ITEM 1. BUSINESS
General Corporate Information
We were incorporated under the BCBCA with
the name “Corvus Gold Inc.” on April 13, 2010 as a wholly-owned subsidiary of ITH, with an authorized capital consisting
of an unlimited number of Common Shares. Pursuant to the corporate spin-out of Corvus from ITH by way of a plan of arrangement
among ITH, the shareholders of ITH and Corvus under the BCBCA, effective August 26, 2010, Corvus was spun out as a separate and
independent public company, and each shareholder of ITH received one-half of a Common Share.
We are a reporting issuer in the Canadian
Provinces of British Columbia, Alberta and Ontario and the Common Shares are listed for trading on the TSX under the trading symbol
“KOR” and are quoted for trading on the OTCQX under the symbol “CORVF”.
Our head office is located at Suite 1750
– 700 West Pender Street, Vancouver, British Columbia, Canada V6C 1G8, and our registered and records office is located at
Suite 2200, HSBC Building, 885 West Georgia Street, Vancouver, British Columbia V6C 3E8.
We are a mineral exploration company engaged
in the acquisition, exploration and development of mineral properties. We currently hold or have the right to acquire interests
in the NBP and the MLP in Nevada. We are in the exploration stage as our Properties have not yet reached commercial production
and our Properties are not beyond the preliminary exploration stage. All work presently planned by us is directed at defining mineralization
and increasing understanding of the characteristics of, and economics of, that mineralization.
Emerging Growth Company Status
We qualify as an “emerging growth
company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have
more than $1,000,000,000 in annual gross revenue and did not have such amount as of May 31, 2019, being the last day of our last
fiscal year.
We may lose our status as an emerging growth
company on May 31, 2020, the last day of our fiscal year following the fifth anniversary of the date of the first sale of common
equity securities pursuant to an effective registration statement.
As an emerging growth company, we are exempt
from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A (a) and (b) of the Exchange Act. Such sections are provided
below:
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Section 404(b) of the Sarbanes-Oxley Act of 2002 requires a public company’s auditor to attest
to, and report on, management's assessment of its internal controls.
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Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951 of the Dodd-Frank Act,
require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
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As long as we qualify as an emerging growth
company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section
14A(a) and (b) of the Exchange Act, we may however determine to voluntarily comply with such requirements in our discretion.
Intercorporate Relationships
We have five material
subsidiaries:
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(a)
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Corvus Nevada, a corporation incorporated in Nevada on April 9, 2007,
which holds all of our properties in Nevada and is 100% owned by Corvus USA;
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(b)
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Raven Gold, a corporation incorporated in Alaska on July 2, 2009,
which held all of our properties in Alaska and will hold any future properties in Alaska and is 100% owned by Corvus USA;
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(c)
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SoN Land & Water, LLC, a limited liability company incorporated
in Nevada on July 25, 2013, of which Corvus Nevada is the sole member;
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(d)
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Corvus USA, a corporation incorporated in Nevada on February 25,
2013, which holds all of the shares of Corvus Nevada and Raven Gold and is 100% owned by Corvus; and
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(e)
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Mother Lode Mining Company LLC, a limited liability company incorporated
in Nevada on March 14, 2014 of which Corvus Nevada is the sole member.
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The following corporate chart sets forth
all of our material subsidiaries:
Recent Corporate History
In May 2010, the board of directors of
ITH approved a proposal to undertake a spin-out transaction to segregate its then existing assets into two separate and highly
focused companies.
The spin-out transaction pursuant to the
Arrangement was approved by the shareholders of ITH on August 12, 2010, and the final order of the Supreme Court of British Columbia
approving the plan of arrangement necessary to implement the transaction was received on August 20, 2010. The effective date of
the Arrangement was August 26, 2010 and the Common Shares commenced trading on the TSX on August 30, 2010. Under the terms of the
Arrangement, ITH retained all assets relating to the Livengood gold project in Alaska, together with approximately $33 million
in working capital, while Corvus received all of ITH’s other existing Alaska and Nevada assets (including the shares of Corvus
Nevada), together with approximately $3.3 million in working capital.
Following the completion of the Arrangement,
Corvus held four advanced to early stage exploration projects in Alaska (Chisna, Terra, LMS and West Pogo) and the advanced exploration
stage NBP in Nevada. Our primary focus is to leverage our exploration expertise to discover major new gold deposits. Furthermore,
we intend to try and build ourselves into a non-operator gold producer with significant carried interests and royalty exposure.
To meet this objective, all of the Alaskan projects received by us in the Arrangement have been sold.
We also received from ITH a 100% interest
in the NBP, which is Corvus’ sole material mineral property and the primary focus of our exploration activities. Since the
acquisition of the NBP from ITH, we have expanded the NBP by entering into additional leases of patented lode mining claims and
staking additional unpatented lode mining claims.
In June 2017, Corvus acquired 100% of the
MLP from Goldcorp USA, Inc. and staked two additional claim blocks adjacent to the MLP. The MLP is in close proximity to Corvus
Gold’s NBP with potential for integration into a single operation.
Business Operations
Summary
We currently hold, or have rights to acquire,
interests in two mineral properties in Nevada, USA, the NBP and the MLP. The Company’s objectives with respect to these Properties
are to evaluate the potential of the Properties and to determine if spending additional funds is warranted (in which case, an appropriate
program to advance the Properties to the next decision point will be formulated and, depending upon available funds, implemented
by us) or not (in which case the Properties may be returned by us to the optionor/lessor or, in respect of properties in which
we are earning an interest, be returned to the optionor thereof). Our present focus is on the exploration and, if warranted, development
of the NBP, located 15 kilometres north of Beatty, Nevada, and the MLP, located in the Bare Mountain District, approximately 10
kilometres from the NBP. Corvus also staked two additional claim blocks, the MN claim group, to the northwest of the Mother Lode
claims, and the ME claim group, to the east of the Mother Lode claims, and the GAP claim group, immediately to the south of NBP.
The progress on, and results of, the work programs on our material mineral property is set out under Part I, Item 2, Properties
in this Annual Report. We continue to assess additional mineral property acquisitions but do not presently contemplate entering
into any such agreements, other than in connection with the NBP and the MLP.
We are in the exploration
stage and do not mine, produce or sell any mineral products at this time. With respect to the NBP and MLP, our present preliminary
studies indicate that any production would be through a combination of heap leaching some of the mineralization (and treatment
of the leaching solution to recover gold and silver) and processing higher grade mineralization through a plant incorporating both
a gravity concentration-cyanide leach circuit and a concentration circuit followed by pressure oxidation of the concentrate and
then leaching of the oxidized filtrate.
Exploration drilling
has been focused on the MLP with Phase I beginning at the MLP in September 2017. Phase II exploration drilling at MLP began in
January 2018 and was completed July 2018. Phase I and Phase II drilling results were used to develop a maiden Mineral Resource
estimate for the MLP which was reported in September 2018 (NR 18-15). Exploration drilling continued at MLP, Phase III, until April
2019, at which time the drilling rig was moved to NBP.
Availability of Raw Materials
All of the raw materials
we require to carry on our business are readily available through normal supply or business contracting channels in Canada and
the United States. Since commencing current operations in August 2010, we have been able to secure the appropriate personnel, equipment
and supplies required to conduct our contemplated programs. As a result, we do not believe that we will experience any shortages
of required personnel, equipment or supplies in the foreseeable future.
Dependence on a Few Contracts
Our business is not substantially dependent
on any contract such as a contract to sell the major part of the Company’s products or services or to purchase the major
part of its requirements for goods, services or raw materials, or on any franchise or license or other agreement to use a patent,
formula, trade secret, process or trade name upon which its business depends. Rather, our ability to continue making the holding,
assessment, lease and option payments necessary to maintain our interest in our mineral projects is of primary concern. We do not
presently anticipate any difficulties in this regard in the current financial year.
Competitive Conditions
There is aggressive competition within
the minerals industry to discover and acquire mineral properties considered to have commercial potential. We compete with other
entities for the opportunity to participate in exploration projects which we believe are promising. In addition, we compete with
others in efforts to obtain financing to acquire and explore mineral properties, acquire and utilize mineral exploration equipment
and hire qualified mineral exploration personnel. We may compete with other junior mining companies for mining claims in regions
adjacent to our existing claims, or in other parts of the world should we dedicate resources to doing so in the future. These companies
may be better capitalized than us and we may have difficulty in expanding our holdings through the staking or acquisition of additional
mining claims or other mineral tenures.
In competing for qualified mineral exploration
personnel, we may be required to pay compensation or benefits relatively higher than those paid in the past, and the availability
of qualified personnel may be limited in high-demand mining periods, such as was in past years when the price of gold was higher
than it is now.
Government Regulation
The exploration and development of a mining
prospect is subject to regulation by a number of federal and state government authorities. These include the United States Environmental
Protection Agency (“EPA”) and the United States Bureau of Land Management (“BLM”) as well as the various
state environmental protection agencies. The regulations address many environmental issues relating to air, soil and water contamination
and apply to many mining related activities including exploration, mine construction, mineral extraction, ore milling, water use,
waste disposal and use of toxic substances. In addition, we are subject to regulations relating to labor standards, occupational
health and safety, mine safety, general land use, export of minerals and taxation. Many of the regulations require permits or licenses
to be obtained and the filing of Notices of Intent and Plans of Operations, the absence of which or inability to obtain will adversely
affect the ability for us to conduct our exploration, development and operation activities. The failure to comply with the regulations
and terms of permits and licenses may result in fines or other penalties or in revocation of a permit or license or loss of a prospect.
Federal
On lands owned by the United States, mining
rights are governed by the General Mining Law of 1872, as amended, which allows the location of mining claims on certain federal
lands upon the discovery of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties
and development and operation of mines is governed by both federal and state laws. Federal laws that govern mining claim location
and maintenance and mining operations on federal lands are generally administered by the BLM. Additional federal
laws,
governing mine safety and health, also apply. State laws also require various permits and approvals before exploration, development
or production operations can begin. Among other things, a reclamation plan must typically be prepared and approved, with bonding
in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will
not be released until that time. Local jurisdictions may also impose permitting requirements (such as conditional use permits or
zoning approvals).
Nevada
In Nevada, initial stage surface exploration
activities that do not disturb the surface, do not require any permits. Notice-level exploration permits (“NOI”) are
required (through the BLM) for the NBP and MLP to perform drilling or other surface disturbing activites with less than five acres
extent. More extensive disturbance requires submittal and approval of a “Plan of Operations” and “Environmental
Assessment” from the BLM. In May 2013, Corvus obtained an amended Plan of Operations allowing 100 acres of surface disturbance
in the public lands portion of the NBP, which is considered sufficient by us for our currently planned drilling and characterization
program. Reclamation costs have been re-estimated on a 3-year basis, with the most recent submitted June 19, 2019. We also applied
for, and received in August 2013, a NOI for disturbance of an additional 1.3 acres outside the currently defined NBP area in order
to allow us to drill water monitor wells and perform geotechnical soil investigations outside the NBP area. This NOI has been reviewed
and extended until May 9, 2021 by BLM. In June of 2015, the Company applied for, and received a NOI which allowed an additional
2.1 acres of disturbance for exploration of the Eastern Steam-heated Alteration zone, outside of the NBP permit area. On December
7, 2015, a decision allowing the increase in disturbance area to 4.8 acres in the Eastern Steam-heated Alteration zone was received
from BLM. This Notice has been extended to 2021. In August of 2017, the Company received an NOI from BLM which allowed 4.8 acres
of surface disturbance for drilling exploration at the MLP. In June 2018, Corvus received approval of an NOI for 4.4 acres of disturbance
at the Company’s Willy’s Exploration Project near the MLP. In September 2018, Corvus received approval of an NOI for
0.7 acres of disturbance at the Company’s Sawtooth Project site near the MLP. As of May 24, 2019, the Company had posted
with the BLM, as security for the reclamation obligations, a Surety Bond of USD 411,191. In general, exploration activities in
Nevada can be carried out on a year-round basis. Mining is conducted in Nevada on a year round basis, both open pit and underground.
In Nevada, we are also required to post
bonds with the State of Nevada to secure our environmental and reclamation obligations on private land, with amount of such bonds
reflecting the level of rehabilitation anticipated by the then proposed activities. Currently, the Company has posted with Nevada
Division of Minerals BMRR in the State of Nevada, as security for these reclamation obligations, a Surety Bond of USD 209,070.
In June 2013, formal meetings were held
with officials of both the Nevada Department of Environmental Protection (“NDEP”) and the BLM to discuss the design
criteria for the environmental baseline studies that will be required to support the development of a Plan of Operation and other
permit applications necessary to enable any mining at or production from the NBP. In January 2014, Corvus Nevada executed a Memorandum
of Understanding (“MOU”) with the Tonopah Office of the BLM for definition of baseline characterization requirements
and development of a mining plan of operations at the NBP. Characterization plans for hydro-geologic modeling studies, rock geochemical
studies and biologic/wildlife studies have been developed and have been reviewed by BLM specialists. We are in the process of responding
to comments and additional requirements received from the BLM with respect to such plans.
In July 2019, the Company submitted revised
Environmental Assessment (“EA”) and Exploration Plan of Operations (“PoO”) documents for 145 acres of surface
disturbance required for an expanded drilling and exploration program at the MLP. That application is pending approval of the BLM.
If we are successful in the future at discovering
a commercially viable mineral deposit on our property interests, then if and when we commence any mineral production, we will also
need to comply with laws that regulate or propose to regulate our mining activities, including the management and handling of raw
materials, disposal, storage and management of hazardous and solid waste, the safety of our employees and post-mining land reclamation.
We cannot predict the impact of new or
changed laws, regulations or permitting requirements, or changes in the ways that such laws, regulations or permitting requirements
are enforced, interpreted or administered. Health, safety and environmental laws and regulations are complex, are subject to change
and have become more stringent over time. It is possible that greater than anticipated health, safety and environmental capital
expenditures or reclamation and closure expenditures will be required in the future. We expect continued government and public
emphasis on environmental issues will result in increased future investments for environmental controls at our operations.
Environmental Regulation
Our mineral projects are subject to various
federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and,
in general, are becoming more restrictive. The development, operation, closure, and reclamation of mining projects in the United
States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and
related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep
records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to
a public review process during which opposition to our proposed operations may be encountered. We are currently operating under
various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Our policy is to
conduct business in a way that safeguards public health and the environment. We believe that our operations are conducted in material
compliance with applicable laws and regulations.
Changes to current local, state or federal
laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased operating
and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted,
additional regulatory requirements could impact the economics of our projects.
U.S.
Federal Laws
The Comprehensive Environmental, Response,
Compensation, and Liability Act (“CERCLA”), and comparable state statutes, impose strict, joint and several liability
on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances
found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement
for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file
claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal
Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes, govern the disposal of solid waste
and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements
for corrective actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances
found on exploration, mining and processing sites long after activities on such sites have been completed.
The Clean Air Act (“CAA”),
as amended, restricts the emission of air pollutants from many sources, including mining and processing activities. Any future
mining operations by the Company may produce air emissions, including fugitive dust and other air pollutants from stationary equipment,
storage facilities and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review,
monitoring and/or control requirements under the CAA and state air quality laws. New facilities may be required to obtain permits
before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance. In addition,
permitting rules may impose limitations on our production levels or result in additional capital expenditures in order to comply
with the rules.
The National Environmental Policy Act (“NEPA”)
requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental
impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions.
If a proposed action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental
Impact Statement (“EIS”). The United States Environmental Protection Agency (“EPA”), other federal agencies,
and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in
the draft and final EIS. This process can cause delays in issuance of required permits or result in changes to a project to mitigate
its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.
The Clean Water Act (“CWA”),
and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States.
The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the
EPA or an analogous state agency. The CWA regulates storm water mining facilities and requires a storm water discharge permit for
certain activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations.
The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters
of the United States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil,
criminal and administrative penalties for unauthorized discharges of pollutants and impose liability on parties responsible for
those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting
from the release.
The Safe Drinking Water Act (“SDWA”)
and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate the drilling and operation of
subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the
program has been delegated to the state. The program requires that a permit be obtained before drilling a disposal or injection
well. Violation of these regulations and/or contamination of groundwater by mining related activities may result in fines, penalties,
and remediation costs, among other sanctions and liabilities under the SWDA and state laws. In addition, third party claims may
be filed by landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.
Nevada
Other Nevada regulations govern operating
and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes
to these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example,
requiring changes to operating constraints, technical criteria, fees or surety requirements.
Key Personnel
As at August 8, 2019, we have two full
time employees and six part-time consultants. Our operations are managed by our officers with oversight by the Directors. We engage
geological, metallurgical, and engineering consultants from time to time as required to assist in evaluating our property interests
and recommending and conducting work programs.
Gold Price History
The price of gold is volatile and is affected
by numerous factors all of which are beyond our control, such as the sale or purchase of gold by various central banks and financial
institutions, inflation, recession, fluctuation in the relative values of the U.S. dollar and foreign currencies, changes in global
and regional gold demand and the political and economic conditions.
The following table presents the high,
low and average afternoon fixed prices in U.S. dollars for an ounce of gold on the London Bullion Market over the past five calendar
years and the current calendar year to date:
Year
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High
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Low
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Average
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USD
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USD
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USD
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2014
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1,385
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1,142
|
|
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1,267
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2015
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1,296
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|
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1,049
|
|
|
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1,160
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2016
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1,366
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|
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1,077
|
|
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1,251
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2017
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1,346
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|
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1,151
|
|
|
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1,257
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2018
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1,355
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1,178
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1,268
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2019 (through August 7, 2019)
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1,506
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1,270
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1,328
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Data Source:
www.kitco.com
Seasonality
The NBP and the MLP are not subject to
material restrictions on our operations due to seasonality.
Available Information
We make available, free of charge, on or
through our Internet website, at
www.corvusgold.com,
our Annual Report on Form 10-K, our quarterly reports on Form 10-Q
and our current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act. Our Internet website and the information contained therein or connected thereto are not intended to be, and are not
incorporated into this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
You should carefully consider the following
risk factors in addition to the other information included in this Annual Report on Form 10-K. Each of these risk factors could
materially and adversely affect our business, operating results and financial condition, as well as materially and adversely affect
the value of an investment in our Common Shares. The risks described below are not the only ones facing the Company. Additional
risks that we are not presently aware of, or that we currently believe are immaterial, may also adversely affect our business,
operating results and financial condition. We cannot assure you that we will successfully address these risks or that other unknown
risks exist that may affect our business.
