|
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, 2019.
RISE
GOLD CORP.
|
(AN
EXPLORATION STAGE COMPANY)
|
CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
PERIOD
ENDED OCTOBER 31, 2019
|
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 United States Dollars)
|
(Unaudited)
|
AS AT
|
|
|
|
Recast (Note 2)
|
|
|
October 31, 2019
|
|
July 31, 2019
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,320,696
|
|
|
$
|
214,158
|
|
Receivables
|
|
|
16,513
|
|
|
|
12,373
|
|
Prepaid expenses (Note 3)
|
|
|
162,389
|
|
|
|
188,696
|
|
Total current assets
|
|
|
2,499,598
|
|
|
|
415,227
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
Mineral property interests (Note 4)
|
|
|
4,149,053
|
|
|
|
4,149,053
|
|
Equipment (Note 5)
|
|
|
618,516
|
|
|
|
624,346
|
|
Total assets
|
|
$
|
7,267,167
|
|
|
$
|
5,188,626
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
199,560
|
|
|
$
|
468,601
|
|
Payable to related parties (Note 7)
|
|
|
5,000
|
|
|
|
129,638
|
|
Advance (Note 4)
|
|
|
25,000
|
|
|
|
101,339
|
|
Equipment loan (Note 5)
|
|
|
163,461
|
|
|
|
223,574
|
|
Total current liabilities
|
|
|
393,021
|
|
|
|
923,152
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
Loan payable (Note 8)
|
|
|
555,688
|
|
|
|
-
|
|
Derivative liability (Note 9)
|
|
|
1,744,179
|
|
|
|
-
|
|
Total liabilities
|
|
|
2,692,888
|
|
|
|
923,152
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
Capital stock, $0.001 par value, 40,000,000 shares authorized; 22,045,965 (July 31, 2019 – 17,463,321) shares issued and outstanding (Note 10)
|
|
|
22,046
|
|
|
|
17,463
|
|
Additional paid-in capital (Note 10)
|
|
|
19,977,760
|
|
|
|
16,801,864
|
|
Shares subscribed
|
|
|
-
|
|
|
|
186,025
|
|
Cumulative translation adjustment
|
|
|
96,449
|
|
|
|
84,715
|
|
Deficit
|
|
|
(15,521,976
|
)
|
|
|
(12,824,593
|
)
|
Total stockholders equity
|
|
|
4,574,279
|
|
|
|
4,265,474
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
7,267,167
|
|
|
$
|
5,188,626
|
|
Nature
and continuance of operations (Note 1)
Contingency (Note 6)
Subsequent events (Note 13)
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 United States Dollars)
|
(Unaudited)
|
|
|
|
|
Recast (Note 2)
|
FOR THE THREE MONTHS ENDED OCTOBER 31,
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
22,667
|
|
|
$
|
19,802
|
|
Directors fees
|
|
|
19,156
|
|
|
|
15,008
|
|
Filing and regulatory
|
|
|
14,650
|
|
|
|
10,706
|
|
Foreign exchange (gain) loss
|
|
|
46,773
|
|
|
|
(31,808
|
)
|
General and administrative
|
|
|
52,937
|
|
|
|
45,658
|
|
Geological, mineral, and prospect costs (Note 4)
|
|
|
350,123
|
|
|
|
777,459
|
|
Interest expense (Note 5 and 8)
|
|
|
15,630
|
|
|
|
5,514
|
|
Professional fees
|
|
|
87,660
|
|
|
|
132,995
|
|
Promotion and shareholder communication
|
|
|
48,057
|
|
|
|
134,100
|
|
Share-based compensation (Note 10)
|
|
|
331,966
|
|
|
|
-
|
|
Salaries
|
|
|
38,585
|
|
|
|
34,539
|
|
Loss before other items
|
|
$
|
1,028,204
|
|
|
$
|
1,143,973
|
|
Loss on fair value adjustment on derivative liability (Note 9)
|
|
|
1,744,179
|
|
|
|
-
|
|
Other income (Note 4)
|
|
|
(75,000
|
)
|
|
|
-
|
|
Net loss for the period
|
|
$
|
2,697,383
|
|
|
$
|
1,143,973
|
|
Foreign exchange translation adjustment arising from change in functional currency
|
|
$
|
(11,734
|
)
|
|
$
|
-
|
|
Net comprehensive loss for the period
|
|
$
|
2,685,649
|
|
|
$
|
1,143,973
|
|
Basic and diluted loss per common share
|
|
$
|
(0.13
|
)
|
|
$
|
(0.09
|
)
|
Weighted average number of common shares outstanding (basic and diluted)
|
|
|
21,099,549
|
|
|
|
12,116,461
|
|
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 United States Dollars)
|
(Unaudited)
|
|
|
|
|
Recast (Note 2)
|
FOR THE THREE MONTHS ENDED OCTOBER 31,
|
|
2019
|
|
2018
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
$
|
(2,697,383
|
)
|
|
$
|
(1,143,973
|
)
|
Items not involving cash
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
5,830
|
|
|
|
3,511
|
|
Interest expense
|
|
|
15,630
|
|
|
|
-
|
|
Share-based payment
|
|
|
331,966
|
|
|
|
-
|
|
Financing expense
|
|
|
(15,000
|
)
|
|
|
-
|
|
Loss on fair value adjustment on derivative liability
|
|
|
1,744,179
|
|
|
|
-
|
|
Unrealized loss on foreign exchange
|
|
|
10,025
|
|
|
|
(16,359
|
)
|
Non-cash working capital item changes:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(4,139
|
)
|
|
|
(5,315
|
)
|
Prepaid expenses
|
|
|
26,307
|
|
|
|
142,484
|
|
Advances
|
|
|
(76,339
|
)
|
|
|
-
|
|
Accounts payables and accrued liabilities
|
|
|
(294,541
|
)
|
|
|
87,358
|
|
Related party payables
|
|
|
(99,138
|
)
|
|
|
-
|
|
Net cash used in operating activities
|
|
|
(1,052,603
|
)
|
|
|
(932,294
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Private placement, net of issuance cost
|
|
|
2,219,254
|
|
|
|
1,653,275
|
|
Loan
|
|
|
1,000,000
|
|
|
|
-
|
|
Repayment of equipment loan
|
|
|
(60,113
|
)
|
|
|
(57,567
|
)
|
Loan from related parties
|
|
|
-
|
|
|
|
38,270
|
|
Net cash provided by financing activities
|
|
|
3,159,141
|
|
|
|
1,633,978
|
|
|
|
|
|
|
|
|
|
|
Change in cash for the period
|
|
|
2,106,538
|
|
|
|
701,684
|
|
Cash, beginning of period
|
|
|
214,158
|
|
|
|
53,481
|
|
Cash, end of period
|
|
$
|
2,320,696
|
|
|
$
|
755,165
|
|
Supplemental
cash flow information (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 STOCKHOLDERS EQUITY
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
