PART
I - FINANCIAL INFORMATION
|
ITEM
1.
|
FINANCIAL
STATEMENTS.
|
The
condensed consolidated interim financial statements of Rise Gold Corp. (we, us, our,
the Company, or the registrant), a Nevada corporation, included herein were prepared, without audit,
pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included
in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were
condensed or omitted pursuant to such rules and regulations, the condensed consolidated interim financial statements should be
read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company
in the Companys Form 10-K for the fiscal year ended July 31, 2018.
RISE
GOLD CORP.
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
PERIOD ENDED OCTOBER 31, 2018
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS:
|
Page
|
|
|
Consolidated
Interim Statement of Financial Position
|
F-1
|
Consolidated
Interim Statement of Loss and Comprehensive Loss
|
F-2
|
Consolidated
Interim Statement of Cash Flows
|
F-3
|
Consolidated
Interim Statement of Stockholders Equity
|
F-4
|
Notes
to Unaudited Consolidated Interim Financial Statements
|
F-5
|
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
CONDENSED
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
|
(Expressed
in Canadian Dollars)
|
(Unaudited)
|
AS AT
|
|
October 31,
|
|
|
July 31,
|
|
|
|
2018
|
|
|
2018
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
992,438
|
|
|
$
|
69,616
|
|
Receivables
|
|
|
23,984
|
|
|
|
17,059
|
|
Prepaid expenses (Note 3)
|
|
|
346,751
|
|
|
|
532,389
|
|
|
|
|
1,363,173
|
|
|
|
619,064
|
|
|
|
|
|
|
|
|
|
|
Mineral property interests (Note 4)
|
|
|
5,447,674
|
|
|
|
5,447,674
|
|
Equipment (Note 5)
|
|
|
706,792
|
|
|
|
711,366
|
|
|
|
$
|
7,517,639
|
|
|
$
|
6,778,104
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
634,875
|
|
|
$
|
521,058
|
|
Loan from related parties (Note 7)
|
|
|
100,072
|
|
|
|
49,150
|
|
Current portion of equipment loan (Note 5)
|
|
|
328,751
|
|
|
|
305,710
|
|
|
|
|
1,063,698
|
|
|
|
875,918
|
|
|
|
|
|
|
|
|
|
|
Equipment loan (Note 5)
|
|
|
195,911
|
|
|
|
293,955
|
|
|
|
|
1,259,609
|
|
|
|
1,169,873
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, $0.001 par value, 400,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
138,490,357 (July 31, 2018 – 116,105,982) shares issued and outstanding (Note 8)
|
|
|
138,490
|
|
|
|
116,106
|
|
Additional paid-in capital (Note 8)
|
|
|
18,398,441
|
|
|
|
16,280,575
|
|
Cumulative translation adjustment
|
|
|
(166,663
|
)
|
|
|
(166,663
|
)
|
Deficit
|
|
|
(12,112,238
|
)
|
|
|
(10,621,787
|
)
|
|
|
|
6,258,030
|
|
|
|
5,608,231
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,517,639
|
|
|
$
|
6,778,104
|
|
Nature
and continuance of operations
(Note 1)
|
Contingency
(Note 5)
|
Subsequent
events
(Note 11)
|
|
The
accompanying notes are an integral part of these condensed consolidated interim financial statements.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
CONDENSED
CONSOLIDATED INTERIM STATEMENT OF LOSS AND COMPREHENSIVE LOSS
|
(Expressed
in Canadian Dollars)
|
(Unaudited)
|
FOR THE THREE MONTHS ENDED OCTOBER 31,
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
25,800
|
|
|
$
|
18,000
|
|
Depreciation (Note 5)
|
|
|
4,574
|
|
|
|
-
|
|
Directors fees
|
|
|
19,553
|
|
|
|
16,098
|
|
Filing and regulatory
|
|
|
13,949
|
|
|
|
14,612
|
|
Foreign exchange
|
|
|
(41,442
|
)
|
|
|
(20,801
|
)
|
Gain on settlement of debt
|
|
|
-
|
|
|
|
(1,608
|
)
|
General and administrative
|
|
|
59,487
|
|
|
|
55,302
|
|
Geological, mineral, and prospect costs (Note 4)
|
|
|
1,008,356
|
|
|
|
173,994
|
|
Interest expense
|
|
|
7,184
|
|
|
|
-
|
|
Professional fees
|
|
|
173,275
|
|
|
|
148,463
|
|
Promotion and shareholder communication
|
|
|
174,715
|
|
|
|
146,246
|
|
Salaries
|
|
|
45,000
|
|
|
|
45,000
|
|
Net loss and comprehensive loss for the period
|
|
$
|
1,490,451
|
|
|
$
|
595,306
|
|
Basic and diluted loss per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
Weighted average number of common shares outstanding (basic and diluted)
|
|
|
121,164,610
|
|
|
|
67,481,151
|
|
The
accompanying notes are an integral part of these condensed consolidated interim financial statements.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
CONDENSED
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
|
(Expressed
in Canadian Dollars)
|
(Unaudited)
|
FOR THE THREE MONTHS ENDED OCTOBER 31,
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
$
|
(1,490,451
|
)
|
|
$
|
(594,306
|
)
|
Items not involving cash
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
4,574
|
|
|
|
-
|
|
Gain on settlement of debt
|
|
|
-
|
|
|
|
(1,608
|
)
|
Unrealized loss on foreign exchange
|
|
|
422
|
|
|
|
1,596
|
|
Non-cash working capital item changes:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(6,925
|
)
|
|
|
7,785
|
|
Prepaid expenses
|
|
|
185,638
|
|
|
|
(13,368
|
)
|
Accounts payables and accrued liabilities
|
|
|
113,817
|
|
|
|
9,817
|
|
Net cash used in operating activities
|
|
|
(1,192,925
|
)
|
|
|
(590,084
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Mineral property
|
|
|
-
|
|
|
|
(372,078
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(372,078
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Private placement
|
|
|
2,140,750
|
|
|
|
1,061,571
|
|
Repayment of equipment loan
|
|
|
(75,003
|
)
|
|
|
-
|
|
Share issuance costs
|
|
|
-
|
|
|
|
(24,206
|
)
|
Loan from related parties
|
|
|
50,000
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
