UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For quarterly period ended June 30, 2024

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 000-54653

 

 

 

AUGUSTA GOLD CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   41-2252162
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     
Suite 555 - 999 Canada Place    
Vancouver, BC, Canada   V6C 3E1
(Address of principal executive offices)   (Zip Code)

 

(604) 687-1717

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
    Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.) Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 85,929,753 shares of common stock, par value $0.0001, were outstanding on August 12, 2024.

 

 

 

 

 

 

AUGUSTA GOLD CORP.

 

TABLE OF CONTENTS TO FORM 10-Q

 

PART I. FINANCIAL INFORMATION   1
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   1
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   20
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES AND MARKET RISK   25
ITEM 4 - CONTROLS AND PROCEDURES   25
PART II. OTHER INFORMATION   26
ITEM 1 - LEGAL PROCEEDINGS   26
ITEM 1A - RISK FACTORS   26
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   26
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES   26
ITEM 4 - MINE SAFETY DISCLOSURES   26
ITEM 5 - OTHER INFORMATION   26
ITEM 6 - EXHIBITS   27
SIGNATURE   28

 

i

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

AUGUSTA GOLD CORP.

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2024 AND DECEMBER 31, 2023

(Expressed in US dollars)

 

  6/30/24   12/31/23 
Assets        
Current assets          
Cash  $612,804   $300,734 
Prepaid   112,340    55,999 
Deposits   0    7,028 
Total current assets   725,144    363,761 
           
Other assets          
Equipment, net   1,022,363    1,044,392 
Reclamation bonds   1,115,813    1,115,813 
Mineral properties, net   58,287,317    58,992,286 
Total other assets   60,425,493    61,152,491 
           
Total assets  $61,150,637   $61,516,252 
           
Liabilities and Stockholders’ Equity (Deficit)          
           
Current liabilities          
Accounts payable  $1,540,492   $1,411,439 
Note payable and accrued interest - related party   29,068,577    25,393,879 
Warrant liability   14,342    692,949 
Asset retirement obligation   67,000    110,700 
Total current liabilities   30,690,411    27,608,967 
           
Long term liabilities          
Asset retirement obligation, net of current   2,367,121    2,971,097 
Warrant liability, net of current   274,373    417,758 
Total long term liabilities   2,641,494    3,388,855 
           
Total liabilities   33,331,905    30,997,822 
           
Stockholders’ equity          
Preferred stock, 250,000,000 shares authorized, $0.0001 par value   0    0 
Preferred stock series A, 5,000,000 shares designated and authorized, $.0001 par value; zero issued and outstanding as of 6/30/24 and 12/31/23   0    0 
Preferred stock series B, 45,000,000 shares designated and authorized, $.0001 par value; issued and outstanding preferred stock series B shares convertible into zero shares of common stock as of 6/30/24 and 12/31/23   0    0 
Common stock, 750,000,000 shares authorized, $ .0001 par value; 85,929,753 shares issued and outstanding as of 6/30/24 and 12/31/23   8,593    8,593 
Additional paid in capital   64,162,062    63,745,580 
Accumulated deficit   (36,351,923)   (33,235,743)
           
Total stockholders’ equity   27,818,732    30,518,430 
           
Total liabilities and stockholders’ equity  $61,150,637   $61,516,252 

 

Commitments and contingencies (Note 6)

 

See accompanying notes to consolidated financial statements

 

1

 

 

AUGUSTA GOLD CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPRHENSIVE INCOME (LOSS)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Expressed in US dollars)

 

   Three Months Ended   Six Months Ended 
   6/30/24   6/30/23   6/30/24   6/30/23 
Operating expenses                
General and administrative  $434,266   $1,196,164   $1,132,701   $2,511,736 
Lease expense   21,000    21,000    21,000    21,000 
Exploration, evaluation and project expense   836,200    626,426    1,232,458    1,350,696 
Accretion expense   71,286    24,915    101,180    52,822 
Depreciation expense   11,015    11,015    22,029    22,029 
Total operating expenses   1,373,767    1,879,520    2,509,368    3,958,283 
                     
Net operating loss   (1,373,767)   (1,879,520)   (2,509,368)   (3,958,283)
                     
Revaluation of warrant liability   1,586,051    5,337,582    821,992    13,560,969 
Interest expense   (751,222)   (631,079)   (1,424,697)   (1,257,794)
Foreign currency exchange gain (loss)   1    49,963    (4,107)   (21,988)
Net income (loss) and comprehensive income (loss)  $(538,937)  $2,876,946   $(3,116,180)  $8,322,904 
                     
Weighted average common shares outstanding – basic   85,929,753    85,929,753    85,929,753    85,186,643 
Weighted average common shares outstanding – diluted   85,929,753    85,988,087    85,929,753    85,244,977 
                     
Earnings (loss) per common share – basic  $(0.01)  $0.03   $(0.04)  $0.10 
Earnings (loss) per common share – diluted  $(0.01)  $0.03   $(0.04)  $0.10 

 

See accompanying notes to consolidated financial statements

 

2

 

 

AUGUSTA GOLD CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Expressed in US dollars)

 

   Common               Total 
   Stock       Additional       Stockholders’ 
   Shares   Common   Paid In   Accumulated   Equity 
   Issued   Stock   Capital   Deficit   (Deficit) 
                     
December 31, 2022   79,204,606   $7,920   $56,375,344   $(39,893,753)  $16,489,511 
Stock based compensation   0    0    472,981    0    472,981 
Placement - January   6,725,147    673    7,866,753    0    7,867,426 
Warrant liability   0    0    (1,668,671)   0    (1,668,671)
Net income       0    0    5,445,958    5,445,958 
March 31, 2023   85,929,753   $8,593   $63,046,407   $(34,447,795)  $28,607,205 
                          
Stock based compensation   0    0    245,142    0    245,142 
Net income       0    0    2,876,946    2,876,946 
June 30, 2023   85,929,753   $8,593   $63,291,549   $(31,570,849)  $31,729,293 
                          
December 31, 2023   85,929,753   $8,593   $63,745,580   $(33,235,743)  $30,518,430 
Stock based compensation   0    0    275,037    0    275,037 
Warrant liability   0    0    0    0    0 
Net loss       0    0    (2,577,243)   (2,577,243)
March 31, 2024   85,929,753   $8,593   $64,020,617   $(35,812,986)  $28,216,224 
                          
Stock based compensation   0    0    141,445    0    141,445 
Net loss       0    0    (538,937)   (538,937)
June 30, 2024   85,929,753   $8,593   $64,162,062   $(36,351,923)  $27,818,732 

 

See accompanying notes to consolidated financial statements

 

3

 

 

AUGUSTA GOLD CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Expressed in US dollars)

 

   Six Months Ended 
   6/30/24   6/30/23 
         
Cash flows from operating activities        
Net income (loss)  $(3,116,180)  $8,322,904 
Adjustments to reconcile net income (loss) to net cash used in operating activities          
Accretion expense   101,180    52,822 
Depreciation expense   22,029    22,029 
Revaluation of warrant liability   (821,992)   (13,560,969)
Share based compensation   416,482    718,123 
Change in operating assets and liabilities:          
Prepaid expenses   (56,341)   (31,914)
Deferred stock issuance costs   0    121,424 
Debt issuance costs   84,282    49,469 
Deposits   7,028    0 
Accounts payable   129,053    (1,836,711)
Accrued interest   1,340,416    1,208,324 
Asset retirement obligation   (43,887)   (106,651)
           
Net cash used in operating activities   (1,937,930)   (5,041,150)
           
Cash flows from financing activities          
Proceeds from private placement of stock   0    8,568,651 
Proceeds from note payable - related party   2,250,000    0 
Share issuance costs   0    (701,225)
Increase in surety bond collateral   0    (1,115,813)
           
Net cash provided by financing activities   2,250,000    6,751,613 
           
Net increase in cash   312,070    1,710,463 
           
Cash, beginning of period   300,734    332,813 
           
Cash, end of period  $612,804   $2,043,276 
    0      
Noncash investing and financing activities          
Interest and taxes paid  $0   $0 
Revaluation of asset retirement obligation  $704,969   $0 
Warrant liability from units placement  $0   $1,668,671 

 

See accompanying notes to consolidated financial statements

 

4

 

 

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Augusta Gold Corp. (the “Company”) is a junior exploration company engaged in the acquisition and exploration of properties that may contain gold, silver, and other metals in the United States. The Company’s target properties are those that have been the subject of historical exploration. The Company owns, controls or has acquired mineral rights on patented claims and federal unpatented claims in the state of Nevada for the purpose of exploration and potential development of gold, silver, and other metals. The Company plans to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential.

 

The Company’s properties do not have any reserves. The Company plans to conduct exploration and engineering evaluation programs on these properties with the objective of ascertaining whether any of its properties contain economic concentrations of precious and base metals that are prospective for mining.

