
a non-binding term sheet with Sprott Resource Lending (the “Lender”) pursuant to which the Lender would provide a credit
facility with a principal amount of up to $20 million (the “Facility”). The Company’s ability to draw down on
the Facility is subject to the negotiation and execution of definitive agreements, completion by the Lender of its due diligence
review and the satisfaction of other customary closing conditions. The Facility, when completed, would be available for up to three
draws occurring during a period of five months following the closing date. As a condition to any such draw, the Company would be
required to raise equity financing not less than the amount drawn. Amounts drawn under the Facility would be secured by a lien
on the Relief Canyon Mine and processing facilities and would bear interest at 9.0% per annum. Amounts drawn would mature three
years following the date drawn, with monthly principal payments commencing on the earlier of June 30, 2018 or upon achievement
of commercial production at the Relief Canyon Mine. The proceeds of the Facility would be used to advance the Relief Canyon project
towards production. There is no assurance that definitive agreements with respect to the Facility will be completed or that any
amount will be drawn under the Facility. The Company has paid a structuring fee of $200,000 and a retainer fee of $100,000. Such
retainer is refundable and shall be applied against legal fees and expenses incurred. As of December 31, 2016, the fees paid to
the Lender and legal fees related to the credit facility of $312,415 are included in prepaid expenses and other current assets
and will be recorded as a reduction in proceeds received form the Facility when drawn.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 10 — INCOME TAXES
The Company accounts for income taxes
under ASC Topic 740: Income Taxes which requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future
tax benefit to be derived from tax losses and tax credit carryforwards. ASC Topic 740 additionally requires the establishment
of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The Company has a net operating loss
carryforward for tax purposes totaling approximately $63.2 million at December 31, 2016, expiring through the year 2036.
Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carryforwards
after certain ownership shifts
The table below summarizes the differences
between the Company’s effective tax rate and the statutory federal rate as follows for the year ended December 31, 2016
and 2015:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Tax benefit computed at “expected” statutory rate
|
|
$
|
(5,316,096
|
)
|
|
$
|
(6,502,139
|
)
|
State income taxes, net of benefit
|
|
|
—
|
|
|
|
—
|
|
Permanent differences:
|
|
|
|
|
|
|
|
|
Stock based compensation and consulting
|
|
|
629,133
|
|
|
|
18,886
|
|
Prior year true-ups
|
|
|
—
|
|
|
|
833,847
|
|
Other
|
|
|
155,300
|
|
|
|
13,512
|
|
Increase in valuation allowance
|
|
|
4,531,663
|
|
|
|
5,635,894
|
|
Net income tax benefit
|
|
$
|
—
|
|
|
$
|
—
|
|
The table below summarizes the differences
between the Company’s effective tax rate and the statutory federal rate as follows for the year ended December 31, 2016
and 2015:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Computed “expected” tax expense (benefit)
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
State income taxes
|
|
|
0
|
%
|
|
|
0
|
%
|
Permanent differences
|
|
|
5.02
|
%
|
|
|
4.53
|
%
|
Change in valuation allowance
|
|
|
28.98
|
%
|
|
|
29.47
|
%
|
Effective tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The Company has a deferred tax asset which
is summarized as follows at December 31, 2016 and 2015:
Deferred tax assets:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Net operating loss carryover
|
|
$
|
21,486,659
|
|
|
$
|
18,920,702
|
|
Stock based compensation
|
|
|
4, 422,167
|
|
|
|
4,986,677
|
|
Depreciable and depletable assets
|
|
|
(212,727
|
)
|
|
|
(367,352
|
)
|
Mining explorations
|
|
|
5,390,018
|
|
|
|
3,028,546
|
|
Capital loss carryforward
|
|
|
1,482,865
|
|
|
|
1,482,863
|
|
Other
|
|
|
28,639
|
|
|
|
27,062
|
|
Less: valuation allowance
|
|
|
(32,597,621
|
)
|
|
|
(28,078,498
|
)
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
After consideration of all the evidence,
both positive and negative, management has recorded a full valuation allowance at December 31, 2016, due to the uncertainty
of realizing the deferred income tax assets. The valuation allowance was increased by approximately $4.5 million.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(in United States dollars)
NOTE 11 — SUBSEQUENT EVENTS
In February 2017, the Company granted an
aggregate of 116,229 restricted stock units to employees and directors of the Company in connection with employee bonus compensation
and annual equity awards to non-employee directors for fiscal 2016. The fair market value on the date of grant was approximately
$382,000. The restricted stock units granted to employees and directors vest 50% on the date of grant and the balance vest over
a one-year period from the date of issuance. For each vested restricted stock unit, the holder will be entitled to receive one
restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a
change in control (see Note 7).
In February 2017, the Company granted 25,000
restricted stock units to new employees of the Company. The fair market value on the date of grant was approximately $80,000. The
restricted stock units granted to employees vest one-third on December 31, 2017, 2018 and 2019. For each vested restricted stock
unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's separation of
employment under certain circumstances or upon a change in control.
In February 2017, the Company issued 3,666
shares of Common Stock upon the vesting of 3,666 restricted stock units to a former employee. The Company cancelled 2,334 forfeited
restricted stock units and an aggregate of 7,222 shares of Common Stock due to forfeiture.
In February 2017, the Company granted 100,000
24-month warrants to purchase shares of Common Stock at an exercise price of $3.45 per share in connection with a contract for
services. The warrants vest ratably over the term of the services agreement.
During January 2017 and February 2017,
1,128,358 warrants to purchase shares of the Company’s Common Stock were forfeited as the warrants were not exercised prior
to their expiration date.
In March 2017, the Company granted 50,000
restricted stock units to the CEO of the Company in connection with bonus compensation for fiscal 2016. The fair market value on
the date of grant was approximately $149,500. The restricted stock units granted to the CEO vested upon grant. The Common Stock
underlying the restricted stock units will be issued upon on the earlier of a change in control or other acceleration or December
31, 2018 (see Note 7).
In March 2017, the Company increased its
statewide surface management surety bond with the BLM from approximately $5.6 million to $12.3 million, in connection with the
approval of the Company’s Plan of Operations Modification. The Company was required to deposit approximately $1.4 million
in additional collateral reducing the overall collateral percentage to 30% of the total $12.3 million reclamation bond, or approximately
$3.7 million of total collateral (see Note 3).
PERSHING GOLD CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
(in United States dollars)
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,962,832
|
|
|
$
|
11,722,102
|
|
Restricted cash
|
|
|
3,690,000
|
|
|
|
2,250,000
|
|
Prepaid expenses and other current assets
|
|
|
954,873
|
|
|
|
1,139,760
|
|
Deposit
|
|
|
3,884
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
6,611,589
|
|
|
|
15,111,862
|
|
|
|
|
|
|
|
|
|
|
NON - CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
3,520,483
|
|
|
|
4,310,980
|
|
Mineral rights
|
|
|
22,803,912
|
|
|
|
22,786,912
|
|
Reclamation bond deposit
|
|
|
50,000
|
|
|
|
25,000
|
|
Deposit
|
|
|
-
|
|
|
|
3,884
|
|
|
|
|
|
|
|
|
|
|
Total Non - Current Assets
|
|
|
26,374,395
|
|
|
|
27,126,776
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
32,985,984
|
|
|
$
|
42,238,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
410,983
|
|
|
$
|
2,150,195
|
|
Deferred rent - current portion
|
|
|
6,447
|
|
|
|
6,738
|
|
Deposit
|
|
|
1,750
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
419,180
|
|
|
|
2,156,933
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
Deposit
|
|
|
-
|
|
|
|
1,750
|
|
Deferred rent - long term portion
|
|
|
-
|
|
|
|
4,512
|
|
Asset retirement obligation
|
|
|
923,981
|
|
|
|
895,085
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,343,161
|
|
|
|
3,058,280
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY :
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 50,000,000 authorized
|
|
|
|
|
|
|
|
|
Convertible Series A Preferred stock ($0.0001 Par Value; 2,250,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding as of September 30, 2017 and December 31, 2016)
|
|
|
-
|
|
|
|
-
|
|
Convertible Series B Preferred stock ($0.0001 Par Value; 8,000,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding as of September 30, 2017 and December 31, 2016)
|
|
|
-
|
|
|
|
-
|
|
Convertible Series C Preferred stock ($0.0001 Par Value; 3,284,396 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding as of September 30, 2017 and December 31, 2016)
|
|
|
-
|
|
|
|
-
|
|
Convertible Series D Preferred stock ($0.0001 Par Value; 7,500,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
none issued and outstanding as of September 30, 2017 and December 31, 2016)
|
|
|
-
|
|
|
|
-
|
|
Convertible Series E Preferred stock ($0.0001 Par Value; 15,151 Shares Authorized;
|
|
|
|
|
|
|
|
|
8,946 shares issued and outstanding; liquidation preference of $9,742,194
|
|
|
|
|
|
|
|
|
as of September 30, 2017 and December 31, 2016)
|
|
|
1
|
|
|
|
1
|
|
Common stock ($0.0001 Par Value; 200,000,000 Shares Authorized;
|
|
|
|
|
|
|
|
|
28,402,389 and 28,389,378 shares issued and outstanding as of September 30, 2017 and December 31, 2016)
|
|
|
2,840
|
|
|
|
2,839
|
|
Additional paid-in capital
|
|
|
197,297,737
|
|
|
|
195,705,344
|
|
Accumulated deficit
|
|
|
(165,657,755
|
)
|
|
|
(156,527,826