|
Capital
Stock
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
Additional
Paid-
|
|
Subscription
|
|
Translation
|
|
|
|
|
|
|
Number
|
|
Amount
|
|
in
Capital
|
|
Receivable
|
|
Adjustment
|
|
Deficit
|
|
Total
|
Recast (Note 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as at July 31, 2018
|
|
|
11,610,598
|
|
|
$
|
11,611
|
|
|
$
|
12,601,183
|
|
|
$
|
-
|
|
|
$
|
(125,506
|
)
|
|
$
|
(8,462,693
|
)
|
|
$
|
4,024,595
|
|
Shares issued for cash
|
|
|
2,238,438
|
|
|
|
2,238
|
|
|
|
1,651,037
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,653,275
|
|
Loss
for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,143,973
|
)
|
|
|
(1,143,973
|
)
|
Balance
as at October 31, 2018
|
|
|
13,849,036
|
|
|
$
|
13,849
|
|
|
$
|
14,252,220
|
|
|
$
|
-
|
|
|
$
|
(125,506
|
)
|
|
$
|
(9,606,666
|
)
|
|
$
|
4,533,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at July
31, 2019
|
|
|
17,463,321
|
|
|
$
|
17,463
|
|
|
$
|
16,801,864
|
|
|
$
|
186,025
|
|
|
$
|
84,715
|
|
|
$
|
(12,824,593
|
)
|
|
$
|
4,265,474
|
|
Shares issued for Cash
|
|
|
4,582,644
|
|
|
|
4,583
|
|
|
|
2,398,988
|
|
|
|
(186,025
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
2,217,546
|
|
Share-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
331,966
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
331,966
|
|
Warrants issued for
financing expense
|
|
|
-
|
|
|
|
-
|
|
|
|
444,942
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
444,942
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,697,383
|
)
|
|
|
(2,697,383
|
)
|
Other
comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,734
|
|
|
|
-
|
|
|
|
11,734
|
|
Balance
as at October 31, 2019
|
|
|
22,045,965
|
|
|
$
|
22,046
|
|
|
$
|
19,977,760
|
|
|
$
|
-
|
|
|
$
|
96,449
|
|
|
$
|
(15,521,976
|
)
|
|
$
|
4,574,279
|
|
The
accompanying notes are an integral part of these condensed consolidated interim financial statements.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
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
2,100,000 shares to 40,000,000 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 $2,697,383 for the three-month period ended October
31, 2019 and has accumulated a deficit of $15,521,976. 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. There is no assurance that the Company will be able to obtain adequate financing in the future
or that such financing will be on terms advantageous to the Company. However, management believes that the Company has sufficient
working capital to meet its projected minimum financial obligations for the next fiscal year. 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, 2019, the Company had working capital of $2,106,577.
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, 2019. 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,
2019 are not necessarily indicative of the results that may be expected for the year ended July 31, 2020.
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.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
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.
Intercompany transactions, balances and unrealized gains or losses on transactions are eliminated upon consolidation.
Foreign
Currency Translation
The Company changed its functional
currency from Canadian Dollars to United States Dollars as at August 1, 2019. The change in functional currency from Canadian
dollars to United States dollars is accounted for prospectively from August 1, 2019. Management determined that the Companys
functional currency had changed based on the assessment related to significant changes of the Companys economic facts and
circumstances. These significant changes included the fact that the Companys equity and debt financings as well as the majority
of the Companys expenses are now primarily denominated in US dollars. Moreover, the Companys place of business and
management are now located in the United States.
Foreign
denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates
which prevailed at the balance sheet date. Expenses and other income are translated at average rates of exchange during the period.
Related translation adjustments are reported as a separate component of stockholders equity (deficiency), whereas gains
or losses resulting from foreign currency transactions are included in the results of operations.
Presentation
Currency Change
The
Company changed its presentation currency from Canadian Dollars to United States Dollars from October 31, 2019, with retrospective
application on comparative figures. The change was made to reflect the change in functional currency to United States Dollars
for the same period.
Comparative figures in the
consolidated statement of financial position have been translated into the presentation currency at the rate of exchange prevailing
at the reporting date. Comparative balances of loss and comprehensive loss and cash flows have been translated into US dollars
using average exchange rates for the comparative reporting period. Components of equity have been translated at the exchange rates
prevailing at the dates of the relevant transactions. The exchange rate differences arising on translation are taken to accumulated
other comprehensive income. The cumulative impact of the change in reporting currency was a gain of $210,221 in accumulated other
comprehensive income as at August 1, 2019.