 

Basis of Presentation and Statement of Compliance

 

The accompanying consolidated financial statements (the “consolidated financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

 

Basis of Measurement

 

These consolidated financial statements have been prepared on the going concern basis, under the historical cost convention, except for certain financial instruments that are measured at fair value as described herein.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Augusta Gold Corp. and its wholly owned subsidiaries, Standard Gold Corp. (“Standard Gold”), Bullfrog Mines LLC (“Bullfrog Mines”), CR Reward, LLC (“CR Reward” or “Reward”) and Rocky Mountain Minerals Corp. (“Rocky Mountain Minerals” or “RMM”). All significant inter-entity balances and transactions have been eliminated in consolidation. Subsidiaries are entities the Company controls when it is exposed, or has rights, to variable returns from its involvement in the entity and can affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are included in the consolidated financial results of the Company from the date of acquisition up to the date of disposition or loss of control.

 

Going Concern and Management’s Plans

 

As at June 30, 2024, the Company has a working capital deficiency of approximately $30,000,000. The ability of the Company to meet its obligations and continue operations is dependent on its ability to obtain additional debt or equity financing. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.

 

Cash, Cash Equivalents and Concentration

 

The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with high credit quality financial institutions in the United States and Canada. On June 30, 2024, the Company’s cash balance was approximately $600,000. To reduce its risk associated with the failure of such financial institution, the Company will evaluate, as needed, the rating of the financial institution in which it holds deposits.

5

 

 

Critical Judgements and Estimation Uncertainties

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, and expenses. These estimates and judgements are subject to change based on experience and new information which could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities affecting future periods. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.

 

Impairment of mineral properties – Management applies significant judgment in its assessment of mineral properties and whether there are any indications of impairment. The Company considers both internal and external sources of information when making the impairment assessment. External sources of information considered are changes in the Company’s economic, legal and regulatory environment, which it does not control, but affects the recoverability of its mining assets. Internal sources of information the Company considers include the manner in which mining properties are expected to be used and indications of economic performance.

 

Share-based compensation – The fair value of share-based compensation is calculated using the Black-Scholes model. The main assumptions used in the model include the estimated life of the option, the expected volatility of the Company’s share price, and the risk-free rate of interest. The resulting value calculated is not necessarily the value that the holder of the option could receive in an arm’s-length transaction.

 

Warrant liability – The fair value of the warrant liability is calculated using the Black-Scholes model. The main assumptions used in the model include the estimated life of the warrant, the expected volatility of the Company’s share price, and the risk-free rate of interest. The resulting value calculated is not necessarily the value that the holder of the warrant could receive in an arm’s-length transaction.

 

Asset retirement obligation – Significant judgment is involved in the determination of future reclamation costs, inflation rates, discount rate, and the life of mine. Revisions to these inputs may result in an adjustment to the carrying value of the obligation and the mineral properties involved.

 

Foreign Currency Translation

 

The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency. The Company has not entered any contracts to manage foreign exchange risk.

 

These consolidated financial statements are presented in U.S. dollars (“USD”), which is the Company’s reporting currency. The functional currency of the Company and its subsidiaries is the US dollar; therefore, the Company is exposed to currency risk from financial assets and liabilities denominated in Canadian dollars. The Company does not consider the currency risk to be material to the future operations of the Company and, as such, does not have a program to manage currency risk.

 

Transactions in foreign currencies are recorded in the functional currency at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rates. Non-monetary items are translated at the exchange rates in effect on the date of the transactions. Foreign exchange gains and losses arising on translation are presented in the consolidated statements of loss and comprehensive loss.

 

Property and Equipment

 

Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, which range from 5 to 15 years. Additions, renewals, and betterments that significantly extend the life of the asset are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any related gain or loss is reflected in income for the period.

 

6

 

 

Leases

 

The Company has adopted Financial Accounting Standards Board (FASB) ASU 2016-02, Leases (Topic 842), for reporting leases. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases. For leases with a lease term greater than one year, the Company recognizes a lease asset for its right to use the underlying leased asset and a lease liability for the corresponding lease obligation.

  

Mineral Property Acquisition and Exploration Costs

 

Mineral property exploration costs are expensed as incurred until economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company has chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once the Company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed. Costs of property and equipment acquisitions are being capitalized.

 

The Company is required to reclaim the property at the Bullfrog Project and Reward Project at the end of their useful lives. In accordance with FASB ASC 410-20, Asset Retirement and Environmental Obligations, the Company recognized the fair value of a liability for an ARO in the amount of $1,681,947 at the Bullfrog Project and $752,174 at the Reward Project. During the period ended June 30, 2024, the Company incurred certain costs related to the ARO estimate that had an effect on the accretion and estimated costs.

 

Although the ultimate amounts for future site reclamation and remediation are uncertain, the best estimate of these obligations was based on information available, including current legislation, third-party estimates, and management estimates. The amounts and timing of the mine closure obligations will vary depending on several factors including future operations and the ultimate life of the mine, future economic conditions, and changes in applicable environmental regulations.

 

Period end  6/30/2024   12/31/2023 
Balance, beginning of period  $3,081,797   $2,814,435 
Accretion   101,180    111,548 
Costs applied to ARO balance   (43,887)   (59,285)
Change in estimates   (704,969)   215,099 
Balance, end of period (current)  $67,000   $110,700 
Balance, end of period (long term)  $2,367,121   $2,971,097 
           
Life of mine - Bullfrog Project   2031    2031 
Life of mine - Reward Project   2029    2029 
Discount rate   11.5%   3.9%
Inflation rate (average)   2.2%   2.2%

 

At June 30, 2024, the estimated future cash flows have been determined using real cash flows and discounted using a rate of 11.5% and a total undiscounted amount for the estimated future cash flows is $2,153,984 at the Bullfrog Project and $1,296,261 at the Reward Project. The Bullfrog and CR Reward projects have surety bonding in place with the Bureau of Land Management for $2,282,270 and $1,161,725 respectively.

 

At June 30, 2023, the estimated future cash flows have been determined using real cash flows and discounted using a rate of 4.0% and a total undiscounted amount for the estimated future cash flows is $1,875,056 at the Bullfrog Project and $1,313,204 at the Reward Project. 

 

7

 

 

Fair Value of Financial Instruments

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

 

Level 1 - Valuation based on quoted market prices in active markets for identical assets and liabilities.

  

Level 2 - Valuation based on quoted market prices for similar assets and liabilities in active markets.

 

Level 3 - Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

 

The fair value of cash, deposits, accounts payable, and notes payable approximates their carrying values due to their short term to maturity. The warrant liabilities are measured using level 3 inputs (Note 4).

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.

 

The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company has elected to classify interest and penalties related to unrecognized income tax benefits, if and when required, as part of income tax expense in the statement of operations. No liability has been recorded for uncertain income tax positions, or related interest or penalties as of December 31, 2023 and December 31, 2022. The periods ended December 31, 2022, 2021, 2020 and 2019 are open to examination by taxing authorities.

 

Long Lived Assets

 

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.

 

Preferred Stock

 

The Company accounts for its preferred stock under the provisions of the ASC on Distinguishing Liabilities from Equity, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires an issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Company has determined that its preferred stock does not meet the criteria requiring liability classification as its obligation to redeem these instruments is not based on an event certain to occur. Future changes in the certainty of the Company’s obligation to redeem these instruments could result in a change in classification.

 

8

 

 

Stock-Based Compensation

 

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). This ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

The estimated fair value of each stock option as of the date of grant was calculated using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on Company stock price history. The Company determines the expected life based on the simplified method given that its own historical share option exercise experience does not provide a reasonable basis for estimating expected term. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The shares of common stock subject to the stock-based compensation plan shall consist of unissued shares, treasury shares or previously issued shares held by any subsidiary of the Company, and such number of shares of common stock are reserved for such purpose.

  

Derivative Financial Instruments

 

The Company accounts for derivative instruments in accordance with Financial Accounting Standards Board (“FASB”) ASC 815, Derivatives and Hedging (“ASC 815”), which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.

 

Certain warrants are treated as derivative financial liabilities. The estimated fair value, based on the Black-Scholes model, is adjusted on a quarterly basis with gains or losses recognized in the statement of loss and comprehensive loss. The Black-Scholes model is based on significant assumptions such as volatility, dividend yield, expected term and liquidity discounts.

