Description of Business
The Company is a mineral exploration company and its primary asset is a major past producing high grade property near Grass Valley, California, United States, which it owns outright. The Company has held several other potential mineral properties in British Columbia, Canada, which were recently written off based on the strength of the Grass Valley asset. The Companys common stock is currently traded on the OTC Markets under the symbol RYES, and is listed on the Canadian Securities Exchange (the CSE) under the symbol RISE. The Company ceased to be an OTC reporting issuer in Canada on February 2, 2016.
On May 18, 2015, the Company entered into an option agreement (the Option Agreement) with Eastfield Resources Ltd., a British Columbia company with its common shares listed for trading on the TSX Venture Exchange under the symbol ETF (Eastfield), pursuant to which Eastfield granted the Company the exclusive and irrevocable option to acquire up to a 75% undivided interest in and to certain mineral claims known as the Indata property located in the Omineca Mining Division in British Columbia, Canada (the Indata Property), by paying Eastfield an aggregate of $450,000 in cash, incurring a minimum of $2,500,000 in aggregate exploration expenditures on the Indata Property, and completing a feasibility study on the property. On May 5, 2017, the Company terminated the Option Agreement and wrote off $50,000 in acquisition costs relating to Indata during the year ended July 31, 2017.
Prior to entering into the Option Agreement, the Company was a development stage company engaged in exploring and evaluating potential strategic transactions in multiple industries, including but not limited to mineral properties and technology.
On May 31, 2016, the Company entered into a property purchase agreement (the Purchase Agreement) with Klondike Gold Corp., a British Columbia company with its common shares listed for trading on the TSX Venture Exchange under the symbol KG (Klondike), regarding the purchase of a portfolio of seven gold and base metal properties in southeast British Columbia consisting of 150 mining claims with a total area of 28,000 hectares (collectively, the Klondike Properties). Under the Purchase Agreement, on July 13, 2016 (the First Closing), the Company paid Klondike $50,000 in cash, issued 1,500,000 shares of the Companys common stock, and issued 1,500,000 warrants exercisable at a price of $0.227 per share until July 13, 2018. On the one year anniversary of the First Closing, the Company was required to pay Klondike $150,000 in cash, issue 2,000,000 shares of the
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Companys common stock, and issue 1,000,000 warrants. Klondike would have retained a 2% net smelter return royalty (NSR) and the Company would have had the right to purchase 50% of the NSR for $1,000,000 at any time after the First Closing. Each of the warrants would have been exercisable for a period of two years into one share of the Companys common stock at a price that is a 20% premium to the 10-day volume-weighted average price of the stock on the CSE immediately prior to the date of issuance. On July 17, 2017, the Company terminated the Purchase Agreement by making a one-time payment of $100,000 in cash to Klondike; accordingly, the Company wrote off $513,031 in acquisition costs relating to the Klondike Properties during the year ended July 31, 2017.
On August 30, 2016, the Company entered into an option agreement with three parties to purchase a 100% interest in and to the Idaho-Maryland Gold Mine property (the I-M Mine Property) located near Grass Valley, California, United States; pursuant to the option agreement, in order to exercise the option, the Company agreed to pay US$2,000,000 by November 30, 2016. Upon execution of the option agreement, the Company paid the vendors a non-refundable cash deposit in the amount of $32,758 (US$25,000), which was to be credited against the purchase price of US$2,000,000 upon exercise of the option. On November 30, 2016, the Company negotiated an extension of the closing date of the option agreement to December 26, 2016, in return for a cash payment of $32,758 (US$25,000), which also was to be credited against the purchase price of US$2,000,000 upon exercise of the option. On December 28, 2016, the Company negotiated a further no-cost extension of the closing date of the option agreement to January 31, 2017. On January 25, 2017, the Company exercised the option by paying $2,588,625 (US$1,950,000), and acquired a 100% interest in the Idaho-Maryland Gold Mine property. In connection with the option agreement, the Company agreed to pay a cash commission of $184,000 (US$140,000) equal to 7 per cent of the purchase price of US$2,000,000; the commission was settled on January 25, 2017 through the issuance of 920,000 units valued at $0.20 per unit, each unit consisting of one share of common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance.