Derivatives
Derivatives
are initially recognized at the fair value on the date the derivative contract is entered into and transaction costs are expensed.
The Companys derivatives are subsequently re-measured at their fair value at each statement of financial position date
with changes in fair value recognized in profit or loss. As the exercise price of the Companys warrants are in Canadian
Dollars, and the functional currency of the Company is the United States Dollar, these warrants are considered a derivative as
a variable amount of cash in the Companys functional currency will be received upon exercise. Accordingly, the Company
accounts for these warrants as a derivative liability.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
2.
|
BASIS
OF PREPARATION (continued)
|
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 Companys
adoption of this standard did not have an impact on its consolidated financials statements.
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 assessed its leases and determined that it did not have any leases extending over the period of 12 month
which resulted in the standard not having any significant impact on its consolidated financial statements.
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.
|
|
October 31, 2019
|
|
July 31, 2019
|
|
|
|
|
Recast (Note 2)
|
Promotion and shareholder communication
|
|
$
|
14,963
|
|
|
$
|
39,600
|
|
Rent
|
|
|
-
|
|
|
|
6,649
|
|
Insurance
|
|
|
38,560
|
|
|
|
33,538
|
|
Deposits
|
|
|
108,488
|
|
|
|
108,531
|
|
Other
|
|
|
378
|
|
|
|
378
|
|
|
|
$
|
162,389
|
|
|
$
|
188,696
|
|
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
4.
|
MINERAL
PROPERTY INTERESTS
|
The
Companys mineral properties balance consists of:
Recast (Note 2)
|
|
Idaho-Maryland,
California
|
|
|
|
Balance, July 31, 2018, July 31, 2019 and October 31, 2019
|
|
$
|
4,149,053
|
|
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, 2019, the Company holds title to the Idaho-Maryland Gold Mine Property.
As
of October 31, 2019, 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 was required to pay $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 $25,000, which would be credited against the purchase price of
$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 $25,000, which would be credited against the purchase price of
$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 $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 $140,000 equal to 7 per cent of the purchase price of $2,000,000; the
commission was settled on January 25, 2017 through the issuance of 92,000 units valued at C$2.00 per unit. 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
C$4.00 for a period of two years from the date of issuance. The Company also incurred additional transaction costs of $109,053,
which have been included in the carrying value of the Idaho-Maryland Gold Mine.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
4.
|
MINERAL
PROPERTY INTERESTS (continued)
|
Idaho-Maryland
Gold Mine Property, California (continued)
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 was required to pay $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 $100,000, which was credited against
the purchase price of $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 $200,000, at which time a payment of $1,600,000
was 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 $300,000, at which time a payment of $1,300,000 was 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 $1,300,000.
On
June 13, 2019, the Company received $150,000 from a third party as a prepayment to use the Companys property for a period
of six months. As at October 31, 2019, $125,000 of this amount has been recognized as other income ($75,000 during the three months
ended October 31, 2019 and $50,000 during the year ended July 31, 2019) with the balance of $25,000 (July 31, 2019 - $101,339)
remaining as an advance.
As at October 31, 2019, the
Company has incurred cumulative exploration expenditures of $5,100,734 on the Idaho-Maryland Gold Mine property as follows:
|
|
Three months ended
October 31, 2019
|
|
Year ended
July 31, 2019
Recast (Note 2)
|
|
|
|
|
|
Idaho-Maryland Gold Mine expenditures:
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
4,750,611
|
|
|
$
|
1,901,276
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
260,160
|
|
|
|
536,217
|
|
Engineering
|
|
|
11,289
|
|
|
|
-
|
|
Exploration
|
|
|
44,285
|
|
|
|
1,650,633
|
|
Rent
|
|
|
13,318
|
|
|
|
93,832
|
|
Supplies
|
|
|
1,325
|
|
|
|
151,564
|
|
Sampling
|
|
|
5,676
|
|
|
|
237,162
|
|
Logistics
|
|
|
8,240
|
|
|
|
161,198
|
|
Depreciation
|
|
|
5,830
|
|
|
|
18,730
|
|
Total expenditures for the period
|
|
|
350,123
|
|
|
|
2,849,335
|
|
|
|
|
|
|
|
|
|
|
Closing balance
|
|
$
|
5,100,734
|
|
|
$
|
4,750,611
|
|
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
5.
|
EQUIPMENT
AND EQUIPMENT LOAN
|
Cost
|
|
Drilling equipment
|
At July 31, 2018 (Recast - Note 2)
|
|
$
|
550,052
|
|
Purchases
|
|
|
94,795
|
|
At July 31, 2019 (Recast - Note 2)
|
|
$
|
644,847
|
|
At October 31, 2019
|
|
$
|
644,847
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
At July 31, 2018 (Recast - Note 2)
|
|
$
|
1,772
|
|
Depreciation
|
|
|
18,729
|
|
At July 31, 2019 (Recast - Note 2)
|
|
$
|
20,501
|
|
Depreciation
|
|
|
5,830
|
|
At October 31, 2019
|
|
$
|
26,331
|
|
|
|
|
|
|
Total carrying value, July 31, 2019 (Recast - Note 2)
|
|
$
|
624,346
|
|
Total carrying value, October 31, 2019
|
|
$
|
618,516
|
|
During
the year ended July 31, 2018, the Company recorded an equipment loan of $495,481 in connection with two diamond core drilling
rigs purchased. The Company paid $332,020 including $21,982 of interest towards this loan as at October 31, 2019. As at October
31, 2019, the outstanding balance remaining on this loan was $163,461 (July 31, 2019 - $223,574).