 

Earnings (Loss) per Common Share

 

The following table shows basic and diluted earnings per share:

 

   Three Months Ended   Six Months Ended 
   6/30/2024   6/30/2023   6/30/2024   6/30/2023 
Basic and diluted earnings (loss) per common share                
Earnings (loss)  $(538,937)  $2,876,946   $(3,116,180)  $8,322,904 
Basic weighted average shares outstanding   85,929,753    85,929,753    85,929,753    85,186,643 
Assumed conversion of dilutive shares   0    58,334    0    58,334 
Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents   85,929,753    85,988,087    85,929,753    85,244,977 
Basic earnings (loss) per common share  $(0.01)  $0.03   $(0.04)  $0.10 
Diluted earnings (loss) per common share  $(0.01)  $0.03   $(0.04)  $0.10 

 

9

 

 

Certain options and warrants and all preferred shares were included in the computation of diluted shares outstanding for the three and six months ended June 30, 2023. The options and warrants that were not included in the diluted weighted average shares calculation were excluded because they were “out-of-the money”. In periods when the Company has a net loss, all common stock equivalents are excluded as they would be anti-dilutive. All options and warrants were excluded in the diluted weighted average shares calculation because of the net loss for the three and six months ended June 30, 2024.

 

The following details the dilutive and anti-dilutive shares as of June 30, 2023:

 

   Dilutive shares - In the money   Anti-dilutive shares - Out of the money   Total 
Options   58,334    4,991,668    5,050,002 
Warrants   0    34,701,615    34,701,615 
Total   58,334    39,693,283    39,751,617 

 

Risks and Uncertainties

 

Since the formation of the Company, it has not generated any revenue. As an early-stage company, the Company is subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a new business. Our business is dependent upon the implementation of our business plan. There can be no assurance that our efforts will be successful or that we will ultimately be able to generate revenue or attain profitability.

  

Natural resource exploration, and exploring for gold, is a business that by its nature is very speculative. There is a strong possibility that we will not discover gold or any other mineralization which can be mined or extracted at a profit. Even if we do discover gold or other deposits, the deposit may not be of the quality or size necessary for us or a potential purchaser of the property to make a profit from mining it. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected geological formations, geological formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are just some of the many risks involved in mineral exploration programs and the subsequent development of gold deposits.

 

The Company business is exploring for gold and other minerals. If the Company discovers commercially exploitable gold or other deposits, revenue from such discoveries will not be generated unless the gold or other minerals are actually mined.

 

Mining operations in the United States are subject to many different federal, state, and local laws and regulations, including stringent environmental, health and safety laws. In the event operational responsibility is assumed for mining our properties, the Company may be unable to comply with current or future laws and regulations, which can change at any time. Changes to these laws may adversely affect any of the Company potential mining operations. Moreover, compliance with such laws may cause substantial delays and require capital outlays greater than those the Company anticipates, adversely affecting any potential mining operations. Future mining operations, if any, may also be subject to liability for pollution or other environmental damage. The Company may choose not to be insured against this risk because of high insurance costs or other reasons.

 

The Company’s exploration and development activities may be affected by existing or threatened medical pandemics, such as the novel coronavirus (COVID-19). A government may impose strict emergency measures in response to the threat or existence of an infectious disease, such as the emergency measures imposed by governments of many countries and states in response to the COVID-19 virus pandemic. As such, there are potentially significant economic and social impacts of infectious diseases, including but not limited to the inability of the Company to develop and operate as intended, shortage of skilled employees or labor unrest, inability to access sufficient healthcare, significant social upheavals or unrest, disruption to operations, supply chain shortages or delays, travel and trade restrictions, government or regulatory actions or inactions (including but not limited to, changes in taxation or policies, or delays in permitting or approvals, or mandated shut downs), declines in the price of precious metals, capital markets volatility, availability of credit, loss of investor confidence and impact on economic activity in affected countries or regions. In addition, such pandemics or diseases represent a serious threat to maintaining a skilled workforce in the mining industry and could be a major health-care challenge for the Company. There can be no assurance that the Company or the Company’s personnel will not be impacted by these pandemic diseases and the Company may ultimately see its workforce productivity reduced or incur increased medical costs/insurance premiums as a result of these health risks. COVID-19 is rapidly evolving and the effects on the mining industry and the Company are uncertain. The Company may not be able to accurately predict the impact of infectious disease, including COVID-19, or the quantum of such risks. There can be no assurance that the Company will not be impacted by adverse consequences that may be brought about by pandemics on global financial markets, which may reduce resources, share prices and financial liquidity and may severely limit the financing capital available to the Company.

 

10

 

 

Recent Accounting Pronouncements

 

The Company is not aware of any recent accounting pronouncements expected to have a material impact on the consolidated financial statements.

  

NOTE 2 - MINERAL PROPERTIES AND EQUIPMENT

 

   Mineral properties   Equipment   Land improvements   Total 
Cost                
As of December 31, 2022  $58,962,286   $161,326   $1,015,869   $60,139,481 
Additions   30,000    0    0    30,000 
As of December 31, 2023   58,992,286    161,326    1,015,869    60,169,481 
Change in ARO estimate   (704,969)   0    0    (704,969)
Additions   0    0    0    0 
As of June 30, 2024  $58,287,317   $161,326   $1,015,869   $59,464,512 
                     
Accumulated depreciation                    
As of December 31, 2022  $0   $65,162   $23,584   $88,746 
Depreciation expense   0    32,265    11,792    44,057 
As of December 31, 2023   0    97,427    35,376    132,803 
Depreciation expense   0    16,133    5,896    22,029 
As of June 30, 2024  $0   $113,560   $41,272   $154,832 
                     
Net book value on June 30, 2024  $58,287,317   $47,766   $974,597   $59,309,680 

 

Mineral properties consist of two main projects:

 

Bullfrog Gold Project, Nevada

 

On October 26, 2020, the Company completed its acquisition of Bullfrog Mines pursuant to the Membership Interest Purchase Agreement (the “MIPA”) among the Company, Homestake Mining Company of California (“Homestake”), and Lac Minerals (USA) LLC (“Lac Minerals” and together with Homestake, the “Barrick Parties”).

 

The project is subject to a 2% net smelter returns royalty (the “Barrick Royalty”) granted on all minerals produced from all of the patented and unpatented claims (subject to the adjustments set out below), pursuant to a royalty deed, dated October 26, 2020 by and among Bullfrog Mines and the Barrick Parties (the “Royalty Deed”).

 

Pursuant to the Royalty Deed, the Barrick Royalty is reduced to the extent necessary so that royalties burdening any individual parcel or claim included in the Barrick Properties on October 26, 2020, inclusive of the Barrick Royalty, would not exceed 5.5% in the aggregate, provided that the Barrick Royalty in respect of any parcel or claim would not be less than 0.5%, even if the royalties burdening a parcel or claim included in the Barrick Properties would exceed 5.5%.

 

11

 

  

Reward Gold Project, Nevada

 

On June 13, 2022, the Company completed the acquisition of the outstanding membership interests (collectively, the “CR Interests”) of CR Reward LLC, a wholly owned subsidiary of Waterton (“CR Reward”), pursuant to a membership interest purchase agreement with Waterton Nevada Splitter, LLC (“Waterton”). CR Reward holds the Reward Project located seven miles from the Company’s Bullfrog Project in Nevada.

 

See Note 6 Commitments for discussion of other option agreements underlying mineral claims.

 

NOTE 3 - STOCKHOLDER’S EQUITY

 

Recent Sales of Unregistered Securities

 

The Company did not issue common shares for the six months ended June 30, 2024.

 

Convertible Preferred Stock

 

In August 2011, the Board of Directors designated 5,000,000 shares of Preferred Stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series A Preferred Stock is not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series A Preferred Stock to the extent that, as a result of the conversion, the holder of such shares would beneficially own more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock. The holders of the Company’s Series A Preferred Stock are also entitled to certain liquidation preferences upon the liquidation, dissolution or winding up of the business of the Company.

 

In October 2012, the Board of Directors designated 5,000,000 shares of Preferred Stock as Series B Preferred Stock. In July 2016, the Board of Directors increased the total Series B Preferred Stock designated to 45,000,000. Each share of Series B Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series B Preferred Stock is not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series B Preferred Stock to the extent that, as a result of the conversion, the holder of such shares would beneficially own more than 4.99% (which may be increased or waived upon no less than 61 days prior notice) in the aggregate of the issued and outstanding shares of our common stock. For a period of 24 months from the issue date, the holder of Series B Preferred Stock were entitled to price protection as determined in the subscription agreement.

 

As of June 30, 2024 and 2023, there were no Preferred Stock shares outstanding.

 

Common Stock Options

 

On February 22, 2021, the Company’s Board of Directors approved a new stock option plan (the “Plan”). The aggregate number of shares of common stock of the Company (a “Share”) that may be reserved for issuance pursuant to the Plan shall not exceed 10% of the number of Shares issued and outstanding from time to time. Options granted vest in accordance with terms at the discretion of the Board.

 

On April 16, 2024, the Company granted 2,800,000 options to certain directors, officers and employees. No options were granted for the twelve months ended December 31, 2023.

 

The Company recognized share-based compensation expense related to stock options of $416,482 and $718,123 for the six months ended June 30, 2024 and 2023, respectively. The options are vested based on years of service, with options vesting between one and three years.