2,115,747
|
|
|
|
1,037,365
|
|
|
|
|
|
|
|
|
|
|
Change in cash for the period
|
|
|
922,822
|
|
|
|
75,203
|
|
Cash, beginning of period
|
|
|
69,616
|
|
|
|
337,099
|
|
Cash, end of period
|
|
$
|
992,438
|
|
|
$
|
412,302
|
|
Supplemental
cash flow information (Note 9)
The
accompanying notes are an integral part of these condensed consolidated interim financial statements.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
CONDENSED
CONSOLIDATED INTERIM STATEMENT OF STOCKHOLDERS EQUITY
|
(Expressed
in Canadian Dollars)
|
(Unaudited)
|
|
|
Capital Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid-
|
|
|
Translation
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Amount
|
|
|
in Capital
|
|
|
Adjustment
|
|
|
Equity
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at July 31, 2017
|
|
|
66,707,655
|
|
|
$
|
66,708
|
|
|
$
|
10,103,162
|
|
|
$
|
(166,663
|
)
|
|
$
|
(6,027,924
|
)
|
|
$
|
3,975,283
|
|
Shares issued for cash
|
|
|
7,077,140
|
|
|
|
7,077
|
|
|
|
1,054,494
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,061,571
|
|
Shares issued for debt
|
|
|
417,184
|
|
|
|
417
|
|
|
|
95,535
|
|
|
|
-
|
|
|
|
-
|
|
|
|
95,952
|
|
Share issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,249
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,249
|
)
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(594,306
|
)
|
|
|
(594,306
|
)
|
Balance as at October 31, 2017
|
|
|
74,201,979
|
|
|
$
|
74,202
|
|
|
$
|
11,234,942
|
|
|
$
|
(166,663
|
)
|
|
$
|
(6,622,230
|
)
|
|
$
|
4,520,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at July 31, 2018
|
|
|
116,105,982
|
|
|
$
|
116,106
|
|
|
$
|
16,280,575
|
|
|
$
|
(166,663
|
)
|
|
$
|
(10,621,787
|
)
|
|
$
|
5,608,231
|
|
Shares issued for cash
|
|
|
22,384,375
|
|
|
|
22,384
|
|
|
|
2,117,866
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,140,250
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,490,451
|
)
|
|
|
(1,490,451
|
)
|
Balance as at October 31, 2018
|
|
|
138,490,357
|
|
|
$
|
138,490
|
|
|
$
|
18,398,441
|
|
|
$
|
(166,663
|
)
|
|
$
|
(12,112,238
|
)
|
|
$
|
6,258,030
|
|
The
accompanying notes are an integral part of these condensed consolidated interim financial statements.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
1.
|
NATURE
AND CONTINUANCE OF OPERATIONS
|
Rise
Gold Corp. (the Company) was originally incorporated as Atlantic Resources Inc. in the State of Nevada on February
9, 2007 and is in the exploration stage. On April 11, 2012, the Company merged its wholly-owned subsidiary, Patriot Minefinders
Inc., a Nevada corporation, in and to the Company to effect a name change to Patriot Minefinders Inc. On January 14, 2015, the
Company completed a name change to Rise Resources Inc. in the same manner. On April 7, 2017, the Company changed its name to Rise
Gold Corp. These mergers were carried out solely for the purpose of effecting these changes of names.
On
February 16, 2015, the Company increased its authorized capital from 21,000,000 shares to 400,000,000 shares.
On
January 29, 2016, the Company completed an initial public offering in Canada and began trading on the Canadian Securities Exchange
(CSE) on February 1, 2016. On November 28, 2017, the Company ceased trading on the OTC Pink Market and began trading
on the OTCQB Venture Market.
The
Company is in the early stages of exploration and as is common with any exploration company, it raises financing for its acquisition
activities. The accompanying condensed consolidated interim financial statements have been prepared on the going concern basis,
which presumes that the Company will continue operations for the foreseeable future and will be able to realize assets and discharge
liabilities in the normal course of business. The Company has incurred a loss of $1,490,451 for the period ended October 31, 2018
and has accumulated a deficit of $12,112,238. This raises substantial doubt about the Companys ability to continue as a
going concern. The ability of the Company to continue as a going concern is dependent on the Companys ability to maintain
continued support from its shareholders and creditors and to raise additional capital and implement its business plan. The consolidated
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
At
October 31, 2018, the Company had working capital of $299,475.
Generally
Accepted Accounting Principles
The
accompanying unaudited condensed consolidated interim financial statements have been prepared in conformity with generally accepted
accounting principles of the United States of America (US GAAP) and the rules and regulations of the Securities
and Exchange Commission (SEC) for financial information with the instructions to Form 10-Q and Regulation S-K. Results
are not necessarily indicative of results which may be achieved in the future. The unaudited condensed consolidated interim financial
statements should be read in conjunction with the Companys Annual Report on Form 10-K, which contains the audited financial
statements and notes thereto, together with Managements Discussion and Analysis, for the year ended July 31, 2018. Certain
information and footnote disclosures normally included in the financial statements prepared in accordance with US GAAP have been
condensed or omitted pursuant to such SEC rules and regulations. The operating results for the three months ended October 31,
2018 are not necessarily indicative of the results that may be expected for the year ended July 31, 2019.