Subsequent
to period ended October 31, 2019, the Company settled the remaining balance of the equipment loan by paying C$190,000 ($143,018).
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
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 $33,750 (2018 - $33,750) to the CEO of the Company.
|
|
b)
|
Directors fees of $19,156 (2018 - $15,008) to directors of the Company. As at October 31, 2019, $5,000
of these director fees is included in payables to related parties. As at July 31, 2019, the Company owed $129,638 to related parties.
|
|
c)
|
During
the period ended October 31, 2019, the Company paid $34,000 (2018 - $11,513) in professional
and consulting fees to a company controlled by a director of the Company.
|
|
d)
|
Share-based
compensation of $326,393 (2018 - $Nil) for options granted during the period ended October
31, 2019.
|
|
e)
|
Consulting
fees of $Nil (2018 - $15,391) to the former CFO of the Company.
|
On September 3, 2019, the Company completed a debt financing for $1,000,000. This loan has a term of 4
years and an interest rate of 10% compounded monthly for the first two years increasing to 20% in year 3 and to 25% in year 4.
Interest will accrue and be paid along with the principal upon the maturity date. The lender received 1,150,000 bonus share purchase
warrants as additional consideration for advancing the loan. The fair value of these warrants was determined to be $444,942 which
was netted against the loan payable balance along with $15,000 paid to the lender for other issuance costs. Each warrant entitles
the holder to acquire one share of common stock at an exercise price of $0.80 (C$1.00) for a period of three years from the date
of issuance. This loan may be repaid prior to the maturity date, in whole or in part, provided that all accrued interest is paid.
In addition, if total interest payments are less than $200,000, the difference will be paid to the Lender as prepayment compensation.
The Loan is secured against the assets of the Company and its subsidiary. As at October 31, 2019, the balance of this loan including
accrued interest of $15,630 is $555,688.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
The
exercise price of the Companys share purchase warrants is fixed in Canadian dollars and the functional currency of the
Company is the USD. These warrants are considered to be a derivative as a variable amount of cash in the Companys functional
currency will be received on exercise of the warrants. Accordingly, the share purchase warrants issued as part of past financings,
are classified and accounted for as a derivative liability.
The
following table shows a continuity of the Companys derivative liability:
|
|
Derivative liability
|
|
Number of warrants
accounted for as
derivative liability
|
Balance, August 1, 2019
|
|
$
|
1,604,768
|
|
|
|
8,049,428
|
|
Addition
|
|
|
869,673
|
|
|
|
2,291,322
|
|
Expiry
|
|
|
(577
|
)
|
|
|
(707,715
|
)
|
Fair value adjustment
|
|
|
(729,685
|
)
|
|
|
-
|
|
Balance, October 31, 2019
|
|
$
|
1,744,179
|
|
|
|
9,633,035
|
|
As
the initial recognition as well as the revaluation of these warrants both took place within the three-month period ended October
31, 2019, the Company recorded a loss on fair value of derivative liability of $1,744,179 during the period (October 31, 2018
- $Nil)
The
following weighted average assumptions were used for the Black-Scholes pricing model valuation of warrants as at October 31, 2019
and August 1, 2019:
|
|
October 31, 2019
|
|
August 1, 2019
|
|
|
|
|
|
Risk-free interest rate
|
|
1.52%
|
|
1.52%
|
Expected life of warrants
|
|
0.16 to 2.80 years
|
|
0.16 to 2.93 years
|
Expected annualized volatility
|
|
92.2% to 125.2%
|
|
115.6% to 127.5%
|
Dividend
|
|
Nil
|
|
Nil
|
Forfeiture rate
|
|
0%
|
|
0%
|
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
10.
|
CAPITAL
STOCK AND ADDITIONAL PAID-IN-CAPITAL
|
Private
Placements
On
August 30, 2018, the Company completed a first tranche of a non-brokered private placement, issuing an aggregate of 288,125 units
at a price of $0.60 (C$0.80) per unit for gross proceeds of $177,580 (C$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 $0.90 (C$1.20) for a period of three years
from the date of issuance until August 30, 2021.
On
September 17, 2018, the Company completed a second tranche of a non-brokered private placement, issuing an aggregate of 200,313
units at a price of $0.60 (C$0.80) per unit for gross proceeds of $123,089 (C$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 $0.90 (C$1.20) 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 $1,352,605 (C$1,750,000) by issuing 1,750,000
units to Meridian Jerritt Canyon Corp. (Meridian), a wholly owned subsidiary of Yamana Gold Inc. (Yamana).
Each unit consists of one share of common stock at a price of $0.80 (C$1.00) per unit and one-half of one share purchase warrant
at a price of $1.00 (C$1.30) exercisable until October 16, 2020. As a result of the investment, the investor owned approximately
12.6% of the Companys issued and outstanding shares on a non-diluted basis. In conjunction with the investment, the Company
issued 87,500 share purchase warrants valued at $37,630 (discount rate – 1.65%, volatility – 139.09%, expected life
– 2 years, dividend yield – 0%) as a finders fee to Southern Arc Minerals Inc. (Southern Arc),
which will be exercisable into one share of common stock at a price of $1.00 (C$1.30) until October 16, 2020.
On
November 5, 2018, the Company raised $572,694 (C$750,000) through the sale of 750,000 units at $0.80 (C$1.00) per unit where each
unit consists of one share of common stock and one half of one share purchase warrant exercisable into one share of common stock
at a price of $1.00 (C$1.30) until November 5, 2020. All 750,000 units issued in the final tranche were acquired by Southern
Arc.
On
March 1, 2019, the Company completed a non-brokered private placement for a total of $1,378,184 (C$1,827,472) through the sale
of 1,827,472 units at a price of $0.80 (C$1.00)
per unit where each unit consists of one share of common stock and one-half of one share purchase warrant.