Risks Related To Our Company
We will require significant additional
capital to fund our business plan.
We will be required to expend significant
funds to determine if proven and probable mineral reserves exist at our Properties, to continue exploration and if warranted, develop
our existing Properties and to identify and acquire additional properties to diversify our Properties portfolio. We have spent
and will be required to continue to expend significant amounts of capital for drilling, geological and geochemical analysis, assaying
and feasibility studies with regard to the results of our exploration. We may not benefit from some of these investments if we
are unable to identify commercially exploitable mineralized material.
Our ability to obtain necessary funding
for these purposes, in turn, depends upon a number of factors, including the status of the national and worldwide economy and the
price of gold and silver. We may not be successful in obtaining the required financing or, if we can obtain such financing, such
financing may not be on terms that are favorable to us. Failure to obtain such additional financing could result in delay or indefinite
postponement of further mining operations or exploration and development and the possible partial or total loss of our potential
interest in our Properties.
We have a limited operating history
on which to base an evaluation of our business and prospects.
Since our inception we have had no revenue
from operations. We have no history of producing metals from any of our properties. Our Properties are exploration stage properties.
Advancing properties from exploration into the development stage requires significant capital and time, and successful commercial
production from a property, if any, will be subject to completing feasibility studies, permitting and construction of the mine,
processing plants, roads, and other related works and infrastructure. As a result, we are subject to all of the risks associated
with developing and establishing new mining operations and business enterprises including:
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completion of feasibility studies to verify reserves and commercial viability, including the ability to find sufficient gold/silver mineral reserves to support a commercial mining operation;
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•
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the timing and cost, which can be considerable, of further exploration, preparing feasibility studies, permitting and construction of infrastructure, mining and processing facilities;
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•
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the availability and costs of drill equipment, exploration personnel, skilled labor and mining and processing equipment, if required;
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•
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the availability and cost of appropriate smelting and/or refining arrangements, if required;
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•
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compliance with environmental and other governmental approval and permit requirements;
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•
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the availability of funds to finance exploration, development and construction activities, as warranted;
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•
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potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants which may delay or prevent development activities;
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•
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potential increases in exploration, construction and operating costs due to changes in the cost of fuel, power, materials and supplies; and
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•
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potential shortages of mineral processing, construction and other facilities related supplies.
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The costs, timing and complexities of exploration,
development and construction activities may be increased by the location of our Properties and demand by other mineral exploration
and mining companies. It is common in exploration programs to experience unexpected problems and delays during drill programs and,
if commenced, development, construction and mine start-up. Accordingly, our activities may not result in profitable mining operations
and we may not succeed in establishing mining operations or profitably producing metals at any of our properties.
We have a history of losses and expect
to continue to incur losses in the future.
We have incurred losses since inception,
have negative cash flow from operating activities and expect to continue to incur losses in the future. We incurred the following
losses from operations during each of the following periods:
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$(11,020,098) for the year ended May 31, 2019; and
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•
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$(9,194,678) for the year ended May 31, 2018.
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We expect to continue to incur losses unless
and until such time as one of our Properties enters into commercial production and generate sufficient revenues to fund continuing
operations. We recognize that if we are unable to generate significant revenues from mining operations and dispositions of our
properties, we will not be able to earn profits or continue operations. At this early stage of our operation, we also expect to
face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business
development. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so
could have a materially adverse effect on our financial condition.
Negative Operating Cash Flow
The Company is an exploration stage company
and has not generated cash flow from operations. The Company is devoting significant resources to the development of the
Properties and to actively pursue exploration and development opportunities, however, there can be no assurance that it will generate
positive cash flow from operations in the future. The Company expects to continue to incur negative consolidated operating
cash flow and losses until such time as it achieves commercial production at a particular project. The Company currently
has negative cash flow from operating activities.
Increased costs could affect our
financial condition.
We anticipate that costs at our projects
and Properties that we may explore or develop, will frequently be subject to variation from one year to the next due to a number
of factors, such as changing grade, metallurgy and revisions to mine plans, if any, in response to the physical shape and location
of the body. In addition, costs are affected by the price of commodities such as fuel, steel, rubber, and electricity. Such commodities
are at times subject to volatile price movements, including increases that could make production at certain operations less profitable.
A material increase in costs at any significant location could have a significant effect on our profitability.
Risks Related to Mining and Exploration
Our Properties are in the exploration
stage.
The NBP and the MLP have estimated mineral
resources identified, but there has not been a mineral reserve estimation in accordance with NI 43-101 or SEC Industry Guide 7.
There is no assurance that we can establish the existence of any mineral reserves on the NBP or the MLP in commercially exploitable
quantities. Until we can do so, we cannot earn any revenues from the Properties and if we do not do so, we will lose all of the
funds that we expend on exploration. If we do not discover any mineral reserves in a commercially exploitable quantity, the exploration
component of our business could fail.
We have not established that our NBP or
MLP contains any mineral reserve according to recognized reserve guidelines, nor can there be any assurance that we will be able
to do so. A mineral reserve is defined by the SEC in its Industry Guide 7 as that part of a mineral deposit, which could be economically
and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having
a “reserve” that meets the requirements of the SEC’s Industry Guide 7 is extremely remote; in all probability
our mineral Properties do not contain any “reserves” and any funds that we spend on exploration could be lost. Even
if we do eventually discover a mineral reserve on our Properties, there can be no assurance that they can be developed into producing
mines and extract those minerals. Both mineral exploration and development involve a high degree of risk and few mineral properties
which are explored are ultimately developed into producing mines.
The commercial viability of an established
mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral
deposit, the proximity of the mineral deposit to infrastructure such as a smelter, roads and a point for shipping, government regulation
and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of
any identified mineral deposit unprofitable.
The nature of mineral exploration
and production activities involves a high degree of risk and the possibility of uninsured losses
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Exploration for and the production of minerals
is highly speculative and involves much greater risk than many other businesses. Most exploration programs do not result in the
discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined.
Our operations are, and any future development or mining operations we may conduct will be, subject to all of the operating hazards
and risks normally incident to exploring for and development of mineral properties, such as, but not limited to:
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economically insufficient mineralized material;
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the ability to find sufficient gold, silver or other metal reserves to support a profitable mining operation;
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fluctuation in production costs that make mining uneconomical;
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labor disputes;
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unanticipated variations in grade and other geologic problems;
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environmental hazards;
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water conditions;
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difficult surface or underground conditions;
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industrial accidents;
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metallurgic and other processing problems;
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mechanical and equipment performance problems;
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failure of pit walls or dams;
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unusual or unexpected rock formations;
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personal injury, fire, flooding, cave-ins and landslides; and
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decrease in the value of mineralized material due to lower
gold and/or silver prices.
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Any of these risks can materially and adversely
affect, among other things, the development of properties, production quantities and rates, costs and expenditures, potential revenues
and production dates. We currently have very limited insurance to guard against some of these risks. If we determine that capitalized
costs associated with any of our mineral interests are not likely to be recovered, we would incur a write-down of our investment
in these interests. All of these factors may result in losses in relation to amounts spent which are not recoverable, or result
in additional expenses.
We have no history of producing metals
from our current mineral properties and there can be no assurance that we will successfully establish mining operations or profitably
produce precious metals.
We have no history of producing metals
from our current mineral Properties. We do not produce gold or silver and do not currently generate operating earnings. While we
seek to move our Properties into production, such efforts will be subject to all of the risks associated with establishing new
mining operations and business enterprises, including:
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the timing and cost, which are considerable, of the construction of mining and processing facilities;
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the ability to find sufficient gold/silver reserves to support a profitable mining operation;
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the availability and costs of skilled labor and mining equipment;
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compliance with environmental and other governmental approval and permit requirements;
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the availability of funds to finance construction and development activities;
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potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants that may delay or prevent development activities; and
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potential increases in construction and operating costs due to changes in the cost of labor, fuel, power, materials and supplies.
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It is common in new mining operations to
experience unexpected problems and delays during construction, development and mine start-up. In addition, our management will
need to be expanded. This could result in delays in the commencement of mineral production and increased costs of production. Accordingly,
we cannot assure you that our activities will result in profitable mining operations or that we will successfully establish mining
operations.
Estimates of mineral resources are
subject to evaluation uncertainties that could result in project failure.
Unless otherwise indicated, mineralization
figures presented in this Annual Report and in our filings with securities regulatory authorities, press releases and other public
statements that may be made from time to time are based upon estimates made by independent geologists and mining engineers. When
making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations
as to the mineral resources, mineral reserves and grades of mineralization on our properties. Until ore is actually mined and processed,
mineral resources, mineral reserves and grades of mineralization must be considered as estimates only.
Our exploration and future mining operations,
if any, are and would be faced with risks associated with being able to accurately predict the quantity and quality of mineral
resources/reserves within the earth using statistical sampling techniques. Estimates of mineral resource/reserve on our Properties
would be made using samples obtained from appropriately placed trenches, test pits and underground workings and intelligently designed
drilling. There is an inherent variability of assays between check and duplicate samples taken adjacent to each other and between
sampling points that cannot be reasonably eliminated. Additionally, there also may be unknown geologic details that have not been
identified or correctly appreciated at the current level of accumulated knowledge about our Properties. This could result in uncertainties
that cannot be reasonably eliminated from the process of estimating mineral resources/reserves. If these estimates were to prove
to be unreliable, we could implement an exploitation plan that may not lead to commercially viable operations in the future.
Any material changes in mineral resource/reserve
estimates and grades of mineralization will affect the economic viability of placing a property into production and a property’s
return on capital.
As we have not completed feasibility studies
on our Properties and have not commenced actual production, mineral resource estimates may require adjustments or downward revisions.
In addition, the grade ultimately mined, if any, may differ from that indicated by our feasibility studies and drill results. Minerals
recovered in small scale tests may not be duplicated in large scale tests under on-site conditions or in production scale.
The mineral resource estimates contained
in this Annual Report have been determined based on assumed future prices, cut-off grades and operating costs that may prove to
be inaccurate. Extended declines in market prices for gold or silver may render portions of our mineralization and resource estimates
uneconomic and result in reduced reported mineralization or adversely affect any commercial viability determinations we may reach.
Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material
adverse effect on our share price and the value of our Properties.
There are differences in U.S. and
Canadian practices for reporting reserves and resources.
Our mineral resource estimates are not
directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally report mineral
reserves and mineral resources in accordance with Canadian requirements. These requirements are different from the practices used
to report mineral reserve and mineral resource estimates in reports and other materials filed with the SEC. It is Canadian practice
to report measured, indicated and inferred mineral resources, which are generally not permitted in disclosure filed with the SEC
by United States issuers. In the United States, mineralization may not be classified as a “reserve” unless the determination
has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination
is made.
United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources
will ever be converted into reserves.
Further, “inferred mineral resources”
have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Disclosure
of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to
report “resources” as in place, tonnage and grade without reference to unit measures.
Accordingly, information concerning descriptions
of mineralization, mineral reserves and mineral resources contained in this Annual Report, or in the documents incorporated herein
by reference, may not be comparable to information made public by other United States companies subject to the reporting and disclosure
requirements of the SEC.
Our exploration activities on our
properties may not be commercially successful, which could lead us to abandon our plans to develop our properties and our investments
in exploration.
Our long-term success depends on our ability
to identify mineral deposits on our existing Properties and other properties we may acquire, if any, that we can then develop into
commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many risks and is frequently
non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate
machinery, equipment or labor. The success of gold, silver and other commodity exploration is determined in part by the following
factors:
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the identification of potential mineralization based on surficial analysis;
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availability of government-granted exploration permits;
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the quality of our management and our geological and technical expertise; and
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the capital available for exploration and development work.
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Substantial expenditures are required to
establish proven and probable mineral reserves through drilling and analysis, to develop metallurgical processes to extract metal,
and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit
will be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the
deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations,
including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting
of minerals and environmental protection. We may invest significant capital and resources in exploration activities and abandon
such investments if we are unable to identify commercially exploitable mineral reserves. The decision to abandon a project may
have an adverse effect on the market value of our securities and the ability to raise future financing.
The volatility of the price of gold
and silver could adversely affect our future operations and, if warranted, our ability to develop our properties
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The potential for profitability of our
operations, the value of our Properties, the market price of the Common Shares and our ability to raise funding to conduct continued
exploration and development, if warranted, are directly related to the market price of gold and silver. Our decision to put a mine
into production and to commit the funds necessary for that purpose must be made long before the first revenue from production would
be received. A decrease in the price of gold and/or silver may prevent our Properties from being economically mined or result in
the write-off of assets whose value is impaired as a result of lower gold and silver prices. The prices of gold and silver are
affected by numerous factors beyond our control, including inflation, fluctuation of the U.S. dollar and foreign currencies, global
and regional demand, the sale of gold by central banks, and the political and economic conditions of major gold and silver producing
countries throughout the world.
The volatility in gold prices is illustrated
in the table presented under the heading “Business – Business Operations – Gold Price History” below.
The volatility of mineral prices represents
a substantial risk which no amount of planning or technical expertise can fully eliminate. In the event gold and/or silver prices
decline or remain low for prolonged periods of time, we might be unable to develop our Properties, which may adversely affect our
results of operations, financial performance and cash flows.
We may not be able to obtain all
required permits and licenses to place any of our properties into production.
Our current and future operations, including
development activities and commencement of production, if warranted, require permits from governmental authorities and such operations
are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor
standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.
Companies engaged in mineral property exploration and the development or operation of mines and related facilities generally experience
increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations
and permits. We cannot predict if all permits which we may require for continued exploration, development or construction of mining
facilities and conduct of mining operations will be obtainable on reasonable terms, if at all. Costs related to applying for and
obtaining permits and licenses may be prohibitive and could delay our planned exploration and development activities. Failure to
comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued
by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring
capital expenditures, installation of additional equipment, or remedial actions.
Parties engaged in mining operations may
be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines
or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permits governing
operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on
our operations and cause increases in capital expenditures or production costs or reduction in levels of production at producing
properties or require abandonment or delays in development of new mining properties.
We are subject to significant governmental
regulations, which affect our operations and costs of conducting our business.
Our current and future operations are and
will be governed by laws and regulations, including:
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laws and regulations governing mineral concession acquisition, prospecting, development, mining and production;
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laws and regulations related to exports, taxes and fees;
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labor standards and regulations related to occupational health and mine safety; and
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environmental standards and regulations related to waste disposal, toxic substances, land use and environmental protection.
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Companies engaged in exploration activities
often experience increased costs and delays in production and other schedules as a result of the need to comply with applicable
laws, regulations and permits. Failure to comply with applicable laws, regulations and permits may result in enforcement actions,
including the forfeiture of mineral claims or other mineral tenures, orders issued by regulatory or judicial authorities requiring
operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment or costly remedial actions. We may be required to compensate those suffering loss or damage by reason of our mineral
exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits.
Existing and possible future laws, regulations
and permits governing operations and activities of exploration companies, or more stringent implementation, could have a material
adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in exploration.
Our activities are subject to environmental
laws and regulations that may increase our costs of doing business and restrict our operations.
All phases of our operations are subject
to environmental regulation in the jurisdictions in which we operate. Environmental legislation is evolving in a manner which will
require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments
of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. These
laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection
of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Compliance with
environmental laws and regulations and future changes in these laws and regulations may require significant capital outlays and
may cause material changes or delays in our operations and future activities. It is possible that future changes in these laws
or regulations could have a significant adverse impact on our Properties or some portion of our business, causing us to re-evaluate
those activities at that time.
Legislation has been proposed that
would significantly affect the mining industry.
Members of the United States Congress have
repeatedly introduced bills which would supplant or alter the provisions of the United States General Mining Law of 1872. If enacted,
such legislation could change the cost of holding unpatented mining claims and could significantly impact our ability to develop
mineralized material on unpatented mining claims. Such bills have proposed, among other things, to either eliminate or greatly
limit the right to a mineral patent and to impose a federal royalty on production from unpatented mining claims. Although we cannot
predict what legislated royalties might be, the enactment of these proposed bills could adversely affect the potential for development
of unpatented mining claims and the economics of existing operating mines on federal unpatented mining claims. Passage of such
legislation could adversely affect our financial performance.
Regulations and pending legislation
governing issues involving climate change could result in increased operating costs, which could have a material adverse effect
on our business.
A number of governments or governmental
bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential
impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us, our
venture partners and our suppliers, including costs related to increased energy requirements, capital equipment, environmental
monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also
negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the emotion, political
significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation
and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such
regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by
us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations
are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate. These may include changes
in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may
adversely impact the cost, production and financial performance of our operations.
Our relationship with the communities
in which we operate impacts the future success of our operations.
Our relationship with the communities in
which we operate is important to ensure the future success of our existing operations. While we believe our relationships with
the communities in which we operate are strong, there is an increasing level of public concern relating to the perceived effect
of mining activities on the environment and on communities impacted by such activities. Certain non-governmental organizations
(“NGOs”), some of which oppose globalization and resource development, are often vocal critics of the mining industry
and its practices. Adverse publicity generated by such NGOs or others related to extractive industries generally, or its operations
specifically, could have an adverse effect on our reputation or financial condition and may impact its relationship with the communities
in which we operate. While we believe that we operates in a socially responsible manner, there is no guarantee that our efforts
in this respect will mitigate this potential risk.
Our business is subject to evolving
corporate governance and public disclosure regulations that have increased both our compliance costs and the risk of noncompliance,
which could have an adverse effect on our stock price.
We are subject to changing rules and regulations
promulgated by a number of governmental and self-regulated organizations, including the SEC, applicable securities regulatory authorities
in Canada, the TSX, the OTCQX, applicable Canadian authorities and the Financial Accounting Standards Board. These rules and regulations
continue to evolve in scope and complexity and many new requirements have been created in response to laws enacted by Congress,
making compliance more difficult and uncertain. Our efforts to comply with new regulations have resulted in, and are likely to
continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating
activities to compliance activities.