Basis
of Consolidation
These
condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiary Rise Grass
Valley Inc. All significant intercompany accounts and transactions have been eliminated on consolidation.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
2.
|
BASIS
OF PREPARATION
(continued)
|
Basis
of Consolidation
(continued)
Subsidiaries
Subsidiaries
are all entities over which the Company has exposure to variable returns from its involvement and has the ability to use power
over the investee to affect its returns. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Company until the date on which control ceases.
The
accounts of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
Inter-company transactions, balances and unrealized gains or losses on transactions are eliminated upon consolidation.
Recently
Adopted and Recently Issued Accounting Standards
In
January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Liabilities. This ASU amendment addresses aspects of recognition, measurement, presentation
and disclosure of financial instruments. It affects investments in equity securities and the presentation of certain fair value
changes for financial liabilities measured at fair value, and simplifies the impairment assessment of equity investments without
a readily determinable fair value by requiring a qualitative assessment. The ASU applies to all entities and is effective for
annual periods beginning after December 15, 2017, and interim periods thereafter, with early adoption permitted. The Company is
currently evaluating the impact of the adoption of this standard.
On
February 25, 2016, the FASB issued ASU No. 2016-02, Leases. This ASU applies to public companies beginning January
1, 2019 and affects the requirement that lessees account for all leases – both operating and finance – on the balance
sheet while recognizing both an asset for the right to use the leased asset and an obligation to make lease payments over the
lease term. The Company is currently evaluating the impact of the adoption of this standard.
Other
than the above, the Company has determined that other significant newly issued accounting pronouncements are either not applicable
to the Companys business or that no material effect is expected on the financial statements as a result of future adoption.
Use
of Estimates
The
preparation of these financial statements in conformity with US GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of
estimates include the carrying value and recoverability of mineral properties and the recognition of deferred tax assets based
on the change in unrecognized deductible temporary tax differences. Actual results could differ from those estimates, and would
impact future results of operations and cash flows.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
|
October 31, 2018
|
|
|
July 31, 2018
|
|
Promotion and shareholder communication
|
|
$
|
272,621
|
|
|
$
|
429,166
|
|
Insurance
|
|
|
57,924
|
|
|
|
102,723
|
|
Other
|
|
|
16,206
|
|
|
|
500
|
|
|
|
$
|
346,751
|
|
|
$
|
532,389
|
|
|
4.
|
MINERAL
PROPERTY INTERESTS
|
The
Companys mineral properties balance consists of:
|
|
Idaho-Maryland,
California
|
|
|
|
|
|
Balance, July 31, 2017
|
|
|
3,789,854
|
|
Additions
|
|
|
1,657,820
|
|
Balance, July 31, 2018 and October 31, 2018
|
|
$
|
5,447,674
|
|
Title
to mineral properties
Title
to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain mineral titles
as well as the potential for problems arising from the frequently ambiguous conveying history characteristic of many mineral properties.
As at October 31, 2018, the Company holds title to the Idaho-Maryland Gold Mine Property.
As
of October 31, 2018, based on managements review of the carrying value of mineral rights, management determined that there
is no evidence that the cost of these acquired mineral rights will not be fully recovered and accordingly, the Company determined
that no adjustment to the carrying value of mineral rights was required. As of the date of these consolidated financial statements,
the Company has not established any proven or probable reserves on its mineral properties and has incurred only acquisition and
exploration costs.
Idaho-Maryland
Gold Mine Property, California
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 located near Grass Valley, California, United States; pursuant to the option agreement, in order to exercise
the option, the Company must 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 will 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 will 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 April 30, 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.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
4.
|
MINERAL
PROPERTY INTERESTS
(continued)
|
Idaho-Maryland
Gold Mine Property, California
(continued)
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 (Note 10). The Company also incurred additional transaction costs of $144,391, which have been included the
carrying value of the Idaho-Maryland Gold Mine.
On
January 6, 2017, the Company entered into an option agreement with Sierra Pacific Industries Inc. (Sierra) 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 must pay 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, the Company negotiated an extension
of the closing date of the option agreement to June 30, 2017, in return for a cash payment of $268,000 (US$200,000), at which
time a payment of US$1,600,000 is due in order to exercise the option. On June 7, 2017, the Company negotiated an 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), at which
time a payment of US$1,300,000 is due in order to exercise the option.
On
May 14, 2018, the Company completed the purchase of the surface rights totalling approximately 82 acres by making final payments
totalling $1,657,820 (US$1,300,000).
As
at October 31, 2018, the Company has incurred cumulative property investigation costs of $55,253 and cumulative exploration expenditures
of $3,442,213 on the Idaho-Maryland Gold Mine property as follows:
|
|
Three months
ended
October 31, 2018
|
|
|
Year ended
July 31, 2018
|
|
|
|
|
|
|
|
|
Idaho-Maryland Gold Mine expenditures:
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
2,433,857
|
|
|
$
|
375,980
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
106,926
|
|
|
|
352,988
|
|
Exploration
|
|
|
627,593
|
|
|
|
1,030,710
|
|
Rent
|
|
|
39,535
|
|
|
|
32,380
|
|
Supplies
|
|
|
83,784
|
|
|
|
246,656
|
|
Sampling
|
|
|
72,714
|
|
|
|
278,344
|
|
Logistics
|
|
|
77,804
|
|
|
|
116,799
|
|
Total expenditures for the year
|
|
$
|
1,008,356
|
|
|
$
|
2,057,877
|
|
|
|
|
|
|
|
|
|
|
Closing balance
|
|
$
|
3,442,213
|
|
|
$
|
2,433,857
|
|
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
5.
|
EQUIPMENT
AND EQUIPMENT LOAN
|
On
June 7, 2018, the Company purchased two diamond core drilling rigs for exploration at the Idaho-Maryland Gold Project for a total
purchase price of $624,459. The purchase is financed and will be paid in equal monthly instalments of $27,396 per month over a
24-month period with an interest rate of 5% per annum. Cumulative interest expense incurred for the equipment purchase as at October
31, 2018 is $9,786.