Each whole warrant is exercisable into one share of common stock at a price of $1.00 (C$1.30) until
March 1, 2021. Out of the 1,827,472 units issued as part of this private placement, 1,004,972 units were issued to Meridian to
settle a convertible debt balance of $757,897 (C$1,004,972). In connection with the private placement, the Company incurred finders
fees and share issuance costs of $80,919 (C$107,299), and issued a total of 19,950 finders warrants valued at $8,371 (C$11,100)
(discount rate – 1.65%, volatility – 139.09%, expected life – 2 years, dividend yield – 0%), exercisable
into one share of common stock at a price of $1.00 (C$1.30) for a period of two years from the
date of issuance.
On
July 3, 2019, the Company completed the first tranche of a non-brokered private placement. The Company raised a total of $552,000
(C$725,769) through the sale of 1,036,813 units at a price of $0.50 (C$0.70) per unit where each unit consists of one share of
common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share
at an exercise price of $0.80 (C$1.00) until July 3, 2022.
On
August 19, 2019, the Company completed the second tranche of a non-brokered private placement for a total of $2,412,281 (C$3,207,850)
through the sale of 4,582,644 units at a price of $0.50 (C$0.70) per unit where each unit consists
of one share of common stock and one-half of one share purchase warrant. Each whole warrant is exercisable into one share of common
stock at a price of $0.80 (C$1.00) until August 19, 2022. The Company has paid finders
fees and associated legal fees of $8,710 and issued a total of 11,196 finders warrants entitling the holder to acquire
one share at a price of $0.80 (C$1.00) until August 19, 2022.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
10.
|
CAPITAL
STOCK AND ADDITIONAL PAID-IN-CAPITAL (continued)
|
Stock
Options
On
November 30, 2018, the Company granted 290,000 stock options with a fair value of $131,300 to employees and directors of the Company.
The options are exercisable at $0.80 (C$1.00) per share for a period of five years and expire
on November 29, 2023.
On
August 21, 2019, the Company granted 751,284 stock options to employees and directors of the Company pursuant to the terms of
the Companys Stock Option Plan. The options are exercisable at $0.50 (C$0.70) per share
for a period of five years and expire on August 21, 2024. During the period ended October 31, 2019, the Company recorded $331,966
in share-based compensation (October 31, 2018 - $Nil)
The
following incentive stock options were outstanding and exercisable at October 31, 2019:
|
|
|
|
|
|
|
Number
of Options
|
|
|
Exercise
Price
($C)
|
|
|
Expiry Date
|
|
|
|
|
|
|
|
|
110,000
|
|
|
$
|
1.50
|
|
|
March 22, 2021
|
|
58,660
|
|
|
|
2.00
|
|
|
August 8, 2021
|
|
214,254
|
|
|
|
2.40
|
|
|
December 27, 2021
|
|
90,000
|
|
|
|
2.80
|
|
|
April 20, 2020
|
|
613,100
|
|
|
|
1.20
|
|
|
April 19, 2023
|
|
280,000
|
|
|
|
1.00
|
|
|
November 29, 2023
|
|
751,284
|
|
|
|
0.70
|
|
|
August 21, 2024
|
|
2,117,298
|
|
|
$
|
1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
option transactions are summarized as follows:
|
|
Number of
Options
|
|
|
Weighted Average
Exercise Price ($C)
|
|
|
Aggregate
Intrinsic Value
|
Balance outstanding and exercisable, July 31, 2018
|
|
|
1,161,014
|
|
|
$
|
1.70
|
|
|
Nil
|
Options granted
|
|
|
290,000
|
|
|
|
1.00
|
|
|
Nil
|
Balance outstanding and exercisable, July 31, 2019
|
|
|
1,451,014
|
|
|
|
1.50
|
|
|
Nil
|
Options granted
|
|
|
751,284
|
|
|
|
0.70
|
|
|
Nil
|
Options
expired
|
|
|
(85,000
|
)
|
|
|
2.06
|
|
|
Nil
|
Balance outstanding and exercisable, October 31, 2019
|
|
|
2,117,298
|
|
|
$
|
1.22
|
|
|
Nil
|
The
following weighted average assumptions were used for the Black-Scholes pricing model valuation of stock options issued during
the period ended October 31, 2019 and year ended July 31, 2019:
|
|
October 31, 2019
|
|
July 31, 2019
|
|
|
|
|
|
Risk-free interest rate
|
|
1.52%
|
|
2.12%
|
Expected life of warrants
|
|
5.0 years
|
|
5.0 years
|
Expected annualized volatility
|
|
136.38%
|
|
136.38%
|
Dividend
|
|
Nil
|
|
Nil
|
Forfeiture rate
|
|
0%
|
|
0%
|
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
10.
|
CAPITAL
STOCK AND ADDITIONAL PAID-IN-CAPITAL (continued)
|
Warrants
The
following warrants were outstanding at October 31, 2019:
Number
of Warrants
|
|
|
Exercise
Price
($C)
|
|
|
Expiry Date
|
|
|
|
|
|
|
|
|
678,886
|
|
|
$
|
2.50
|
|
|
December 27, 2019
|
|
13,333
|
|
|
|
2.50
|
|
|
January 3, 2020
|
|
2,100
|
|
|
|
1.50
|
|
|
April 18, 2020
|
|
3,516,100
|
|
|
|
1.50
|
|
|
April 18, 2021
|
|
288,125
|
|
|
|
1.20
|
|
|
August 30, 2021
|
|
200,313
|
|
|
|
1.20
|
|
|
September 17, 2021
|
|
962,500
|
|
|
|
1.30
|
|
|
October 16, 2020
|
|
375,000
|
|
|
|
1.30
|
|
|
November 5, 2020
|
|
933,686
|
|
|
|
1.30
|
|
|
March 1, 2021
|
|
518,407
|
|
|
|
1.00
|
|
|
July 3, 2022
|
|
2,302,518
|
|
|
|
1.00
|
|
|
August 19, 2022
|
|
1,150,000
|
|
|
|
1.00
|
|
|
September 3, 2022
|
|
10,940,968
|
|
|
$
|
1.30
|
|
|
|
|
|
|
|
|
|
|
|
|
During
the period ended October 31, 2019, a total of 708,074 warrants with an exercise price of C$2.50 expired unexercised.