The Company has completed and announced the results of an exploration program on the I-M Mine Property, following a plan outlined in a National Instrument 43-101 report filed on June 1, 2017. This report was created through processing historic data on the I-M Mine Property obtained from the vendors.
On December 23, 2016, the Company completed a non-brokered private placement, issuing an aggregate of 21,044,500 units at a price of $0.20 per unit for gross proceeds of $4,208,900. Each unit consisted of one share of common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance. In connection with the private placement, the Company paid finders fees of $218,410 and issued a total of 1,104,300 finders warrants exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance.
On January 6, 2017, the Company entered into an option agreement with Sierra Pacific Industries Inc. (Sierra Pacific) to purchase a 100% interest in and to certain surface rights totalling approximately 82 acres located near Grass Valley, California, United States, contiguous to the Idaho-Maryland Gold Mine property acquired by the Company on January 25, 2017. Pursuant to the option agreement, in order to exercise the option, the Company was to have paid US$1,900,000 by March 31, 2017. Upon execution of the option agreement, the Company paid the vendors a non-refundable cash deposit in the amount of $132,732 (US$100,000), which will be credited against the purchase price of US$1,900,000 upon exercise of the option. On April 3, 2017, in return for a cash payment of $268,000 (US$200,000), the Company negotiated an extension of the closing date of the option agreement to June 30, 2017, at which time a payment of US$1,600,000 was to be due in order to exercise the option. On June 7, 2017, the Company negotiated a second extension of the closing date of the option agreement to September 30, 2017 in return for a cash payment of $406,590 (US$300,000), which will be credited against the remaining purchase price of US$1,600,000 upon exercise of the option. On September 1, 2017, the Company negotiated a third extension of the closing date of the option agreement to June 30, 2018 in return for cash payments as follows: US$300,000 by September 30, 2017 (paid), US$300,000 by December 30, 2017 (paid), US$300,000 by March 30, 2018, and a final payment of US$400,000 by June 30, 2018, which comprise the remaining purchase price of US$1,300,000 in full. At January 31, 2018, a total of US$700,000 remained payable.
On January 24, 2017, the Company completed a non-brokered private placement, issuing an aggregate of 1,340,000 units at a price of $0.20 per unit for gross proceeds of $268,000. Each unit consisted of one share of common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of $0.40 for a
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period of two years from the date of issuance. In connection with the private placement, the Company paid finders fees of $5,220 and issued a total of 26,100 finders warrants exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance.
On February 6, 2017, the Company completed a non-brokered private placement, issuing an aggregate of 455,000 units at a price of $0.25 per unit for gross proceeds of $113,750. Each unit consisted of one share of common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance. In connection with the private placement, the Company paid finders fees of $2,625 and issued a total of 10,500 finders warrants exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance.
On May 5, 2017, the Company completed a non-brokered private placement, issuing an aggregate of 9,009,814 units at a price of $0.23 per unit for gross proceeds of $2,072,257. Each unit consists of one share of common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance. In connection with the private placement, the Company paid finders fees of $100,392 and issued a total of 436,488 finders warrants exercisable into one share of common stock at a price of $0.40 for a period of two years from the date of issuance.
On September 26, 2017, the Company completed a non-brokered private placement, issuing an aggregate of 7,077,140 units at a price of $0.15 per unit for gross proceeds of $1,061,570. Each unit consisted of one share of common stock and one non-transferable share purchase warrant exercisable into one share of common stock at a price of $0.25 for a period of two years from the date of issuance. In connection with the private placement, the Company paid finders fees of $540 and issued a total of 3,600 finders warrants exercisable into one share of common stock at a price of $0.25 for a period of two years from the date of issuance.
On December 27, 2017, the Company completed the second tranche of a non-brokered private placement, issuing an aggregate of 6,417,000 units at a price of $0.15 per unit for gross proceeds of $962,550. Each unit consisted of one share of common stock and one non-transferable share purchase warrant exercisable into one share of common stock at a price of $0.25 for a period of two years from the date of issuance. In connection with the private placement, the Company paid finders fees of $55,779 and issued a total of 371,860 finders warrants exercisable into one share of common stock at a price of $0.25 for a period of two years from the date of issuance.