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
31,642,823
|
|
|
|
39,180,358
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
32,985,984
|
|
|
$
|
42,238,638
|
|
See accompanying notes to unaudited consolidated
financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in United States dollars)
|
|
|
|
For the Three Months Ended September 30,
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and related taxes
|
|
|
826,674
|
|
|
|
889,726
|
|
|
|
3,139,184
|
|
|
|
3,561,221
|
|
Exploration cost
|
|
|
189,295
|
|
|
|
1,294,705
|
|
|
|
1,017,425
|
|
|
|
1,800,493
|
|
Consulting fees
|
|
|
501,202
|
|
|
|
374,870
|
|
|
|
1,723,607
|
|
|
|
1,533,151
|
|
General and administrative expenses
|
|
|
1,008,016
|
|
|
|
1,071,611
|
|
|
|
3,250,493
|
|
|
|
3,109,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,525,187
|
|
|
|
3,630,912
|
|
|
|
9,130,709
|
|
|
|
10,004,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2,525,187
|
)
|
|
|
(3,630,912
|
)
|
|
|
(9,130,709
|
)
|
|
|
(10,004,293
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
9,673
|
|
|
|
-
|
|
Foreign currency gain (loss)
|
|
|
674
|
|
|
|
-
|
|
|
|
(9,981
|
)
|
|
|
-
|
|
Interest expense and other finance costs
|
|
|
(1,181
|
)
|
|
|
(703
|
)
|
|
|
(6,159
|
)
|
|
|
(5,406
|
)
|
Interest income
|
|
|
3,138
|
|
|
|
421
|
|
|
|
7,247
|
|
|
|
1,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expenses) - net
|
|
|
2,631
|
|
|
|
(282
|
)
|
|
|
780
|
|
|
|
(4,268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(2,522,556
|
)
|
|
|
(3,631,194
|
)
|
|
|
(9,129,929
|
)
|
|
|
(10,008,561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,522,556
|
)
|
|
$
|
(3,631,194
|
)
|
|
$
|
(9,129,929
|
)
|
|
$
|
(10,008,561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred deemed dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,599,565
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common stockholders
|
|
$
|
(2,522,556
|
)
|
|
$
|
(3,631,194
|
)
|
|
$
|
(9,129,929
|
)
|
|
$
|
(13,608,126
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.09
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.54
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding - basic and diluted
|
|
|
28,402,389
|
|
|
|
26,206,570
|
|
|
|
28,396,928
|
|
|
|
25,049,831
|
|
See accompanying notes to unaudited consolidated
financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in United States dollars)
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(9,129,929
|
)
|
|
$
|
(10,008,561
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
825,136
|
|
|
|
829,260
|
|
Accretion
|
|
|
28,896
|
|
|
|
29,192
|
|
Stock-based compensation
|
|
|
1,044,888
|
|
|
|
1,634,189
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Other receivables
|
|
|
-
|
|
|
|
65,653
|
|
Prepaid expenses and other current assets
|
|
|
184,887
|
|
|
|
421,322
|
|
Accounts payable and accrued expenses
|
|
|
(1,191,706
|
)
|
|
|
313,783
|
|
Deferred rent
|
|
|
(4,803
|
)
|
|
|
(3,304
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(8,242,631
|
)
|
|
|
(6,718,466
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Increase in reclamation bond deposits
|
|
|
(25,000
|
)
|
|
|
-
|
|
Purchase of mineral rights
|
|
|
(17,000
|
)
|
|
|
(3,165
|
)
|
Purchase of property and equipment
|
|
|
(34,639
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
(76,639
|
)
|
|
|
(3,165
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock, net of issuance costs
|
|
|
-
|
|
|
|
13,206,488
|
|
Payments on notes payable
|
|
|
-
|
|
|
|
(17,319
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
-
|
|
|
|
13,189,169
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS
|
|
|
(8,319,270
|
)
|
|
|
6,467,538
|
|
|
|
|
|
|
|
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS- beginning of period
|
|
|
13,972,102
|
|
|
|
5,487,384
|
|
|
|
|
|
|
|
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS- end of period
|
|
$
|
5,652,832
|
|
|
$
|
11,954,922
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
6,159
|
|
|
$
|
5,406
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reduction of accrued bonuses in connection with vested restricted common stock unit grants
|
|
$
|
469,423
|
|
|
$
|
-
|
|
Reduction of accounts payable in connection with issuance of common stock
|
|
$
|
8,250
|
|
|
$
|
-
|
|
Reduction of accounts payable in connection with issuance of restricted stock unit grants
|
|
$
|
65,000
|
|
|
$
|
-
|
|
Preferred stock deemed dividend
|
|
$
|
-
|
|
|
$
|
3,599,565
|
|
See accompanying notes to unaudited consolidated
financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS
Pershing Gold Corporation (the “Company”),
formerly named Sagebrush Gold Ltd., was incorporated under the laws of the State of Nevada on August 2, 2007. The Company
is a gold and precious metals exploration company pursuing exploration, development, and mining opportunities primarily in Nevada.
The Company is currently focused on exploration of its Relief Canyon properties in Pershing County in northwestern Nevada. None
of the Company’s properties contain proven and probable reserves, and the Company’s activities on all of its properties
are exploratory in nature.
On August 30, 2011, the Company, through
its wholly-owned subsidiary, Gold Acquisition Corp. (“Gold Acquisition”), acquired the Relief Canyon Mine property
(“Relief Canyon”) located in Pershing County, near Lovelock, Nevada.
A wholly-owned subsidiary, Pershing Royalty
Company, a Delaware corporation, was formed on May 17, 2012 to hold royalty interests in two gold exploration properties.
On July 5, 2016, a wholly-owned subsidiary, Blackjack Gold Corporation, a Nevada corporation, was formed for potential purchases
of exploration targets.
On June 17, 2015, the Board of Directors of
the Company approved a reverse stock split of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”), at a ratio of 1-for-18 (the “Reverse Stock Split”) which became effective on June 18, 2015. In connection
with the Reverse Stock Split, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation,
as amended, with the Nevada Secretary of State to reduce the number of shares of Common Stock the Company is authorized to issue
from 800,000,000 to 200,000,000. All share and per share values of the Company’s Common Stock for all periods presented in
the accompanying consolidated financial statements are retroactively restated for the effect of the Reverse Stock Split in accordance
with Staff Accounting Bulletin Topic 4C: Equity Accounts – Change in Capital Structure (“SAB Topic 4C”).
Going concern
These consolidated financial statements
of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other
things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period
of time. The Company has incurred a net loss of approximately $9.1 million for the nine months ended September 30, 2017,
has used approximately $8.2 million of net cash in operations for the nine months ended September 30, 2017, has incurred a total cumulative
deficit of approximately $165.7 million since its inception and requires capital for its contemplated business and exploration
activities to take place. The Company plans to raise additional capital to carry out its business plan. The Company’s ability
to raise additional capital through future equity and debt securities issuances is unknown. Obtaining additional financing, the
successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to profitable operations
are necessary for the Company to continue business. The ability to successfully resolve these factors raises substantial doubt
about the Company’s ability to continue as a going concern as determined by management. The consolidated financial statements
of the Company do not include any adjustments that may result from the outcome of the uncertainties.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation and principles of
consolidation
The consolidated financial statements
are prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and present the consolidated
financial statements of the Company and its wholly-owned subsidiaries as of September 30, 2017. All intercompany transactions and
balances have been eliminated. All adjustments (consisting of normal recurring items) necessary to present fairly the Company’s
financial position as of September 30, 2017, and the results of operations and cash flows for the nine months ended September 30,
2017 have been included. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative
of the results to be expected for the full year. The accounting policies and procedures employed in the preparation of these consolidated
financial statements have been derived from the audited financial statements of the Company for the fiscal year ended December
31, 2016, which are contained in the Company’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”)
on March 29, 2017. The consolidated balance sheet as of December 31, 2016, contained herein, was derived from those financial statements.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of estimates
In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date
of the consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly
from those estimates. Significant estimates made by management include, but are not limited to, the useful life of property
and equipment, the valuation of deferred tax assets and liabilities, including valuation allowance, amounts and timing of closure
obligations, the assumptions used to calculate fair value of restricted stock units, options and warrants granted, stock-based
compensation, beneficial conversion on preferred stock, capitalized mineral rights, asset valuations, timing of the performance
criteria of restricted stock units and the fair value of common stock issued.
Reclassifications
Certain prior period amounts have been reclassified
to conform to the current period presentation. The reclassified amounts have no impact on the Company’s previously reported
financial position or results of operations.
Cash and cash equivalents
The Company considers all highly liquid investments
with an original maturity of three months or less when acquired to be cash equivalents. The Company places its cash with high credit
quality financial institutions. The Company’s accounts at these institutions are insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $250,000.