Warrant
transactions are summarized as follows:
|
|
Number of Warrants
|
|
|
Weighted Average
Exercise Price ($C)
|
|
Balance, July 31, 2018
|
|
|
8,394,882
|
|
|
$
|
2.70
|
|
Warrants issued
|
|
|
3,278,030
|
|
|
|
1.2
|
|
Warrants expired
|
|
|
(3,476,388
|
)
|
|
|
4.00
|
|
Balance, July 31, 2019
|
|
|
8,196,524
|
|
|
$
|
1.60
|
|
Warrants issued
|
|
|
3,452,518
|
|
|
|
1.00
|
|
Warrants expired
|
|
|
(708,074
|
)
|
|
|
(2.50
|
)
|
Balance, October 31, 2019
|
|
|
10,940,968
|
|
|
$
|
1.30
|
|
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.
RISE
GOLD CORP.
|
(An
Exploration Stage Company)
|
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE PERIOD ENDED OCTOBER 31, 2019
|
(Expressed
in United States Dollars)
|
(Unaudited)
|
|
11.
|
SUPPLEMENTAL
DISCLOSURE WITH RESPECT TO CASH FLOWS
|
During
the three-month periods ended October 31, 2019 and 2018, the Company had the following non-cash financing and investing activities:
For
the period ended October 31, 2019:
|
a)
|
The
Company issued a total of 11,196 finders warrants entitling the holder to acquire one share at a price of $1.00 until August
19, 2022 with a fair value of $4,990. The following weighted average assumptions were used for the Black-Scholes pricing model
valuation of these warrants: Risk-free interest rate – 1.52%; expected volatility – 123.27%; share price and strike
price - C$1.00; expected life of warrants – 3 years.
|
|
12.
|
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 25, 2019, the Company announced that its Board of Directors has approved a 1-for-10 reverse split (consolidation) of
the Companys authorized and issued shares of common stock with a par value of $0.001 per share. It is proposed that the
reverse split will be effective as of the market open on or about December 16, 2019 on the CSE and the OTCQB Venture Market. The
share information included in this report is on a post-consolidation basis.
Subsequent
to period ended October 31, 2019, the Company settled the remaining balance of the equipment loan by paying C$190,000 ($143,018).
|
ITEM2.
|
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
Our
Company was incorporated on February 9, 2007 as Atlantic Resources Inc. in the state of Nevada pursuant to the Nevada Revised
Statutes. On April 11, 2012, we changed our name to Patriot Minefinders Inc. On January 14, 2015, we changed our name
to Rise Resources Inc. On April 7, 2017, we changed our name to Rise Gold Corp.
On
January 14, 2015, we completed a merger with our wholly owned subsidiary, Rise Resources Inc., and formally assumed the subsidiarys
name by filing Articles of Merger with the Nevada Secretary of State. The subsidiary was incorporated entirely for the purpose
of effecting the name change and the merger did not affect our Articles of Incorporation or corporate structure in any other way.
On
January 22, 2015, we completed a 1 for 80 reverse split of our common stock and effected a corresponding decrease in our
authorized capital by filing a Certificate of Change with the Nevada Secretary of State (the Reverse Split). As
a result of the Reverse Split, our authorized capital decreased from 168,000,000 shares to 2,100,000 and our issued and outstanding
common stock decreased from 6,340,000 shares to 79,252, with each fractional share being rounded up to the nearest whole share.
Both
the name change and Reverse Split became effective in the market at the open of business on February 9, 2015.
On
April 9, 2015, we increased our authorized capital from 2,100,000 to 40,000,000 shares of common stock.
On
March 29, 2017, we completed another merger with our wholly owned subsidiary, Rise Gold Corp., and formally assumed the subsidiarys
name by filing Articles of Merger with the Nevada Secretary of State. The subsidiary was incorporated entirely for the purpose
of effecting the name change and the merger did not affect our Articles of Incorporation or corporate structure in any other way.
We
currently have one wholly owned subsidiary, Rise Grass Valley, Inc., which holds certain of our interests and assets located in
the United States, and in particular, our interest in the I-M Mine Property. Rise Grass Valley, Inc. was incorporated in the state
of Nevada pursuant to the Nevada Revised Statutes.
Our
common stock is currently listed in Canada on the Canadian Securities Exchange (the CSE) under the symbol RISE.
We are a reporting issuer in British Columbia, Alberta, and Ontario in Canada. Our common stock is also currently traded in the
United States on the OTCQB Venture Market under the symbol RYES. We are an SEC reporting company by virtue of our
class of common stock being registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the Exchange
Act).
Business
Development
Developments
in our Companys business during the July 31, 2019 fiscal year and the three month period ended October 31, 2019 include
the following:
On
August 30, 2018, the Company completed a first tranche of a non-brokered private placement, issuing an aggregate of 288,125 units
at a price of $0.60 (C$0.80) per unit for gross proceeds of $177,580 (C$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 $0.90 (C$1.20) for a period of three years
from the date of issuance until August 30, 2021.