Land reclamation requirements for
our properties may be burdensome and expensive.
Although variable depending on location
and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies (as well as companies
with mining operations) in order to minimize long term effects of land disturbance.
Reclamation may include requirements to:
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control dispersion of potentially deleterious effluents;
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treat ground and surface water to drinking water standards; and
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reasonably re-establish pre-disturbance land forms and vegetation.
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In order to carry out reclamation obligations
imposed on us in connection with our potential development activities, we must allocate financial resources that might otherwise
be spent on further exploration and development programs. We plan to set up a provision for our reclamation obligations on our
Properties, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated reclamation work,
our financial position could be adversely affected.
We face intense competition in the
mining industry.
The mining industry is intensely competitive
in all of its phases. As a result of this competition, some of which is with large established mining companies with substantial
capabilities and with greater financial and technical resources than ours, we may be unable to acquire additional attractive mining
claims or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment and retention
of qualified managerial and technical employees. If we are unable to successfully compete for qualified employees, our exploration
and development programs may be slowed down or suspended. We compete with other precious metal companies for capital. If we are
unable to raise sufficient capital, our exploration and development programs may be jeopardized or we may not be able to acquire,
develop or operate additional precious metal projects.
A shortage of equipment and supplies
could adversely affect our ability to operate our business.
We are dependent on various supplies and
equipment to carry out our mining exploration and, if warranted, development operations. The shortage of such supplies, equipment
and parts could have a material adverse effect on our ability to carry out our operations and therefore limit, or increase the
cost of, production.
Joint ventures and other partnerships
may expose us to risks.
We may enter into joint ventures or partnership
arrangements with other parties in relation to the exploration, development and production of a certain portion of the Properties
in which we have an interest. Joint ventures can often require unanimous approval of the parties to the joint venture or their
representatives for certain fundamental decisions such as an increase or reduction of registered capital, merger, division, dissolution,
amendments of constating documents, and the pledge of joint venture assets, which means that each joint venture party may have
a veto right with respect to such decisions which could lead to a deadlock in the operations of the joint venture. Further, we
may be unable to exert control over strategic decisions made in respect of such Properties. Any failure of such other companies
to meet their obligations to us or to third parties, or any disputes with respect to the parties’ respective rights and obligations,
could have a material adverse effect on the joint ventures or their properties and therefore could have a material adverse effect
on our results of operations, financial performance, cash flows and the price of the Common Shares.
Our directors and officers may have
conflicts of interest as a result of their relationships with other companies.
Our directors and officers are also directors,
officers and shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploiting
natural resource properties. Consequently, there is a possibility that our directors and/or officers may be in a position of conflict
in the future.
Our failure to strictly comply with
anti-corruption laws could have a material adverse effect on our reputation and results of operations.
Our operations are governed by, and involve
interactions with, many levels of government in numerous countries. We are required to comply with anti-corruption and anti-bribery
laws, including the Canadian Corruption of Foreign Public Officials Act and the U.S. Foreign Corrupt Practices Act. In recent years,
there has been a general increase in both the frequency of enforcement and the severity of penalties under such laws, resulting
in greater scrutiny and punishment to companies convicted of violating anti-corruption and anti-bribery laws. Furthermore, a company
may be found liable for violations by not only its employees, but also by its contractors and third-party agents. Our internal
procedures and programs may not always be effective in ensuring that we, our employees, contractors or third-party agents will
comply strictly with such laws. If we become subject to an enforcement action or in violation of such laws, this may have a material
adverse effect on our reputation, result in significant penalties, fines and/or sanctions imposed on us, and/or have a material
adverse effect on our operations.
Our failure to strictly comply with
Canada’s Extractive Sector Transparency Measures Act could have a material adverse effect on our reputation and results of
operations.
The Canadian Extractive Sector Transparency
Measures Act (“ESTMA”), which became effective June 1, 2015, requires public disclosure of payments to governments
by mining and oil and gas companies engaged in the commercial development of oil, gas and minerals who are either publicly listed
in Canada or with business or assets in Canada. Mandatory annual reporting is required for extractive companies with respect to
payments made to foreign and domestic governments at all levels, including entities established by two or more governments, including
Indigenous groups. Reporting on payments to Canadian First Nations will commence in 2018 for payments made in 2017. ESTMA requires
reporting on the payments of any taxes, royalties, fees, production entitlements, bonuses, dividends, infrastructure improvement
payments, and any other prescribed payment over C$100,000. Failure to report, false reporting or structuring payments to avoid
reporting may result in fines of up to C$250,000 (which may be concurrent). We commenced ESTMA reporting in 2017. If we become
subject to an enforcement action or in violation of ESTMA, this may result in significant penalties, fines and/or sanctions imposed
on us resulting in a material adverse effect on our reputation.
Our business is affected by the global
economy.
Global financial conditions continue to
be characterized as volatile. In recent years, global markets have been adversely impacted by the credit crisis that began in 2008,
the European debt crisis and significant fluctuations in fuel and energy costs and metals prices. Many industries, including the
mining industry, have been impacted by these market conditions. Global financial conditions remain subject to sudden and rapid
destabilizations in response to future events, as government authorities may have limited resources to respond to future crises.
A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to consumer spending,
employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state
of the financial markets, interest rates and tax rates, may adversely affect our growth and profitability. Future crises may be
precipitated by any number of causes, including natural disasters, geopolitical instability, changes to energy prices or sovereign
defaults. If increased levels of volatility continue or in the event of a rapid destabilization of global economic conditions,
it may result in a material adverse effect on commodity prices, demand for metals, including gold, silver, zinc, copper and lead,
availability of credit, investor confidence, and general financial market liquidity, all of which may adversely affect our business
and the market price of our securities.
We may experience difficulty attracting
and retaining qualified management to meet the needs of our anticipated growth, and the failure to manage our growth effectively
could have a material adverse effect on our business and financial condition.
We are dependent on a relatively small
number of key employees, including our President and Chief Executive Officer and our Chief Operating Officer. The loss of any officer
could have an adverse effect on us. We have no life insurance on any individual, and we may be unable to hire a suitable replacement
for them on favorable terms, should that become necessary.
It may be difficult to enforce judgments
or bring actions outside the United States against us and certain of our directors.
We are a Canadian corporation and certain
of our Directors are neither citizens nor residents of the United States. A substantial part of the assets of several of these
persons, are located outside the United States. As a result, it may be difficult or impossible for an investor:
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to enforce in courts outside the United States judgments obtained in United States courts based upon the civil liability provisions of United States federal securities laws against these persons and the Company; or
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to bring in courts outside the United States an original action to enforce liabilities based upon United States federal securities laws against these persons and the Company.
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Our results of operations could be
affected by currency fluctuations.
Our Properties are located in the United
States and most costs associated with this property are paid in U.S. dollars. There can be significant swings in the exchange rate
between the U.S. and Canadian dollar. There are no plans at this time to hedge against any exchange rate fluctuations in currencies.
Title to our properties may be subject
to other claims, which could affect our Properties rights and claims.
There are risks that title to our property
may be challenged or impugned. Our current Properties are located in Nevada and may be subject to prior unrecorded agreements or
transfers or native land claims and title may be affected by undetected defects. There may be valid challenges to the title of
our Properties which, if successful, could impair development and/or operations. This is particularly the case in respect of those
portions of our Properties in which we hold our interest solely through a lease with the claim holders, as such interest is substantially
based on contract and has been subject to a number of assignments (as opposed to a direct interest in the property).
Several of the mineral rights to our Properties
consist of “unpatented” lode mining claims created and maintained in accordance with the United States General Mining
Law of 1872. Unpatented mining claims are unique 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 is often uncertain. This uncertainty arises,
in part, out of the complex federal and state laws and regulations under the United States General Mining Law of 1872. Also, unpatented
mining claims are always subject to possible challenges by third parties or validity contests by the federal government. The validity
of an unpatented lode mining or mill site claim, in terms of both its location and its maintenance, is dependent on strict compliance
with a complex body of U.S. federal and state statutory and decisional law. In addition, there are few public records that definitively
determine the issues of validity and ownership of unpatented mining claims. Should the federal government impose a royalty or additional
tax burdens on the portion of the property that lie within public lands, the resulting mining operations could be seriously impacted,
depending upon the type and amount of the burden.
We may be unable to secure surface
access or purchase required surface rights.
Although the Company acquires the rights
to some or all of the minerals in the ground subject to the mineral tenures that it acquires, or has a right to acquire, in most
cases it does not thereby acquire any rights to, or ownership of, the surface to the areas covered by such mineral tenures. In
such cases, applicable mining laws usually provide for rights of access to the surface for the purpose of carrying on mining activities,
however, the enforcement of such rights through the courts can be costly and time consuming. It is necessary to negotiate surface
access or to purchase the surface rights if long-term access is required. There can be no guarantee that, despite having the right
at law to access the surface and carry on mining activities, we will be able to negotiate satisfactory agreements with any such
existing landowners/occupiers for such access or purchase of such surface rights, and therefore we may be unable to carry out planned
mining activities. In addition, in circumstances where such access is denied, or no agreement can be reached, we may need to rely
on the assistance of local officials or the courts in such jurisdiction the outcomes of which cannot be predicted with any certainty.
Our inability to secure surface access or purchase required surface rights could materially and adversely affect our timing, cost
or overall ability to develop any mineral deposits we may locate.
Our properties and operations may
be subject to litigation or other claims.
From time to time our Properties or operations
may be subject to disputes which may result in litigation or other legal claims. We may be required to assert or defend against
these claims which will divert resources and management time from operations. The costs of these claims or adverse filings may
have a material effect on our business and results of operations.
We do not currently insure against
all the risks and hazards of mineral exploration, development and mining operations.
Exploration, development and mining operations
involve various hazards, including environmental hazards, industrial accidents, metallurgical and other processing problems, unusual
or unexpected rock formations, structural cave-ins or slides, flooding, fires, metal losses and periodic interruptions due to inclement
or hazardous weather conditions. These risks could result in damage to or destruction of mineral properties, facilities or other
property, personal injury, environmental damage, delays in operations, increased cost of operations, monetary losses and possible
legal liability. We may not be able to obtain insurance to cover these risks at economically feasible premiums or at all. We may
elect not to insure where premium costs are disproportionate to our perception of the relevant risks. The payment of such insurance
premiums and of such liabilities would reduce the funds available for exploration and production activities.
We are dependent upon information
technology systems, which are subject to disruption, damage, failure and risks associated with implementation and integration.
We are dependent upon information technology
systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure
from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters
and defects in design. Cybersecurity incidents, in particular, are evolving and include, but are not limited to, malicious
software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in
systems, unauthorized release of confidential or otherwise protected information and the corruption of data. Various measures have
been implemented to manage our risks related to information technology systems and network disruptions. However, given the unpredictability
of the timing, nature and scope of information technology disruptions, we could potentially be subject to operational delays, the
compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation
or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material adverse
effect on our cash flows, competitive position, financial condition or results of operations.
Risks Related to the Common Shares
We believe that we may be a “passive
foreign investment company” for the current taxable year which may result in materially adverse United States federal income
tax consequences for United States investors.
We generally will be designated as a “passive
foreign investment company” under the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended
(a “PFIC”) if, for a tax year, (a) 75% or more of our gross income for such year is “passive income” (generally,
dividends, interest, rents, royalties, and gains from the disposition of assets producing passive income) or (b) if at least 50%
or more of the value of our assets produce, or are held for the production of, passive income, based on the quarterly average of
the fair market value of such assets. United States shareholders should be aware that we believe we were classified as a PFIC during
our tax year ended May 31, 2019, and based on current business plans and financial expectations, believe that we may be a PFIC
for the current and future taxable years. If we are a PFIC for any year during a U.S. shareholder’s holding period, then
such U.S. shareholder generally will be required to treat any gain realized upon a disposition of Common Shares, or any “excess
distribution” received on its Common Shares, as ordinary income, and to pay an interest charge on a portion of such gain
or distribution, unless the shareholder makes a timely and effective "qualified electing fund" election (“QEF Election”)
or a "mark-to-market" election with respect to the Common Shares. A U.S. shareholder who makes a QEF Election generally
must report on a current basis its share of our net capital gain and ordinary earnings for any year in which we are a PFIC, whether
or not we distribute any amount to our shareholders. A U.S. shareholder who makes a mark-to-market election generally must include
as ordinary income each year the excess of the fair market value of the Common Shares over the taxpayer’s basis therein.
This paragraph is qualified in its entirety by the discussion below under the heading “Certain United States Federal Income
Tax Considerations.” Each U.S. shareholder should consult its own tax advisors regarding the PFIC rules and the U.S. federal
income tax consequences of the acquisition, ownership, and disposition of Common Shares.
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 Shares.
Effective internal control is necessary
for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud,
we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business
and reputation with investors may be harmed. As a result of our small size, any current internal control deficiencies may adversely
affect our financial condition, results of operation and access to capital. Although as of May 31, 2019, management has concluded
that our internal control over financial reporting is effective, there can be no assurance that our internal control over financial
reporting will remain effective.
Our share price may be volatile and
as a result you could lose all or part of your investment
.
In addition to volatility associated with
equity securities in general, the value of your investment could decline due to the impact of any of the following factors upon
the market price of the Common Shares:
•
|
changes in the worldwide price for gold and/or silver;
|
•
|
disappointing results from our exploration efforts;
|
•
|
decline in demand for Common Shares;
|
•
|
downward revisions in securities analysts’ estimates or changes in general market conditions;
|
•
|
technological innovations by competitors or in competing technologies;
|
•
|
investor perception of our industry or our prospects; and
|
•
|
general economic trends.
|
In the last 12 months, the price of our
stock on the TSX has ranged from a low of $1.55 to a high of $3.39. In addition, stock markets in general have experienced extreme
price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated
to operating performance and may adversely affect the market price of the Common Shares. As a result, you may be unable to resell
any Common Shares you acquire at a desired price.
We have never paid dividends on the
Common Shares.
We have not paid dividends on the Common
Shares to date, and we may not be in a position to pay dividends for the foreseeable future. Our ability to pay dividends with
respect to the Common Shares will depend on our ability to successfully develop our Properties and generate earnings from operations.
Further, our initial earnings, if any, will likely be retained to finance our operations. Any future dividends on Common Shares
will depend upon our earnings, our then-existing financial requirements and other factors, and will be at the discretion of the
Board.
Investors’ interests in our
Company will be diluted and investors may suffer dilution in their net book value per Common Share if we issue additional employee/Director/consultant
options or if we sell additional Common Shares to finance our operations
.
In order to further expand the Company’s
operations and meet our objectives, any additional growth and/or expanded exploration activity will likely need to be financed
through sale of and issuance of additional Common Shares, including, but not limited to, raising funds to explore the Properties.
Furthermore, to finance any acquisition activity, should that activity be properly approved, and depending on the outcome of our
exploration programs, we will likely also need to issue additional Common Shares to finance future acquisitions, growth and/or
additional exploration programs of our Properties or to acquire additional properties. We will also in the future grant to some
or all of our Directors, officers, and key employees and/or consultants options to purchase Common Shares as non-cash incentives.
The issuance of any equity securities could, and the issuance of any additional Common Shares will, cause our existing shareholders
to experience dilution of their ownership interests.
If we issue additional Common Shares or
decide to enter into joint ventures with other parties in order to raise financing through the sale of equity securities, investors’
interests in the Company will be diluted and investors may suffer dilution in their net book value per Common Share depending on
the price at which such securities are sold.
We are subject to the continued listing
criteria of the TSX and our failure to satisfy these criteria may result in delisting of the Common Shares
.
The Common Shares are currently listed
on the TSX. In order to maintain the listing, we must maintain certain financial and share distribution targets, including maintaining
a minimum number of public shareholders. In addition to objective standards, the TSX may delist the securities of any issuer if,
in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; if it appears that the extent
of public distribution or the aggregate market value of the security has become so reduced as to make continued listing on the
TSX inadvisable; if the issuer sells or disposes of principal operating assets or ceases to be an operating company; if an issuer
fails to comply with the listing requirements of TSX; or if any other event occurs or any condition exists which makes continued
listing on the TSX, in the opinion of the TSX, inadvisable.
If the TSX delists the Common Shares, investors
may face material adverse consequences, including, but not limited to, a lack of trading market for the Common Shares, reduced
liquidity, decreased analyst coverage of the Company, and an inability for us to obtain additional financing to fund our operations.
The issuance of additional Common
Shares may negatively impact the trading price of our securities.
We have issued Common Shares in the past
and will continue to issue Common Shares to finance our activities in the future. In addition, outstanding options, warrants and
broker warrants to purchase Common Shares may be exercised, resulting in the issuance of additional Common Shares. The issuance
by us of additional Common Shares would result in dilution to our shareholders, and even the perception that such an issuance may
occur could have a negative impact on the trading price of the Common Shares.
We are an “emerging growth
company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make
our Common Shares less attractive to investors.
We are an “emerging growth company,”
as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company,
we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved. We will lose our status as an emerging growth company on May 31, 2020.
We cannot predict if investors will find our Common Shares less attractive because we may rely on these exemptions. If some investors
find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and our stock
price may be more volatile. Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards
until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption
from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other
public companies that are not emerging growth companies.
Broker-dealers may be discouraged
from effecting transactions in Common Shares because they are considered a penny stock and are subject to the penny stock rules.
The Common Shares are a penny stock. The
SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price
(as defined) less than USD 5.00 per share or an exercise price of less than USD 5.00 per share, subject to certain exceptions.
The Common Shares are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who
sell to persons other than established customers and “accredited investors”. The term “accredited investor”
refers generally to institutions with assets in excess of USD 5,000,000 or individuals with a net worth in excess of USD 1,000,000
or annual income exceeding USD 200,000 or USD 300,000 jointly with their spouse. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document
in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation
of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny
stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information,
must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock
not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary market for the Common Shares. Consequently, these
penny stock rules may affect the ability of broker-dealers to trade in the Common Shares.