  

12

 

 

Stock Option Activity

 

A summary of the stock options as of June 30, 2024, and changes during the periods are presented below:

 

           Weighted     
           Average     
       Weighted   Remaining     
       Average   Contractual   Aggregate 
   Number of   Exercise   Life   Intrinsic 
   Options   Price   (Years)   Value 
Balance at December 31, 2022   5,200,002   $1.56    3.45   $57,468 
Exercised   0    0.00    0    0 
Issued   0    0.00    0    0 
Canceled   (190,000)  C$2.02    0    0 
Balance at December 31, 2023   5,010,002   $1.48    2.43    0 
Exercised   0    0.00    0    0 
Issued   2,800,000   C$1.11    4.80    0 
Canceled   (765,000)  C$2.02    0    0 
Balance at June 30, 2024   7,045,002   $1.18    3.04   $1,750 
Options exercisable at June 30, 2024   4,378,336   $1.88    2.07   $1,750 

 

Warrant Activity

 

Total outstanding warrants of 30,887,574 as of June 30, 2024, were as follows:

 

   Warrants Issued   Total 
Warrants issued (includes expired warrants)   27,433,335    3,777,784    3,362,573    336,257    300,000    35,209,949 
Issued date   10/26/2020    3/4/2021    1/20/2023    1/20/2023    2/26/2024      
Expiration date   10/26/2024    3/4/2024    1/20/2026    1/20/2024    2/26/2029      
Exercise price (Canadian $)  $1.80   $2.80   $2.30   $1.71   $0.62      
                               
Balance at December 31, 2022   27,225,001    3,777,784    0    0    0    31,002,785 
Exercised   0    0    0    0    0    0 
Issued   0    0    3,362,573    336,257    0    3,698,830 
Expired   0    0    0    0    0    0 
Balance at December 31, 2023   27,225,001    3,777,784    3,362,573    336,257    0    34,701,615 
Exercised   0    0    0    0    0    0 
Issued   0    0    0    0    300,000    300,000 
Expired   0    (3,777,784)   0    (336,257)   0    (4,114,041)
Balance at June 30, 2024   27,225,001    0    3,362,573    0    300,000    30,887,574 

 

13

 

 

NOTE 4 - DERIVATIVE FINANCIAL INSTRUMENTS

 

Warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the Warrants have a derivative liability value.

 

The value of the October 2020 Warrants of $11,439,156 has been calculated on the date of issuance of October 26, 2020, using Black-Scholes valuation technique. The warrant liability was valued at $14,342 and $691,782 for the six months ended June 30, 2024 and the year ending December 31, 2023, respectively with the following assumptions:

 

   10/26/20   12/31/23   6/30/24 
Fair market value of common stock  $1.26   $0.63   $0.69 
Exercise price  $1.38   $1.36   $1.32 
Term   4 years    0.8 years    0.3 years 
Volatility range   68.4%   72.7%   47.5%
Risk-free rate   0.2%   4.8%   5.5%

 

The value of the March 2021 Warrants of $3,306,758 has been calculated on the date of issuance of March 4, 2021, using Black-Scholes valuation technique. The warrant liability was expired as of June 30, 2024 and was valued at $1,167 for the year ending December 31, 2023 with the following assumptions:

 

    3/4/21     12/31/23     6/30/24  
Fair market value of common stock   $ 1.97     $ 0.63     $ 0.00  
Exercise price   $ 2.21     $ 2.12     $ 0.00  
Term     3 years       0.2 years       0.00  
Volatility range     72.7 %     101.2 %     0.0 %
Risk-free rate     0.3 %     5.4 %     0.0 %

 

The value of the January 2023 Warrants of $1,762,488 has been calculated on the date of issuance of January 20, 2023, using Black-Scholes valuation technique. The warrant liability was valued at $274,373 and $417,758 for the six months ended June 30, 2024 and the year ending December 31, 2023, respectively with the following assumptions:

 

   1/20/23   12/31/23   6/30/24 
Fair market value of common stock  $1.13   $0.63   $0.69 
Exercise price  $1.71   $1.74   $1.68 
Term   3 years    2 years    1.6 years 
Volatility range   84.1%   80.1%   70.7%
Risk-free rate   3.8%   4.2%   4.7%

 

NOTE 5 - RELATED PARTY

 

Augusta Investments Inc.

 

●On September 13, 2022, the Company entered into a secured note purchase agreement (the “Purchase Agreement”) with Augusta Investments Inc. (“Augusta Investments”), which shares a common director of Augusta Gold, to offer and sell a secured promissory note of the Company (the “Note”) in exchange for Augusta Investments loaning the Company $22,232,561 (the “Loan”). The Loan and the issuance of the Note occurred on September 13, 2022. The Company used the Loan to make the second payment and deferred payment to Waterton Nevada Splitter LLC (“Waterton”) on September 13, 2022, in connection with the Company’s acquisition of its Reward gold project that closed on June 13, 2022.

 

The Note bears interest at a rate of prime plus 3% and is for a maximum term of 12 months. The Note is secured by a first-priority, perfected security interest in all the assets of the Company pursuant to a guarantee and security agreement (the “Security Agreement”) and certain deeds of trust (the “Deeds of Trust”, collectively with the Purchase Agreement, the Note and the Security Agreement, the “Loan Documents”).

 

The payment of the obligations of the Company under the Note is also guaranteed by each of the subsidiaries of the Company pursuant to the Security Agreement. The Company paid Augusta Investments an origination fee of 0.5% of the amount of the Loan on the closing of the issuance of the Note pursuant to the Purchase Agreement.

 

14

 

 

●On September 13, 2023, the Company and Augusta Investments entered into Amendment Number One (the “Amendment”) to the Note. The Amendment amends Section 1 of the Note to change the maturity date of the Note from September 13, 2023 to the earlier of (i) first Business Day occurring 30 days after the Lender has provided written notice to the Company demanding payment on the entire unpaid balance of principal and all accrued and unpaid interest thereon; (ii) the date upon which the Company makes payment in full of the entire unpaid balance of principal and all accrued and unpaid interest; and (iii) December 13, 2023.

 

●On December 13, 2023, the Company and Augusta Investments entered into Amendment Number Two (the “Amendment 2”) to the Note. Amendment 2 amends Section 1 of the Note to change the maturity date of the Note from December 13, 2023, to March 31, 2024. In consideration for the Lender granting an extension to the maturity date, the Company has agreed to pay to the Lender an extension fee of $33,501, which is accrued and due on the maturity date.

 

●On March 27, 2024, the Company entered into Amendment Number One (the “Purchase Agreement Amendment”) to its previously issued Purchase Agreement with Augusta Investments, pursuant to which Augusta Investments agreed to purchase the Note in the amount of US$22,232,561.

 

In connection with entering into the Purchase Agreement Amendment, Augusta Investments loaned the Company an additional $525,000, less a $25,000 loan origination fee, and the Company issued an amended and restated Note to Augusta Investments dated March 27, 2024 (the “Amended and Restated Note”). The Amended and Restated Note amends the Note to provide that the principal amount due and payable thereunder will be set forth on Schedule A thereto, as amended from time to time, by the mutual agreement of the parties. As issued on March 27, 2024, the Amended and Restated Note is for a principal amount of $22,818,853, which includes (i) the original issue amount of the Note on September 13, 2022 of $22,126,000 (along with $106,561 of debt issuance costs), (ii) an extension fee of $33,501 on December 13, 2023, (iii) the $500,000 loan (along with an additional $25,000 of debt issuance costs) on March 27, 2024 and (iv) the extension fee of $27,791 on March 27, 2024. The Amended and Restated Note bears interest at a rate of prime plus 3% and has an outside maturity date of June 30, 2024.

 

●On April 26, 2024, the Company executed an amended Schedule A (the “Amended Schedule A”) to its amended and restated secured promissory note issued to Augusta Investments Inc. (the “Purchaser”) on September 13, 2022, as amended and restated on March 27, 2024 (the “Amended and Restated Note”). In connection with entering into the Amended Schedule A, the Purchaser loaned the Company an additional $1,500,000 pursuant to the terms and conditions of the Amended and Restated Note (the “Additional Loan”). As amended by the Amended Schedule A, the Amended and Restated Note is for a principal amount of $24,318,853.

 

●On June 28, 2024, the Company entered into Amendment Number One (the “June 2024 Amendment”) to its amended and restated secured promissory note issued to Augusta Investments Inc. (the “Lender”) on September 13, 2022, as amended and restated on March 27, 2024 (the “Amended and Restated Note”).

 

The June 2024 Amendment amends Section 1 of the Note to change the outside maturity date of the Amended and Restated Note from June 30, 2024, to September 30, 2024. In consideration for the Lender granting an extension to the maturity date, the Company has agreed to pay to the Lender an extension fee of $30,399, which amount will be accrued and due on the maturity date.