On
September 17, 2018, the Company completed a second tranche of a non-brokered private placement, issuing an aggregate of 200,313
units at a price of $0.60 (C$0.80) per unit for gross proceeds of $123,089 (C$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 $0.90 (C$1.20) 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 $1,352,605 (C$1,750,000) by issuing 1,750,000
units to Meridian Jerritt Canyon Corp. (Meridian), a wholly owned subsidiary of Yamana Gold Inc. (Yamana).
Each unit consists of one share of common stock at a price of $0.80 (C$1.00) per unit and one-half of one share purchase warrant
at a price of $1.00 (C$1.30) exercisable until October 16, 2020. As a result of the investment, the investor owned approximately
12.6% of the Companys issued and outstanding shares on a non-diluted basis. In conjunction with the investment, the Company
issued 87,500 share purchase warrants valued at $37,630 (discount rate – 1.65%, volatility – 139.09%, expected life
– 2 years, dividend yield – 0%) as a finders fee to Southern Arc Minerals Inc. (Southern Arc),
which will be exercisable into one share of common stock at a price of $1.00 (C$1.30) until October 16, 2020.
On
November 5, 2018, the Company raised $572,694 (C$750,000) through the sale of 750,000 units at $0.80 (C$1.00) per unit where each
unit consists of one share of common stock and one half of one share purchase warrant exercisable into one share of common stock
at a price of $1.00 (C$1.30) until November 5, 2020. All 750,000 units issued in the final tranche were acquired by Southern
Arc.
On
March 1, 2019, the Company completed a non-brokered private placement for a total of $1,378,184 (C$1,827,472) through the sale
of 1,827,472 units at a price of $0.80 (C$1.00) per unit where each unit consists of one share of common stock and one-half of
one share purchase warrant. Each whole warrant is exercisable into one share of common stock at a price of $1.00 (C$1.30) until
March 1, 2021. Out of the 1,827,472 units issued as part of this private placement, 1,004,972 units were issued to Meridian to
settle a convertible debt balance of $757,897 (C$1,004,972). In connection with the private placement, the Company incurred finders
fees and share issuance costs of $80,919 (C$107,299), and issued a total of 19,950 finders warrants valued at $8,371 (C$11,100)
(discount rate – 1.65%, volatility – 139.09%, expected life – 2 years, dividend yield – 0%), exercisable
into one share of common stock at a price of $1.00 (C$1.30) for a period of two years from the date of issuance.
On
July 3, 2019, the Company completed the first tranche of a non-brokered private placement. The Company raised a total of $552,000
(C$725,769) through the sale of 1,036,813 units at a price of $0.50 (C$0.70) per unit where each unit consists of one share of
common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share
at an exercise price of $0.80 (C$1.00) until July 3, 2022.
On
August 19, 2019, the Company completed the second tranche of a non-brokered private placement for a total of $2,412,281 (C$3,207,850)
through the sale of 4,582,644 units at a price of $0.50 (C$0.70) per unit where each unit consists of one share of common stock
and one-half of one share purchase warrant. Each whole warrant is exercisable into one share of common stock at a price of $0.80
(C$1.00) until August 19, 2022. The Company has
paid finders fees and associated legal fees of $8,710 and issued a total
of 11,196 finders warrants entitling the holder to acquire one share at a price of $0.80 (C$1.00) until August 19, 2022.
Plan
of Operations
As
at October 31, 2019, the Company had a cash balance of $2,320,696, compared to a cash balance of $214,158 as of July 31, 2019.
Our
plan of operations for the next 12 months is to prepare and apply for a Use Permit from Nevada County California, to re-open the
Idaho-Maryland gold mine at the I-M Mine Property.
The
Company has commenced engineering work to support an application for a Use Permit from Nevada County to allow the following activities:
|
1.
|
Dewatering
of the underground mine workings.
|
|
2.
|
Underground
exploration drilling.
|
|
3.
|
Full
commercial mining with onsite mineral processing at the historic throughput of 1,000 tons per day Rise
has completed an exploration drilling program on the I-M Mine Property in June of 2019. Up to October 31, 2019, Rise has completed
seventeen drill holes totaling approximately 20,584 meters.
|
Project
Design
The
Use Permit application proposes underground mining to recommence at an average throughput of 1,000 tons per day. The existing
Brunswick Shaft, which extends to ~3400 feet depth below surface, would be used as the primary rock conveyance from the IM Mine.
A second service shaft would be constructed by raising from underground to provide for the conveyance of personnel, materials,
and equipment. Gold processing would be done by gravity and flotation to produce gravity and flotation gold concentrates. Processing
equipment and operations would be fully enclosed in attractive modern buildings and numerous mature trees located on the perimeter
of the Brunswick site would be retained to provide visual shielding of aboveground project facilities and operations.
The
Company would produce barren rock from underground tunneling and sand tailings as part of the project which would be used for
creation of approximately 58 acres of level and useable industrial zoned land for future economic development in Nevada County.
A
water treatment plant and pond, using conventional processes, would ensure that groundwater pumped from the mine is treated to
regulatory standards before being discharged to the local waterways.
Detailed
studies by professionals in the fields of civil and electrical engineering, biology, hydrology, cultural resources, traffic, air
quality, human health, vibration, and sound have guided the design of the project.
Approximately
300 employees would be required if the mine reaches full production.
Nevada
County Use Permit
The
application and permitting process are being managed by Benchmark Resources, a California based planning and environmental consulting
firm with substantial experience in the permitting of mining projects. Benchmarks track record of success has resulted
in the development of numerous environmentally sensitive and socially accepted mining projects across the state.