During
the year ended July 31, 2018, the Company also purchased additional drilling equipment for a total of $89,213.
Purchases
|
|
|
713,672
|
|
At July 31, 2018
|
|
$
|
713,672
|
|
Purchases
|
|
|
-
|
|
At October 31, 2018
|
|
$
|
713,672
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
At July 31, 2017
|
|
$
|
-
|
|
Depreciation
|
|
|
2,306
|
|
At July 31, 2018
|
|
$
|
2,306
|
|
Depreciation
|
|
|
4,574
|
|
At October 31, 2018
|
|
$
|
6,880
|
|
|
|
|
|
|
|
|
|
|
|
Total carrying value, July 31, 2018
|
|
$
|
711,366
|
|
Total carrying value, October 31, 2018
|
|
$
|
706,792
|
|
During
the year ended July 31, 2018, the Company recorded an equipment loan of $624,459 in connection with the two diamond core drilling
rigs purchased. The Company paid $109,584 including $9,786 of interest towards this loan as at October 31, 2018. As at October
31, 2018, the outstanding balance on this loan was $524,662, out of which $328,751 has been classified as the current portion.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
During
the year ended July 31, 2014, the Company entered into a binding letter of intent (LOI) with Wundr Software Inc.
(Wundr). Under the terms of the LOI, the Company would acquire 100% of the issued and outstanding common shares
of Wundr. Due to unforeseen circumstances, the Company did not complete the transactions contemplated in the LOI, which the Company
announced had expired on January 10, 2014.
On
September 17, 2014, the Company learned that it was the subject, along with a number of additional defendants, of a notice of
civil claim (the Claim) filed in the Supreme Court of British Columbia by Wundr, under which Wundr is seeking general
damages from the Company as well as damages for conspiracy to cause economic harm. None of the allegations contained in the Claim
have been proven in court. Management has determined that the probability of the Claim resulting in an unfavourable outcome and
financial loss to the Company is unlikely.
|
7.
|
RELATED
PARTY TRANSACTIONS
|
Key
management personnel consist of the Chief Executive Officer, Chief Financial Officer, and the directors of the Company. The remuneration
of the key management personnel is as follows:
|
a)
|
Salaries
of $45,000 (2017 - $45,000) to the CEO of the Company.
|
|
b)
|
Consulting
fees of $20,000 (2017 - $12,000) to the former CFO of the Company, and consulting fees
of $5,800 (2017 - $6,000) to the former CEO of the Company.
|
|
c)
|
Directors
fees of $19,553 (2017 - $16,098) to directors of the Company.
|
|
d)
|
During
the period ended October 31, 2018, the Company paid $15,000 (2017 - $Nil) in professional
fees to a company controlled by a director of the Company.
|
As
at October 31, 2018, the Company has recorded loans from related parties of $60,646 and $39,426 (US$30,500) (July 31, 2018 -10,000
and $39,150 (US$30,500) respectively) representing advances made by a director and two former directors. The advances are due
on demand without interest.
As
at October 31, 2018, included in accounts payable and accrued liabilities is $121,414 (July 31, 2018 - $68,521) in accounts and
advances payable and accrued liabilities to current and former directors, officers and companies controlled by directors and officers
of the Company.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
8.
|
CAPITAL
STOCK AND ADDITIONAL PAID-IN-CAPITAL
|
Issued
Capital Stock
On
August 9, 2017, the Company issued 417,184 units to a third party pursuant to a debt conversion by the third party in the amount
of $95,952, representing finders fees payable on the private placement which closed May 5, 2017.
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. At the time of issuance, the units had a fair value of
$60,491 ($0.145 per unit); accordingly, the Company recognized a gain on settlement of debt of $35,461 for the nine month period
ended April 30, 2018.
On
January 29, 2018, the Company issued a total of
192,670
shares of common stock upon the exercise of finders warrants at a price of $0.10 per share.
Private
Placements
On
September 26, 2017, the Company completed the first tranche of 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 valued at $388 (discount rate – 1.59%, volatility – 150.97%, expected life –
2 years, dividend yield – 0%), 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 valued at $28,997 (discount rate – 1.64%, volatility – 139.85%, expected life – 2 years,
dividend yield – 0%), 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
April 18, 2018, the Company completed a non-brokered private placement, issuing an aggregate of 35,161,000 units at a price of
$0.10 per unit for gross proceeds of $3,516,100. 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 $0.15 for a period of three years from the date of issuance.
In connection with the private placement, the Company paid finders fees of $2,100 and issued a total of 21,000 finders
warrants valued at $1,467 (discount rate – 1.88%, volatility – 123.60%, expected life – 2 years, dividend yield
– 0%), exercisable into one share of common stock at a price of $0.15 for a period of two years from the date of issuance.
On
August 31, 2018, the Company completed a first tranche of a non-brokered private placement, issuing an aggregate of 2,881,250
units at a price of $0.08 per unit for gross proceeds of $230,500. Each unit consists of one share of common stock and one share
purchase warrant exercisable into one share of common stock at a price of $0.12 for a period of three years from the date of issuance
until August 31, 2021.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
8.
|
CAPITAL
STOCK AND ADDITIONAL PAID-IN-CAPITAL
(continued)
|
Private
Placements (continued)
On
September 17, 2018 completed a second tranche of a non-brokered private placement, issuing an aggregate of 2,003,125 units at
a price of $0.08 per unit for gross proceeds of $160,250. Each unit consists of one share of common stock and one share purchase
warrant exercisable into one share of common stock at a price of $0.12 for a period of three years from the date of issuance until
September 17, 2021.