At September 30, 2017, the Company had bank
balances exceeding the FDIC insurance limit on interest bearing accounts. To reduce its risk associated with the failure of such
financial institutions, the Company evaluates at least annually the rating of the financial institutions in which it holds deposits.
Restricted cash
Restricted cash consists of cash and investments
which are held as collateral under surface management surety bonds issued on the Company’s behalf. The following table provides
a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets that
sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows:
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,962,832
|
|
|
$
|
11,722,102
|
|
Restricted cash equivalents
|
|
|
3,690,000
|
|
|
|
2,250,000
|
|
Total cash, cash equivalents and restricted cash equivalents
|
|
$
|
5,652,832
|
|
|
$
|
13,972,102
|
|
Fair value of financial instruments
The Company adopted Accounting Standards Codification
(“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities
measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally
accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value
and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s
financial position or operating results, but did expand certain disclosures.
ASC 820 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs
and minimize the use of unobservable inputs.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
These inputs are prioritized below:
Level 1:
|
Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
|
Level 2:
|
Observable market-based inputs or unobservable inputs that are corroborated by market data.
|
Level 3:
|
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
|
The Company analyzes all financial instruments
with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting
standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on
the lowest level of input that is significant to the fair value measurement.
The carrying amounts reported in the consolidated
balance sheets for cash and cash equivalents, other receivables, prepaid expenses, accounts payable and accrued expenses approximate
their estimated fair market values based on the short-term maturity of these instruments.
Prepaid expenses and other current assets
Prepaid expenses and other current assets of
$954,873 and $1,139,760 at September 30, 2017 and December 31, 2016, respectively, consist primarily of costs paid for future services
which will occur within a year. Prepaid expenses principally include prepayments for consulting, public relations, and business
advisory services, insurance premiums, drilling services, mining claim fees and mineral lease fees which are being amortized over
the terms of their respective agreements. Included in other current assets are deferred financing costs of $369,240 and $312,415
at September 30, 2017 and December 31, 2016, respectively. The Company defers these costs until such time that the associated financing
is completed. Upon completion and recognition of the proceeds, any deferred financing costs will be reported as a direct deduction
from the amount of the proceeds received. If it is determined that the contemplated financing will not be completed, any amounts
deferred will be expensed.
Mineral property acquisition and exploration
costs
Costs of leasing, exploration, carrying and
retaining unproven mineral lease properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred
as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties
and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production
is established. When a property reaches the production stage, the related capitalized costs are amortized using the units-of-production
method over the estimated life of the proven and probable reserves. If in the future the Company has capitalized mineral properties,
these properties will be periodically assessed for impairment. To date, the Company has not established the commercial feasibility
of any exploration prospects; therefore, all exploration costs are being expensed.
ASC 930-805, “Extractive Activities-Mining:
Business Combinations” (“ASC 930-805”), states that mineral rights consist of the legal right to explore, extract,
and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights
are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the
acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral
rights include costs associated with acquiring patented and unpatented mining claims.
ASC 930-805-30-1 and 30-2 provide that, in
fair valuing mineral assets, an acquirer should take into account both:
·
The
value beyond proven and probable reserves (“VBPP”) to the extent that a market participant would include VBPP in determining
the fair value of the assets.
·
The
effects of anticipated fluctuations in the future market price of minerals in a manner that is consistent with the expectations
of market participants.
Property and equipment
Property and equipment are carried at cost.
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses
are included in income in the year of disposition. Depreciation is calculated on a straight-line basis over the estimated useful
life of the assets, generally one to twenty-five years.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of long-lived assets
The Company accounts for the impairment or
disposal of long-lived assets according to ASC 360, “Property, Plant and Equipment”. The Company continually monitors
events and changes in circumstances that could indicate that the carrying amounts of long-lived assets, including mineral rights,
may not be recoverable. Long-lived assets in the exploration stage are monitored for impairment based on factors such as the Company’s
continued right to explore the area, exploration reports, assays, technical reports, drill results and the Company’s continued
plans to fund exploration programs on the property, and whether sufficient work has been performed to indicate that the carrying
amount of the mineral property cost carried forward as an asset will not be fully recovered. The tests for long-lived assets in
the exploration stage are monitored for impairment based on factors such as current market value of the long-lived assets and results
of exploration, future asset utilization, business climate, mineral prices and future undiscounted cash flows expected to result
from the use of the related assets.
Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to
be generated by the asset. When necessary, impaired assets are written down to estimated fair value based on the best information
available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows.
Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary
significantly from such estimates. The Company recognizes an impairment loss when the sum of expected undiscounted future cash
flows is less than the carrying amount of the asset. The Company did not record any impairment of its long-lived assets at September
30, 2017 and December 31, 2016, respectively.
Asset Retirement Obligations
Asset retirement obligations (“ARO”),
consisting primarily of estimated mine reclamation and closure costs at the Company’s Relief Canyon property, are recognized
in the period incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations,
which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to
accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived
asset and depreciated over the asset’s remaining useful life. Asset retirement obligations are periodically adjusted to reflect
changes in the estimated present value resulting from revisions to the estimated timing or amount of reclamation and closure costs.
The Company reviews and evaluates its asset retirement obligations annually or more frequently at interim periods if deemed necessary.
Income taxes
The Company accounts for income taxes pursuant
to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other
things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.
The Company follows the provision of ASC 740-10
related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits
of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10,
the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution of
appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that
meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent
likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions
taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying
balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The Company has adopted ASC 740-10-25, “Definition
of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for
the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon
the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than
not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The
federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally
for three years after they are filed.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock-based compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment Topic of ASC 718, “Compensation — Stock Compensation” (“ASC
718”), which requires recognition in the consolidated financial statements of the cost of employee and director services
received in exchange for an award of equity instruments over the period the employee or director is required to perform the services
in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director
services received in exchange for an award based on the grant-date fair value of the award.
Effective for the fiscal year-ended December
31, 2016, the Company early adopted ASU 2016-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2016-09”),
which makes several modifications to Topic 718. Upon adoption of ASU 2016-09, the Company recognizes the effect of forfeitures
in compensation cost as they occur, rather than estimating forfeitures as of the award date. Any previously recognized compensation
cost will be reversed in the period of forfeiture.
Pursuant to ASC Topic 505-50, “Equity
Based Payments to Non-employees”, for share-based payments to consultants and other third-parties, compensation expense is
determined at the measurement date. The expense is recognized over the vesting period of the award. Until the measurement date
is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based
on the fair value of the award at the reporting date.
Related party transaction
Parties are considered to be related to the
Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common
control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions.
Foreign currency transactions
The Company accounts for foreign currency transactions
in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”), specifically the guidance in subsection
ASC 830-20, “Foreign Currency Transactions”. The U.S. dollar is the functional and reporting currency for the Company
and its subsidiaries. Pursuant to ASC 830, monetary assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses upon settlement reported
in foreign exchange gain (loss) in the computation of net income (loss).
Recent accounting pronouncements
In February 2016, the FASB issued ASU
2016-02, “Leases (Topic 842)”. The new standard requires lessees to apply a dual approach, classifying leases as either
finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.
This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line
basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases
with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted
for similar to existing guidance for operating leases. The new guidance will be effective for fiscal years beginning after December
15, 2018, and interim periods within those annual periods and is applied retrospectively. Early adoption is permitted. The Company
does not believe the guidance will have a material impact on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09,
“Compensation - Stock Compensation (Topic 718)” (“ASU 2016-09”) as part of FASB's simplification initiative
focused on improving areas of GAAP for which cost and complexity may be reduced while maintaining or improving the usefulness of
information disclosed within the financial statements. ASU 2016-09 focuses on simplification specifically with regard to share-based
payment transactions, including income tax consequences, classification of awards as equity or liabilities and classification on
the statement of cash flows. The guidance in ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim
periods within those annual periods. Early adoption is permitted. The Company’s adoption did not have a material impact on
the Company’s consolidated results of operations, financial position and related disclosures.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In August 2016, the FASB issued ASU 2016-15,
“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB
Emerging Issues Task Force)” (“ASU 2016-15”). ASU 2016-15 addresses the following eight specific cash flow issues:
Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon
interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments
made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned
life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial
interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle.
This guidance will be effective for the Company on January 1, 2018. The Company does not believe the guidance will have a material
impact on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, “Statement
of Cash Flows (Topic 230): Restricted Cash,” or ASU 2016-18. ASU 2016-18 is intended to clarify how entities present
restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash and cash
equivalents and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers between
cash and cash equivalents and restricted cash in the statement of cash flows. When cash and cash equivalents and restricted cash
are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the
statement of cash flows to the related captions in the balance sheet. This reconciliation can be presented either on the face of
the statement of cash flows or in the notes to the financial statements. ASU 2016-18 is effective for fiscal years
beginning after December 15, 2017 and is to be applied retrospectively. Early adoption is permitted, including adoption in
an interim period. The Company early adopted ASU 2016-18 for the three-month period-ended September 30, 2017 and its adoption did
not have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, “Intangibles
– Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates Step 2 from the
goodwill impairment test. When an indication of impairment was identified after performing the first step of the goodwill impairment
test, Step 2 required that an entity determine the fair value at the impairment testing date of its assets and liabilities (including
unrecognized assets and liabilities) using the same procedure that would be required in determining the fair value of assets acquired
and liabilities assumed in a business combination. Under the amendments in ASU No. 2017-04, an entity would perform its annual,
or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value. An entity
would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value.