ITEM 2. PROPERTIES
Nevada Properties
NBP and MLP
Our principal mineral properties are the
NBP and the MLP, which form a unified gold exploration project (the “NBP-MLP”) located in northwestern Nye County,
Nevada, in the Northern Bullfrog Hills and Bare Mountains to the east, north and west of the town of Beatty. The NBP-MLP does not
have any known proven or probable reserves under SEC Industry Guide 7 and the project is exploratory in nature. The Technical Report,
“Technical Report and Preliminary Economic Assessment for the Integrated Mother Lode and North Bullfrog Projects, Bullfrog
Mining District, Nye County, Nevada” is available under Corvus’ SEDAR profile at www.sedar.com and EDGAR profile at
www.sec.gov. The Technical Report describes the integration of the two properties into a single mining operation. The Technical
Report is referred to herein for informational purposes only and is not incorporated herein by reference. The Technical Report
contains disclosure regarding Mineral Resources that are not SEC Industry Guide 7 compliant proven or probable reserves.
See
“Cautionary Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable
Reserves” above.
The preliminary economic assessment on
the NBP and the MLP is preliminary in nature and includes “inferred mineral resources” that have a great amount of
uncertainty as to their existence and are considered too speculative geologically to have economic considerations applied to them
that would enable them to be categorized as mineral reserves. It cannot be assumed that all, or any part, of an inferred mineral
resource will ever be upgraded to a higher category.
The following disclosure is derived, in
part, and supported by the Technical Report.
Property Description and Location
The NBP-MLP is located in the Bullfrog
Hills and Bare Mountains of northwestern Nye County, Nevada (Figure 1), and covers about 12,314 hectares of patented and unpatented
mining claims in sections 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 and 36 of T10S R46E, in sections 1,
2, 3, 4, 5, 6, 10, 11, 12, 13, 14, 15, 23, 24, 25, 26, 34 and 35 of T11S R46E, in sections 2, 3, 9, and 10 of T12S R46E, in sections
19, 30, 31 and 32 of T10S R47E, in sections 4, 5, 6, 7, 8, 9, 16, 17, and 18 of T11S R47E, in sections 10, 11, 14, 15, 16, 22,
23, 26, 27, 34, 35 and 36 of T11S R47E, in sections 1, 2, 3, 4, 9, 10, 11, 12 and 13 of T12S R47E, and in sections 4, 5, 6, 7,
8, 9, 16, 17 and 18 of T12S R48E of MDBM. In addition at NBP, we have a total of nine option/lease agreements in place that give
us control of an aggregate of 51 patented lode mining claims (Figure 1). Corvus Nevada owns an additional five patented claims
(the Millman claims) and a 430 acre property with 1600 acre-feet of water rights located north of NBP in the Sacrobatus hydrographic
basin (Basin 146). During October 2018, the NBP was extended to the south by locating the GAP claims, which consist of 190 Federal
Lode mining claims extending south from the previous southwest boundary of the NBP.
Figure 1. Property Map showing the
Location of the North Bullfrog, Mother Lode and Gap claim groups with respect to the town of Beatty, NV.
The MLP is located north of the Bare Mountains
of northwestern Nye County, Nevada (Figure 1) and is connected to the southeast corner of the NBP. The MLP consists of about 3,570
hectares (8,820 acres) of federal unpatented lode mining claims located in Sections 10, 11, 14, 15, 22, 23, 26, 27, 34, 35 and
36 of T11S, R47E; Sections 1, 2, 3, 9, 10, 11, 12, and 13 of T12S, R47E; and Sections 6, 7, 8, 9, 16, 17 and 18 of T12S, R48E,
Mount Diablo Base and Meridian (“MDBM”). The individual claim blocks are the MN claims, the Mother Lode claims and
the ME claims.
Studies at the MLP-NBP have been focused
on the integration of the NBP and the MLP into a single mining operation. The Technical Report describing the integrated NBP-MLP
dated November 1, 2018 and amended November 8, 2018 is available on SEDAR.
Title and Ownership
Redstar
Gold Joint Venture and ITH Land Purchase
Redstar Gold Corp. (“Redstar”)
originally staked 213 unpatented lode mining claims and optioned 21 patented lode mining claims from six private parties in 2006.
ITH optioned the original NBP land package from Redstar in 2006, creating the North Bullfrog Property Joint Venture (“NBPJV”).
ITH added 11 patented lode mining claims (the Mayflower property) to the NBPJV in 2007 under the Greenspun lease agreement. Redstar
added 12 patented lode mining claims (the Connection and adjacent properties) to the NBPJV in 2008 under the lease agreement with
Lunar Landing LLC. In August 2009 ITH purchased 100% interest in the NBPJV from Redstar by paying Redstar $250,000 and issuing
200,000 ITH common shares. These holdings were then transferred to Corvus during the spin out. Corvus completed an additional option
lease agreement on two patented lode mining claims in the Jolly Jane area in March 2011. In May 2014, Corvus amended its existing
lease agreement with Kolo Corp. to add the Yellow Rose and Yellow Rose No. 1 claims. In March 2015 Corvus added a second option
lease agreement with Lunar Landing LLC, to lease the Sunflower, Sunflower No. 1 and Sunflower No. 2 claims for a total of nine
option agreements on private land. Table 1 summarizes the obligations of the nine leases which are part of Corvus’ responsibilities
on the NBP.
Table 1: Summary of Lease Obligations
that are part of the NBP
Party
|
Area
|
Claims/Acres
|
Next Payment
(3)
|
Property Taxes
|
NSR
|
Signing Date
|
Gregory
|
North Pioneer
|
1/8.2
|
$3,800
|
none
|
2%
|
6/16/2006
|
Wiley
(1)
|
Savage
|
3/45.7
|
$9,500
|
none
|
2%
|
5/22/2006
|
Kolo Corp
|
Jolly Jane & Yellow Rose
|
4/81.7
|
$7,400
|
$258
|
3%
|
5/8/2006
|
Milliken
|
Pioneer
|
3/24.5
|
$5,700
|
none
|
2%
|
5/8/2006
|
Pritchard
|
Pioneer
|
12/203.0
|
$20,000
|
none
|
4%
|
5/16/2006
|
Lunar Landing LLC
|
Connection
|
12/195.0
|
$16,200
|
$207
|
4%
|
10/27/2008
|
Lunar Landing LLC
|
Sunflower
|
3/59.2
|
$5,000
|
$180
|
4%
|
3/30/2015
|
Greenspun
(2)
|
Mayflower
|
11/183.1
|
$10,000
|
$214
|
4%
|
12/1/2007
|
Sussman
|
Jolly Jane
|
2/37.4
|
$32,000
|
$113
|
2%
|
3/1/2011
|
Total
|
-
|
51/748.7
|
$109,600
|
$972
|
-
|
-
|
|
(1)
|
Original
title transferred from Hall to Wiley due to death in the family
|
|
(2)
|
Plus
50,000 shares of ITH and 25,000 Common Shares
|
Corvus has added an additional 808 federal
unpatented lode mining claims which were staked in 2012, and added an additional 57 federal unpatented lode mining claims which
were staked in late 2014.
The Gregory, Wiley, Kolo Corp., Milliken,
Pritchard and Lunar Landing leases contain provisions for extension of the lease beyond the initial term, as long as active exploration
or mining activities are maintained by the Company. The leases are now extended annually under this provision.
Gregory
Property (North Pioneer Area) Notification of Extension Term
Pursuant to a mining lease made and entered
into as of June 16, 2006 between Redstar and an arm’s length individual, Redstar has leased one patented mineral claims which
form part of the North Bullfrog project holdings. The lease is for an initial term of 10 years, and for so long thereafter as mining
activities continue on the claims or contiguous claims held by the lessee. The lessee is required to pay advance minimum royalty
payments (recoupable from production royalties) of USD 2,000 on execution, USD 2,000 on each of June 16, 2007, 2008 and 2009, USD
3,000 on June 16, 2010 and each anniversary thereafter, adjusted for inflation. The lessor is entitled to receive a 2% NSR royalty
on all production, which may be purchased by the lessee for USD 1,000,000 per 1% (USD 2,000,000 for the entire royalty).
Hall
Property (Savage Valley Area)
Pursuant to a mining lease made and entered
into as of May 22, 2006 between Redstar and two arm’s length individuals, Redstar has leased three patented mineral claims.
The lease is for an initial term of 10 years, and for so long thereafter as mining activities continue on the claims or contiguous
claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties)
of USD 8,000 on execution, USD 4,800 on each of May 22, 2007, 2008 and 2009, USD 7,200 on May 22, 2010 and each anniversary thereafter,
adjusted for inflation. The lessor is entitled to receive a 2% NSR royalty on all production, which may be purchased by the lessee
for USD 1,000,000 per 1% (USD 2,000,000 for the entire royalty).
Kolo
Property (Jolly Jane Area)
Pursuant to a mining lease made and entered
into as of May 8, 2006 between Redstar and an arm’s length private Nevada corporation, Redstar has leased two patented mining
claims (Jolly Jane and ZuZu). The lease is for an initial term of 10 years, and for so long thereafter as mining activities continue
on the claims or contiguous claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable
from production royalties) of USD 2,000 on execution, USD 2,000 on each of May 8, 2007, 2008 and 2009, USD 3,000 on May 8, 2010
and each anniversary thereafter, adjusted for inflation. The lessor is entitled to receive a 3% NSR royalty on all production from
the Jolly Jane and ZuZu claims, which may be purchased by the lessee for USD 850,000 per 1% (USD 2,550,000 for the entire royalty).
The Kolo lease agreement was amended on
May 29, 2014 to add the Yellow Rose and Yellow Rose No. 1 patented claims to the agreement. The term remained the same, but the
amended lease includes additional Advance Minimum Royalty payments of USD 2,400 per year for years one and two, increasing to USD
3,600 per year thereafter (adjusted for inflation) for the Yellow Rose claims. The Lessor is entitled to receive a 3% NSR royalty
on all production from the Yellow Rose claims, which may be purchased by the lessee for USD 770,000 per 1% (USD 2,310,000 for the
entire royalty).
Milliken
Property (Pioneer Area)
Pursuant to a mining lease made and entered
into as of May 8, 2006 between Redstar and two arm’s length individuals, Redstar has leased three patented mining claims.
The lease is for an initial term of 10 years, and for so long thereafter as mining activities continue on the claims or contiguous
claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties)
of USD 4,000 on execution, USD 3,500 on each of May 8, 2007, 2008 and 2009, USD 4,500 on May 8, 2010 and each anniversary thereafter,
adjusted for inflation. The lessor is entitled to receive a 2% NSR royalty on all production, which may be purchased by the lessee
for USD 1,000,000 per 1% (USD 2,000,000 for the entire royalty).
Prichard
Property (Pioneer Area)
Pursuant to a mining lease made and entered
into as of May 16, 2006 between Redstar and an arm’s length individual, Redstar has leased 12 patented mineral claims. The
lease is for an initial term of 10 years, and for so long thereafter as mining activities continue on the claims or contiguous
claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties)
of USD 20,500 on execution and USD 20,000 on each anniversary thereafter. The lessor is entitled to receive a 4% NSR royalty on
all production, which may be purchased by the lessee for USD 1,000,000 per 1% (USD 4,000,000 for the entire royalty).
Lunar
Property (Connection Area)
Pursuant to a mining lease and option to
purchase agreement made effective October 27, 2008 between Redstar and an arm’s length limited liability company, Redstar
has leased (and has the option to purchase) 12 patented mining claims. The ten-year, renewable mining lease requires advance minimum
royalty payments (recoupable from production royalties, but not applicable to the purchase price if the option to purchase is exercised)
of USD 10,800 on signing and annual payments for the first three anniversaries of USD 10,800 and USD 16,200 for every year thereafter.
Redstar has an option to purchase the property (subject to the NSR royalty below) for USD 1,000,000 at any time during the life
of the lease. Production is subject to a 4% NSR royalty, which may be purchased by the lessee for USD 1,250,000 per 1% (USD 5,000,000
for the entire royalty).
Lunar
Property (Sunflower Area)
Pursuant to a mining lease and option to
purchase agreement made effective March 30, 2015 between Corvus Nevada and an arm’s length limited liability company, Corvus
Nevada has leased (and has the option to purchase) three patented mining claims. The three and a half year, renewable mining lease
requires advance minimum royalty payments (recoupable from production royalties, but not applicable to the purchase price if the
option to purchase is exercised) of USD 5,000 on signing and annual payments for the three anniversaries of USD 5,000. Corvus Nevada
has an option to purchase the property (subject to the NSR royalty below) for USD 300,000 at any time during the life of the lease.
Production is subject to a 4% NSR royalty, which may be purchased by the lessee for USD 500,000 per 1% (USD 2,000,000 for the entire
royalty).
Sussman
Property (Jolly Jane Area)
Pursuant to a mining lease and option to
purchase made effective March 1, 2011 between Corvus Nevada and an arm’s length individual, Corvus Nevada has leased, and
has the option to purchase, two patented mineral claims. The lease is for an initial term of 10 years, subject to extension for
an additional 10 years (provided advance minimum royalties are timely paid), and for so long thereafter as mining activities continue
on the claims. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties, but not applicable
to the purchase price if the option to purchase is exercised) of USD 20,000 on execution, USD 25,000 on each of March 1, 2012,
2013 and 2014, USD 30,000 on March 1, 2015 and each anniversary thereafter, adjusted for inflation. The lessor is entitled to receive
a 2% NSR royalty on all production. The lessee may purchase the royalty for USD 1,000,000 per 1%. If the lessee purchases the entire
royalty (USD 2,000,000) the lessee will also acquire all interest of the lessor in the subject property.
Greenspun
Property (Mayflower Area)
ITH, through what is now Corvus Nevada,
entered into a mining lease with an option to purchase with the Greenspun Group for 183 acres of patented lode mining claims that
cover much of the Mayflower prospect. The Mayflower lease requires Corvus to make payments and complete work programs as outlined
in Table 2. During the term of the lease any production from the Mayflower property is subject to a sliding scale royalty, also
outlined in Table 2. Corvus has the right to purchase a 100% interest in the Mayflower property for $7.5 million plus a 0.5% NSR
(if gold is less than $500) or 1.0% (if gold is above $500) at any time during the term of the lease (subject to escalation for
inflation if the option is exercised after the 10th year of the lease). The annual property taxes to be paid by Corvus for the
Mayflower property are $214. On February 11, 2015, the Mayflower mining lease with option to purchase was amended with the addition
of an anti-dilution clause applying to the ITH shares and with an increase in the annual payment to include 25,000 Common Shares.
On November 22, 2017, the term of the lease was extended for 10 additional years to December 7, 2027.
Table 2: Summary of the Material
Terms of the Mayflower/Greenspun Group Lease
Term: Five Years Beginning December 1, 2007
|
Five additional years to December 7, 2017,
plus an additional three year period or so long thereafter as commercial production continues
Ten Additional years to December 7, 2027,
plus an additional three year period or so long thereafter as commercial production continues
|
Lease Payments: Due on Each Anniversary Date of the Lease
|
On regulatory acceptance - USD 5,000 and
25,000 common shares of ITH
Each of first – fourth anniversaries,
USD 5,000 and 20,000 common shares of ITH
Each of fifth – ninth anniversaries,
USD 10,000, 50,000 common shares of ITH and 25,000 common shares of Corvus
Each tenth to 20
th
anniversaries,
USD 10,000, 50,000 common shares of ITH and 25,000 common shares of Corvus
|
Work Commitments: Excess Expenditures in Any Year Can Be Carried Forward, or if under Spent the Unspent Portion Paid to Greenspun Group
|
Years 1-3 USD 100,000 each year the lease
is in effect
Years 4-6 USD 200,000 each year the lease
is in effect
Years 7-10 USD 300,000 each year the lease
is in effect
Years 11-20 USD 300,000 each year the lease
is in effect
|
Retained Royalty: Production Sliding Scale Net Smelter Return Based on Price of Gold Each Quarter
|
2% if gold is less than USD 300 per ounce
3% if gold is between USD 300 and USD 500
per ounce
4% if gold is more than USD 500 per ounce
|
Advance Minimum Royalty Payments (if not in commercial production by the tenth anniversary, in order to extend lease for an additional three years)
|
Years 21-23 USD 100,000 each year the lease is in effect and commercial production has not been achieved
|
Purchase
Option
:
|
During first 10 years, the property can
be purchased for USD 7.5 million plus an 0.5% NSR (if gold is less than USD 500) or 1.0% (if gold is above USD 500)
After the tenth anniversary the USD 7.5
million purchase price escalates by the Consumer Price Index, using the CPI immediately prior to the tenth anniversary as a base
|
Millman
Property
On February 21, 2013 Corvus Nevada signed
a purchase agreement, which was subsequently closed on March 28, 2013, for the purchase of the surface rights only to five patented
lode mining claims owned by Mr. and Mrs. Gordon Millman and located east of the Mayflower Property. This ground could be used for
potential overburden storage from the Mayflower deposit as well as improving access to the Mayflower Property in general. Corvus
Nevada purchased the surface rights for USD 160,000. Additionally, Corvus Nevada agreed to pay the Millmans a fee of US $0.02 per
ton of any potential overburden storage subject to a minimum storage of 12 million short tons of material. The note for the storage
fee of $240,000 was paid on December 17, 2015.
Sarcobatus
Property
In December 2013, SoN Land and Water LLC,
wholly owned by Corvus Nevada, completed the purchase of an 170 hectare fee simple parcel of land approximately 30 kilometres northwest
of the NBP which carries with it 1,600 acre feet of irrigation water rights within the Sarcobatus Flats water basin. The cost of
the land and associated water rights was USD 1,034,626. The Company has registered the purchase of water rights with the Nevada
State Engineer (“NSE”) and has changed the use to mining on July 18, 2017. Corvus has received a temporary transfer
of the extraction point for a portion of the water (80 acre feet) to the NBP. Corvus has applied to transfer the point of extraction
of all of the water rights to the NBP, and that application is in process. The water right requires annual renewal and the 2019
application is pending approval.