On
October 16, 2018, the Company completed a strategic initial investment in a financing of $1.75 million by issuing 17,500,000 Units
to Meridian Jerritt Canyon Corp., a wholly-owned subsidiary of Yamana Gold Inc. Each unit consists of one common stock at a price
of $0.10 per Unit and one-half of one share purchase warrant at a price of $0.13 exercisable until October 16, 2020. As a result
of the investment, the investor owns approximately 12.6% of the Companys issued and outstanding shares on a non-diluted
basis. In conjunction with the investment, the Company will issue 875,000 share purchase warrants as a finders fee (Finders
Warrants) to Southern Arc Minerals Inc. Each finders Warrant entitles the holder to acquire one share at an exercise
price of $0.13 until October 16, 2020.
Stock
Options
During
the year ended July 31, 2018, the Company granted a total of 6,381,000 stock options to employees, officers, directors, and consultants
of the Company, exercisable at a weighted average price of $0.12 per share for a period of five years;
The following incentive
stock options were outstanding at October 31, 2018:
|
Number
of Options
|
|
|
Exercise
Price
|
|
|
Expiry Date
|
|
|
|
|
|
|
|
|
|
|
|
1,100,000
|
|
|
$
|
0.15
|
|
|
March 22, 2021
|
|
|
586,600
|
|
|
|
0.20
|
|
|
August 8, 2021
|
|
|
2,142,542
|
|
|
|
0.24
|
|
|
December 27, 2021
|
|
|
500,000
|
|
|
|
0.27
|
|
|
April 3, 2022
|
|
|
900,000
|
|
|
|
0.28
|
|
|
April 20, 2020
|
|
|
6,381,000
|
|
|
|
0.12
|
|
|
April 19, 2023
|
|
|
11,610,142
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
8.
|
CAPITAL
STOCK AND ADDITIONAL PAID-IN-CAPITAL
(continued)
|
Stock
Options (continued)
Stock
option transactions are summarized as follows:
|
|
Number of Options
|
|
|
Weighted Average
Exercise Price
|
|
|
Aggregate
Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2017
|
|
|
5,729,142
|
|
|
$
|
0.24
|
|
|
|
Nil
|
|
Options granted
|
|
|
6,381,000
|
|
|
|
0.12
|
|
|
|
Nil
|
|
Options expired/forfeited
|
|
|
(500,000
|
)
|
|
|
(0.33
|
)
|
|
|
Nil
|
|
Balance outstanding and exercisable, July 31, 2018 and October 31, 2018
|
|
|
11,610,142
|
|
|
$
|
0.17
|
|
|
|
Nil
|
|
Warrants
The
following warrants were outstanding at October 31, 2018:
|
Number
of Warrants
|
|
|
Exercise
Price
|
|
|
Expiry Date
|
|
|
|
|
|
|
|
|
|
|
22,148,800
|
|
|
|
0.40
|
|
|
December 23, 2018
|
|
|
2,286,100
|
|
|
|
0.40
|
|
|
January 24, 2019
|
|
|
465,500
|
|
|
|
0.40
|
|
|
February 6, 2019
|
|
|
9,863,486
|
|
|
|
0.40
|
|
|
May 5, 2019
|
|
|
7,080,740
|
|
|
|
0.25
|
|
|
September 25, 2019
|
|
|
6,788,860
|
|
|
|
0.25
|
|
|
December 27, 2019
|
|
|
133,333
|
|
|
|
0.25
|
|
|
January 3, 2020
|
|
|
21,000
|
|
|
|
0.15
|
|
|
April 18, 2020
|
|
|
35,161,000
|
|
|
|
0.15
|
|
|
April 18, 2021
|
|
|
2,881,250
|
|
|
|
0.12
|
|
|
August 31, 2021
|
|
|
2,003,125
|
|
|
|
0.12
|
|
|
September 17, 2021
|
|
|
9,625,000
|
|
|
|
0.13
|
|
|
October 15, 2020
|
|
|
98,458,194
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
8.
|
CAPITAL
STOCK AND ADDITIONAL PAID-IN-CAPITAL
(continued)
|
Warrants
(continued)
Warrant
transactions are summarized as follows:
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise Price
|
|
|
|
|
|
|
|
|
Balance, July 31, 2017
|
|
|
36,039,372
|
|
|
$
|
0.39
|
|
Warrants issued
|
|
|
49,602,117
|
|
|
|
0.18
|
|
Warrants Expired
|
|
|
(1,500,000
|
)
|
|
|
|
|
Warrants exercised
|
|
|
(192,670
|
)
|
|
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2018
|
|
|
83,948,819
|
|
|
$
|
0.27
|
|
Warrants issued
|
|
|
14,509,375
|
|
|
|
0.19
|
|
Balance, October 31, 2018
|
|
|
98,458,194
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
The
following weighted average assumptions were used for the Black-Scholes pricing model valuation of finders warrants issued
during the period ended October 31, 2017:
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
1.65
|
%
|
|
|
0.76
|
%
|
Expected life of warrants
|
|
|
2.0 years
|
|
|
|
2.0 years
|
|
Expected annualized volatility
|
|
|
139.09
|
%
|
|
|
179.45
|
%
|
Dividend
|
|
|
Nil
|
|
|
|
Nil
|
|
Forfeiture rate
|
|
|
0
|
%
|
|
|
0
|
%
|
Share-Based
Payments
The
Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and
consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan the exercise
price of each option equals the market price of the Companys stock, less any applicable discount, as calculated on the
date of grant. The options can be granted for a maximum term of 5 years with vesting determined by the board of directors.
The
company issued no share purchase options during the period ended October 31, 2018 and 2017.
RISE
GOLD CORP. (FORMERLY RISE RESOURCES INC.)