In addition, an entity must consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting
unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a SEC filer should adopt
the amendments in ASU No. 2017-04 for its annual, or any interim, good will impairment tests in fiscal years beginning after
December 15, 2019. The Company does not believe the guidance will have a material impact on its consolidated financial statements.
In
May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation”. The update provides guidance
about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting
in ASC Topic 718. An entity shall account for the effects of a modification described in ASC paragraphs 718-20-35-3 through 35-9,
unless all the following are met: (1) The fair value of the modified award is the same as the fair value of the original award
immediately before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting
conditions of the original award immediately before the original award is modified; and (3) The classification of the modified
award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before
the original award is modified. The provisions of this update become effective for annual periods and interim periods within those
annual periods beginning after December 15, 2017. The
Company does not believe the guidance will have a material impact
on its consolidated financial statements.
In July 2017, the FASB issued ASU 2017-11 “Earnings
Per Share (Topic 260)”. The amendments in the update change the classification of certain equity-linked financial instruments
(or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified
instruments. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per
share (“EPS”) in accordance with Topic 260, Earnings Per Share, to recognize the effect of the down round feature when
it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS.
Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance
for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including
related EPS guidance (in Topic 260). For public business entities, the amendments in Part I of this update are effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not believe the guidance
will have a material impact on its consolidated financial statements.
Other accounting standards that have been
issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the
consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to
have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 3 — MINERAL PROPERTIES
The Company’s Relief Canyon property
rights currently total approximately 25,000 acres and are comprised of approximately 948 owned unpatented mining claims, 120 owned
millsite claims, 172 leased unpatented mining claims, and 2,235 acres of leased and 2,770 acres of subleased private lands. Most
of the property on which the Relief Canyon deposit is located is subject to a 2% net smelter return production royalty, with a
portion of that property subject to net smelter return production royalties totaling 4.5%. The rest of the property is subject,
under varying circumstances, to net smelter return production royalties ranging from 2% to 5%.
Pershing Pass Property
The Pershing Pass property consists of over
700 unpatented mining claims covering approximately 12,000 acres and a mining lease of private lands covering approximately 600
acres. Out of the total unpatented mining claims, 17 unpatented mining claims are subject to a 2% net smelter return royalty
and 19 unpatented mining claims are leased with a purchase option.
The primary term of the mining lease of private
lands is ten years ending in January 2023, which may be extended as long as mineral exploration, development or mining continue
on the property. Production from the private lands covered by the lease is subject to a 2% net smelter return royalty on all metals
produced other than gold, and to a royalty on gold indexed to the gold price, ranging from 2% at gold prices of less than $500
per ounce to 3.5% at gold prices over $1,500 per ounce. Prior to one year after commercial production begins, the Company can repurchase
up to 3% of the royalty on gold production at the rate of $600,000 for each 1%.
In September 2013, the Company entered into
a lease agreement and purchase option for 19 unpatented mining claims (approximately 400 acres) in the Pershing Pass Property.
Production from the lease is subject to a 1% net smelter return royalty on precious metals and a 0.5% net smelter royalty on all
other metals produced from the leased property. Prior to production, and starting in September 2016, the Company is required
to pay a $10,000 annual advance minimum royalty payment until September 2023. The annual advance minimum royalty payment increases
to $12,500 in September 2023, to $15,000 in September 2028 and to $20,000 in September 2033. The Company has the
right to buy the leased claims at any time for $250,000.
Newmont Properties
On April 5, 2012, the Company purchased
from Victoria Gold Corp. and Victoria Resources (US) Inc. (collectively, “Victoria”) their interest in approximately
13,300 acres of mining claims and private lands adjacent to the Company’s original landholdings at the Relief Canyon Mine
in Pershing County, Nevada.
Approximately 8,900 acres of the lands that
the Company acquired from Victoria were a leasehold interest comprised of unpatented mining claims and private lands subject to
a 2006 Mineral Lease and Sublease with Newmont USA Ltd. (“Newmont”), which the Company refers to as the Newmont Leased
property. At that time, the Newmont Leased property consisted of 155 unpatented lode mining claims owned by Newmont comprising
approximately 2,800 acres, approximately 4,900 acres of privately-owned fee minerals leased by Newmont from the owners, and
62 unpatented mining claims that were owned by Victoria within the Newmont Leased property and area of interest.
On January 14, 2015, the Company entered into
an Asset Purchase Agreement with Newmont (the “Asset Purchase Agreement”) pursuant to which the Company acquired for
$6.0 million, 74 unpatented mining claims totaling approximately 1,300 acres that the Company had previously leased from Newmont,
and entered into a new mining lease directly with New Nevada Resources, LLC and New Nevada Lands, LLC for approximately 1,600 acres
of fee, or private, land that the Company had previously subleased from Newmont.
As part of the January 2015 transactions completed
pursuant to the Asset Purchase Agreement, a subsidiary of the Company entered into a Mining Lease (the “2015 Mining Lease”)
with New Nevada Resources, LLC and New Nevada Lands, LLC (the “Owners”), covering certain fee lands (the “Leased
Properties”) included in the Company’s Relief Canyon properties. The 2015 Mining Lease has a term of twenty years and
for as long thereafter as any mining, development or processing operations are being conducted on a continuous basis. The 2015
Mining Lease contains customary terms and conditions, including an advance royalty and a 2.5% net smelter returns production royalty
on the Leased Properties payable to the Owners.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 3 — MINERAL PROPERTIES (continued)
Newmont Leased Property
As part of the Asset Purchase Agreement transactions,
Newmont and the Company entered into an amendment of the 2006 Minerals Lease and Sublease (the “Third Amendment”),
pursuant to which the Company agreed to a $2.6 million work commitment on the properties remaining subject to the 2006 Minerals
Lease and Sublease to be expended by the seventh anniversary of the effective date of the Third Amendment. Upon the eighth anniversary
of the effective date of the Third Amendment, the Company shall pay an annual rental payment of $10.00 per acre if the Company
does not incur $500,000 in qualified expenditures during the preceding year. Expenditures incurred in excess of the annual work
commitment or rental payment obligation may be carried forward as credits against future annual work commitment obligations or
rental payment obligations. As of June 15, 2017, the most recent cost reporting date, the Company can credit approximately $2.8
million in exploration expenditures already incurred against the remaining $2.3 million work commitment and future rental payment
obligations.
Also as part of the transactions completed
pursuant to the Asset Purchase Agreement, Newmont and the Owners entered into a new Mining Lease (the “2015 Newmont Lease”)
covering about 2,770 acres of private lands included in the Company’s Relief Canyon properties (the “Subleased Properties”)
and subleased by the Company from Newmont pursuant to the 2006 Minerals Lease and Sublease. The 2015 Newmont Lease has a term of
twenty years and for as long thereafter as any mining, development or processing operations are being conducted on a continuous
basis. The 2015 Newmont Lease contains customary terms and conditions, including an advance royalty and a 2.5% net smelter returns
production royalty on the Subleased Properties payable to the Owners. The Company continues to hold rights to the Subleased Properties
pursuant to its 2006 Minerals Lease and Sublease with Newmont.
On March 29, 2017, the Company entered into
a Mining Sublease with Newmont granting the Company the exclusive right to prospect, explore for, develop, and mine minerals on
certain lands within the Pershing Pass area south of the Relief Canyon Mine. The Mining Sublease has an initial term of ten years
and may be extended by the Company until December 3, 2034 and so long thereafter as any mining, development, or processing operations
are being conducted continuously. The Mining Sublease calls for the Company to make minimum work expenditures for the first four
years of the Mining Sublease, followed by annual advanced minimum royalty payments to Newmont to maintain the Mining Sublease in
good standing. The Sublease may be terminated any time after providing 90 days written notice of termination. If the required minimum
work commitment of $500,000 has not been satisfied prior to termination the Company must pay Newmont the difference between the
$500,000 required minimum work commitment and costs already incurred by the Company towards the required minimum work commitment.
As of June 30, 2017, the most recent cost reporting date, the Company can credit approximately $200,000 in exploration expenditures
already incurred against the $1.5 million work commitment.
General
The Company has posted statewide surface management
surety bonds with the United States Department of the Interior Bureau of Land Management (“BLM”) as required by the
State of Nevada in the amount of approximately $12.3 million, which is approximately $76,000 in excess of the coverage requirement
as of September 30, 2017, to reclaim land disturbed in its exploration and mining operations. The surface management surety bonds
are provided through third-party insurance underwriters. The Company was required to deposit a total of $3,690,000, or 30% of the
total surety bonds, in collateral accounts. The funds deposited in the collateral accounts are classified as restricted cash on
the Company’s balance sheet.