 

In connection with the June 2024 Amendment, the Company and the Lender executed an amended Schedule A (the “Amended Schedule A”) to the Amended and Restated Note to add the amount of the Extension Fee to the principal amount of the Amended and Restated Note. As amended by the Amended Schedule A, the Amended and Restated Note is for a principal amount of $24,349,251.

 

On February 26, 2024, the Company entered into an unsecured note purchase agreement with Donald Taylor (the “Lender”) to offer and sell an unsecured promissory note of the Company in exchange for the Lender loaning the Company $250,000 (along with an additional $12,500 of debt issuance fees). The note bears interest at a rate of 14% and matures on December 31, 2024. In connection with the loan, the Company issued 300,000 warrants (the “Warrants”) to the Lender. Each Warrant is exercisable for one share of the Company’s common stock for a period of five years at an exercise price of C$0.62. The value of the February 2024 Warrants of $97,370 has been calculated on the date of issuance of February 26, 2024, using Black-Scholes valuation technique.

  

15

 

 

Related Party - Augusta Investments  Note Payable   Accrued
Interest		   Total 
As of December 31, 2022  $22,232,561   $610,761   $22,843,322 
Additional debt issuance costs   33,501    (33,501)   0 
Interest expense   0    2,550,557    2,550,557 
As of December 31, 2023   22,266,062    3,127,817    25,393,879 
Additional debt issued   2,000,000    0    2,000,000 
Additional debt issuance costs   83,189    (83,189)   0 
Interest expense   0    1,406,950    1,406,950 
As of June 30, 2024  $24,349,251   $4,451,578   $28,800,829 

 

Related Party - Don Taylor  Note Payable   Accrued
Interest		   Total 
As of December 31, 2023  $0   $0   $0 
Additional debt issued   250,000    0    250,000 
Additional debt issuance costs   12,500    (12,500)   0 
Interest expense   0    17,748    17,748 
As of June 30, 2024  $262,500   $5,248   $267,748 

 

Related Party - Total  Note Payable   Accrued
Interest		   Total 
As of December 31, 2022  $22,232,561   $610,761   $22,843,322 
Additional debt issuance costs   33,501    (33,501)   0 
Interest expense   0    2,550,557    2,550,557 
As of December 31, 2023   22,266,062    3,127,817    25,393,879 
Additional debt issued   2,250,000    0    2,250,000 
Additional debt issuance costs   95,689    (95,689)   0 
Interest expense   0    1,424,698    1,424,698 
As of June 30, 2024  $24,611,751   $4,456,826   $29,068,577 

 

On October 26, 2020, the Company entered into an arrangement to share office space, equipment, personnel, consultants and various administrative services with other companies related by virtue of certain directors and management in common. These services have been provided through a management company equally owned by each company party to the arrangement. Costs incurred by the management company are allocated and funded by the shareholders of the management company based on time incurred and use of services. If the Company’s participation in the arrangement is terminated, the Company will be obligated to pay its share of the rent payments for the remaining term of the office space rental agreement.

 

16

 

 

The Company was charged for the following with respect to this arrangement for the six months ended June 30, 2024 and 2023:

 

   Six Months Ended 
    6/30/2024    6/30/2023 
Salaries and benefits  $106,365   $228,542 
Office   44,193    52,182 
Operating expenses   38,989    51,523 
Total  $189,547   $332,247 

 

The Company was committed to payments for office leases located in Toronto through 2024, however due to staffing changes, the Company no longer has a payment requirement for the office space.

 

As of June 30, 2024, there were 7,045,002 options issued and outstanding to officers, directors and employees of the Company of which 6,850,002 were to related parties. There was related party share-based compensation expense of $403,247 and $718,123 for the six months ending June 30, 2024 and 2023, respectively.

 

The Company entered a consulting arrangement with Augusta Capital Corporation (“ACC”), a private company 100% beneficially held by the Company’s Executive Chairman.  ACC invoiced the Company C$183,752 and C$198,457 during the six months ended June 30, 2024 and 2023, respectively, for consulting services.

 

The Chief Executive Officer had an amount due from the Company of $645,823 and $520,825 related to accrued payroll costs as of June 30, 2024 and December 31, 2023, respectively.

 

NOTE 6 - COMMITMENTS AND CONTINGENCIES

 

The Company has four mineral leases underlying the Reward property, which require annual advance royalty payments according to the following schedules. These leases are out of the scope of ASC 842 Leases, and any advance royalty paid is expensed off as exploration expenses. Once in production, each agreement attracts payment of net smelter royalties as per the following table. 

 

   Total 
2024  $30,400 
2025  $10,400 
2026  $10,400 
2027  $10,900 
2028  $10,900 
2029  $10,900 
2030  $11,400 
2031  $9,000 
2032  $9,000 
2033  $9,500 
2034  $9,500 
2035  $9,500 
2036  $10,000 
2037  $10,000 
2038  $10,000 
Applicable NSRs   3%

 

(1) All amounts of annual advance minimum royalties paid during a calendar year shall be applied toward all amounts of earned mineral production royalties payable during that calendar year.

  

17

 

 

On July 1, 2017, RMM entered a 30-year Mineral Lease (the “Lunar Lease”) with Lunar Landing, LLC (“Lunar”) involving 24 patented mining claims underlying part of the Bullfrog property. Lunar owns a 100% undivided interest in the mining claims. These leases are out of the scope of ASC 842 Leases, and are expensed when paid.

 

Under the Lunar Lease, RMM shall expend as minimum work commitments of $50,000 per year starting in 2017 until a cumulative of $500,000 of expense has been incurred. If RMM fails to perform its obligations under the Lunar Lease, and in particular fails to make any payment due to Lunar thereunder, Lunar may declare RMM in default by giving RMM written notice of default which specifies the obligation(s) which RMM has failed to perform. If RMM fails to remedy a default in payment within fifteen (15) days of receiving the notice of default or fails to remedy or commence to remedy any other default within thirty (30) days of receiving notice, Lunar may terminate the Lunar Lease and RMM shall peaceably surrender possession of the properties to Lunar. Notice of default or of termination shall be in writing and served in accordance with the Lunar Lease. RMM has made all required payments and has paid Lunar $153,000 as of June 30, 2024, and makes lease payments on the following schedule:

 

Payment due July  Annual
Payment		 
2024-2026  $21,000 
2027-2031  $25,000 
2032-2036  $30,000 
2037-2041  $40,000 
2042-2046  $45,000 

 

On October 29, 2014, RMM entered into an Option Agreement (the “Mojave Option”) with Mojave Gold Mining Corporation (“Mojave”) granting RMM the right to purchase 100% of 12 patented mining claims located in Nye County, Nevada. This property is contiguous to the Company’s Bullfrog Project and covers approximately 156 acres, including the northeast half of the M-S pit mined by Barrick Gold in the 1990s.

 

Mojave granted to RMM the sole and immediate working right and option with respect to the property until the 10th anniversary of the closing date, to earn a 100% interest in and to the property free and clear of all charges encumbrances and claims, except a sliding scale net smelter return (or NSR) royalty.

 

In order to maintain in force, the working right and option granted to RMM, and to exercise the Mojave Option, the Company issued Mojave 750,000 shares of Company common stock and paid $16,000 to Mojave in October 2014. Subsequently, RMM paid to Mojave a total of $190,000 over the next 10 years, with the last payment made to Mojave in October 2023. As of the date hereof, the Mojave Option has been exercised in full. This lease is out of the scope of ASC 842 Leases, and any payment is capitalized to mineral property.

 

18

 

 

On December 9, 2020, Bullfrog Mines entered into a mining option agreement with Abitibi Royalties (USA) Inc. (“Abitibi”) granting Bullfrog Mines the option (the “Abitibi Option”) to acquire forty-three unpatented lode mining claims to the south of the Bullfrog deposit. The Abitibi Option was amended on December 9, 2022, to extend the exercise deadline and to increase the last payment amount required to exercise the option. Bullfrog Mines made an initial payment to Abitibi of C$25,000 and exercised the Abitibi Option in full on January 30, 2023, by:

 

  ● Paying to Abitibi C$50,000 in cash before December 9, 2021;

 

  ● Paying to Abitibi C$78,750 in cash before January 30, 2023; and

 

  ● Granting to Abitibi a 2% net smelter royalty on the claims subject to the Abitibi Option on January 30, 2023, of which Bullfrog Mines has the option to purchase 0.5% for C$500,000 on or before December 9, 2030.

 

The Company is from time to time involved in various legal proceedings related to its business. Except as disclosed here in, management does not believe that adverse decisions in any pending or threatened proceedings or that amounts that may be required to be paid by reason thereof will have a material adverse effect on the Company’s financial condition or results of operations.

 

NOTE 7 - SEGMENTED INFORMATION

 

Segmented information has been compiled based on the material mineral properties in which the Company performs exploration activities.