Other
property considerations
All of the unpatented lode mining claims
are on U.S. public land administered by the BLM. These claims give Corvus the right to explore for and mine minerals, including
gold and silver, subject to the necessary permits. The current exploration permits from BLM and NDEP allow Corvus surface access,
maintenance of roads, drilling and sampling, and a defined amount of accompanying surface disturbance. The unpatented lode mining
claims require payment of yearly maintenance fees to the BLM and Nye County (recording fees) of an aggregate of USD 145,000 (estimated
for 2019). Annual property taxes to be paid by Corvus for some of the properties under the original six Redstar leases and subsequent
leases are listed in Table 1.
The unpatented lode claims at the Mother
Lode property will require payment of yearly maintenance fees to BLM and Nye County (recording fees) of an estimated USD 100,000
(estimated for 2019).
Current exploration activities are covered
by a Plan of Operations (NVN-83002) with the BLM. Two exploration Plans of Operation are in place with the NDEP (NDEP#0280 private
land and #0290 public land administered by the BLM) that fulfill the State of Nevada permitting obligations on private and public
lands, respectively. Additional exploration activities are covered by five Notices of Intent (“NOI”) with the BLM.
Those NOIs (N-9221, N-93906, N-95622, N-96894 and N-96991) have temporary terms renewable every two years, and currently extend
to 2020. Reclamation bonds, related to environmental liabilities to which the Properties are subject, are in place to cover activities
on the Properties. Corvus’ reclamation liabilities are covered by surety bonds issued by Lexon Insurance Company in the amount
of USD 284,386 for 89.2 acres (excludes the NOI bonded obligations) of disturbance on public land with the BLM and USD 209,070
for 25.4 acres of disturbance on private land with NDEP. An additional $126,805 of reclamation liability cost for the five NOIs
is also covered by the Lexon Insurance Company.
Accessibility, Physiography, Climate
and Infrastructure at NBP-MLP
The Properties are accessible by a two
and one half hour (209 kilometres, 130 mile) drive north of Las Vegas, Nevada along US Highway 95. US Highway 95 is the major transportation
route between Las Vegas, Nevada, Reno, Nevada and Boise Idaho. Las Vegas is serviced by a major international airport. The Properties
lie immediately to the west and to the east of the highway. Beatty, Nevada is the closest town to the property with a population
of about 1,100 and contains most basic services. The nearest major supply point that would support a major mining related activity
is Las Vegas, Nevada about 160 kilometres to the southeast. There are several accessible old mine workings. Access around both
Properties is by a series of reasonably good gravel and dirt roads that extend to most of the important exploration areas.
The Properties are in Western Nevada’s
high desert, which receives about 15 centimetres of precipitation per year, mostly as modest snow fall in the winter and thunderstorms
in the summer. The average daily temperature (°F) varies from a low of 40 (5 °C) in January to a high of 80 (27 °C)
in July. The hills at the Properties are covered with sparse low brush including creosote, four-wing saltbush, rabbit brush and
Nevada ephedra. The Properties are in the Basin and Range province, with the local topographic relief ranging from only a few hundred
feet to 1000 feet. Most of the areas at the Properties are characterized by low hills separated by modest width valleys.
There are currently no other structures
or infrastructure on the Properties. Major mining and construction equipment sales and service are readily available throughout
Nevada; however, most major mining operations are located in the northern part of the state and are serviced from the cities of
Reno and Elko. Human resources are readily available within the community of Beatty and historically provided a substantial portion
of the workforce for the Bullfrog Mine, which operated between 1989 and 1998 as both an open pit and underground gold mining operation.
Pahrump, approximately 110 kilometres to the southeast of Beatty, is a larger community with a population of 36,000. Pahrump is
a local regional center, with a hospital and emergency medical services, a college campus with technical training for industrial
support and expanded service sectors.
Electrical power is provided to the immediate
area of both the NBP and Mother Lode Properties by the Valley Electric Association, Inc. (“VEA”), which is headquartered
in Pahrump. A 135 kV line runs from the south to the Beatty substation, and a 25 kV line runs north from Beatty, NV along Highway
95. VEA began upgrading its existing electrical facilities, on the eastern portion of the NBP, in mid-2013. The upgrade has a separate
circuit of 15 Mw capacity and will accommodate the presently anticipated future demand at NBP. The Company contributed USD 28,500
for the line upgrade. Two electrical feeder lines run west from the main line, one to the perimeter of the NBP to power an aggregate
crushing plant operating in the southern portion of NBP and a second that traverses the NBP to power a centrally located microwave
station and the Company’s weather station which has been installed on Corvus controlled patented mining claims near Mayflower.
A feeder line currently runs from US Highway 95 up Fluorspar Canyon to a communications installation in the Bare Mountains above
Mother Lode. We anticipate that adequate power will be available for all proposed future mining operations at both Properties.
Water resources for a mining project at
NBP must be obtained from the ground water. There appears to be sufficient resources in the ground water basins at the NBP, and
the Company has registered the water rights purchased in Sarcobatus with the NSE. The Company has converted the Sarcobatus water
rights to a temporary mining use, and has applied to transfer the point of extraction to the NBP. Water wells, booster stations,
and pipelines would be developed to provide water to the mine, process facilities, and ancillary structures. The current plan would
be to drill several wells northwest of the heap leach pad and install a fresh water line from the well fields to the process plant.
The hydrologic characterization program was advanced at the end of 2018 by drilling a water well in the NW corner of NBP which
confirmed the potential of water well sites in the Sarcobatus Flats (Nevada State Water Basin 146) within the northwest portion
of the NBP.
In 2019 the NSE conveyed existing water
rights at the Mother Lode project to Corvus. The water rights, 144.4 acre-feet, were used for mining of the Mother Lode mine and
the Daisy mine during the period 1988-1996 and represent the combined duty of 3 existing water wells near Mother Lode (MW-3, MW-4
and PW-2). Corvus has developed video borehole logs that confirmed the condition of the wells and has re-completed 2 of the wells
(MW-3 and MW-4) to supply water for future exploration drilling.
Geology and Mineralization
Regional
Geologic Setting
NB-MLP lies within the Walker Lane mineral
belt and the Southwestern Nevada Volcanic Field (SWNVF). The regional stratigraphy includes a basement of Late Proterozoic to Late
Paleozoic metamorphic and sedimentary rocks. Basement rocks are overlain by a thick pile of Miocene volcanic and lesser sedimentary
rocks of the SWNVF, ranging in age from ~15-7.5 Ma (Figure 2). The pre-Tertiary rocks exhibit large-scale folding and thrust faulting,
having been subjected to compressional deformation associated with multiple pre-Tertiary orogenic events. The stratigraphy of the
SWNVF is dominated by ash flow tuff sheets erupted from a cluster of nested calderas known as the Timber Mountain Caldera Complex.
The southwestern edge of the caldera complex lies approximately eight kilometres northeast of the MLP, and ten kilometres east
of the NBP (Figure 2). The stratigraphy of the SWNVF includes voluminous ash flow tuff sheets, smaller volume lava flows, shallow
intrusive bodies, and lesser sedimentary rocks. Many of the volcanic units exposed around NBP-MLP include ash flow tuffs that originated
from the caldera complex. Other volcanic units are locally sourced outside of the caldera complex, particularly at the NBP.
The Bullfrog and Fluorspar Hills comprise
a somewhat isolated structural domain within the Walker Lane, where both pre-Tertiary and Miocene rocks have been subjected to
large-scale, W- to WNW-directed, syn-volcanic extension (i.e. down-to-the-west normal faulting and east-tilting of stratigraphy).
Extensional faulting was coincident with magmatism and volcanic activity between ~15-9.4 Ma. Hydrothermal alteration and gold mineralization
were also episodic through this time period. If present, through-going right-lateral faults of the Walker Lane are poorly exposed
in the SWNVF. One possible example of a NW-trending, through-going Walker Lane structure cuts through the historic Silicon and
Thompson mine areas to the northeast of the MLP (Figure 2). Despite the dominance of caldera volcanism in the region, little or
no mineralization is associated with any caldera ring fracture system. Rather, mineralization is typically associated with extensional
faults outside of the caldera complex.
Extension is accommodated by the Bullfrog
Hills Fault System (BHFS); a complex group of kinematically linked faults that facilitate WNW-directed extension and east-tilted
block rotation. The primary structure of the BHFS is the Southern Bullfrog Hills Fault (SBHF). The SBHF is an east-west-trending,
north-dipping, district-scale, low-angle detachment fault. West of Beatty, in the main Bullfrog district, the SBHF separates Proterozoic
metamorphic rocks in the footwall from weakly metamorphosed Paleozoic sedimentary and Tertiary volcanic rocks in the hanging wall.
East of Beatty, in the Bare Mountain sub-district, the same fault is called the Fluorspar Canyon Fault (“FCF”, Figure
2). The FCF cuts up-section from west to east such that in Fluorspar Canyon it separates Paleozoic sedimentary rocks (footwall)
from brittle Tertiary volcanic rocks (hanging-wall). The FCF continues to cut up-section to the east until it eventually separates
brittle Tertiary rocks (footwall) from brittle Tertiary rocks (hanging-wall) at Mother Lode. The magnitude of displacement along
the SBHF-FCF appears to decrease from west to east across the greater Bullfrog district. The northward dip of the SBHF-FCF generally
increases from west to east including: ~20
o
north at the Bullfrog mine, 25-30
o
north in lower Fluorspar Canyon,
45
o
north at the Secret Pass mine, and 55-65
o
northwest at Mother Lode.
Secondary structures of the BHFS include
large-displacement, NNW- to NNE-trending, moderately to steeply west-dipping, down-to-the-west, normal faults. These faults accommodate
the east-tilting of the Tertiary units throughout the Bullfrog and Fluorspar Hills. Hydrothermal alteration and gold mineralization
are often spatially associated with these large-displacement faults. Such faults are expected to have listric shapes at depth.
The MP fault, which hosts the Bullfrog vein at the Bullfrog mine, is an example of a listric fault. Another example is the Contact
Fault, which truncates the north side of the Montgomery-Shoshone deposit. The Contact fault also hosts low-grade mineralization
under Rhyolite Valley. The Road Fault at the NBP is the northern continuation of the Contact Fault. Such faults are interpreted
to sole into the SBHF-FCF detachment fault at depth.
Figure 2 Regional Geology of the
Greater Bullfrog District
The long period of syn-volcanic extension
in the western SWNVF between ~15-9.4 Ma (depending on location) includes at least two periods of accelerated extension documented
in the Bullfrog and Fluorspar Hills. Regional work has identified a major period of extension between ~12.7 Ma and 11.6 Ma culminating
with the eruption of the Timber Mountain Group ash-flows between 11.6 and 11.45 Ma. Evidence for this period of extension lies
west of Mother Lode where the 12.7 Ma Tiva Canyon Tuff is tilted up to 45
o
east, but the nearby 11.6 Ma Rainier Mesa
Tuff is essentially horizontal. Block rotation of up to 45
o
is documented between 12.7 and 11.6 Ma in the Fluorspar
Hills. Mineralization at Mother Lode is coincident with the onset of this period of accelerated extension. Regional work postulates
a second period of accelerated extension between 11.4 Ma and 10.5 Ma, which resulted in major block rotation, rapid erosion and
the deposition of the Rainbow Mountain Debris Flow Sequence. In the Mayflower area, the base of the Rainbow Mountain Debris Flow
Sequence is tilted as much as 55
o
east, whereas the top of the sequence is tilted only 25
o
east. Block rotation
of up to 30
o
is documented in this area while the Mayflower basin was filling with debris. In the southern Bullfrog
Hills east of Rainbow Mountain, the 11.45 Ma Ammonia Tanks tuff is tilted as much as 70
o
east, whereas the base of the
overlying Rainbow Mountain sequence is tilted only 35
o
east. The block rotation of 35
o
is documented in this
area between 11.4 and 10.5 Ma. Extensional faulting continued through ~9.5 Ma, with an additional 25
o
of eastward rotation
of the Rainbow Mountain Sequence. Extensional faulting ceased in the Bullfrog Hills prior to the eruption of the relatively flat-lying
9.4 Ma Pahute Mesa Tuff. The 10 Ma age of Bullfrog and Mayflower mineralization and the 9.5-10.2 Ma age of the Eastern Steam-heated
Zone at NBP coincide with the culmination of extensional tectonism in the Bullfrog Hills.
Extensional faulting in the Bullfrog and
Fluorspar Hills created fault-bounded sedimentary basins which filled with basement- and volcanic-derived sediments (e.g. the Sedimentary
Rocks of Joshua Hollow, the Jolly Jane Formation, and the Rainbow Mountain Debris Flow Sequence). During younger periods of extension,
older normal faults in the hanging-walls of large-displacement listric faults may have experienced significant reactivation and
subsequent eastward rotation, such that they may exhibit relative reverse displacement.
MLP
Geology
The stratigraphy of the Fluorspar Hills
has been described in pamphlets that accompany published geologic maps. The local stratigraphy at MLP has been refined by Corvus
based on pit mapping and exploration drilling. Brief descriptions of units present in the MLP area are given in the following descriptions.
Figure 3 is a simplified geologic map of the Mother Lode deposit area.
Due to the position of the main claim block,
surface exposures of Paleozoic sedimentary rocks are limited at the MLP (Figure 3). The Paleozoic rocks encountered in drilling
are differentiated only by lithofacies. The lithofacies-based units are informally correlated to major Paleozoic units, and interpreted
as separated by thrust faults. The most abundant lithology is a thick sequence of light to medium grey massive dolomite (Psd),
which correlates with the Silurian Lone Mountain Dolomite. Overlying the dolomite in drill holes and in outcrop south of the Mother
Lode pit is a heterogeneous siliciclastic sequence (Psq) dominated by quartzite with lesser dolomitic quartz sandstone, sandy dolomite,
and sandy limestone. The Psq sequence is interpreted to be a highly attenuated, dismembered thrust slice including Eureka Quartzite,
Antelope Valley Limestone and possibly other Ordovician through Devonian lithologies. The Psq unit structurally overlies Psd along
a thrust fault identified herein as the SNA thrust fault (Figure 3). Overlying the Psq sequence is another dismembered sequence
dominated by black siliceous graphitic argillite with lesser dark grey limestone and dolomite (Pss). Lithologies of the Pss sequence
resemble Mississippian and Devonian lithologies exposed in the Joshua Hollow area south of Mother Lode. The Pss sequence is interpreted
to be a dismembered thrust slice overlying Psq along a second thrust fault identified herein as the Joshua thrust.
Despite variations in thickness, the Paleozoic
stratigraphy described above is recognized consistently in reverse circulation drill holes at Mother Lode. The SNA thrust places
older Ordovician(?) rocks over younger Silurian rocks. The Joshua thrust places younger Devonian and Mississippian(?) rocks over
older Ordovician(?) rocks. Both thrust faults appear to dip moderately to gently east. Paleozoic sedimentary rocks, primarily Psd,
host 18% of the samples >0.2 g/t gold in the Mother Lode assay database.
The age of the platy, silty carbonate rocks
in the southeast corner of the Mother Lode pit has been the subject of much debate by previous workers. The well-indurated and
variably folded nature of the platy rocks suggests they are older pre-Tertiary rocks. Based on Corvus drilling, the platy rocks
overlie Tertiary volcaniclastic and conglomeratic sediments. The current interpretation is that these platy rocks are indeed Tertiary
in age and are assigned to the Sedimentary Rocks of Joshua Hollow. If the platy rocks can be determined through micro-fossil work
to be pre-Tertiary, then this exposure would be interpreted as a gravity slide block of older Paleozoic rocks shed into the SRJH
basin.
The Sedimentary Rocks of Joshua Hollow
(SRJH) comprise a heterogeneous sedimentary sequence subdivided into five lithofacies units including: 1) older tuffaceous sediments
(Tjs1); 2) conglomerate (Tjc); 3) volcaniclastic sandstone (Tjvs); 4) grey welded tuff (Tjt); and 5) fine-grained carbonaceous
sediments (Tjs). The stratigraphic order is generally ascending, but the subunits typically inter-finger with each other laterally
and are locally repeated vertically. There is substantial lithologic variability in the SRJH between drill holes. The SRJH are
collectively up to 150 metres thick in the Mother Lode area. Tjvs and Tjs comprise the bulk of the SRJH sequence, and are the only
sub-units exposed in the Mother Lode pit. Tjc, Tjvs and Tjs comprise a generally fining-upward sequence deposited in a local Tertiary
basin marginal to the ancestral Bare Mountain structural high. The SRJH were originally named for sparse recessive exposures south
of Mother Lode in lower Joshua Hollow. The age of the SRJH is unknown, but pre-dates the 14 Ma quartz-porphyry rhyolite dike swarm
of eastern Bare Mountain. The SRJH are considered time-stratigraphic equivalents of the Tr1 sediments in the southern Bullfrog
Hills (>14 Ma). It is possible that the lower SRJH includes sediments as old as Oligocene. All subunits of the SRJH are known
to be mineralized at Mother Lode. The SRJH hosts 40% of the samples >0.2 g/t gold in the Mother Lode assay database.
The basal sedimentary sequence includes
variegated pink, light green and light brown tuffaceous siltstone, fine tuffaceous sandstone, and tuffaceous-conglomeratic sandstone.
When present, Tjs1 lies unconformably on Paleozoic rocks along the basal Tertiary unconformity. Thickness varies from 0-30 metres
in drill holes, suggesting the unit was deposited on an erosional unconformity of significant relief or may have been subjected
to erosion. Tjs1 is not known to crop out anywhere in the Mother Lode area. Tjs1 is distinctive from the overlying Tjvs and Tjs
sub-units, suggesting that it was derived from a different provenance area. Tjs1 may be, in part, a time-stratigraphic equivalent
of the Oligocene Titus Canyon Formation recognized elsewhere in the Bullfrog district.