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEAR ENDED JULY 31, 2018
|
(Expressed
in Canadian Dollars)
|
|
|
9.
|
SUPPLEMENTAL
DISCLOSURE WITH RESPECT TO CASH FLOWS
|
During
the three month period ended October 31, 2017, the Company:
|
a)
|
Issued
3,600 finders warrants valued at $388 (Note 7);
|
|
b)
|
Issued
417,184 units, each unit comprised of one share of common stock and one share purchase
warrant, valued at $95,952, pursuant to a debt conversion in relation to finders
fees payable on the private placement which closed on May 5, 2017 (Note 7); and
|
|
c)
|
Accrued
$1,600 in share issuance costs through accounts payable and accrued liabilities.
|
|
10.
|
SEGMENTED
INFORMATION
|
A
reporting segment is defined as a component of the Company that:
|
-
|
Engages
in business activities from which it may earn revenues and incur expenses;
|
|
-
|
Operating
results are reviewed regularly by the entitys chief operating decision maker;
and
|
|
-
|
Discrete
financial information is available
|
The
Company has determined that it operates its business in one geographical segment located in California, United States, where all
of its equipment and mineral property interests are located.
On
November 5, 2018, the Company raised a total of $750,000 through the sale of 7,500,000 units (each a Unit) at $0.10
per Unit where each Unit consists of one share of common stock (a Share) and one half of one share purchase warrant
(a Warrant). Each whole Warrant entitles the holder to acquire one Share at an exercise price of $0.13 until November
5, 2020. All 7,500,000 Units issued in the final tranche were acquired by Southern Arc Minerals Inc. (Southern Arc).
All securities issued pursuant to the Private Placement will be subject to statutory hold periods in accordance with applicable
United States and Canadian securities laws.
On
November 30, 2018, the Company granted 2,900,000 stock options to employees and directors of the Company. The options are exercisable
at $0.10 per share for a period of five years and expire on November 29, 2023.
ITEM
2.
|
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
SPECIAL
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements in this report, including statements in the following discussion, are what are known as forward looking statements,
which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can
accurately predict the future. Words such as plans, intends, will, hopes, seeks,
anticipates, expects and the like often identify such forward looking statements, but are not the only
indication that a statement is a forward looking statement. Such forward looking statements include statements concerning our
plans and objectives with respect to present and future operations, and statements which express or imply that such present and
future operations will or may produce revenues, income or profits. Numerous factors and future events could cause US to change
such plans and objectives or fail to successfully implement such plans or achieve such objectives, or cause such present and future
operations to fail to produce revenues, income or profits. Therefore, the following discussion should be considered in light of
the discussion of risks and other factors contained in this QUARTERLY report on Form 10-Q and in OUR other filings with the Securities
and Exchange Commission. No statements contained in the following discussion should be construed as a guarantee or assurance of
future performance or future results.
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 an exploration 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
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
was 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 was 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 (paid),
and a final payment of US$400,000 by June 30, 2018. At the date of this MD&A, all payments have been made resulting in the
Company fully exercising its option and purchase of the property from Sierra Pacific effective as of May 15, 2018.
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 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.
On
April 18, 2018, the Company completed a non-brokered private placement, issuing an aggregate of 35,161,000 units at a price of
$0.10 per unit for gross proceeds of $3,516,100. 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 $0.15 for a period of three years from the date of issuance.
In connection with the private placement, the Company paid finders fees of $2,100 and issued a total of 21,000 finders warrants
exercisable into one share of common stock at a price of $0.15 for a period of two years from the date of issuance.
On
April 19, 2018, the Company granted an aggregate of 6,381,000 stock options to its employees, officers, directors, and consultants,
each option exercisable at a price of $0.12 for a period of five years.
On
August 31, 2018, the Company completed a first tranche of a non-brokered private placement, issuing an aggregate of 2,881,250
units at a price of $0.08 per unit for gross proceeds of $230,500. Each unit consists of one share of common stock and one share
purchase warrant exercisable into one share of common stock at a price of $0.12 for a period of three years from the date of issuance
until August 31, 2021.
On
September 17, 2018 completed a second tranche of a non-brokered private placement, issuing an aggregate of 2,003,125 units at
a price of $0.08 per unit for gross proceeds of $160,250. Each unit consists of one share of common stock and one share purchase
warrant exercisable into one share of common stock at a price of $0.12 for a period of three years from the date of issuance until
September 17, 2021.
On
October 16, 2018, the Company completed a strategic initial investment in a financing of $1.75 million by issuing 17,500,000 Units
to Meridian Jerritt Canyon Corp., a wholly-owned subsidiary of Yamana Gold Inc. Each unit consists of one common stock at a price
of $0.10 per Unit and one-half of one share purchase warrant at a price of $0.13 exercisable until October 16, 2020. As a result
of the investment, the investor owns approximately 12.6% of the Companys issued and outstanding shares on a non-diluted
basis. In conjunction with the investment, the Company will issue 875,000 share purchase warrants as a finders fee (Finders
Warrants) to Southern Arc Minerals Inc. Each finders Warrant entitles the holder to acquire one share at an exercise
price of $0.13 until October 16, 2020.
On
November 5, 2018, the Company raised a total of $750,000 through the sale of 7,500,000 units (each a Unit) at $0.10
per Unit where each Unit consists of one share of common stock (a Share) and one half of one share purchase warrant
(a Warrant). Each whole Warrant entitles the holder to acquire one Share at an exercise price of $0.13 until November
5, 2020. All 7,500,000 Units issued in the final tranche were acquired by Southern Arc Minerals Inc. (Southern Arc).
All securities issued pursuant to the Private Placement will be subject to statutory hold periods in accordance with applicable
United States and Canadian securities laws.
On
November 30, 2018, the Company granted 2,900,000 stock options to employees and directors of the Company. The options are exercisable
at $0.10 per share for a period of five years and expire on November 29, 2023.
Plan
of Operations
As
at October 31, 2018, the Company had a cash balance of $992,438, compared to a cash balance of $69,616 as of July 31, 2018.
Our
plan of operations for the next 12 months is to continue our current diamond drilling exploration activities at the I-M Mine Property.
Rise
has initiated but not yet completed an exploration drilling program on the I-M Mine Property to date.