As of September 30, 2017, based on management’s
review of the carrying value of mineral rights, management determined that there is no evidence that the cost of these acquired
mineral rights will not be fully recovered and accordingly, the Company determined that no adjustment to the carrying value of
mineral rights was required. As of the date of these consolidated financial statements, the Company has not established any proven
or probable reserves on its mineral properties and has incurred only acquisition and exploration costs.
Mineral properties consisted of the following:
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
Relief Canyon Mine — Gold Acquisition
|
|
$
|
8,501,071
|
|
|
$
|
8,501,071
|
|
Relief Canyon Mine — Newmont Properties
|
|
|
13,709,441
|
|
|
|
13,709,441
|
|
Pershing Pass Property
|
|
|
593,400
|
|
|
|
576,400
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,803,912
|
|
|
$
|
22,786,912
|
|
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 4 — PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
|
|
Estimated Life
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Furniture and fixtures
|
|
5 years
|
|
$
|
56,995
|
|
|
$
|
56,995
|
|
Office and computer equipment
|
|
1 - 5 years
|
|
|
434,563
|
|
|
|
416,363
|
|
Land
|
|
—
|
|
|
358,886
|
|
|
|
358,886
|
|
Building and improvements
|
|
5 - 25 years
|
|
|
820,182
|
|
|
|
820,182
|
|
Site costs
|
|
10 years
|
|
|
1,412,624
|
|
|
|
1,412,624
|
|
Crushing system
|
|
20 years
|
|
|
2,505,012
|
|
|
|
2,505,012
|
|
Process plant and equipment
|
|
10 years
|
|
|
3,517,809
|
|
|
|
3,517,809
|
|
Vehicles and mining equipment
|
|
5 - 10 years
|
|
|
605,824
|
|
|
|
699,025
|
|
|
|
|
|
|
9,711,895
|
|
|
|
9,786,896
|
|
Less: accumulated depreciation
|
|
|
|
|
(6,191,412
|
)
|
|
|
(5,475,916
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,520,483
|
|
|
$
|
4,310,980
|
|
For the nine months ended September 30, 2017
and 2016, depreciation expense amounted to $825,136 and $829,260, respectively. During the nine months ended September 30, 2017,
the Company wrote off fully depreciated property and equipment for a total of $109,640.
NOTE 5 — ASSET RETIREMENT OBLIGATIONS
In conjunction with the permit approval permitting
the Company to resume mining in the existing open pits at the Relief Canyon Mine during the third quarter of 2014, the Company
has recorded an asset retirement obligation based upon the reclamation plan submitted in connection with the permit.
The following table summarizes activity in
the Company’s ARO:
|
|
September 30,
2017
|
|
|
September 30,
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Balance, beginning of period
|
|
$
|
895,085
|
|
|
$
|
783,539
|
|
Accretion expense
|
|
|
28,896
|
|
|
|
29,192
|
|
Reclamation obligations settled
|
|
|
-
|
|
|
|
-
|
|
Additions and changes in estimates
|
|
|
-
|
|
|
|
-
|
|
Balance, end of period
|
|
$
|
923,981
|
|
|
$
|
812,731
|
|
NOTE 6 — STOCKHOLDERS’ EQUITY
On June 17, 2015, the Board of Directors of
the Company approved a reverse stock split of the Company’s Common Stock at a ratio of 1-for-18 (the “Reverse Stock
Split”) which became effective on June 18, 2015. In connection with the Reverse Stock Split, the Company filed a Certificate
of Amendment to its Amended and Restated Articles of Incorporation, as amended, with the Nevada Secretary of State to reduce the
number of shares of Common Stock the Company is authorized to issue from 800,000,000 to 200,000,000. All share and per share values
of the Company’s Common Stock for all periods presented in the accompanying consolidated financial statements are retroactively
restated for the effect of the Reverse Stock Split in accordance with SAB Topic 4C.
Preferred Stock
The Company is authorized within the limitations
and restrictions stated in the Amended and Restated Articles of Incorporation to provide by resolution or resolutions for the issuance
of 50,000,000 shares of Preferred Stock, par value $0.0001 per share in such series and with such designations, preferences and
relative, participating, optional or other special rights and qualifications, limitations or restrictions as the Company’s
Board of Directors establishes.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 6 — STOCKHOLDERS’ EQUITY (continued)
Series A Convertible Preferred Stock
As of September 30, 2017, 2,250,000 shares
of Series A Preferred Stock, $0.0001 par value were authorized with none outstanding.
Series B Convertible Preferred Stock
As of September 30, 2017, 8,000,000 shares
of Series B Preferred Stock, $0.0001 par value were authorized with none outstanding.
Series C Convertible Preferred Stock
As of September 30, 2017, 3,284,396 shares
of Series C Preferred Stock, $0.0001 par value, were authorized with none outstanding.
9% Series D Cumulative Preferred Stock
As of September 30, 2017, 7,500,000 shares
of Series D Preferred Stock, $0.0001 par value, were authorized with none outstanding.
Series E Convertible Preferred Stock
As of September 30, 2017, 15,151 shares of
Series E Preferred Stock, $0.0001 par value, were authorized with 8,946 Series E Preferred shares outstanding.
Common Stock
Restricted Stock Units
In February 2017, the Company granted an aggregate
of 116,229 restricted stock units to employees and directors of the Company in connection with employee bonus compensation and
annual equity awards to non-employee directors for fiscal year 2016. The fair market value on the date of grant was approximately
$382,000. The restricted stock units granted to employees and directors vest 50% on the date of grant and the balance vest over
a one-year period from the date of issuance. For each vested restricted stock unit, the holder will be entitled to receive one
restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances or upon a
change in control.
In February 2017, the Company granted 25,000
restricted stock units to new employees of the Company. The fair market value on the date of grant was approximately $80,000. The
restricted stock units granted to employees vest one-third on December 31, 2017, 2018 and 2019. For each vested restricted stock
unit, the holder will be entitled to receive one restricted share of the Company's Common Stock upon the holder's separation of
employment under certain circumstances or upon a change in control.
In March 2017, the Company granted 50,000 restricted
stock units to the CEO of the Company in connection with bonus compensation for fiscal year 2016. The fair market value on the
date of grant was approximately $149,500. The restricted stock units granted to the CEO vested upon grant. The Common Stock underlying
the restricted stock units will be issued upon on the earlier of a change in control or other acceleration or December 31, 2018.
Between February 2017 and March 2017, the Company
issued 5,591 shares of Common Stock upon the vesting of 5,591 restricted stock units to former employees. The Company cancelled
3,759 forfeited restricted stock units and retired an aggregate of 10,926 shares of restricted Common Stock due to forfeitures
prior to their vesting.
In April 2017, the Company converted 15,995
vested restricted stock units into 15,995 shares of the Company’s Common Stock due to the passing of one of the members of
the Company’s Board of Directors.
Between April 2017 and September 2017, the
Company issued 2,351 shares of Common Stock and granted a total of 35,575 restricted stock units to two members of the Company’s
Board of Directors as payment in lieu of cash for retainer and meeting fees earned totaling $73,250 for fiscal years 2015 and 2016
and $54,500 for the nine months ended September 30, 2017. For each vested restricted stock unit, the holder will be entitled to
receive one restricted share of the Company's Common Stock upon the holder's separation of employment under certain circumstances
or upon a change in control.
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 6 — STOCKHOLDERS’ EQUITY (continued)
As of December 31, 2016, the Company recognized
a liability for employee bonus compensation with a fair value of approximately $530,000 which was included in accounts payable
and accrued expenses. Consequently, the Company recognized stock based compensation of approximately $530,000 during the year ended
December 31, 2016 in connection with these transactions. As of September 30, 2017, the Company recorded approximately $469,423
into additional paid in capital and a contemporaneous reduction of accounts payable and accrued expenses in connection with the
issuance of vested restricted stock units related to fiscal year 2016 bonus compensations. As of September 30, 2017, the remaining
balance of unvested restricted stock units related to fiscal year 2016 bonus compensations amounted to approximately $56,138.
During the nine months ended September 30,
2017 and 2016, the Company recorded total stock-based compensation expense in connection with restricted stock and restricted stock
unit awards of $908,323 and $1,578,589, respectively. At September 30, 2017, there was a total of $2,012,118 unrecognized
compensation expense in connection with restricted stock and restricted stock unit awards.