The
IM Mine Property is 100% owned by the Company and located on private land in Nevada County, California. As a result, the Project
is subject to the Nevada County Land Use and Development Code. Subsurface mining and aboveground processing are allowed uses subject
to County approval of a Use Permit. The Company will also be
required to obtain approval of a Reclamation Plan, variance, and
rezone from the County for any surface component of the underground mining operation before mining operations can commence.
In
order to approve the requested entitlements, the County must satisfy the requirements of the California Environmental Quality
Act (CEQA). CEQA requires that the County study the environmental impacts of any discretionary action, disclose
the impacts to the public, and mitigate unavoidable impacts to the extent feasible. CEQA is triggered whenever a California governmental
agency is asked to approve a discretionary project. The project application will require an Environmental Impact Report (EIR).
A
general outline of milestones in the process to approval of the permit is outlined as follows;
|
1)
|
County
reviews application and hires a 3rd party environmental consultant;
|
|
2)
|
Countys
consultant prepares a Draft EIR;
|
|
3)
|
Draft
EIR is published for public comments;
|
|
4)
|
County
s consultant publishes a Final EIR including responses to comments; and
|
|
5)
|
County
decisionmakers review the Final EIR and consider approval of the Use Permit and Reclamation Plan at a public hearing.
|
The
timeline from application to land use approval is expected to range from 12-18 months. Construction and operational permits would
follow as needed.
The
Company believes it drilling program has been successful but cautions investors no current mineral resources or mineral reserves
have been defined. The Companys submission of an application for a Use Permit from Nevada County requires information regarding
planned throughput and material quantities. The Company cautions investors that no technical report has been filed to support
that this rate of production can be achieved. The Company has not completed a feasibility study to establish mineral reserves
and therefore has not demonstrated economic viability of the IM Mine. The Company has not made a production decision for the IM
Mine.
Results
of Operations
For
the Periods Ended October 31, 2019 and 2018
The
Companys operating results for the periods ended October 31, 2019 and 2018 are summarized as follows:
|
|
|
|
|
Recast
|
|
FOR THE THREE MONTHS ENDED OCTOBER 31,
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
22,667
|
|
|
$
|
19,802
|
|
Directors fees
|
|
|
19,156
|
|
|
|
15,008
|
|
Filing and regulatory
|
|
|
14,650
|
|
|
|
10,706
|
|
Foreign exchange (gain) loss
|
|
|
46,773
|
|
|
|
(31,808
|
)
|
General and administrative
|
|
|
52,937
|
|
|
|
45,658
|
|
Geological, mineral, and prospect costs
|
|
|
350,123
|
|
|
|
777,459
|
|
Interest expense
|
|
|
15,630
|
|
|
|
5,514
|
|
Professional fees
|
|
|
87,660
|
|
|
|
132,995
|
|
Promotion and shareholder communication
|
|
|
48,057
|
|
|
|
134,100
|
|
Share-based compensation
|
|
|
331,966
|
|
|
|
-
|
|
Salaries
|
|
|
38,585
|
|
|
|
34,539
|
|
Loss before other items
|
|
$
|
1,028,204
|
|
|
$
|
1,143,973
|
|
Loss on fair value adjustment on derivative liability
|
|
|
1,744,179
|
|
|
|
-
|
|
Other income
|
|
|
(75,000
|
)
|
|
|
-
|
|
Net loss for the period
|
|
$
|
2,697,383
|
|
|
$
|
1,143,973
|
|
Foreign exchange translation adjustment arising from change in functional currency
|
|
$
|
(11,734
|
)
|
|
$
|
-
|
|
Net comprehensive loss for the period
|
|
$
|
2,685,649
|
|
|
$
|
1,143,973
|
|
Basic and diluted loss per common share
|
|
$
|
(0.13
|
)
|
|
$
|
(0.09
|
)
|
Weighted average number of common shares outstanding (basic and diluted)
|
|
|
21,099,549
|
|
|
|
12,116,461
|
|
Liquidity
and Capital Resources
Working
Capital
|
|
At October
31, 2019
|
|
|
At July 31,
2019
|
|
|
At July 31,
2018
|
|
Current Assets
|
|
$
|
2,499,598
|
|
|
$
|
415,227
|
|
|
$
|
475,851
|
|
Current Liabilities
|
|
$
|
393,021
|
|
|
$
|
923,152
|
|
|
$
|
672,903
|
|
Working Capital
|
|
$
|
2,106,577
|
|
|
$
|
(507,925
|
)
|
|
$
|
(197,052
|
)
|
Cash
Flows
|
|
For the three month
period ended
October 31, 2019
|
|
|
For the three month
period ended
October 31, 2018
|
|
Net Cash used in Operating Activities
|
|
$
|
(1,052,603
|
)
|
|
$
|
(932,294
|
)
|
Net Cash used in Investing Activities
|
|
$
|
-
|
|
|
$
|
-
|
|
Net Cash provided by Financing Activities
|
|
$
|
3,159,141
|
|
|
$
|
1,633,978
|
|
Net Increase in Cash During the Period
|
|
$
|
2,106,538
|
|
|
$
|
701,684
|
|
As of October 31, 2019, the Company had $2,320,696 in cash, $2,499,598 in current assets, $7,267,167 in
total assets, $393,021 in current liabilities and $2,692,888 in non-current liabilities, a working capital
of $2,106,577 and an accumulated deficit of $15,521,976.
During
the three-month period ended October 31, 2019, the Company used $1,052,603 (2018 - $932,294) 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.
The
Company had no investing activities during the three-month periods ending October 31, 2019 and 2018.
The
Company received net cash of $3,159,141 (2018 - $1,633,978) from financing activities during the three-month period ended October
31, 2019.
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.