Up
to October 31th 2018, Rise has completed ten drill holes, B-17-01, B-18-02 thru B-18-07, Z-18-08 & Z-18-09m and I-18-10 for
total drilling of ~9,214 meters. Assay results for drill holes up to B-18-05 have been released as at October 31
st
,
2018.
Exploration
drilling at the Brunswick portion of the Idaho-Maryland Gold project has been successful with numerous gold bearing veins intersected
and previously released in 2018 on January 3
rd
, June 28
th
, July 23
rd
, and August 7
th
.
A summary of drill highlights for the program released to date is presented in Table 4 and illustrated in Figure 8 below.
Previously
Released Drill Intercept Highlights from B-17-01 to B-18-05*
BRUNSWICK CONFIRMATION HOLES (B1600L-B2300L)
|
|
Hole
|
|
From
(m)
|
|
To (m)
|
|
Gold
(gpt)
|
|
Intercept
Length
(m)
|
|
Estimated
True Width
(m)
|
|
Vein
|
|
Map
Ref
|
B-17-01
|
|
638.9
|
|
653.8
|
|
12.2
|
|
14.9
|
|
7.8
|
|
B1
|
|
A
|
Including
|
|
643.7
|
|
646.5
|
|
62.7
|
|
2.7
|
|
|
|
B1 Center
|
|
|
Including
|
|
645.0
|
|
645.6
|
|
266.0
|
|
0.6
|
|
|
|
|
|
|
B-18-04
|
|
516.9
|
|
521.0
|
|
8.0
|
|
4.1
|
|
3.0
|
|
B32
|
|
C
|
Including
|
|
516.9
|
|
518.0
|
|
23.0
|
|
1.1
|
|
|
|
|
|
|
B-18-02
|
|
578.4
|
|
582.8
|
|
7.9
|
|
4.4
|
|
1.0 - 3.4
|
|
B116 or B1
|
|
C
|
B-18-03
|
|
516.6
|
|
518.6
|
|
6.0
|
|
2
|
|
1.7
|
|
B1 East
|
|
D
|
B-18-04
|
|
711.9
|
|
715.2
|
|
5.1
|
|
2.3
|
|
1.8
|
|
B18
|
|
E
|
B-18-04
|
|
625.2
|
|
628.0
|
|
4.0
|
|
2.8
|
|
2.1
|
|
B10
|
|
F
|
B-18-04
|
|
637.0
|
|
640.0
|
|
4.4
|
|
3
|
|
2.3
|
|
B10
|
|
G
|
BRUNSWICK EXTENSION HOLES (B2300L-B3280L)
|
|
Hole
|
|
From
(m)
|
|
To (m)
|
|
Gold
(gpt)
|
|
Intercept
Length
(m)
|
|
Estimated
True Width
(m)
|
|
Vein
|
|
Map
Ref
|
B-18-05
|
|
978.1
|
|
983.3
|
|
22.4
|
|
5.2
|
|
2.6
|
|
B40
|
|
H
|
Including
|
|
978.1
|
|
979.3
|
|
93.2
|
|
1.2
|
|
|
|
|
|
|
B-17-01
|
|
1111.6
|
|
1126.8
|
|
4.5
|
|
15.2
|
|
?
|
|
?
|
|
I
|
Including
|
|
1112.1
|
|
1113.6
|
|
40.6
|
|
1.5
|
|
|
|
|
|
|
B-18-05
|
|
748.3
|
|
763.6
|
|
2.6
|
|
15.3
|
|
11.0
|
|
B41
|
|
J
|
B-18-05
|
|
667.9
|
|
671.4
|
|
5.9
|
|
3.5
|
|
2.0
|
|
B6
|
|
K
|
Including
|
|
670.3
|
|
671.4
|
|
13.0
|
|
1.1
|
|
|
|
|
|
|
B-18-05
|
|
682.9
|
|
690.4
|
|
2.4
|
|
7.5
|
|
4.1
|
|
B6
|
|
L
|
B-18-05
|
|
899.6
|
|
905.5
|
|
2.5
|
|
5.9
|
|
3.4
|
|
B39
|
|
N
|
IDAHO DEEP DRILLING (~1km BELOW MINE)
|
|
Hole
|
|
From
(m)
|
|
To (m)
|
|
Gold
(gpt)
|
|
Intercept
Length
(m)
|
|
Estimated
True Width
(m)
|
|
Vein
|
|
Map
Ref
|
B-18-05
|
|
1590.1
|
|
1594.6
|
|
23.7
|
|
4.5
|
|
3.2
|
|
IB30
|
|
M
|
Including
|
|
1593.6
|
|
1594.0
|
|
230.0
|
|
0.4
|
|
|
|
|
|
|
B-18-05
|
|
1887.5
|
|
1890.4
|
|
10.9
|
|
2.9
|
|
2.0
|
|
IB50
|
|
O
|
Including
|
|
1889.4
|
|
1889.9
|
|
61.0
|
|
0.5
|
|
|
|
|
|
|
|
*
|
Details
of drill intercepts in previous Rise Gold news releases previously released in 2018 on January 3
rd
, June 28
th
,
July 23
rd
, and August 7
th
.
|
Long
section Showing Drill Results Previously Released
We
have implemented a quality control program for our drill program to ensure best practices in the sampling and analysis of the
drill core. This includes the insertion of blind blanks, duplicates and certified standards. HQ and NQ sized drill core is saw
cut with half of the drill core sampled at intervals based on geological criteria including lithology, visual mineralization,
and alteration. The remaining half of the core is stored on-site at our warehouse in Grass Valley, California. Drill core samples
are transported in sealed bags to ALS Minerals analytical assay lab in Reno, Nevada.