Figure 3 - Simplified Geologic Map
of the Mother Lode Area
Overlying and interbedded with Tjs1 is
a distinctive siliceous to locally calcareous conglomerate unit. The unit includes fine to coarse angular lithic gritstone, gritty
pebble conglomerate and coarse pebble to cobble conglomerate. Tjc contains clasts of a variety of Paleozoic sedimentary lithologies
including chert, quartzite, dolomite, limestone, sandstone and siltstone. Tjc also contains clasts of Mesozoic (?) granitoid rocks,
Tjs1 lithologies, and minor Tertiary volcanic rocks. Where Tjs1 is absent, Tjc conglomerate lies directly on Paleozoic rocks along
the basal Tertiary unconformity. Tjc often contains conspicuous rounded, broken, deformed and healed Paleozoic clasts that resemble
those found in conglomerates mapped as Titus Canyon Formation elsewhere in the Bullfrog district. Tjc varies in thickness from
0-30 metres, apparently being deposited in channels along an unconformity of significant relief. Because of their inter-fingering
nature, Tjc and Tjs1 have been lumped together as a single unit for the purpose of geologic modeling. The combined Tjc-Tjs1 units
host 5% of the samples >0.2 g/t gold in the Mother Lode assay database.
Overlying and locally interbedded with
Tjc are intervals of fine to coarse, bedded to non-bedded, calcareous and siliceous volcaniclastic sandstone. Tjvs sandstone typically
exhibits an equigranular salt and pepper texture as a result of detrital grains of white feldspar, black biotite, minor grey quartz,
and small black carbonaceous lithic fragments. Highly irregular rip-up clasts of carbonaceous Tjs up to 20 centimetres are common
within the volcaniclastic sandstones. The drilled thickness of individual sandstone intervals varies from <1 to >30 metres.
Volcaniclastic sandstone is interpreted as channel-filling debris derived predominantly from Tertiary volcanic rocks. Tjvs is well-mineralized
where it exhibits the light grey color of strong illite-pyrite alteration. Tjvs hosts 18% of the samples
>
0.2 g/t gold
in the Mother Lode assay database.
A distinctive light grey welded tuff subunit
has been recognized in a few of the northeastern-most drill holes. The tuff is similar in color and composition to the volcaniclastic
sandstone but exhibits a welding fabric defined by white flattened pumice clasts. The tuff subunit varies in drilled thickness
from 10 to 30 metres. It generally occurs in the lower portion of the SRJH and is expected to thicken to the northeast in future
drilling. Tjt is mineralized in every hole that it has been recognized. Tjt may prove to be a significant mineralized marker unit
in future drilling. The grey welded tuff currently hosts <1% of the samples
>
0.2 g/t gold in the Mother Lode assay
database.
Fine grained carbonaceous sediments comprise
the bulk of the upper portion of the SRJH. Lithofacies include variably carbonaceous, mostly calcareous to locally siliceous, laminated
mudstone and siltstone, massive or flaser-bedded water-lain tuff, and variably argillaceous laminated lacustrine limestone (i.e.
marl). Carbonaceous sediments are commonly interbedded with lenses of Tjvs volcaniclastic sandstone. The drilled thickness of individual
intervals of Tjs varies from 10-50 metres within the SRJH. Some of the highest grades in the Mother Lode deposit are hosted in
Tjs carbonaceous sediments. Tjs hosts 17% of the samples >0.2 g/t gold in the Mother Lode assay database.
The Lithic Ridge Tuff is recognized by
Corvus geologists as a distinct stratigraphic unit in drill holes and on the north high-wall of the Mother Lode pit. The tuff had
been erroneously logged by previous operators as a xenolith-rich porphyritic dacite intrusive phase. The Lithic Ridge Tuff consists
of poorly to moderately welded, generally lithic-rich, quartz-biotite-feldspar-bearing ash-flow tuff. Lithic content varies from
<5 to 20+%, including common green altered porphyritic dacite clasts and a variety of Paleozoic clasts. The Lithic Ridge Tuff
overlies the upper beds of the SRJH along an irregular mixed contact zone, suggesting a significant volume of SRJH soft sediments
were ripped-up into the base of Tlr as it was being deposited. The Lithic Ridge Tuff is a well-known regional ash-flow unit of
the SWNVF dated at 14 Ma Tlr is ubiquitously hydrothermally altered, sulphidized and locally mineralized in the Mother Lode deposit
area. Tlr hosts 4% of the samples
>
0.2 g/t gold in the Mother Lode assay database.
Rhyolite porphyry dikes in the Mother Lode
area are part of a NNE-trending, west-dipping swarm of hydrothermally altered dikes that intrude pre-Tertiary rocks for over 14
kilometres along the eastern flank of Bare Mountain. The dikes at Mother Lode comprise the northernmost exposures of the dike swarm,
and the only exposures known to intrude Tertiary rocks. The dikes form somewhat tabular to highly irregular, discontinuous bodies
in both the hanging wall and footwall of the Fluorspar Canyon Fault. Where relatively unaltered, the rhyolite has an aphanitic
to granophyric groundmass with phenocrysts of quartz, plagioclase, sanidine, biotite and minor hornblende. Quartz, biotite and
plagioclase phenocrysts >5 mm are common. Where intensely altered and mineralized, the groundmass is replaced by a mixture of
illite-smectite. Mafic minerals are progressively altered to chlorite and replaced by pyrite in mineralized rhyolite. Feldspars
are altered to calcite, illite, or adularia. Rhyolite porphyry dikes have yielded age dates ranging from 14.4 to 13.8 Ma with an
accepted average age of ~14 Ma. An interpretation from new drilling at Mother Lode is that rhyolite dikes intrude the Lithic Ridge
Tuff and may have formed a local lava flow overlying the Lithic Ridge Tuff. Dike emplacement and the eruption of the Lithic Ridge
Tuff are closely related to magmatic activity at ~14 Ma. Tip is the dominant host lithology at Mother Lode, hosting 33% of the
samples
>
0.2 g/t gold in the assay database.
A second sedimentary sequence has been
recognized overlying the Lithic Ridge Tuff. The unit includes limonitic to carbonaceous, siliceous to calcareous, fine volcaniclastic
sandstone and siltstone similar to Tjs and Tjvs. North of the Mother Lode pit, the Tys unit varies in thickness from 0 to 10 metres
and increases to a maximum known thickness of 70 metres in ML 18-072 west of the pit. Tys is lumped in with Tlr in the geologic
model. Tys is not known to be mineralized at Mother Lode.
The regionally extensive Crater Flat Group
has been described to include the Tram Tuff (Tct) and Bullfrog Tuff (Tcb) members crop out to the northeast of Mother Lode and
in Fluorspar Canyon. Neither tuff has been identified in-situ in the Mother Lode drilling area. The tuffs are similar in texture
and composition, both being moderately crystal-rich welded tuffs that exhibit ubiquitous hydrothermal alteration. The younger Bullfrog
Tuff has been dated at 13.25 Ma. The Bullfrog Tuff is the primary host unit at the Secret Pass Deposit.
In the Fluorspar Hills, the Paintbrush
Group is comprised of two members: the 12.8 Ma Topopah Springs Tuff (Tpt), and 12.7 Ma Tiva Canyon Tuff (Tpc). The Paintbrush tuffs
are typically reddish brown, aphanitic, phenocryst-poor and densely welded. Paintbrush tuffs are distinctly shard-rich and phenocryst-poor
compared to other major ash flow tuffs of the SWNVF. The Paintbrush Group has an exposed thickness of nearly 600 metres north of
the Secret Pass Deposit but is not recognized in the Mother Lode area. The contact between the underlying Bullfrog Tuff and basal
vitrophyre of the Topopah Springs Tuff is well-exposed on the north high-wall of the Secret Pass Pit.
A substantial thickness of heterolithic
debris flow breccia (Toxh) overlies the Tiva Canyon Tuff ~1.5 kilometres west of the Mother Lode deposit. Such breccias in the
Mother Lode area are mapped as Tox (i.e. older breccia). The Tox unit is analogous to younger post-Rainier Mesa debris flow breccia
deposits of the Rainbow Mountain Sequence at NBP. Tox is predominantly heterolithic but may locally contain monolithic breccias
(Toxm) of rhyolite porphyry, SRJH, Lithic Ridge Tuff, or Crater Flat Group tuffs. Heterolithic debris flow breccias are generally
non-bedded, very poorly sorted, and contain sand- to large boulder-size clasts of all older units. Tox exists only in the hanging
wall of the FCF, where it unconformably overlies Tp, Tip, Tlr, Tys and SRJH. Tox is interpreted to have been deposited on an angular
erosional unconformity of significant relief. Up to 150 metres of Toxh has been penetrated in the hanging-wall of the Fluorspar
Canyon Fault west of the Mother Lode pit. Tox is interpreted as mass-wasted scarp breccias and alluvial fan deposits that have
been shed off fault scarps, including the FCF, during the period of accelerated extension between 12.7-11.6 Ma. Based on stratigraphic
relations, Tox is considered a post-mineral unit at Mother Lode (post-12.7 Ma), but it is also known to contain gold. The distribution
of oxide gold mineralization in Tox suggests that the mineralization is detrital in nature, having been mass-wasted off the mineralized
footwall of the FCF. Tox hosts 2% of the samples
>
0.2 g/t gold in the assay database.
The lower part of the Timber Mountain Group
includes rhyolitic tuffs and lava flows that are known as the Pre-Timber Mountain tuffs (Tprt) and lavas (Tprr) respectively. These
units are undated but occupy the stratigraphic position between the Paintbrush Group (or Tox, if present) and the large volume
Timber Mountain tuffs. Tprt consists of light-colored, non-welded to bedded, lapilli rich, pumaceous lithic-rich crystal tuff.
Tprt is up to 150 metres thick in the Mother Lode drilling area. Tprt appears to blanket paleo-topography cut on the Toxh debris
flow sequence. Tprt was deposited during or just after the period of accelerated extensional tectonism associated with the deposition
of Tox. Tprt is not known to be mineralized at Mother Lode but exhibits ubiquitous steam-heated alteration north and west of the
deposit.
Tprt represents pyroclastic deposits associated
with Tprr rhyolite volcanism. Tprr consists of aphanitic to fine porphyritic, massive to flow-banded, rhyolite lava flows (i.e.
flow-dome complexes) at the Twisted Canyon and Sawtooth areas of MLP and at the Spicerite target areas at NBP. The rhyolite varies
in appearance from relatively fresh, grey to black, glassy perlite or obsidian, to tan to pale green strongly devitrified zeolitic
rhyolite. Tprr is not present in the Mother Lode area.
Regionally there are two large-volume ash
flow sheets that comprise bulk of the Timber Mountain Group. These include the 11.6 Ma Rainier Mesa Tuff (Tmr) and 11.45 Ma Ammonia
Tanks Tuff (Tma). The Timber Mountain tuffs are typically densely welded, crystal-rich ashflow tuffs, with 15-20+% phenocrysts
of quartz, feldspar and biotite. The units can be distinguished from each other by the presence of sphene and bluish chatoyant
sanidine phenocrysts in the Ammonia Tanks Tuff. In the Mother Lode area, the Rainier Mesa Tuff directly overlies steam-heated Tprt.
The Rainier Mesa Tuff may overlie Tprr or Tp elsewhere in the district. The Rainier Mesa Tuff is sub-horizontal, relatively unaltered,
and entirely post-mineral in the Mother Lode area. The Ammonia Tanks Tuff is recognized only at the Sawtooth target area.
Older unconsolidated gravel deposits of
late-Miocene to Pliocene age occur at the Willy’s target area along the eastern rangefront area of Bare Mountain, and at
the Twisted Canyon and Baileys Gap target areas on the east side of Oasis Valley (see Figure 2). The gravels form sub-horizontal
terraces that are commonly, deeply incised. Underlying older rocks are often poorly exposed in the bottoms of incised ravines below
the terrace gravels. The older gravels at the MLP are correlated to the Gravels of Sober-up Gulch on the west side of Oasis Valley
at NBP. The thickness of Tgs is highly variable, but not expected to exceed 100 metres. An 8.2 Ma age for a tuff unit within the
Gravels of Sober-up Gulch east of Bare Mountain has been reported.
The Mother Lode deposit is largely covered
with unconsolidated Quaternary gravels. Quaternary gravels range in thickness from 1-20 metres in the Mother Lode drilling area.
The Quaternary gravels are variably caliche-cemented and form stable vertical walls in the Mother Lode pit.
NBP
Geology
The NBP is within the Walker Lane structural
province and the Southwestern Nevada Volcanic Field (“SWNVF”). The Project lies approximately ten kilometres west of
the western margin of the middle Miocene Timber Mountain caldera complex of the SWNVF and many of the volcanic units exposed on
the NBP originated from the caldera complex. However, it appears that many of the most important host rocks to the mineralization
are locally derived from what is now known as the NBH Volcanic Complex (“NBVC”) and are slightly older than the main
ash flows erupted from the Timber Mountain Caldera. The region is underlain by Paleozoic sedimentary rocks which are the basement
for the mid-Miocene tuffs and related rocks that are the hosts for most of the mineralization in the Bullfrog mining district.
The region was subjected to extensional faulting which was contemporaneous with volcanism and localized sedimentary basins filled
with reworked volcanic and basement debris developed as a result. Multiple episodes of extension have been documented. Most of
the major fault zones have northerly strikes with normal displacement to the west. However, hanging wall antithetic faults are
also present. Some of the major faults are interpreted to have listric shapes, similar to the main mineralizing fault at the Bullfrog
mine, and likely sole into a district-scale detachment fault at depth. During younger periods of extension many of the older faults
in the hanging walls of these listric structures have experienced significant rotation. Figure 4 is a geologic map of NBP showing
target exploration and resource areas:
The NBH is underlain by pre-Tertiary basement
rocks consisting of Precambrian to Cambrian sedimentary rocks of the Wood Canyon, Zabriskie and Carrara Formations. The basement
rocks are exposed on the property in two prominent erosional windows. The pre-Tertiary windows are remnants of a basement structural
high of significant relief upon which the Tertiary rocks were deposited. The basement rocks are overlain by a sequence of Miocene
volcanic and lesser sedimentary rocks of the SWNVF.
The lowermost Tertiary rocks are known
as the Jolly Jane Formation and consist of a basal conglomerate overlain by a sequence of heterogeneous sedimentary rocks including
mudstone, siltstone and sandstone. The basal conglomerate is a time transgressive surface lag deposit which generally contains
abundant clasts of pre-Tertiary basement rocks. The type locality for this unit is known from drilling in the Jolly Jane area and
consists of up to 50 metres of heterogeneous sediments which appear to have been accumulated in a structural basin prior to and
during the onset of volcanism. Sandstone, silt, shale and calcareous sediments are present with both black organic-rich and hematitic
intervals also present. It is common to see tuffaceous sediments in the upper portions of the sand and shale sequences. The thickness
and composition of the Jolly Jane Formation is highly variable, and is interpreted to have been deposited on a Tertiary erosional
unconformity of significant relief.
The Jolly Jane Formation is overlain by
the Savage Formation which consists of locally-sourced lava domes, flows and associated intrusive rocks of dacitic to rhyolitic
composition. The Savage Formation also includes intercalated volcaniclastic intervals (re-worked dacite) and locally carbonaceous
sediments. It is rather heterogeneous in terms of the thickness and the areal distribution of individual domes, flows and epiclastic
intervals. The Savage Formation is only locally mineralized.
The Pioneer Formation rhyolitic pyroclastics
overlie the Savage Formation dacites. The Pioneer Formation ranges from 10 to more than 200 metres in thickness and consists of
monotonous lithic lapilli tuffs. In the northern parts of the NBP these tuffs are mixed with rhyolite domes of uncertain origin,
however, dating shows that the tuffs and rhyolites are essentially the same age. Epiclastic sediments found at the top of the Pioneer
Formation suggest that an angular unconformity is developed between this sequence and the overlying Sierra Blanca Tuff. The Pioneer
Formation is extensively altered and hosts a large portion of the disseminated gold mineralization.
The Sierra Blanca Tuff is a large rhyolitic
ash flow tuff that blankets the NBP. Unlike the preceding units, which appear to have been locally derived, the Sierra Blanca Tuff
probably represents a regional ash flow eruption that came from outside the NBP. The Sierra Blanca Tuff varies in thickness from
<70 metres at Jolly Jane to >160 metres at North Sierra Blanca. The tuff consists of a single cooling unit and is densely
welded. The densely welded nature makes the rock brittle and, as a consequence, it is the most important host for both disseminated
and vein style mineralization at the NBP.
Following the deposition of the Sierra
Blanca Tuff, local volcanism continued with the deposition of the Savage Dacite, another locally-sourced sequence of lava domes,
flows, pyroclastics and epiclastics of primarily dacitic composition. The Savage Dacite varies greatly in both thickness and composition,
characterized by alternating eruptive cycles of geochemically different dacitic magmas. The Savage Dacite is only mineralized where
it is in contact with significant fault structures.
Zircon dating shows that the entire sequence
from Pioneer Formation through the Savage Dacite was deposited between 16.1Ma and 14.4Ma, making it among the oldest volcanic in
the region.
Figure 4: Geologic Map of NBP Showing
Target and Resource Areas and Legend of Geologic Symbols
The 13.5Ma Crater Flat Tuff, which consists
of two regionally extensive ash flow cooling units, appears to overlie the Savage Dacite at both Savage Valley and Jolly Jane but
the contact is not exposed at the surface. The Crater Flat Tuffs are extensively altered at both YellowJacket and Jolly Jane but
no significant mineralization has yet been identified in these units.
The Rainbow Mountain Sequence is the most
heterogeneous unit of the NBH. It consists of intercalated sequences of heterolithic and monolithic sedimentary debris flow breccias,
large slide bocks derived from local volcanic and sedimentary units, as well as rhyolitic ash flows and rhyolite domes. The debris
flow breccias are bedded but poorly sorted, consisting of sand – to large boulder-size clasts of predominantly volcanic rocks.
Both gravity sliding and fluvial processes appear to have played a role in deposition. The volcanic debris is derived from many
of the SWNVF units that are preserved as tabular ash flow tuff sheets elsewhere in the Bullfrog Hills. These include the Crater
Flat Group, the Paintbrush Group and the Timber Mountain Group tuffs. The debris flow breccia deposits are largely the result of
the re-working of the SWNVF units via gravity sliding and alluvial fan development around fault-bounded basement structural highs.
The Debris Flow Breccia sequence represents a period of dynamic extensional faulting, scarp development and mass wasting. Massive,
relatively intact blocks of monolithic breccias are interpreted as landslide megabreccia deposits that were shed off local fault
scarps. Gold mineralization at Mayflower and Connection is hosted in the Rainbow Mountain Sequence. The thickness of this unit
exceeds 300 metres in the Mayflower area.