 

Expenses and mineral property carrying values by material project for the six months ended June 30, 2024:

 

   Exploration,
evaluation
and project
expense		   Reclamation
bonds		   Mineral
properties		 
Bullfrog Gold Project  $596,556   $709,209   $12,110,783 
Reward Project   635,902    406,604    46,176,534 
   $1,232,458   $1,115,813   $58,287,317 

 

Expenses and mineral property carrying values by material project for the year ended December 31, 2023:

 

   Exploration,
evaluation
and project
expense		   Reclamation
bonds		   Mineral
properties		 
Bullfrog Gold Project  $1,677,838   $709,209   $12,464,306 
Reward Project   1,008,818    406,604    46,527,980 
   $2,686,656   $1,115,813   $58,992,286 

 

NOTE 8 - SUBSEQUENT EVENTS

 

None.

 

19

 

 

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Certain statements in this Management’s Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements”. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “would,” “expect,” “intend,” “could,” “estimate,” “should,” “anticipate,” or “believe,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable law. Readers should carefully review the risk factors and related notes included under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 29, 2024.

 

The following MD&A is intended to help readers understand the results of our operation and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Interim Unaudited Financial Statements and the accompanying Notes to Interim Unaudited Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.

 

Unless otherwise indicated or unless the context otherwise requires, all references in this document to “we,” “us,” “our,” the “Company,” and similar expressions refer to Augusta Gold Corp., and depending on the context, its subsidiaries.

 

Company History and Recent Events

 

General Corporate Overview

 

The Company is an exploration stage gold company focused on building a long-term business that delivers stakeholder value through developing the Company’s Bullfrog and Reward gold projects and pursuing accretive merger and acquisition opportunities. We are focused on exploration and advancement of gold exploration and potential development projects, which may lead to gold production or strategic transactions such as joint venture arrangements with other mining companies or sales of assets for cash and/or other consideration. At present, our properties are in the exploration stage, and we do not mine, produce or sell any mineral products and we do not currently generate cash flows from mining operations.

 

The Bullfrog Gold Project is located approximately 120 miles north-west of Las Vegas, Nevada and 4 miles west of Beatty, Nevada. The Reward Gold Project is located seven miles from the Bullfrog Gold Project. The Company owns, controls or has acquired mineral rights on federal patented and unpatented mining claims in the State of Nevada for the purpose of exploration and potential development of gold, silver, and other metals. The Company plans to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential.

 

The Company is led by a management team and board of directors with a proven track record of success in financing, exploring and developing mining assets and delivering shareholder value.

 

Recent Development of the Business

 

On June 13, 2022, the Company closed (the “Closing”) on its previously announced membership interest purchase agreement (the “Agreement”) with Waterton Nevada Splitter, LLC (“Waterton”) to acquire all of the outstanding membership interests (collectively, the “CR Interests”) of CR Reward LLC, a wholly-owned subsidiary of Waterton (“CR Reward”). CR Reward holds the Reward Project located just seven miles from the Company’s Bullfrog Project in Nevada.

 

The CR Interests were acquired for the following consideration: (a) $12,500,000 in cash paid at closing; (b) the issuance of 7,800,000 shares of Augusta Gold common stock at closing; and (c) $22,126,000 in cash paid on September 14, 2022 (comprising collectively the “Second Payment” and the “Deferred Payment”).

  

20

 

 

Results of Operations

 

Three Months Ended June 30, 2024 and 2023

 

   Three Months Ended 
   6/30/24   6/30/23 
Operating expenses        
General and administrative  $434,266   $1,196,164 
Lease expense   21,000    21,000 
Exploration, evaluation and project expense   836,200    626,426 
Accretion expense   71,286    24,915 
Depreciation expense   11,015    11,015 
Total operating expenses   1,373,767    1,879,520 
           
Net operating loss   (1,373,767)   (1,879,520)
           
Revaluation of warrant liability   1,586,051    5,337,582 
Interest expense   (751,222)   (631,079)
Foreign currency exchange gain (loss)   1    49,963 
Net income (loss) and comprehensive income (loss)  $(538,937)  $2,876,946 

 

Six Months Ended June 30, 2024 and 2023

 

   Six Months Ended 
   6/30/24   6/30/23 
Operating expenses        
General and administrative  $1,132,701   $2,511,736 
Lease expense   21,000    21,000 
Exploration, evaluation and project expense   1,232,458    1,350,696 
Accretion expense   101,180    52,822 
Depreciation expense   22,029    22,029 
Total operating expenses   2,509,368    3,958,283 
           
Net operating loss   (2,509,368)   (3,958,283)
           
Revaluation of warrant liability   821,992    13,560,969 
Interest expense   (1,424,697)   (1,257,794)
Foreign currency exchange gain (loss)   (4,107)   (21,988)
Net income (loss) and comprehensive income (loss)  $(3,116,180)  $8,322,904 

 

21

 

 

For the three months ended June 30, 2024, the Company decreased general and administrative expenses by approximately $762,000. The change was due to the following year over year variances:

 

Three months ended  6/30/2024   6/30/2023   Variance 
Accounting fees  $32,000   $354,000   $(322,000)
Legal and other professional fees   74,000    335,000    (261,000)
Marketing expense   3,000    7,000    (4,000)
Payroll   94,000    138,000    (44,000)
Corporate expenses & rent   33,000    26,000    7,000 
Share based compensation   141,000    245,000    (104,000)
Insurance   30,000    25,000    5,000 
Stock exchange fees   21,000    54,000    (33,000)
Other general expenses   6,000    12,000    (6,000)
Total  $434,000   $1,196,000   $(762,000)

 

For the six months ended June 30, 2024, the Company decreased general and administrative expenses by approximately $1,379,000. The change was due to the following year over year variances:

 

Six months ending  6/30/2024   6/30/2023   Variance 
Accounting fees  $170,000   $461,000   $(291,000)
Legal and other professional fees   106,000    702,000    (596,000)
Marketing expense   6,000    15,000    (9,000)
Payroll   231,000    354,000    (123,000)
Corporate expenses & rent   83,000    104,000    (21,000)
Share based compensation   416,000    718,000    (302,000)
Insurance   52,000    63,000    (11,000)
Stock exchange fees   57,000    75,000    (18,000)
Other general expenses   12,000    20,000    (8,000)
Total  $1,133,000   $2,512,000   $(1,379,000)

 

  ● Accounting fees decrease resulted from increase in audit fees offset by additional consulting fees needed for required regulatory filings and planning/projection activities in 2023.

 

  ● Legal fees and professional fees decreased due to a reduction in corporate activities in 2024.

 

  ● Marketing expenses were lower as 2023 had additional amounts that were used for company and shareholder awareness projects. 

 

  ● The payroll and corporate expenses result from the Company having an agreement to share office space, equipment, personnel, consultants and various administrative services for the Company’s head office located in Vancouver, BC, Canada. Management expects payroll costs to fluctuate based on the personnel and consultants used during the period.
     
  ● The Company granted options to officers, directors and employees of the Company pursuant to the terms of the Company’s Stock Option Plan. In September 2022 the options were repriced resulting in an increase in share based compensation for that period. Certain stock options were canceled in 2023 and 2024 after termination of an employee resulting in reversal of previous share based compensation expense.  The options that were issued in February 2021 were fully vested in February 2024.  In addition, the February 2024 Warrants of $97,370 has been calculated on the date of issuance of February 26, 2024, using Black-Scholes valuation technique.  In April 2024, 2,800,000 options were granted that vested based on years of service up to three years.

  

22

 

 

For the three months ended June 30, 2024, the Company increased exploration, evaluation and project expenses by approximately $210,000. The change was due to the following year over year variances:

 

Three months ending  6/30/2024   6/30/2023   Variance 
Consultants/Contractors  $350,000   $131,000   $219,000 
Supplies and equipment   66,000    60,000    6,000 
Overhead and payroll   192,000    246,000    (54,000)
Permits and fees   211,000    178,000    33,000 
Other   17,000    11,000    6,000 
Total  $836,000   $626,000   $210,000 

 

For the six months ended June 30, 2024, the Company decreased exploration, evaluation and project expenses by approximately $119,000. The change was due to the following year over year variances:

 

Six months ending  6/30/2024   6/30/2023   Variance 
Consultants/Contractors  $412,000   $365,000   $47,000 
Supplies and equipment   141,000    148,000    (7,000)
Overhead and payroll   427,000    619,000    (192,000)
Permits and fees   231,000    200,000    31,000 
Other   21,000    19,000    2,000 
Total  $1,232,000   $1,351,000   $(119,000)

 

In the second quarter of 2024, the Company continued with development and compliance activities for the Reward and Bullfrog Projects.  During the quarter, environmental baseline studies, compliance reporting, and preparation of a feasibility level technical report for the CR Reward project were advanced.  Additionally, the authorized extension and realignment of the desert tortoise fence needed for pit development and operations was initiated.