All
gold assays were obtained using a method of screen fire assaying. The Historic I-M Mine Project is known to contain coarse
gold, for which a screen fire assay is the best way to obtain a definitive result. This procedure involves screening a large pulverized
sample of up to 1 kg at 100 microns. The entire oversize (including the disposable screen) is fire assayed as this contains the
coarse gold and a duplicate determination is made on the minus 100 micron fraction. A calculation can
then be made to determine the total weight of gold in the sample. Any +100 micron material remaining on the screen is retained
and analyzed in its entirety by fire assay with gravimetric finish and reported as the Au (+) fraction result. The –100
micron fraction is homogenized and two sub-samples of 50 grams are analyzed by fire assay with AAS finish. If the grade of the
material exceeds 10 gpt the sample is re-assayed using a gravimetric finish. The average of the two results is taken and reported
as the Au (-) fraction result. All three values are used in calculating the combined gold content of the plus and minus fractions.
We
have not attained profitable operations and are dependent upon obtaining financing to pursue our proposed exploration activities.
For these reasons, our auditors believe that there is substantial doubt that we will be able to continue as a going concern.
Results
of Operations
For
the Periods Ended October 31, 2018 and 2017
The
Companys operating results for the periods ended October 31, 2018 and 2017 are summarized as follows:
FOR THE THREE MONTHS ENDED OCTOBER 31,
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
25,800
|
|
|
$
|
18,000
|
|
Depreciation (Note 6)
|
|
|
4,574
|
|
|
|
-
|
|
Directors fees
|
|
|
19,553
|
|
|
|
16,098
|
|
Filing and regulatory
|
|
|
13,949
|
|
|
|
14,612
|
|
Foreign exchange
|
|
|
(41,442
|
)
|
|
|
(20,801
|
)
|
Gain on settlement of debt (Note 10)
|
|
|
-
|
|
|
|
(1,608
|
)
|
General and administrative
|
|
|
59,487
|
|
|
|
55,302
|
|
Geological, mineral, and prospect costs (Note 5)
|
|
|
1,008,356
|
|
|
|
173,994
|
|
Interest expense (Note 6)
|
|
|
7,184
|
|
|
|
-
|
|
Professional fees
|
|
|
173,275
|
|
|
|
148,463
|
|
Promotion and shareholder communication
|
|
|
174,715
|
|
|
|
146,246
|
|
Salaries
|
|
|
45,000
|
|
|
|
45,000
|
|
Net loss and comprehensive loss for the period
|
|
$
|
1,490,451
|
|
|
$
|
595,306
|
|
The
Companys operating expenses increased during the period ended October 31, 2018 compared to the prior period primarily as
a result of increased exploration activities.
Liquidity
and Capital Resources
Working
Capital
|
|
At October 31, 2018
|
|
|
At July 31, 2018
|
|
|
At July 31, 2017
|
|
Current Assets
|
|
$
|
1,363,173
|
|
|
$
|
619,064
|
|
|
$
|
520,300
|
|
Current Liabilities
|
|
$
|
1,063,698
|
|
|
$
|
875,918
|
|
|
$
|
334,871
|
|
Working Capital
|
|
$
|
299,475
|
|
|
$
|
(256,854
|
)
|
|
$
|
185,429
|
|
Cash
Flows
|
|
For the three month
period ended
October 31, 2018
|
|
|
For the three month
period ended
October 31, 2017
|
|
Net Cash used in Operating Activities
|
|
$
|
(1,192,925
|
)
|
|
$
|
(590,084
|
)
|
Net Cash used in Investing Activities
|
|
$
|
-
|
|
|
$
|
(372,078
|
)
|
Net Cash provided by Financing Activities
|
|
$
|
2,115,747
|
|
|
$
|
1,037,365
|
|
Net Increase in Cash During Period
|
|
$
|
922,822
|
|
|
$
|
75,203
|
|
As
of October 31, 2018, the Company had $992,438 in cash, $1,363,173 in current assets, $7,517,639 in total assets, $1,063,698 in
current liabilities and $1,259,609 in total liabilities, working capital of $299,475 and an accumulated deficit of $12,11,2238.
During
the three month period ended October 31, 2018, the Company used $1,192,925 (2017 - $590,084) in net cash on operating activities.
The difference in net cash used in operating activities during the two periods was largely due to the increase in the Companys
net loss for the most recent period.
During
the three month period ended October 31, 2018, the Company used net cash of $Nil (2017 - $372,078) in investing activities on
its mineral property.
The
Company received net cash of $2,140,750 (2017 - $1,037,365) from financing activities during the three month period ended October,
2018. During the period ended October 30, 2018, the Company also received $50,000 in loans from a related party.
The
Company expects to operate at a loss for at least the next 12 months. It has no agreements for additional financing and cannot
provide any assurance that additional funding will be available to finance its operations on acceptable terms in order to enable
it to carry out its business plan. There are no assurances that the Company will be able to complete further sales of its common
stock or any other form of additional financing. If the Company is unable to achieve the financing necessary to continue its plan
of operations, then it will not be able to carry out any exploration work on the Idaho-Maryland Property or the other properties
in which it owns an interest and its business may fail.
Off
Balance Sheet Arrangements
The
Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
Not
applicable.
ITEM
4.
|
CONTROLS
AND PROCEDURES.
|
Evaluation
of Disclosure Controls and Procedures
The
Securities and Exchange Commission (the SEC) defines the term disclosure controls and procedures to mean
controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports
that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer
in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuers management,
including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
As
of the end of the period covered by this Report, management of the Company carried out an evaluation, with the participation of
its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures. Based on this evaluation, management concluded that the Companys disclosure controls
and procedures were not effective as of October 31, 2018 because a material weakness in internal control over financial reporting
existed as of that date as a result of a lack of segregation of incompatible duties due to insufficient personnel.
A
material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented
or detected on a timely basis.
Changes
in Internal Control over Financial Reporting
There
were no changes in the Companys internal control over financial reporting during the period ended October 31, 2018 that
have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.