On January 3, 2018, the Company completed the third and final tranche of a non-brokered private placement, issuing an aggregate of 133,333 units at a price of $0.15 per unit for gross proceeds of $20,000. Each unit consisted of one share of common stock and one non-transferable share purchase warrant exercisable into one share of common stock at a price of $0.25 for a period of two years from the date of issuance.
On February 12, 2018, 500,000 stock options exercisable at a price of $0.33 were cancelled pursuant to a contract termination.
Plan of Operations
As at January 31, 2018, the Company had a cash balance of $143,375, compared to a cash balance of $337,099 as of July 31, 2017.
The Companys plan of operations for the next 12 months is to continue its current diamond drilling exploration program at the Idaho-Maryland Mine Property. The Company plans to complete the recommended work program as outlined in the Technical Report on the Idaho-Maryland Mine Property (the Technical Report), which was issued on June 1, 2017.
On January 3
rd
2018 the Company announced the assay results from drill hole B-17-01, the first drill hole of the exploration drilling program at the Idaho-Maryland (I-M) Gold Project located in Nevada County, California.
Diamond drill hole B-17-01 (the Drillhole) was completed in November 2017. The Drillhole had a total length of 1419 m (4654 ft) and reached a depth of ~1157 m (3794 ft) below surface. The starting azimuth of the Drillhole was 310 degrees and the ending azimuth was 278 degrees with an average inclination of ~55 degrees.
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An intercept of 62.7 gpt gold over 2.7 m was intersected in the Center Vein of the Brunswick #1 Vein Set, approximately 50 m below the B1600 level at a depth of ~540 m below surface. The true width of the intercept is estimated at 1.4 m. The Drillhole intersected three sub-parallel veins at the Brunswick #1 Vein. The B1 Vein Set, including the Center Vein and two sections of internal waste, averaged 12.2 gpt gold over 14.9 m with an estimated true width of 7.8 m.
A summary of the most significant assay composites from the Drillhole is presented in Table 1.
The Drillhole azimuth deviated significantly from the planned azimuth and therefore did not intersect the Idaho #1 Vein at depth as as outlined in the Technical Report on the Idaho-Maryland Mine Property (the Technical Report), which was issued on June 1, 2017. This target remains untested and will be tested with future drilling.
Table 1 Assay Composites for Drillhole B-17-01
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|
|
|
|
|
Zone
|
From (m)
|
To (m)
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Interval (m)
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Est. True Width (m)
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Gold (gpt)
|
Brunswick #1 Vein Set
|
638.9
|
653.8
|
14.9
|
7.8
|
12.2
|
Including
|
|
|
|
|
|
HW Vein
|
638.9
|
640.4
|
1.5
|
0.8
|
3.2
|
Internal Waste
|
640.4
|
643.7
|
3.3
|
1.7
|
0.1
|
Center Vein
|
643.7
|
646.5
|
2.7
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1.4
|
62.7
|
Internal Waste
|
646.5
|
652.4
|
5.9
|
3.1
|
0.2
|
FW Vein
|
652.4
|
653.8
|
1.4
|
0.7
|
2.9
|
|
|
|
|
|
|
Second Intercept
|
1111.6
|
1126.8
|
15.2
|
?
|
4.5
|
Including
|
1111.6
|
1113.6
|
2.0
|
?
|
31.4
|
The Idaho-Maryland property hosts numerous exploration targets that warrant drilling. While a significant drill program is required to test these targets, the Company requested that Amec Foster Wheeler, who prepared the Technical Report, prepare a recommended drill program not to exceed a budget of $600,000.
A single 6,000 ft (1,830 m) surface diamond drill hole was recommended by Amec Foster Wheeler to provide geological samples from most of the major lithological units on the Idaho-Maryland Mine Property geology. The single hole has been designed to pierce the #1 Vein projection approximately 400 ft (122 m) below the elevation of the I2400 Level and then carry on through the potential western extensions of the Idaho 3 Vein System. The objectives of this drill hole are as follows:
1)
Provide a long drill intercept of the Brunswick Block from surface to the Serpentinite contact.
2)
Test the up-dip area and below the 52 Vein (60 Winze) mineralized area in the Brunswick Block.
3)
Test the #1 Vein below the I2400 Level.
4)
Test the serpentinite footwall for potential 3 Vein/Rose Garden analogies.