 

The revaluation of the warrant liability is based on the following outstanding warrants:

 

Issue Date  Expiration
Date		  Outstanding Warrants   Exercise Price
October 2020  October 2024   18,125,001 C$ 1.80
January 2023  January 2026   3,362,573 C$ 2.30

 

There are an additional 9,400,000 warrants outstanding which are not warrant liabilities and therefore have no effect on the revaluation of warrant liability (the February 2024 Warrants are not considered a liability and do not get revalued).

 

Liquidity and Capital Resources

 

The Company has no revenue generating operations from which it can internally generate funds. To date, the Company’s ongoing operations have been financed by the sale of its equity securities by way of public offerings, private placements and the exercise of incentive stock options and share purchase warrants. The Company believes that it will be able to secure additional private placements and public financing in the future, although it cannot predict the size or pricing of any such financing. This situation is unlikely to change until such time as the Company can develop a bankable feasibility study on one of its projects.

 

On January 20, 2023, the Company closed its offering (the “Offering”) of 6,725,147 units (“Units”) of the Company at a price of C$1.71 per Unit, including the units issued pursuant to the full exercise of the over-allotment option by the underwriters in the Offering (the “Underwriters”), for aggregate gross proceeds of approximately C$11,500,000 before deducting Offering expenses.

 

In connection with the closing of the Offering, the Company entered into a Warrant Indenture dated January 20, 2023 (the “Warrant Indenture”) with Endeavor Trust Corporation, as the warrant agent, pursuant to which the Company issued Warrants to purchase up to a maximum of 3,362,573 Warrant Shares. Each Warrant is exercisable at any time after January 20, 2023, and prior to January 20, 2026.

  

23

 

 

As compensation in connection to the Offering, the Company paid the Underwriters cash compensation equal to 5.0% of the aggregate gross proceeds of the Offering and issued to the Underwriters 336,257 common stock purchase warrants (the “Compensation Warrants”). Each Compensation Warrant is exercisable for one share of common stock (each, a “Compensation Warrant Share”) for a period of 12 months following the closing of the Offering at a price of C$1.71 per Compensation Warrant Share. 

  

Liquidity

 

As of June 30, 2024, the Company had total liquidity of $613,000 in cash and cash equivalents. The Company had negative working capital of $30,000,000 and an accumulated deficit of $36,000,000. For the six months ended June 30, 2024, the Company had negative operating cash flows before changes in working capital of $3,400,000 and a net loss of $3,100,000.

 

As of June 30, 2023, the Company had total liquidity of $2,000,000 in cash and cash equivalents. The Company had negative working capital of $23,000,000 and an accumulated deficit of $31,600,000. For the six months ended June 30, 2023, the Company had negative operating cash flows before changes in working capital of $4,400,000 and a net income of $8,300,000.

 

The Company expects that it will operate at a loss for the foreseeable future and believes the current cash and cash equivalents and working capital will be sufficient for it to maintain its currently held properties, fund its planned exploration, and fund its currently anticipated general and administrative costs for at least the next 12 months from the date of this report. However, the Company does expect that it will be required to raise additional funds through public or private equity financings in the future to continue in business in the future past the immediate 12-month period. Should such financing not be available in that timeframe, the Company will be required to reduce its activities and will not be able to carry out all of its presently planned exploration and, if warranted, development activities on its currently anticipated scheduling.

 

Capital Management

 

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development and exploration of its mineral properties and to maintain a flexible capital structure, which optimizes the costs of capital to an acceptable risk.

 

As of June 30, 2024, the capital structure of the Company consists of 85,929,753 shares of common stock, par value $0.0001. The Company manages the capital structure and adjusts it in response to changes in economic conditions, its expected funding requirements, and risk characteristics of the underlying assets. The Company’s funding requirements are based on cash forecasts. In order to maintain or adjust the capital structure, the Company may issue new debt, new shares and/or consider strategic alliances. Management reviews its capital management approach on a regular basis. The Company is not subject to any externally imposed capital requirements.

 

Contractual obligations and commitments

 

The Company’s contractual obligations and commitments as of June 30, 2024, and their approximate timing of payment are as follows:

 

Payment due July  Annual
Payment		 
2024-2026  $21,000 
2027-2031  $25,000 
2032-2036  $30,000 
2037-2041  $40,000 
2042-2046  $45,000 

 

Off Balance Sheet Arrangements

 

We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.

 

Critical Accounting Policies and Use of Estimates

 

Stock based compensation is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. We estimate the fair value of each stock option as of the date of grant using the Black-Scholes pricing model. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

  

24

 

 

Mineral property exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company has chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once the Company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed. Costs of property acquisitions are being capitalized, and a required payment of $20,000 was made in 2018 to Mojave Gold Mining Corporation (“Mojave”) as part of the Option to Purchase Agreement (“Option”).

 

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES AND MARKET RISK

 

Not Applicable.

 

ITEM 4 - CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024.

 

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

 

Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

With respect to the quarterly period ending June 30, 2024, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon our evaluation regarding the quarterly period ending June 30, 2024, our management, including our chief executive officer and chief financial officer, has concluded that its disclosure controls and procedures were effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

 

Changes in Internal Controls

 

There have been no changes in the Company’s internal control over financial reporting during the three months ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

  

25

 

 

PART II. OTHER INFORMATION

 

ITEM 1 - LEGAL PROCEEDINGS

 

We know of no material, active or pending legal proceedings against the Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 1A - RISK FACTORS

 

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The risks described in our Annual Report and as otherwise herein are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows, and/or future results.

 

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4 - MINE SAFETY DISCLOSURES

 

Pursuant to Section 1503(a) of the United States Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under the regulation of the Federal Mine Safety and Health Administration (“MSHA”) under the United States Federal Mine Safety and Health Act of 1977 (the “Mine Act”). During the three months ended June 30, 2024, we had no U.S. properties subject to regulation by the MSHA under the Mine Act and consequently no disclosure is required under Section 1503(a) of the Dodd-Frank Act.

 

ITEM 5 - OTHER INFORMATION

 

(a) None.

 

(b) None.

 

(c) During the quarter ended June 30, 2024, none of our directors or officers adopted, modified, or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

26

 

 

ITEM 6 – EXHIBITS

 

Exhibit
Number		   Description
     
3.1   Articles of Incorporation (incorporated by reference with Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 12, 2023)
3.2   Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on October 12, 2023)
4.1   Form of Warrant from October 2020 Private Placement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on October 15, 2020)
4.2   Form of Warrant from March 2021 Private Placement (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 5, 2021)
4.3   Form of Warrant Indenture dated January 20, 2023 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 20, 2023)
4.4   Form of Compensation Warrant Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on January 20, 2023)
4.5   Form of Warrant dated February 26, 2024 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on March 1, 2024)
10.1   The Amended Schedule A, as amended on April 26, 2024, to its amended and restated secured promissory note issued to Augusta Investments Inc. on September 13, 2022, as amended and restated on March 27, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 26, 2024)
10.2   Amendment Number One dated June 28, 2024, to its amended and restated secured promissory note issued to Augusta Investments Inc. on September 13, 2022, as amended and restated on March 27, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 5, 2024)
10.3   The Amended Schedule A, as amended on June 28, 2024, to its amended and restated secured promissory note issued to Augusta Investments Inc. on September 13, 2022, as amended and restated on March 27, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 5, 2024)
31.1   Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2   Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1   Certification of Chief Executive Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2   Certification of Chief Financial Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS   Inline XBRL Instance Document*
101.SCH   Inline XBRL Taxonomy Extension Schema Document*
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

 

* Filed herewith

 

27

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: August 12, 2024 AUGUSTA GOLD CORP.
     
  By: /s/ Donald R. Taylor
    Name:  Donald R. Taylor
    Title: President and Chief Executive Officer (Principal Executive Officer)

 

Date: August 12, 2024 AUGUSTA GOLD CORP.
     