A summary of the status of the restricted stock
units as of September 30, 2017, and of changes in restricted stock units outstanding during the nine months ended September 30,
2017, is as follows:
|
|
Nine months ended September 30, 2017
|
|
|
|
(Unaudited)
|
|
|
|
Restricted Stock
Unit
|
|
|
Weighted
Average
Grant-Date
Fair Value
Per Share
|
|
Outstanding at December 31, 2016
|
|
|
845,765
|
|
|
$
|
5.68
|
|
Granted
|
|
|
226,804
|
|
|
|
3.22
|
|
Vested and converted
|
|
|
(21,586
|
)
|
|
|
3.55
|
|
Forfeited
|
|
|
(3,759
|
)
|
|
|
3.41
|
|
Outstanding at September 30, 2017
|
|
|
1,047,224
|
|
|
$
|
5.20
|
|
Common Stock Options
A summary of the Company’s outstanding
stock options as of September 30, 2017 (unaudited) and changes during the nine months ended are presented below:
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
Balance at December 31, 2016
|
|
|
1,794,453
|
|
|
$
|
7.21
|
|
|
|
5.20
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance at September 30, 2017
|
|
|
1,794,453
|
|
|
|
7.21
|
|
|
|
4.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at end of period
|
|
|
1,794,453
|
|
|
$
|
7.21
|
|
|
|
|
|
Options expected to vest
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted during the period
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 6 — STOCKHOLDERS’ EQUITY (continued)
Common Stock Warrants
A summary of the Company’s outstanding
stock warrants as of September 30, 2017 (unaudited) and changes during the nine months ended are presented below:
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
Balance at December 31, 2016
|
|
|
4,311,166
|
|
|
$
|
6.16
|
|
|
|
0.98
|
|
Granted
|
|
|
100,000
|
|
|
|
3.45
|
|
|
|
2.00
|
|
Cancelled
|
|
|
(1,913,403
|
)
|
|
|
7.79
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance at September 30, 2017
|
|
|
2,497,763
|
|
|
$
|
4.80
|
|
|
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercisable at September 30, 2017
|
|
|
2,497,763
|
|
|
$
|
4.81
|
|
|
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of warrants granted during the period
|
|
|
|
|
|
$
|
0.87
|
|
|
|
|
|
In February 2017, the Company granted 100,000
24-month warrants to purchase shares of Common Stock at an exercise price of $3.45 per share in connection with a contract for
services. The warrants vest ratably over the 6-month term of the services agreement. During the nine months ended September 30,
2017, the Company recorded total stock-based compensation expense of $86,899 in connection with this stock warrant grant.
During January 2017 and February 2017, 1,128,358
warrants to purchase shares of the Company’s Common Stock were forfeited as the warrants were not exercised prior to their
expiration date.
During April 2017, 785,045 warrants to purchase
shares of the Company’s Common Stock were forfeited as the warrants were not exercised prior to their expiration date.
NOTE 7 — NET LOSS PER COMMON SHARE
Net loss per common share is calculated in
accordance with ASC Topic 260, “Earnings Per Share”. Basic loss per share is computed by dividing net loss available
to common stockholder, adjusted for preferred dividends, by the weighted average number of shares of Common Stock outstanding during
the period. The computation of diluted net loss per share does not include anti-dilutive Common Stock equivalents in the weighted
average shares outstanding. The following table sets forth the computation of basic and diluted loss per share:
|
|
For the Nine
Months ended
September 30,
2017
|
|
|
For the Nine
Months ended
September 30,
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net loss available to common stockholders
|
|
$
|
(9,129,929
|
)
|
|
$
|
(13,608,126
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
Denominator for basic and diluted loss per share (weighted-average shares)
|
|
|
28,396,928
|
|
|
|
25,049,831
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.32
|
)
|
|
$
|
(0.54
|
)
|
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 7 — NET LOSS PER COMMON SHARE (continued)
The following were excluded from the computation
of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s net loss. In periods where
the Company has a net loss, all dilutive securities are excluded.
|
|
September 30,
2017
|
|
|
September 30,
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Common stock equivalents:
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
1,794,453
|
|
|
|
1,794,453
|
|
Stock warrants
|
|
|
2,497,763
|
|
|
|
4,311,166
|
|
Restricted stock units
|
|
|
1,047,224
|
|
|
|
848,765
|
|
Convertible preferred stock
|
|
|
2,725,092
|
|
|
|
2,725,092
|
|
Total
|
|
|
8,064,532
|
|
|
|
9,679,476
|
|
NOTE 8 — COMMITMENTS AND CONTINGENCIES
Operating Lease
The Company leases its corporate facility and
certain office equipment under operating leases with expiration dates through 2018. In April 2015, the Company executed a new operating
lease agreement for its corporate facility in Lakewood, Colorado. The lease is for a period of 39 months commencing in May 2015
and expiring in July 2018. The Company recognized total deferred rent of $6,447 in connection with this lease agreement as of September
30, 2017. Rent expense was $38,557 and $49,573 for the nine months ended September 30, 2017 and 2016, respectively.
Future minimum rental payments required under operating leases are
as follows:
2017
|
|
$
|
21,086
|
|
2018
|
|
|
45,454
|
|
|
|
$
|
66,540
|
|
Mining Leases
As more fully discussed in Note 3 — Mineral
Properties, the Company leases certain mineral properties included in its Pershing Pass Property. The future minimum lease payments
under these mining leases are as follows:
2017
|
|
$
|
15,000
|
|
2018
|
|
|
25,000
|
|
2019
|
|
|
25,000
|
|
2020
|
|
|
25,000
|
|
2021
|
|
|
25,000
|
|
Thereafter
|
|
|
42,500
|
|
|
|
$
|
157,500
|
|
PERSHING GOLD CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(in United States Dollars)
NOTE 8 — COMMITMENTS AND CONTINGENCIES (continued)
Credit Facility
On November 29, 2016, the Company entered into
a non-binding term sheet with Sprott Resource Lending (the “Lender”) pursuant to which the Lender would provide a credit
facility with a principal amount of up to $20 million (the “Facility”). The Company’s ability to draw down on
the Facility is subject to the negotiation and execution of definitive agreements, completion by the Lender of its due diligence
review and the satisfaction of other customary closing conditions. The Facility, when completed, would be available for up to three
draws occurring during a period of five months following the closing date. As a condition to any such draw, the Company would be
required to raise equity financing not less than the amount drawn. Amounts drawn under the Facility would be secured by a lien
on the Relief Canyon Mine and processing facilities and would bear interest at 9.0% per annum. Amounts drawn would mature three
years following the date drawn, with monthly principal payments commencing on the earlier of June 30, 2018 or upon achievement
of commercial production at the Relief Canyon Mine. The proceeds of the Facility would be used to advance the Relief Canyon project
towards production. There is no assurance that definitive agreements with respect to the Facility will be completed or that any
amount will be drawn under the Facility.
The Company has paid the Lender a structuring
fee of $200,000 and a retainer fee of $100,000. Such retainer is refundable and shall be applied against legal fees and expenses
incurred. As of September 30, 2017, the fees paid to the Lender and legal fees related to the Facility totaled $369,240 which are
included in prepaid expenses and other current assets and will be recorded as a reduction in proceeds received from the Facility
when, and if, drawn.
3,286,127 Shares
PERSHING GOLD CORPORATION
Common Stock
PROSPECTUS
PART II - INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 13. Other Expenses of Issuance and
Distribution.
We are paying all of the selling stockholders’
expenses related to this offering, except that the selling stockholders will pay any applicable underwriting discounts and commissions.
The fees and expenses payable by us in connection with this Registration Statement are estimated as follows:
Securities and Exchange Commission Registration Fee
|
|
$
|
985.99
|
|
Accounting Fees and Expenses
|
|
$
|
2,500
|
|
Legal Fees and Expenses
|
|
$
|
30,000
|
|
Miscellaneous Fees and Expenses
|
|
$
|
25,000
|
|
Total
|
|
$
|
58,485.99
|
|
Item 14. Indemnification of Directors and Officers.
Nevada Revised Statutes Sections 78.7502
and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted
himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal
action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful.
Under Revised Statutes Section 78.751,
advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met
the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards.
Our Articles of Incorporation provide that
our officers and directors shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the
State of Nevada against all expenses, liability and loss (including attorneys’ fees, judgments, fines and amounts paid or
to be paid in settlement) reasonably incurred or suffered by them in connection with any civil, criminal, administrative or investigative
action, suit or proceeding related to their service as an officer or director. Such right of indemnification shall be a contract
right which may be enforced in any manner desired by such person. We must pay the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding as they are incurred and in advance of the final disposition of the action,
suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification
shall not be exclusive of any other right which such directors or officers may have or hereafter acquire.
Our Articles of Incorporation provide that
we may adopt bylaws to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may purchase
and maintain insurance on behalf of any of officers and directors. The indemnification provided in our Articles of Incorporation
shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the
heirs, executors and administrators of such person.
Our Bylaws provide that a director or officer
shall have no personal liability to us or our stockholders for damages for breach of fiduciary duty as a director or officer, except
for damages for breach of fiduciary duty resulting from (a) acts or omissions which involve intentional misconduct, fraud,
or a knowing violation of law, or (b) the payment of dividends in violation of Nevada Revised Statutes Section 78.3900.
The Company has entered into indemnification
agreements with its directors and executive officers providing for indemnification against all expenses, judgments, fines and amounts
paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action, suit, alternative
dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made a party by reason
of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted by Nevada law.
These agreements are more fully described in the prospectus under “Executive Compensation — Indemnification
Agreements”.
Item 15. Recent Sales of Unregistered Securities.