Mineralization
MLP
Mineralization
Mother Lode is characterized as a sediment,
intrusive, and locally volcanic-hosted disseminated gold deposit. Mineralization most closely resembles Carlin-type sediment-hosted
gold deposits of north-central Nevada. There is similarity to Carlin-type deposits and evidence for a large buried porphyry-type
magmatic system associated with the rhyolite dike swarm at eastern Bare Mountain. The Mother Lode deposit formed at ~12.7 Ma, which
is much younger than the typical ~40 Ma age in north-central Nevada. The nature of mineralization is rather passive and with very
low introduction of secondary silica, suggesting it may have formed at a shallower depth and at lower temperature than typical
Carlin-type deposits. Mineralization exhibits geochemical associations between Au and As-Sb-Hg-Tl-Te-Bi-F, with very low Ag and
base metals.
The Mother Lode deposit model consists
of structurally and stratigraphically-controlled disseminated gold mineralization hosted primarily in rhyolite porphyry dikes (Tip)
and the Sedimentary Rocks of Joshua Hollow (SRJH). Lesser volume hosts include Paleozoic sedimentary rocks (Psd and Psq), Tertiary
volcanic rocks (Tlr), and debris flow breccias (Tox). Mineralization in Tip, SRJH and Tlr is mostly sulphide, but may be oxidized
depending on depth. Mineralization in Psd, Psq and Tox is mostly oxide. The current interpretation is that oxide mineralization
in Tox is detrital, with mineralized rock having been mass-wasted as scarp breccias into the hanging-wall of the FCF. Paleozoic
rocks are most commonly mineralized in proximity to dike margins but are also mineralized along subtle non-dike-filled structures
and as pseudo-stratiform jasperoid bodies.
The primary structural control feeding
mineralization at Mother Lode is a series of north-trending, 50-70
o
west-dipping rhyolite dike-filled structures. Mineralization
is both semi-tabular and highly irregular as fluids ascended along dike-filled structures in the underlying Paleozoic rocks, through
the Tertiary unconformity, and expanded upward into the Tertiary section. Mineralizing fluids appear to have bled out laterally
away from mineralized dikes into favorable permeable lithologies and secondary structures, including the FCF. Deeper drilling has
extended the deposit to the west, where it appears that the FCF plays a significant role as a high-grade structural feeder (Figure
3). The potential for additional mineralized dikes in the vicinity of the FCF at depth to the west below current drilling is a
highly attractive target.
Rhyolite dikes along the entire Bare Mountain
swarm were subjected to high-temperature, sanidine- and biotite-stable alteration shortly after emplacement. At Mother Lode, biotite-stable
alteration was followed by a lower temperature pervasive illite-smectite-pyrite event that affected both the dikes and surrounding
wall rocks. The illite-smectite-pyrite event penetrates well up into the Lithic Ridge Tuff, forming a large sulphidation halo around
the gold mineralization. Illite-smectite-pyrite alteration typically exhibits strongly elevated As, Sb and Tl, and may be well-mineralized
or only anomalous in gold. The evidence suggests an early relatively barren illite-pyrite event is followed by an overprinting
main stage Au-Te sulphidation event.
Trace element geochemistry associated with
gold mineralization in drill hole samples includes: As (max 9262 ppm), Sb (max 1429 ppm), Te (max 16 ppm), Tl (max 17 ppm), Hg
(max 30 ppm) and Bi (max 25 ppm). The elements with the strongest correlation to gold are tellurium and arsenic. Base metals are
very low at Mother Lode. Elevated base metal values are largely associated with basement rocks. The presence of fluorite veining
and a strong association between gold and fluorine has been reported at Mother Lode. Fluorine is not included in the multi-element
analysis used by Corvus, but fluorite has been identified in the Mother Lode pit. Petrographic studies on sulphide concentrates
from drill holes at Mother Lode identified growth zones in pyrite grains exhibiting concentrations of arsenic. It has been concluded
that the Mother Lode deposit formed at a depth of 500-1000 metres or less, from gold-bearing fluids with temperatures between 200-240
o
C.
High-grade gold appears to be associated with remobilized carbon, particularly in Tjs and Tjvs in the upper portion of the deposit.
Remobilized carbon appears to have accumulated in a blanket-like zone above the upper reaches of the rhyolite dikes.
Jasperoid in Paleozoic rocks appears to
have both structural and stratigraphic control. Jasperoid intervals in drill holes commonly contain significant Ag values up to
100 ppm. The average Ag/Au ratio from jasperoid samples is 15:1. The average Ag/Au ratio in non-jasperoid Tertiary rock-hosted
samples is <0.5:1. Jasperoid mineralization in Paleozoic rocks may be a separate mineralizing event that predates the main Mother
Lode gold system. Jasperoid is typically oxidized and yields high cyanide shake leach recoveries.
NBP
Mineralization
All of the mineralization at NBP can be
classified as low-sulphidation epithermal mineralization. There are at least two and possibly three distinct periods of mineralization
present. Older mineralization, before 11.2 Ma, is observed at the Sierra Blanca and Jolly Jane mineral resource areas. A younger
mineralization, 10 Ma, occurs at the Mayflower mineral resource area.
In both mineralization periods, there are
two styles of low suphidation gold/silver mineralization; (1) high-grade, fault controlled fissure veins, vein breccias and stockworks
(Mayflower, Liberator, YellowJacket, Liberty and others), and (2) low-grade disseminated replacement deposits (Sierra Blanca, Jolly
Jane and Mayflower). The low-grade, disseminated mineralization is currently the more abundant type at NBP.
|
1)
|
Sierra Blanca Mineralization
|
Mineralization at Sierra Blanca can be
classified into six different styles:
•
|
Disseminated gold mineralization associated with pervasive silica adularia and sulphidation of iron (ubiquitous at Sierra Blanca );
|
•
|
Gold associated with fault controlled suphidation (NE30, NE50, NE60 Faults);
|
•
|
Gold associated with quartz veining;
|
•
|
Continuous quartz vein and associated stockworks (Josh vein at YellowJacket);
|
•
|
Localized quartz veins and stockworks (numerous zones); or
|
•
|
Sulphide veining with gold and tellurium mineralization (Air Track Hill).
|
Pervasive disseminated mineralization occurs
in the Pioneer Formation and Sierra Blanca Tuff over virtually the entire area at Sierra Blanca at 0.2-0.3 g/t gold grade. Oxidation
of this mineralization extends locally to 200 metres and is associated with good cyanide leach metallurgical recovery. Fault hosted
mineralization has been encountered in numerous locations (NS10, E30, NE40, NE50, NE60 and Savage Faults) with consistently higher
gold grade (1-17 g/t) than the disseminated mineralization. Where oxidized, the fault zones respond well to cyanide leaching.
Quartz vein and stockwork mineralization
occurs primarily in the YellowJacket deposit, a generally NW striking structural corridor along the eastern side of Sierra Blanca.
The gold-bearing quartz vein and stockwork zones are generally gray translucent quartz with native gold and electrum, and varying
amounts of acanthite or other silver sulphosalts. Metallurgical testing indicates the potential for high gold and silver recovery
with cyanide leaching, both above and below the oxidation horizon.
The pervasive disseminated mineralization
at Sierra Blanca and the Josh vein and stockwork mineralization at YellowJacket comprise approximately 84% of the gold resource
at NBP.
|
2)
|
Jolly Jane Mineralization
|
Jolly Jane is located in the middle of
NBP and virtually all of the geological elements common to NBP are found there. Disseminated mineralization occurs within the Sierra
Blanc Tuff, which is thinner, approximately 70 metres as compared to a thickness of >160 metres at Sierra Blanca. The mineralized
Sierra Blanca Tuff is preserved a horst between the West Jolly Jane Fault and the East Jolly Jane Fault. Gold grade is similar
to Sierra Blanca disseminated mineralization with slightly lower cyanide leach recovery.
|
3)
|
Mayflower Mineralization
|
Younger, fracture controlled deposits at
Mayflower and Pioneer were historically mined. The Mayflower Mine developed on a calcite vein and stockwork zone along a NW striking,
steeply SW-dipping fault zone in silica-adularia-altered heterolithioc debris flow breccia in the Rainbow Mountain Sequence. Multiple
high-grade gold areas have been identified, surrounded by low-grade mineralization. Mayflower mineralization is typically 0. 4-0.5
g/t and is well oxidized with good cyanide leach recovery.
Historical Exploration Work
The Bullfrog district is informally divided
into three subdistricts: 1) Main Bullfrog {west of Beatty NV, along the Southern Bullfrog Hills Fault [SBHF] in Figure 2}; 2) North
Bullfrog {west Oasis Valley in the northern Bullfrog Hills in Figure 2}; and 3) Bare Mountain {east of Beatty NV along the Fluorspar
Canyon Fault [FCF] in Figure 2}. Figure 2 shows the modern (red) producing mines and the general areas of the subdistricts. Gold
was first discovered in the main Bullfrog district by Frank “Shorty” Harris and Ernest Cross on August 9, 1904 at the
location of the Original Bullfrog mine. The discovery sparked a rush of prospectors and within a few weeks the district was staked
“for nine miles in all directions from the sagebrush flats, including part of the desert to the tip of every summit in sight”.
District production is estimated at 111,805 ounces of gold and 868,749 ounces of silver between 1905 and 1921. The Montgomery-Shoshone
mine was the most important mine in the district, operating between 1907 and 1910. A number of other small mines in the Main Bullfrog
and North Bullfrog subdistricts contributed to the total reported production.
The Bare Mountain subdistrict is also known
historically as the Fluorine district. Gold was first discovered on the east side of Bare Mountain in 1905 as prospectors flocked
to the Beatty area after the discovery at Original Bullfrog mine. Gold was first discovered in Fluorspar Canyon in 1906 near the
Daisy shaft. Unreported amounts of gold were produced from a number of small operations around Bare Mountain between 1907 and 1929.
Gold prospecting led to the discovery of a number of fluorite vein deposits associated with gold mineralization including the Daisy
(or Crowell), Goldspar and Mary mines. Daisy was by far the largest fluorspar mine producing 204,508 tons between 1919 and 1986.
Fluorspar Canyon was named because of a number of fluorite occurrences in the Daisy area.
Mercury was discovered in 1908 at the Harvey
(also known as the Telluride) mine on the northeast flank of Bare Mountain just one kilometer south-southwest of the Mother Lode
deposit. The Harvey mine operated intermittently between 1912 and 1943 producing 72 flasks of mercury. Another mercury occurrence
known as the Tip Top mine lies along the Flatiron jasperoid just 800 metres southwest of the Mother Lode deposit. The Tip Top mine
has no documented production, but may have produced up to 100 flasks of mercury. The Harvey and Tip Top mines are known to have
gold associated with cinnabar, but no reported gold production. Mercury was later discovered at the Thompson mine in 1929. The
Thompson mine is located 5 kilometres northeast of Mother Lode, and is reported to have had only minor mercury production.
Ceramic grade high-purity silica was produced
at the Silicon mine between 1919 and 1929, located 1.5 kilometres northwest of the Thompson mine.
Modern exploration for precious metals
in the main Bullfrog subdistrict began as early as 1982, when geologists from St. Joe Minerals Corporation became interested in
the Montgomery-Shoshone area. St. Joe Minerals conducted extensive exploration in the area of the Montgomery-Shoshone and Senator
Stewart mines, resulting in the discovery of the Bullfrog vein deposit in 1987. Several company acquisitions resulted in Barrick
Gold Corporation (“Barrick”) being the final owner and operator of the mine. The Bullfrog mine produced gold and silver
from three deposits including: 1) Bullfrog (open pit and underground); 2) Montgomery-Shoshone (open pit); and 3) Bonanza Mountain
(open pit). Between 1989 and 1999, the Bullfrog mine produced 2.31 million ounces (“Moz”) of gold and 3.0 Moz of silver.
The Gold Bar open pit mine, located 4 kilometres northeast of the Original Bullfrog mine, produced a small (unreported) amount
of gold in the late 1980’s.
Modern exploration for precious metals
in the North Bullfrog subdistrict began as early as 1974. There has been no reported modern production from the North Bullfrog
subdistrict.
Modern exploration for precious metals
in the Bare Mountain subdistrict began in the 1973 when Cordilleran Exploration Company (“Cordex”) staked claims in
the Sterling mine area. Between 1973 and 1977, Cordex discovered and delineated bulk-tonnage sediment-hosted gold mineralization
at the Sterling mine. In 1978, Cordex leased the Sterling property to Saga Exploration Company (“Saga”). Saga continued
to explore the property, and in 1980 formed the Sterling Mine Joint Venture (“SMJV”). The SMJV began producing gold
in April 1980.
Cordex explored the Paleozoic sedimentary
rocks in Fluorspar Canyon starting in the mid-1970’s, focusing on gold mineralization associated with the fluorite occurrences.
In 1979, U.S. Borax Incorporated (“US Borax”) (Pacific Coast Mines) staked the original BVC claims in the Fluorspar
Canyon area. U.S. Borax was primarily interested in uranium, but recognized the potential for bulk-tonnage volcanic-hosted disseminated
gold mineralization, and discovered the Secret Pass deposit in 1981. In 1985, Cordex entered into a joint venture agreement with
U.S. Borax, and by 1989 had earned 100% interest in the U.S. Borax holdings, which would become the core of the Daisy mine property.
In 1990-1991, Inter-Rock Gold, Inc. (“Inter-Rock”), through a series of transactions, acquired an option to earn 100%
interest in the Daisy mine property, subject to a 25% back-in right to Cordex. Between 1985 and 1994, Cordex was involved in the
discovery and delineation of two new sediment-hosted gold deposits at Daisy South and Daisy West, as well as expanding the Secret
Pass deposit. In 1994, Inter-Rock had earned 100% interest in the Daisy mine property through the funding of ongoing exploration,
and Cordex (now Rayrock Mines Inc. (“Rayrock”)) elected to exercise their back-in rights to hold 25% interest in the
property. In 1995, the Mother Lode property was purchased by Rayrock from U.S. Nevada Gold Search Joint Venture (“USNGSJV”)
and incorporated into the Daisy mine property. The Daisy mine partnership subsequently consisted of Rayrock as the operator (35%)
and Inter-Rock as the majority owner (65%). The Daisy mine partnership began mining the Secret Pass and Daisy West deposits in
late 1996 and ceased mining operations in late 1999. Inter-Rock sold all interest in the Daisy mine property back to Rayrock in
1998. Gold production from the Daisy leach pad continued into 2001.
Reported modern production of 351,744 ounces
from Bare Mountain subdistrict has come from the following deposits: 1) 212,744 ounces produced at the Sterling mine (open pit
and underground) between 1980 and 2015; 2) 104,000 ounces produced from the combined Secret Pass and Daisy West open pit mines
between 1996 and 2001; and 3) 35,000 ounces produced from the Mother Lode open pit mine between 1989-1991.
The discovery and production history of
the MLP is presented in the section below.
MLP
History
In 1983, shortly after U.S. Borax had discovered
the Secret Pass deposit, Galli Exploration Associates (“Galli”) which was later spun off as GEXA Gold Corporation (“GEXA”)
in 1987, prospected and staked claims in the Mother Lode-Joshua Hollow areas east of Secret Pass. In 1985, Galli drilled 54 shallow
holes in the Flatiron jasperoid area along the Fluorspar Canyon Fault. Mineralized intercepts were generally narrow, low grade,
and confined to the fault zone. Galli geologists recommended drilling the pediment area where the Fluorspar Canyon Fault was projected
to intersect a northwest-trending rangefront fault. The Mother Lode deposit was discovered in 1987 with drill hole ML-59, which
intersected 47m (155 ft) of 1.7 g/t (0.049 ounces per ton) gold. GEXA also discovered the SNA deposit under pediment to the south
of Mother Lode in 1987.
The Mother Lode deposit was delineated
by drilling in 1987 and 1988. In 1988, GEXA formed USNGSJV with U.S. Precious Metals, Inc. and contract miner N.A. Degerstrom,
Inc.. Mining of the Mother Lode deposit began in 1989. Between 1989 and 1991, the USNGSJV produced approximately 35,000 ounces
of gold at Mother Lode at an average grade of 1.8 g/t gold. The bulk of the gold production came in 1990. Mining ceased in 1991
as oxide reserves were mined-out.
Rayrock purchased the Mother Lode property
in 1995 from the USNGSJV; incorporating the Mother Lode and SNA deposit resources into the Daisy mine property. Rayrock continued
to explore the Mother Lode-SNA area through 1997. Rayrock also intended to mine sulfide resources at Mother Lode as a part of their
Daisy mine plan but a declining gold price in 1998 prohibited this development. Some mining development was done in the Mother
Lode pit between 1998 and 1999, but no separate gold production was reported.
Glamis Marigold Mining Company (“Glamis”)
acquired all of the assets of Rayrock in March 1999, including 100% interest in the Daisy mine property. Glamis continued limited
gold recovery from the Daisy leach pad into early 2001. The majority of the Daisy mine property was dropped by Glamis in 2001 and
2002, and the Daisy Project began reclamation work. Glamis retained a small portion of the Daisy Project property including the
13 mining claims covering the Mother Lode mine area. Goldcorp USA, Inc. acquired all of the assets of Glamis in 2006, including
the 13 claims at Mother Lode. The Mother Lode claims were transferred into Goldcorp Daisy LLC (a wholly owned subsidiary of Goldcorp
USA, Inc.) in 2014. In May 2017, Corvus acquired Goldcorp Daisy LLC from Goldcorp USA, Inc. In 2017-2018, Corvus had staked 436
additional mining claims which comprise the current MLP land position shown in Figure 1.
In May 2016, Glamis was notified by the
BLM that the BLM was closing the Plan of Operations and authorizing a reclamation cost estimate reduction of 100%. In June 2016,
Goldcorp Daisy LLC received notification from the BMRR that all regulatory requirements for permanent closure of the Daisy mine
had been met, and that the Water Pollution Control Permit was terminated. Goldcorp Daisy LLC was relieved of all obligations under
Nevada Revised Statutes 445 A and the Nevada Administrative Code 445A. BMRR also concurred with the BLM’s decision and terminated
the Reclamation Permit 0031 noting that all reclamation and surety liability associated with the permit had been successfully completed.