5)
Test and obtain samples of ankerite alteration in the serpentinite unit.
6)
Test for the location of the major Idaho faults.
7)
Drill through the serpentinite unit to provide further insight on the thickness and geometry of this unit at depth.
8)
Determine drill hole deviation, drilling productivity, and drilling costs to allow refinement of the design of a major drill program at the Idaho-Maryland Mine Property.
In addition, Amec Foster Wheeler recommends that the digital geological model be expanded to include model channel samples, the lithological contacts and structures such as the diabase dikes, ankerite alteration envelopes,
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minor quartz veins, and all faults mapped by the historic mine operators. This work may provide additional insight into the mineralization controls at the Idaho-Maryland Mine Property.
The cost of the work program is estimated at $595,000 as shown in the following table:
Estimated Cost of Recommended Work Program
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|
Hole length (m)
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1829
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m
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Duration
|
38
|
days
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Drilling cost
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$390,000
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|
Mobilization
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$7,000
|
|
Standby charges
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$40,000
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|
Centrifuge system
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$36,000
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|
Living allowance
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$29,000
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|
Geology & assaying
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$38,000
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|
Supplies
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$15,000
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|
Total drilling cost
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$555,000
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= $303/m
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Geological modelling
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$40,000
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|
Total work program
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$595,000
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CAD
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Though the Company recently completed private placements whereby it raised a total of $2,044,120, the Company does not currently have sufficient funds to both carry out an exploration program and cover its anticipated general operating expenses for the year, so it will require additional funding. The Company anticipates that additional funding will be in the form of equity financing from the sale of its common stock or from loans from one of several directors or officers, or companies controlled by directors or officers. The Company does not have any arrangements in place for any future equity financing or loans, and if the Company is not successful in raising additional financing, the Company anticipates that it will not be able to proceed with its business plan.
The Company anticipates incurring operating losses for the foreseeable future. It bases this expectation, in part, on the fact that very few mineral claims in the exploration stage ultimately develop into producing, profitable mines. The Companys future financial results are also uncertain due to a number of factors, some of which are outside its control. These factors include the following:
·
its ability to raise additional funding;
·
the market price for any minerals that may be discovered on the Idaho-Maryland Mine Property; and
·
the results of its proposed exploration program on the Idaho-Maryland Mine Property.
The Company has not attained profitable operations and is dependent upon obtaining financing to pursue its proposed exploration activities. For these reasons the Companys auditors believe that there is substantial doubt that it will be able to continue as a going concern.
Results of Operations
For the Periods Ended January 31, 2018 and 2017
The Companys operating results for the periods ended January 31, 2018 and 2017 are summarized as follows:
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|
|
|
|
|
|
|
For the six month period ended January 31, 2018
|
|
For the six month period ended January 31, 2017
|
Consulting
|
$
|
39,500
|
$
|
195,171
|
Directors fees
|
|
50,855
|
|
-
|
Filing and regulatory
|
|
61,514
|
|
19,204
|
Foreign exchange
|
|
(21,688)
|
|
1,407
|
Gain on settlement of payables
|
|
(1,608)
|
|
(11,415)
|
General and administrative
|
|
105,436
|
|
60,006
|
Geological mineral property costs
|
|
709,677
|
|
-
|
Professional fees
|
|
224,057
|
|
93,752
|
Promotion and shareholder communication
|
|
258,307
|
|
267,673
|
Property investigation costs
|
|
-
|
|
55,253
|
Salaries
|
|
91,077
|
|
64,225
|
Share-based payments
|
|
-
|
|
570,255
|
Loss for the period
|
|
(1,517,127)
|
|
(1,315,531)
|
The Companys operating expenses increased during the period ended January 31, 2018 compared to the prior period primarily as a result of the Companys work program on the I-M Mineral Property, as well as increased costs for consulting, filing and regulatory, professional fees and promotion and shareholder communications, driven by increases in consulting and expenses related to planning and researching the Companys mineral properties along with completing the recommended diamond drilling exploration program, costs related to various legal work and the recent filing of an S-1 Registration Statement with the U.S. Securities and Exchange Commission, and promotional activity involved in raising funds in the recent private placement.
Liquidity and Capital Resources
Working Capital