  By: /s/ Tyler Minnick
    Name:  Tyler Minnick
    Title: Interim Chief Financial Officer (Interim Principal Financial and Accounting Officer)

 

 

28

 

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EXHIBIT 31.1

 

CERTIFICATION

 

I, Donald R. Taylor, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q of Augusta Gold Corp.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

 

Date: August 12, 2024

 By:  /s/ Donald R. Taylor
    Donald R. Taylor
   

Chief Executive Officer

(Principal Executive Officer)

 

 

EXHIBIT 31.2

CERTIFICATION

 

I, Ty Minnick, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q of Augusta Gold Corp.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: August 12, 2024

 By:  /s/ Ty Minnick
    Ty Minnick
   

Interim Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Augusta Gold Corp. (the “Company”), for the fiscal quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald R. Taylor, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

1.        The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

 

 

 

Date: August 12, 2024

 By:  /s/ Donald R. Taylor
    Donald R. Taylor
   

Chief Executive Officer

(Principal Executive Officer)

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Augusta Gold Corp. (the “Company”), for the fiscal quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ty Minnick, Interim Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

1.        The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

 

 

 

Date: August 12, 2024

 By:  /s/ Ty Minnick
    Ty Minnick
   

Interim Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

v3.24.2.u1
Cover - shares
 6 Months Ended
Jun. 30, 2024
Aug. 12, 2024
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
Amendment Flag false  
Document Period End Date Jun. 30, 2024  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q2  
Entity Information [Line Items]    
Entity Registrant Name AUGUSTA GOLD CORP.  
Entity Central Index Key 0001448597  
Entity File Number 000-54653  
Entity Tax Identification Number 41-2252162  
Entity Incorporation, State or Country Code DE  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Contact Personnel [Line Items]    
Entity Address, Address Line One Suite 555 - 999 Canada Place  
Entity Address, Address Line Two Vancouver  
Entity Address, City or Town BC  
Entity Address, Country CA  
Entity Address, Postal Zip Code V6C 3E1  
Entity Phone Fax Numbers [Line Items]    
City Area Code (604)  
Local Phone Number 687-1717  
Entity Listings [Line Items]    
Title of 12(b) Security None  
No Trading Symbol Flag true  
Security Exchange Name NONE  
Entity Common Stock, Shares Outstanding   85,929,753
v3.24.2.u1
Consolidated Balance Sheets - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Current assets    
Cash $ 612,804 $ 300,734
Prepaid 112,340 55,999
Deposits 0 7,028
Total current assets 725,144 363,761
Other assets    
Equipment, net 1,022,363 1,044,392
Reclamation bonds 1,115,813 1,115,813
Mineral properties, net 58,287,317 58,992,286
Total other assets 60,425,493 61,152,491
Total assets 61,150,637 61,516,252
Current liabilities    
Accounts payable 1,540,492 1,411,439
Warrant liability 14,342 692,949
Asset retirement obligation 67,000 110,700
Total current liabilities 30,690,411 27,608,967
Long term liabilities    
Asset retirement obligation, net of current 2,367,121 2,971,097
Warrant liability, net of current 274,373 417,758
Total long term liabilities 2,641,494 3,388,855
Total liabilities 33,331,905 30,997,822
Stockholders’ equity    
Preferred stock 0 0
Common stock, 750,000,000 shares authorized, $ .0001 par value; 85,929,753 shares issued and outstanding as of 6/30/24 and 12/31/23 8,593 8,593
Additional paid in capital 64,162,062 63,745,580
Accumulated deficit (36,351,923) (33,235,743)
Total stockholders’ equity 27,818,732 30,518,430
Total liabilities and stockholders’ equity 61,150,637 61,516,252
Related Party    
Current liabilities    
Note payable and accrued interest - related party 29,068,577 25,393,879
Series A Preferred Stock    
Stockholders’ equity    
Preferred stock 0 0
Series B Preferred Stock    
Stockholders’ equity    
Preferred stock $ 0 $ 0
v3.24.2.u1
Consolidated Balance Sheets (Parentheticals) - $ / shares
Jun. 30, 2024
Dec. 31, 2023
Preferred stock, par value (in Dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 250,000,000 250,000,000
Common stock, shares authorized 750,000,000 750,000,000
Common stock, par value (in Dollars per share) $ 0.0001 $ 0.0001
Common stock, shares issued 85,929,753 85,929,753
Common stock, shares outstanding 85,929,753 85,929,753
Series A Preferred Stock    
Preferred stock, par value (in Dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Series B Preferred Stock    
Preferred stock, par value (in Dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 45,000,000 45,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
v3.24.2.u1
Consolidated Statements of Operations and Comprhensive Income (Loss) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Operating expenses        
General and administrative $ 434,266 $ 1,196,164 $ 1,132,701 $ 2,511,736
Lease expense 21,000 21,000 21,000 21,000
Exploration, evaluation and project expense 836,200 626,426 1,232,458 1,350,696
Accretion expense 71,286 24,915 101,180 52,822
Depreciation expense 11,015 11,015 22,029 22,029
Total operating expenses 1,373,767 1,879,520 2,509,368 3,958,283
Net operating loss (1,373,767) (1,879,520) (2,509,368) (3,958,283)
Revaluation of warrant liability 1,586,051 5,337,582 821,992 13,560,969
Interest expense (751,222) (631,079) (1,424,697) (1,257,794)
Foreign currency exchange gain (loss) 1 49,963 (4,107) (21,988)
Net income (loss) and comprehensive income (loss) $ (538,937) $ 2,876,946 $ (3,116,180) $ 8,322,904
Weighted average common shares outstanding – basic (in Shares) 85,929,753 85,929,753 85,929,753 85,186,643
Weighted average common shares outstanding – diluted (in Shares) 85,929,753 85,988,087 85,929,753 85,244,977
Earnings (loss) per common share – basic (in Dollars per share) $ (0.01) $ 0.03 $ (0.04) $ 0.1
Earnings (loss) per common share – diluted (in Dollars per share) $ (0.01) $ 0.03 $ (0.04) $ 0.1
v3.24.2.u1
Consolidated Statements of Stockholders’ Equity (Deficit) - USD ($)
Common Stock
Additional Paid In Capital
Total
Balance at Dec. 31, 2022 $ 7,920 $ 56,375,344 $ 16,489,511
Balance (in Shares) at Dec. 31, 2022 79,204,606    
Stock based compensation $ 0 472,981 472,981
Stock based compensation (in Shares) 0    
Placement - January $ 673 7,866,753 7,867,426
Placement - January (in Shares) 6,725,147    
Warrant liability $ 0 (1,668,671) (1,668,671)
Warrant liability (in Shares) 0    
Net income (loss) $ 0 0 5,445,958
Balance at Mar. 31, 2023 $ 8,593 63,046,407 28,607,205
Balance (in Shares) at Mar. 31, 2023 85,929,753    
Balance at Dec. 31, 2022 $ 7,920 56,375,344 16,489,511
Balance (in Shares) at Dec. 31, 2022 79,204,606    
Net income (loss)     8,322,904
Balance at Jun. 30, 2023 $ 8,593 63,291,549 31,729,293
Balance (in Shares) at Jun. 30, 2023 85,929,753    
Balance at Mar. 31, 2023 $ 8,593 63,046,407 28,607,205
Balance (in Shares) at Mar. 31, 2023 85,929,753    
Stock based compensation $ 0 245,142 245,142
Stock based compensation (in Shares) 0    
Net income (loss) $ 0 0 2,876,946
Balance at Jun. 30, 2023 $ 8,593 63,291,549 31,729,293
Balance (in Shares) at Jun. 30, 2023 85,929,753    
Balance at Dec. 31, 2023 $ 8,593 63,745,580 30,518,430
Balance (in Shares) at Dec. 31, 2023 85,929,753    
Stock based compensation $ 0 275,037 275,037
Stock based compensation (in Shares) 0    
Warrant liability $ 0 0 0
Warrant liability (in Shares) 0    
Net income (loss) $ 0 0 (2,577,243)
Balance at Mar. 31, 2024 $ 8,593 64,020,617 28,216,224
Balance (in Shares) at Mar. 31, 2024 85,929,753    
Balance at Dec. 31, 2023 $ 8,593 63,745,580 30,518,430
Balance (in Shares) at Dec. 31, 2023 85,929,753    
Net income (loss)     (3,116,180)
Balance at Jun. 30, 2024 $ 8,593 64,162,062 27,818,732
Balance (in Shares) at Jun. 30, 2024 85,929,753    
Balance at Mar. 31, 2024 $ 8,593 64,020,617 28,216,224
Balance (in Shares) at Mar. 31, 2024 85,929,753    
Stock based compensation $ 0 141,445 141,445
Stock based compensation (in Shares) 0    
Net income (loss) $ 0 0 (538,937)
Balance at Jun. 30, 2024 $ 8,593 $ 64,162,062 $ 27,818,732
Balance (in Shares) at Jun. 30, 2024 85,929,753    
v3.24.2.u1
Consolidated Statements of Cash Flows - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Cash flows from operating activities    
Net income (loss) $ (3,116,180) $ 8,322,904
Adjustments to reconcile net income (loss) to net cash used in operating activities    
Accretion expense 101,180 52,822
Depreciation expense 22,029 22,029
Revaluation of warrant liability (821,992) (13,560,969)
Share based compensation 416,482 718,123
Change in operating assets and liabilities:    
Prepaid expenses (56,341) (31,914)
Deferred stock issuance costs 0 121,424
Debt issuance costs 84,282 49,469
Deposits 7,028 0
Accounts payable 129,053 (1,836,711)
Accrued interest 1,340,416 1,208,324
Asset retirement obligation (43,887) (106,651)
Net cash used in operating activities (1,937,930) (5,041,150)
Cash flows from financing activities    
Proceeds from private placement of stock 0 8,568,651
Proceeds from note payable - related party 2,250,000 0
Share issuance costs 0 (701,225)
Increase in surety bond collateral