Sterling Gold Mining Corp began acquiring
land and staking open ground in the Daisy-Secret Pass-Mother Lode area in 2005, and by 2007 had assembled a substantial land position
at northern Bare Mountain covering all the former Daisy mine property and surrounding Glamis’ small Mother Lode claim block.
The land position is currently owned by Coeur Mining Inc.
NBP
History
The NBP is in the Bullfrog Mining District.
Gold was discovered at what was to become the original Bullfrog mine by Frank “Shorty” Harris and Ernest Cross on August
9, 1904. Two periods of mining activity account for the majority of production from the District. It is reported that 111,805 ounces
of gold and 868,749 ounces of silver were produced between 1905 and 1921, after which there was little production until the 1980s.
In early 1982 geologists from St. Joe Minerals Corporation became interested in the District. They conducted extensive exploration
in the area of the Montgomery-Shoshone and Senator Stewart mines, resulting in the discovery of the Bullfrog deposit in mid-1986.
Several company acquisitions resulted in Barrick Gold Corporation (“Barrick”) being the final owner of the mine. The
Bullfrog mine produced gold and silver from three separate deposits including: 1) main Bullfrog (open pit and underground); 2)
Montgomery-Shoshone (open pit); and 3) Bonanza Mountain (open pit). Between 1989 and 1999, it is reported that the Bullfrog mine
produced 2.31 Moz of gold and 3.0 Moz of silver.
The early history of the NBP is comingled
with the greater Bullfrog Mining District. The Pioneer and Mayflower were the principal mines in the northern part of the district.
The Pioneer mine was most active between 1909 and 1926 with about 15,000 feet of underground workings, all being developed within
330-feet of the surface. There are no accurate production figures, but limited records suggest that head grades were about one
quarter ounce of gold per ton. The Mayflower mine was probably active during the same time, but again there are no reliable production
records. Underground development at Sierra Blanca, Jolly Jane, Savage Valley, and YellowJacket also attest to historic mining and
production, probably during the same period.
Modern exploration started in the early
1970s and consisted of a number of companies with focuses on different parts of the property. These programs consisted of a variety
of activities including surface mapping and sampling, underground mapping and sampling, and drilling.
Between the early 1970s and the end of
the Barrick exploration in the mid-1990s, approximately 249 rotary and reverse-circulation drill holes were drilled on the NBP.
With the downturn in gold price at the
start of the 21
st
Century, interest in the NBP was essentially nonexistent. Redstar became attracted to the North Bullfrog
area in late 2005, and started staking claims and acquiring leases on patented mining claims. In March 2007, Redstar granted ITH
the right to earn an interest in the NBP and thereafter formed the NBPJV. In December 2007 ITH completed a lease of the Mayflower
property, which was included in the NBPJV. Following the execution of the NBPJV agreement, ITH commenced active exploration on
the NBP. In October 2008, Redstar completed a lease of the Connection property, which was also included in the NBPJV. On August
4, 2009, ITH purchased Redstar’s interests in the NBP and continued the exploration program as sole owner/lessor. On August
26, 2010, ITH spun out Corvus as a separate public company in a transaction which resulted in Corvus owning Corvus Nevada, through
which all interest in the NBP was held, thus resulting in Corvus indirectly acquiring all of the interest in and responsibilities
for the NBP.
Updated NBP-MLP Mineral Resources
Corvus has prepared the following Mineral Resource Estimates in
accordance with the disclosure obligations in NI 43-101 and in accordance with the CIM Definition Standards. There have been historic
resource estimates at MLP, within the context of NI 43-101, including actual mine production. In addition to NBP Resource Estimates,
this report is the first Mineral Resource estimate at MLP since the adoption of NI 43-101. Project mineral inventories are reported
at various cut-off-grades and classifications.
Vulcan
®
Software was used
to estimate and quantify the Project Mineral Resources. Vulcan
®
software utilizes a block modeling approach to represent
the deposit as a series of 3-D blocks to which grade attributes, and other attributes can be assigned. Mineral inventories have
been pit-constrained using Whittle
®
in order to demonstrate the reasonable prospects of eventual economic extraction.
General statistics and geostatistics were evaluated using GSLIB
®
, Sage2000
®
, Rockworks
®
Utilities, Excel and a variety of internally developed programs. Maps, cross sections, project layout and other visual aides were
evaluated with Vulcan
®
and ArcGIS
®
.
The evaluation of Mineral Resources for
the NBP-MLP Project involved the following procedures:
•
|
Validation of the database and wireframe models developed by Corvus;
|
•
|
Data Processing (compositing and capping) and statistical analysis;
|
•
|
Selection of estimation strategies and estimation parameters;
|
•
|
Block modelling and grade interpolation and validation of the results;
|
•
|
Classification and tabulation of Mineral Resources;
|
•
|
Quantifying the reasonable prospects for eventual economic extraction of Mineral Resources.
|
Table 3 summarizes the Mineral Resources,
classified according to CIM definitions, for the Project. Reasonable prospects for eventual economic extraction, defined in this
section of the report, assume open pit mining, run-of-mine heap leach processing of oxide mineralization, mill processing of un-oxidized
mineralization or mill processing of gravity separable gold and silver.
Mineral Resources are not Mineral Reserves
and do not have demonstrated economic viability. Numbers may not add up due to rounding. There are no known environmental, permitting,
legal, title, taxation, socio-economic, marketing, political, or other relevant factors that may materially affect the Mineral
Resource estimate in this report. The Qualified Person for the Mineral Resource Estimate is Scott Wilson.
Table 3 Mother Lode and North Bullfrog,
Pit-constrained, Measured, Indicated and Inferred Mineral Resources at Gold Selling Price of USD $1,250 per Ounce (Effective date
September 18, 2018)
|
Gold Milling
Cutoff Grade 0.63-0.76 Au g/t
|
Gold Heap Leach
Cutoff Grade 0.06-0.15 Au g/t
|
Gold Total
(Milling & Heap Leach)
|
Resource Classification
|
Tonnes
(x1,000)
|
Au
g/t
|
Au Ounces
(x1,000)
|
Tonnes
(x1,000)
|
Au
g/t
|
Au Ounces
(x1,000)
|
Tonnes
(x1,000)
|
Au
g/t
|
Au Ounces
(x1,000)
|
Measured
|
9,311
|
1.59
|
475
|
34,560
|
0.27
|
305
|
43,871
|
0.55
|
780
|
Indicated
|
18,249
|
1.68
|
988
|
149,374
|
0.24
|
1,150
|
167,623
|
0.40
|
2,138
|
Total M & I
|
27,560
|
1.65
|
1,463
|
183,934
|
0.25
|
1,455
|
211,494
|
0.43
|
2,918
|
Inferred
|
2,284
|
1.61
|
118
|
78,742
|
0.26
|
549
|
81,026
|
0.26
|
667
|
|
Silver Milling
Cutoff Grade 0.63-0.76 Au g/t
|
Silver Heap Leach
Cutoff Grade 0.06-0.15 Au g/t
|
Silver Total
(Milling & Heap Leach)
|
Resource Classification
|
Tonnes
(x1,000)
|
Au
g/t
|
Au Ounces
(x1,000)
|
Tonnes
(x1,000)
|
Au
g/t
|
Au Ounces
(x1,000)
|
Tonnes
(x1,000)
|
Au
g/t
|
Au Ounces
(x1,000)
|
Measured
|
6,019
|
11.47
|
2,220
|
14,525
|
1.41
|
658
|
20,544
|
4.36
|
2,878
|
Indicated
|
8,315
|
8.93
|
2,388
|
129,251
|
0.66
|
2,758
|
137,566
|
1.16
|
5,146
|
Total M & I
|
14,334
|
9.99
|
4,608
|
143,776
|
0.74
|
3,416
|
158,110
|
1.58
|
8,024
|
Inferred
|
116
|
9.12
|
34
|
64,669
|
0.48
|
1,008
|
64,785
|
0.50
|
1,042
|
* - Cautionary
Note to U.S. Investors: The above table uses the terms “mineral resource,” “measured mineral resource,”
“Indicated mineral resource”, “measured and indicated mineral resource” and “inferred mineral resource”.
Investors are cautioned not to assume that all or any part of a mineral deposit in the above categories will ever be converted
into SEC Industry Guide 7 compliant reserves. MLP and NBP do not contain SEC Industry Guide 7 compliant reserves and the properties
are exploratory in nature. See “Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred
Resources and Proven and Probable Reserves” above.
NBP-MLP Project Development Activities
Mother
Lode Metallurgical Test Program
Metallurgical test work had been performed
during the historical mining at Mother Lode and Daisy Projects during the period 1987-1999. Both of those projects had focused
on mining of oxidized mineralization and historical metallurgical testing data was available, as well as production histories on
gold recovery from the heap leach facilities. Both projects had recognized the existence of substantial sulphide mineralization
that was not amenable to heap leaching and had performed preliminary studies on BioOx as a potential technology to allow processing
of the sulphide mineralization.
During 2018, fresh materials from core
and field duplicates from the MLP RC drilling were obtained and composites developed for oxide material, two sulphide materials,
and for comminution tests. The sulfide materials were predominantly associated with the two different geologic units; Tip1 –
a porphyritic rhyolite intrusive, and Tjvs – sediments of Joshua Hollow.
The 2018 test program took place at McClelland
Laboratories, Inc., Hazen Research, Inc. and Resource Development, Inc.
Three metallurgical composites were prepared
from drill hole reject samples to represent oxide material, sulfide material, type Tip1, and sulfide material type Tjvs. The samples
comprising these composites were RC drill duplicate samples and were nominally minus 6.3 mm (1/4" in.) size.
Two additional composites were prepared
for comminution testing. The samples were half-HQ core, nominally 25.4 mm (1") diameter in size.
A separate set of 52 oxide samples were
investigated for preg-rob assaying, as well as a series of bottle roll tests to demonstrate CN gold recovery.
McClelland Laboratories completed:
•
|
Head Analyses: conducted on the three metallurgical composites included fire assay, cyanide shake analysis, carbon and sulfur speciation analyses, and diagnostic leach tests.
|
•
|
Comminution Testing: a crusher work index, abrasion index and ball mill work index test was conducted on each of the two comminution composites.
|
•
|
Gravity Concentration Testing: a whole sample gravity concentration test was conducted on each of the two sulfide composites to determine response to whole sample gravity concentration at a P
80
-75µm feed size.
|
•
|
Flotation Testing: whole sample rougher flotation testing was conducted on the two sulfide composites. Parameters evaluated included feed size, reagent schemes, solids density and desliming before flotation. Bulk, 14 kg, flotation tests were also conducted to generate concentrate for ultra-fine grinding/cyanidation testing and concentrate oxidation tests.
|
•
|
Flotation Product Cyanidation Testing: Flotation concentrate from bulk whole flotation tests conducted on the sulfide composites. Concentrate samples were sent to ALS Minerals (Kamloops) for ultra-fine grinding (“UFG”) to generate feeds for cyanidation leach tests. Duplicate cyanidation tests, both with and without activated carbon added, were conducted on the reground concentrate from each composite. Bottle roll cyanidation tests were also conducted on flotation tailings from three selected tests.
|
•
|
Bulk Gravity Concentration/Flotation Testing: a bulk (49 kg) gravity concentration test was conducted on each of the two sulfide composites at a P
80
-75µm feed size, using a Knelson concentrator to generate concentrate and feed for bulk flotation testing. The resulting gravity concentrate was cleaned by panning. The resulting cleaner tails and rougher tails were recombined and used as feed for a bulk flotation test.
|
•
|
Rougher flotation: this was conducted on each of the two gravity tailings to generate concentrate for testing. The gravity cleaner concentrates and flotation rougher concentrates were combined for down-stream process testing.
|
•
|
Acid base accounting testing: The testing was also completed on the corresponding flotation tailings.
|
Additionally,
•
|
Concentrate roasting tests and cyanidation of roasted residues: this was completed at Hazen Research Inc.
|
•
|
Concentrate pressure oxidation and cyanidation of residues: this was completed at Research Development Incorporated, RDi.
|
•
|
Atmospheric alkaline oxidation and cyanidation of residues: this was completed at Hazen Research Inc.
|
•
|
Biological Oxidation tests: this was completed at McClelland Laboratories.
|
NBP Activities
Monitoring programs to develop baseline
characterization data for support of future permitting activities continued during the period. Water quality monitoring wells and
surface springs were sampled in July and December 2018, and in May and June 2019.
The required annual Noxious Weed survey
was reported in November 2018, and the survey results did not indicate the presence of any noxious weed at the NBP site. The survey
is performed annually and inspects the areas previously disturbed by Corvus exploration activities. The 2019 survey was conducted
in June 2019 and results are pending.
The Company operated a meteorological monitoring
station at NBP and submitted quarterly reports to the NDEP in September 2018, January 2019 and April 2019.
The Sarcobatus water rights have been renewed
for the 2018-2019 period. Quarterly pump tests have been performed and the production volumes reported to Nevada Division of Water
Resources. A temporary change of use to mining application was granted by the Nevada Division of Water Resources in 2018. The extraction
point of 80 acre-feet of the water was transferred to the NBP to support future exploration operations, and a production water
well was drilled in the northwest corner of the NBP, in the Sarcobatus Basin. A tank farm installed to support drilling operations
during 2019.
MLP Activities
Baseline data collection work to support
the preparation of an EA for an expanded exploration project at Mother Lode was completed during 2019. The EA document and Plan
of Operations documents were submitted for review in November 2018. Additional field survey information was required and was collected
in April 2019, and revised EA and Plan of Operations documents were submitted to BLM in July 2019.
A Right-of-Way application for use of the
existing roads between the MLP site and the existing water wells was submitted to BLM in July 2019.
The historic Mother Lode water production
well MW-4 was surveyed by video camera in November 2018 and found to be in serviceable condition. Pumping equipment was installed
in November and approximately 6000 gallons of water was produced at a rate of 110 gpm. Historic well MW-3 was re-completed in January
2019. A video log of well PW-2 was performed in January 2019 and indicated that the well was in good condition. The re-completion
of PW-2 is planned for December 2019. Completion reports were submitted to Nevada Division of Water Resources.
Planned Exploration Work 2019-2020
Exploration drilling was moved from Mother
Lode to North Bullfrog in May 2019. Drilling will performed between May-October 2019 on the Cat Hill, Japeroid, YellowJacket and
Deep Rhyolite targets. Following completion of the NBP drilling, the drilling rig will be moved back to the MLP in October 2019
for further exploration.
Exploration Budget 2019-2020
The Company currently projects an exploration
expenditure of USD 1.7 million during the 12 months beginning June 1, 2019.
Qualified Person and Quality Control/Quality
Assurance
Jeffrey A. Pontius (CPG 11044), a qualified
person as defined by NI 43-101, has supervised the preparation of the scientific and technical information that forms the basis
for the disclosure in this Annual Report on Form 10-K (other than the Mother Lode mineral resource estimate) and has reviewed and
approved the disclosure herein. Mr. Pontius is not independent of the Company, as he is the Chief Executive Officer and President
and holds common shares and incentive stock options in Corvus.
Carl E. Brechtel (Colorado PE 23212, Nevada
PE 008744 and Registered Member 353000 of SME), a qualified person as defined by National Instrument 43-101, has coordinated execution
of the technical work and has reviewed and approved the disclosure in this Annual Report on Form 10-K related thereto. Mr. Brechtel
is not independent of the Company, as he is the Chief Operating Officer and holds Common Shares and incentive stock options in
Corvus.
The work programs at the NBP and MLP were
designed and supervised by Mark Reischman, Corvus Gold’s Nevada Exploration Manager, who is responsible for all aspects of
the work, including the quality control/quality assurance program. On-site personnel at the project log and track all samples prior
to sealing and shipping. Quality control is monitored by the insertion of blind certified standard reference materials and blanks
into each sample shipment. All resource sample shipments are sealed and shipped to American Assay Laboratories in Reno, Nevada,
for preparation and assaying.
Assaying for the NBP and MLP holes has
been performed by American Assay Laboratories (“AAL”) in Sparks, Nevada. Corvus has no business relationship with AAL
beyond being a customer for analytical services. The Sparks laboratory is Standards Council of Canada, Ottawa, Ontario Accredited
Laboratory No. 536 and conforms with requirements of CAN-P-1579, CAN-P-4E (ISO/IEC 17025:2005).
Check assaying has been performed by Bureau
Veritas North America (“BV”, formerly Inspectorate America Corporation), in Sparks Nevada and Vancouver, Canada, and
ALS Minerals Laboratories (“ALS Minerals”), in Sparks, Nevada. Corvus has no business relationship with BV or ALS Minerals
beyond being a customer for analytical services. The BV laboratory is Accredited Laboratory No. 720 and conforms to requirements
of CAN-P-1579, CAN-P-4E (ISO 9001:2008) and ALS is Accredited Laboratory No. 660 and conforms to requirements of CAN-P-1579, CAN-P-4E
(ISO/IEC 17025:2005).
Mr. Scott E. Wilson, CPG (10965), Registered
Member of SME (4025107) and President of Resource Development Associates Inc., is an independent consulting geologist specializing
in Mineral Reserve and Mineral Resource calculation reporting, mining project analysis and due diligence evaluations. He has acted
as the Qualified Person, as defined in NI 43-101, for the Mineral Resource estimate and the Technical Report. Mr. Wilson has over
29 years of experience in surface mining, resource estimation and strategic mine planning. Mr. Wilson and Resource Development
Associates Inc. are independent of the Company under NI 43-101. Mr. Wilson, a Qualified Person, has verified the data underlying
the information disclosed herein by reviewing the reports of AAL and all procedures undertaken for QA/QC. All matters were consistent
and accurate accordingly to his professional judgment. There were no limitations on the verification process.
For additional information on the NBP-MLP,
including information relating to exploration, data verification and the Mineral Resource estimates, see the Technical Report,
which is available under Corvus’ SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. The Technical Report is
referred to herein for informational purposes only and is not incorporated herein by reference. The Technical Report contains disclosure
regarding Mineral Resources that are not Guide 7 compliant proven or probable reserves, see “Cautionary Note to U.S. Investors
Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves” above.