On January 28, 2015, the Company issued
four-year warrants to purchase 8,334 shares of common stock to a consultant. The warrants vested on March 1, 2015 and are exercisable
at $5.40 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities
Act of 1933 by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On April 10, 2015, in connection with a
private placement, we issued 1,652,268 shares of common stock and warrants to acquire an aggregate of 660,934 shares of common
stock to certain accredited investors, for aggregate gross proceeds of approximately $9.6 million. The Company relied on the exemptions
from registration under Section 4(a)(2) of the Securities Act, or Rule 506 of Regulation D, as a transaction by
an issuer not involving a public offering, or Regulation S, for purposes of the private placement.
On April 10, 2015, in connection with the
aforementioned private placement, we issued warrants to acquire an aggregate of 89,164 shares of common stock to a placement
agent as consideration for certain placement agent services. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof, as a transaction
by an issuer not involving a public offering.
On April 21, 2015, in connection with a
private placement, we issued 310,233 shares of common stock and warrants to acquire an aggregate of 124,111 shares of common
stock to certain accredited investors, for aggregate gross proceeds of approximately $1.8 million. The Company relied on the exemption
from registration under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D, as a transaction by an issuer not involving
a public offering, or Regulation S, for purposes of the private placement.
On April 21, 2015, in connection with the
aforementioned private placement, we issued warrants to acquire an aggregate of 31,023 shares of common stock to a placement agent
as consideration for certain placement agent services. The issuance of these securities was deemed to be exempt from the registration
requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof, as a transaction by an
issuer not involving a public offering.
On June 8, 2015 and June 9, 2015, the Company
granted 55,556 and 11,112 restricted stock units, respectively, to certain of the Company’s non-employee directors pursuant
to the Company’s 2013 Equity Incentive Plan. The restricted stock units vest over a three year period. The issuance of these
securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof,
as a transaction by an issuer not involving a public offering.
On June 28, 2015,
the Company granted 700,000 restricted stock units to an executive of the Company pursuant to the Company’s 2013 Equity Incentive
Plan. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue
of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On September 18, 2015, the Company issued
5,556 shares of common stock in connection with the death of one of the non-employee members of the board of directors. The issuance
of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2)
thereof, as a transaction by an issuer not involving a public offering.
On September 24,
2015, a certain holder of the Company’s Series E Preferred Stock converted 50 shares into 9,822 shares of common stock
of the Company in accordance with the Series E Preferred Stock certificate of designation. The issuance of these securities
was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction
by an issuer not involving a public offering.
On December 9, 2015, the Company issued
12,500 restricted stock units to director Edward Karr. For each restricted stock unit, Mr. Karr will be entitled to receive one
share of common stock upon the Reporting Person's termination of service on the Issuer's board of directors or in connection with
a change of control. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities
Act of 1933, as amended, by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On December 23, 2015, the Company issued
50,000 restricted stock units to certain employees and officers, 18,000 of which were not reported, and were not required to be
reported, under the Exchange Act. For each fully vested restricted stock unit, the recipient will be entitled to receive one share
of common stock upon termination of employment or in connection with a change of control or under certain other circumstances.
The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended,
by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On February 4, 2016 in connection with a
private placement, the Company issued 367,467 shares of common stock to certain accredited investors for aggregate gross proceeds
of approximately $1.25 million. The Company relied on the exemption from registration under Section 4(a)(2) of the Securities Act
or Rule 506 of Regulation D, as a transaction by an issuer not involving a public offering, for purposes of the private placement.
On February 15, 2016, a stockholder converted 1 share of the
Company’s Series E Preferred Stock into 292 shares of common stock of the Company in accordance with the Series E Preferred
Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of
the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On February 25, 2016, in connection with
a private placement, the Company issued 2,120,882 shares of common stock and warrants to acquire an aggregate of 1,060,429 shares
of common stock, for aggregate gross proceeds of approximately $6.9 million and net proceeds of approximately $6.1 million after
commissions. A placement agent acted on behalf of the Company and was issued 30 month warrants (exercisable six months and one
day after issuance) to purchase an aggregate of 261,590 shares of common stock at an exercise price of $5.06, subject to adjustment
in the event of stock dividends, recapitalizations or certain other transactions. The Company relied on the exemption from registration
under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D, as a transaction by an issuer not involving a public offering,
or Regulation S, for purposes of the private placement.
On March 9, 2016, a stockholder converted 100 shares of the
Company’s Series E Preferred Stock into 30,461 shares of common stock of the Company in accordance with the Series E Preferred
Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of
the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On March 23, 2016, the Company issued 5,480
shares of common stock and 4,000 shares of common stock, respectively, to two consultants in exchange for services provided to
the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act
of 1933 by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On March 28, 2016, in a private placement,
the Company issued 1,850,000 shares of common stock and warrants to acquire an aggregate of 925,000 shares of common stock for
aggregate gross proceeds of approximately $6.0 million. The Company relied on the exemption from registration under Section 4(a)(2)
of the Securities Act, as a transaction by an issuer not involving a public offering, for purposes of the private placement.
On May 4, 2016, the Company issued 4,843
shares of common stock to a consultant in exchange for services provided to the Company. The issuance of these securities was deemed
to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(a)(2) thereof, as a transaction
by an issuer not involving a public offering.
On June 7, 2016, a stockholder converted 98 shares of the
Company’s Series E Preferred Stock into 29,853 shares of common stock of the Company in accordance with the Series E Preferred
Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of
the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On June 21, 2016, a stockholder converted 150 shares of the
Company’s Series E Preferred Stock into 45,693 shares of common stock of the Company in accordance with the Series E Preferred
Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of
the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On June 24, 2016, the Company issued 5,995 restricted stock
units to a director upon the director’s appointment to the board. The issuance of these securities was deemed to be exempt
from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not
involving a public offering.
On June 30, 2016, a stockholder converted 80 shares of the
Company’s Series E Preferred Stock into 24,370 shares of common stock of the Company in accordance with the Series E Preferred
Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of
the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On December 29, 2016, the Company issued 1,000 shares of common
stock to an employee upon conversion of 1,000 vested restricted stock units in conjunction with the termination of an employment
agreement. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by
virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On February 3, 2017,
the Company granted 100,000 24-month warrants to purchase shares of common stock at an exercise price of $3.45 per share in connection
with a contract for future services. The issuance of these securities was deemed to be exempt from the registration requirements
of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On February 3, 2017,
the Company granted an aggregate of 116,229 restricted stock units to employees and directors of the Company in connection with
employee bonus compensation and annual equity awards to non-employee directors for fiscal year 2016. The issuance of these securities
was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction
by an issuer not involving a public offering.
On February 16, 2017, the Company granted
25,000 restricted stock units to new employees of the Company. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving
a public offering.
On February 27, 2017, the Company issued
3,666 shares of common stock upon the vesting of 3,666 restricted stock units to a former employee. The issuance of these securities
was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction
by an issuer not involving a public offering.
On March 21, 2017,
the
Company granted 50,000 restricted stock units to the Company’s chief executive officer in connection with bonus compensation
for fiscal year 2016.
The issuance of these securities was deemed to be exempt from the registration requirements of the
Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On March 31, 2017, the Company issued 1,925
shares of common stock upon the vesting of 1,925 restricted stock units to a former employee. The issuance of these securities
was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction
by an issuer not involving a public offering.
On April 9, 2017, the
Company issued 15,995 shares of common stock upon the vesting of 15,995 restricted stock units to a former director of the Company.
The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of
Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On June 30, 2017, the
Company granted 30,320 restricted stock units to two directors of the Company for payment in lieu of cash for retainer and meeting
fees earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act
by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On July 7, 2017, the
Company issued 2,351 shares of common stock to a director of the Company for payment in lieu of cash for retainer and meeting fees
earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue
of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On September 30, 2017, the Company
granted 5,255 restricted stock units to two directors of the Company for payment in lieu of cash for retainer and meeting fees
earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue
of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
On December 11, 2017, in connection with
a private placement, the Company issued 2,347,236 shares of common stock and warrants to acquire an aggregate of 938,891 shares
of common stock. The Company relied on the exemption from registration under Section 4(a)(2) of the Securities Act, as a transaction
by an issuer not involving a public offering, for purposes of the private placement.
On December 29, 2017,
the Company granted 5,626 restricted stock units to two directors of the Company for payment in lieu of cash for retainer and
meeting fees earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities
Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
Item 16. Exhibits and Financial Statement Schedules
Exhibit No.
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Description
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2.1
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Share Exchange Agreement dated as of September 29, 2010, by and among The Empire Sports & Entertainment Holdings Co., The Empire Sports & Entertainment, Co. and the shareholders of The Empire Sports & Entertainment Co. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010)
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3.1
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Amended and Restated Articles of Incorporation, as amended by certificates of amendment dated May 16, 2011, February 27, 2012, December 11, 2014 and June 17, 2015 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 4, 2010)
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3.2
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Certificate of Amendment to the Amended and Restated Articles of Incorporation of Pershing Gold Corporation, as filed with the Nevada Secretary of State on June 17, 2015 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 22, 2015)
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3.3
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Certificate of Designation for Series E (Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2013)
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3.4
|
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Second Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2017)
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4.1
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Form of Investor Warrant (Incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015)
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4.2
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Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015)
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4.3
|
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Form of Investor Warrant (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
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4.4
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Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
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4.5
|
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Warrant, dated March 28, 2016 (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016)
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4.6
|
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Form of Warrant
(
Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017)
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4.7
|
|
Form of Private Placement Warrant
(
Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017)
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5.1
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Opinion of Davis Graham & Stubbs LLP*
|
10.1
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The Empire Sports & Entertainment Holdings Co. 2010 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010)+
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10.2
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Form of 2010 Incentive Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) +
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10.3
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Form of 2010 Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) +
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10.4
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Indemnification Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 13, 2012)
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10.5
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2012 Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 13, 2012) +
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10.6
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Consulting Agreement with Barry Honig (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 11, 2012) +
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10.7
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Revised Offer Letter, dated November 21, 2012, between the Company and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2012) +
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10.8
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Severance Compensation Agreement, dated November 21, 2012, between the Company and Eric Alexander (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2012) +
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10.9
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Form of the 2012 Equity Incentive Plan Restricted Stock Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 15, 2013) +
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10.10
|
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Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 19, 2013) +
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10.11
|
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Pershing Gold Corporation 2013 Equity Incentive Plan (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 19, 2013) +
|
10.12
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Form of 2012 Equity Incentive Plan Amended and Restated Nonqualified Stock Option Agreement (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
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10.13
|
|
Form of 2012 Equity Incentive Plan Nonqualified Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
|
10.14
|
|
Form of 2012 Equity Incentive Plan Amended and Restated Restricted Stock Agreement (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
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10.15
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Form of Restricted Stock Agreement (Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) +
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10.16
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Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2013)
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10.17
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|
Registration Rights Agreement, dated July 2, 2014 and July 18, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 18, 2014)
|
10.18
|
|
Registration Rights Agreement, dated July 30, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 30, 2014)
|
10.19
|
|
Offer Letter between the Company and Timothy Janke dated August 27, 2014 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 4, 2014) +
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10.20
|
|
Registration Rights Agreement, dated October 15, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 21, 2014)
|
10.21
|
|
Asset Purchase Agreement dated effective January 13, 2015 among Newmont USA Limited, Pershing Gold Corporation and Gold Acquisition Corporation (Incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2015)
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10.22
|
|
Mining Lease dated January 15, 2015, between New Nevada Resources, LLC and New Nevada Lands, LLC, as lessor, and Gold Acquisition Corp., as lessee (Incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2015)
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10.23
|
|
Third Amendment to Restricted Stock Agreement, dated February 5, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) +
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10.24
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Third Amendment to Amended and Restated Restricted Stock Agreement, dated February 5, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) +
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10.25
|
|
First Amendment to Restricted Stock Grant Agreement, dated February 6, 2015, between Pershing Gold Corporation and Alexander Morrison (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) +
|
10.26
|
|
First Amendment to Restricted Stock Grant Agreement, dated February 6, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) +
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10.27
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Form of Subscription Agreement among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015)
|
10.28
|
|
Form of Registration Rights Agreement among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015)
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10.29
|
|
Amended and Restated Executive Employment Agreement, dated June 28, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 29, 2015) +
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10.30
|
|
Restricted Stock Unit Grant Agreement, dated June 28, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 29, 2015) +
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10.31
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Form of the 2013 Equity Incentive Plan Restricted Stock Grant Agreement (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) +
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10.32
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|
Form of 2013 Equity Incentive Plan Restricted Stock Unit Grant Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) +
|
10.33
|
|
Offer Letter between the Company and Debra Struhsacker dated September 19, 2013 (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) +
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10.34
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Severance Compensation Agreement, dated September 19, 2013, between the Company and Debra Struhsacker (Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) +
|
10.35
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Amended Severance Compensation Agreement, dated November 19, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 24, 2015) +
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10.36
|
|
First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
|
10.37
|
|
First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
|
10.38
|
|
Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
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10.39
|
|
First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
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10.40
|
|
First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
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10.41
|
|
Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
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10.42
|
|
First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
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10.43
|
|
First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
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10.44
|
|
Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) +
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10.45
|
|
Form of Registration Rights Agreement, dated February 4, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.57 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 22, 2016)
|
10.46
|
|
Form of Subscription Agreement, dated February 4, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.58 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 22, 2016)
|
10.47
|
|
Form of Subscription Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
|
10.48
|
|
Form of Unit Purchase Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
|
10.49
|
|
Form of Registration Rights Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016)
|
10.50
|
|
Form of Subscription Agreement, dated March 24, 2016 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016)
|
10.51
|
|
Registration Rights Agreement, dated March 28, 2016 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016)
|
10.52
|
|
Extension Severance Compensation Agreement, dated August 15, 2016, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.52 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) +
|
10.53
|
|
Second Amended Severance Compensation Agreement, dated September 15, 2016, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 21, 2016) +
|
10.54
|
|
Amendment No. 1 to the Pershing Gold Corporation 2013 Equity Incentive Plan, dated October 7, 2016 (Incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) +
|
10.55
|
|
Third Amended Severance Compensation Agreement, dated January 11, 2017, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) +
|
10.56
|
|
Amendment to Offer of Employment, dated January 11, 2017, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) +
|
10.57
|
|
Second Extension Severance Compensation Agreement, dated January 11, 2017, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) +
|
10.58
|
|
Restricted Stock Unit Grant Agreement, dated March 21, 2017, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2017) +
|
10.59
|
|
Amendment No. 1 to the Pershing Gold Corporation 2013 Equity Incentive Plan, dated October 7, 2016 (incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017)
|
10.60
|
|
Indemnification Agreement between the Company and Edward Karr, dated March 24, 2017 (Incorporated by reference to Exhibit 10.6 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017)+
|
10.61
|
|
Form of Employee Restricted Stock Unit Grant Agreement (Incorporated by reference to Exhibit 10.7 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017) +
|
10.62
|
|
Form of Non-Employee Director Restricted Stock Unit Grant Agreement (Incorporated by reference to Exhibit 10.8 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017)+
|
10.63
|
|
Form of Restricted Stock Unit Grant Agreement for Restricted Stock Units in Lieu of Director Fees (Incorporated by reference to Exhibit 10.9 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017)+
|
10.64
|
|
Form of Subscription Agreement (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017)
|
10.65
|
|
Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017)
|
10.66
|
|
Fourth Amended Severance Compensation Agreement, dated December 21, 2017, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 28, 2017) +
|
21.1
|
|
List of Subsidiaries (Incorporated by reference to Exhibit 21.1 of the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017)
|
23.1
|
|
Consent of KBL, LLP*
|
23.2
|
|
Consent of Davis Graham & Stubbs LLP (included in Exhibit 5.1)*
|
23.3
|
|
Consent of Mine Development Associates Inc.*
|
24.1
|
|
Powers of Attorney (included on signature page)*
|
101.ins
|
|
XBRL Instance Document*
|
101.sch
|
|
XBRL Taxonomy Schema Document*
|
101.cal
|
|
XBRL Taxonomy Calculation Document*
|
101.def
|
|
XBRL Taxonomy Linkbase Document*
|
101.lab
|
|
XBRL Taxonomy Label Linkbase Document*
|
101.pre
|
|
XBRL Taxonomy Presentation Linkbase Document*
|
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration statement:
|
(i)
|
To include any prospectus required by Section 10(a)(3) of the Securities Act;
|
|
(ii)
|
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
|
|
(iii)
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining
liability under the Securities Act of 1933 to any purchaser:
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(i)
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If the registrant is relying on Rule 430B:
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(A)
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Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
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(B)
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Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
provided, however
, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
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(ii)
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If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.
Provided, however,
that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
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(b) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question as to whether
such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Lakewood, State of Colorado on January 18, 2018.
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PERSHING GOLD CORPORATION
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(Registrant)
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January 18, 2018
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By:
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/s/ Stephen Alfers
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Name: Stephen Alfers
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Title: President and Chief Executive Officer
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POWER OF ATTORNEY
Each of the undersigned hereby constitutes
and appoints Stephen Alfers and Eric Alexander, and each of them, the undersigned’s true and lawful attorney-in-fact and
agent, with full power of substitution, for the undersigned and in his name, place and stead, to sign in any and all capacities
(including, without limitation, the capacities listed below), the registration statement, any and all amendments (including post-effective
amendments) to the registration statement and any and all successor registration statements of Pershing Gold Corporation, including
any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits
thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary
to be done to enable Pershing Gold Corporation to comply with the provisions of the Securities Act and all the requirements of
the Securities and Exchange Commission, as fully to all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
Signature
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Title
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Date
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/s/ Stephen Alfers
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Stephen Alfers
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President, Chief Executive Officer and Chairman
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January 18, 2018
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(Principal Executive Officer)
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/s/ Eric Alexander
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Eric Alexander
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Vice President Finance and Controller
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January 18, 2018
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(Principal Financial and Accounting Officer)
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/s/ Barry Honig
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Barry Honig
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Director
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January 18, 2018
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/s/ Edward Karr
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Edward Karr
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Director
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January 18, 2018
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/s/ Alex Morrison
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Alex Morrison
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Director
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January 18, 2018
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/s/ Pamela Saxton
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Pamela Saxton
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Director
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January 18, 2018
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EXHIBIT INDEX
* Filed herewith.
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