UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
Commission File No.
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction Of Incorporation or Organization) |
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(Address of Principal Executive Offices) |
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Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.0001 par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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).
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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. (Check one):
Large accelerated filer | ☐ |
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| 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.) Yes
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Auditor Firm ID: | Auditor Name: | Auditor Location: |
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TABLE OF CONTENTS
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 44 |
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 45 |
ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 49 |
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 49 |
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 51 |
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 57 |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 60 |
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CAUTIONARY NOTE TO INVESTORS REGARDING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES AND PROVEN AND PROBABLE MINERAL RESERVES
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and applicable Canadian securities laws, and as a result we report our mineral reserves and mineral resources according to two different standards. U.S. reporting requirements are governed by subpart 1300 of Regulation S-K under the Exchange Act (“S-K 1300”). Canadian reporting requirements for disclosure of mineral properties are governed by NI 43-101. Both sets of reporting standards have similar goals in terms of conveying an appropriate level of confidence in the disclosures being reported, but the standards embody slightly different approaches and definitions.
In our public filings in the U.S. and Canada and in certain other announcements not filed with the SEC, we disclose proven and probable reserves and measured, indicated and inferred resources, each as defined in S-K 1300 and NI 43-101. As currently reported, there are no material differences in our disclosed proven and probable reserves and measured, indicated and inferred resource under each of S-K 1300 and NI 43-101. The estimation of measured resources and indicated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves, and therefore investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into S-K 1300-compliant or NI 43-101-compliant reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources, and therefore it cannot be assumed that all or any part of inferred resources will ever be upgraded to a higher category. Therefore, investors are cautioned not to assume that all or any part of inferred resources exist, or that they can be mined legally or economically.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended, and “forward-looking information” within the meaning of applicable Canadian securities legislation, collectively “forward-looking statements”. Such forward-looking statements concern our anticipated results and developments in the operations of the Company in future periods, planned exploration activities, the adequacy of the Company’s financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” (or the negative and grammatical variations of any of these terms) occur or be achieved. These forward looking statements may include, but are not limited to, statements concerning:
·the Company’s strategies and objectives, both generally and in respect of the Bullfrog Gold Project;
·the recommendations of the Technical Report for the Bullfrog Gold Project;
·the Company’s decisions regarding the timing and costs of exploration programs with respect to, and the issuance of the necessary permits and authorizations required for, the Company’s exploration programs at the Bullfrog Gold Project;
·the Company’s estimates of the quality and quantity of the mineralized materials at its mineral properties;
·the potential discovery and delineation of mineral deposits/reserves and any expansion thereof beyond the current estimate;
·the Company’s expectation that it will become a gold producer;
·the Company’s estimates of future operating and financial performance;
·the Company’s potential funding requirements and sources of capital, including near-term sources of additional cash and long-term financing through the sale of equity and/or debt financings and through the exercise of stock options and warrants;
·the Company’s expectation that the Company will continue to raise capital;
·the Company’s expectation that the Company will continue to incur losses and will not pay dividends for the foreseeable future;
·the Company’s estimates of its future cash position;
·the Company’s anticipated general business and economic conditions;
·the Company’s ability to meet its financial obligations as they come due, and to be able to raise the necessary funds to continue operations; and
·that the Company will operate at a loss for the foreseeable future.
Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, risks related to:
·our history of losses;
·negative cash flow;
·our limited operating history;
·increased costs affecting our financial condition;
·the Bullfrog Gold Project being in the exploration stage;
·whether the Bullfrog Gold Project is feasible;
·the Bullfrog Gold Project requiring substantial capital investment;
·our inability to obtain required permits;
·our status as a junior mining company;
·difficulties in managing growth;
·our potential loss of key persons;
·risks related to the evolving novel coronavirus (“COVID-19”) pandemic and health crisis and the governmental and regulatory actions taken in response thereto;
·the risks of mineral exploration;
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·evaluation uncertainty in estimating mineralized material;
·changes in estimates of mineralized material;
·our exploration projects not succeeding;
·price volatility of gold and silver;
·environmental regulations;
·challenges to title to our properties;
·amendments to mining law;
·supply shortages;
·inability to maintain infrastructure to conduct exploration activities;
·new regulation related to climate change;
·relationships with communities in which we operate;
·newly adopted mining disclosure regulations;
·evolving corporate standards;
·Canadian reporting requirements; and
·The price of the shares of common stock being volatile.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list of factors that may affect any of the Company’s forward-looking statements is not exhaustive. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including without limitation those discussed in “Part I, Item 1A, Risk Factors”, of this Annual Report on Form 10-K as well as other factors described elsewhere in this report and the Company’s other reports filed with the SEC.
The Company’s forward-looking statements contained in this Annual Report on Form 10-K are based on the beliefs, expectations and opinions of management as of the date of this Annual Report. The Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements.
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GLOSSARY OF SELECTED MINING TERMS
Ag | Silver |
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Au | Gold |
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Breccia | Broken sedimentary and volcanic rock fragments cemented by a fine-grained matrix |
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Clastic Rock | Fragments, or clasts, of pre-existing minerals |
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Cutoff Grade | The grade (i.e., the concentration of metal or mineral in rock) that determines the destination of the material during mining. For purposes of establishing “prospects of economic extraction,” the cut-off grade is the grade that distinguishes material deemed to have no economic value (it will not be mined in underground mining or if mined in surface mining, its destination will be the waste dump) from material deemed to have economic value (its ultimate destination during mining will be a processing facility). Other terms used in similar fashion as cut-off grade include net smelter return, pay limit, and break-even stripping ratio. |
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Deposit | A mineralized body which has been physically delineated by sufficient drilling, trenching, and/or underground work, and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures. Such a deposit does not qualify as a commercially mineable ore body or as containing reserves or ore, unless final legal, technical and economic factors are resolved |
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Detachment Fault | A regionally extensive, gently dipping normal fault that is commonly associated with extension in large blocks of the earth’s crust |
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g/t | Grams per metric tonne |
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Metamorphic Rock | Rock that has transformed to another rock form after intense heat and pressure |
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Miocene | A geologic era that extended from 5 million to 23 million years ago |
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Mineralization | The concentration of metals and their chemical compounds within a body of rock |
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Net Smelter Royalty | A percentage payable to an owner or lessee from the production or net proceeds received by the operator from a smelter or refinery, less transportation, insurance, smelting and refining costs and penalties as set out in a royalty agreement. |
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Paleozoic | A geologic era extending from 230 million to 540 million years ago |
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Photogrammetry | The science of making measurements from photographs; the output is typically a map or a drawing |
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Proterozoic | A geologic era extending from 540 million years to 2,500 million years ago. |
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Reverse Circulation (RC) | A drilling method whereby drill cuttings are returned to the surface through the annulus between inner and outer drill rods, thereby minimizing contamination from wall rock. |
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Rhyolite | An igneous, volcanic extrusive rock containing more than 65% silica. |
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Schist | A group metamorphic rocks that contain more than 50% platy and elongated minerals such as mica. |
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Siliciclastic Rock | Non-carbonate sedimentary rocks that are almost exclusively silicas-bearing, either as quartz or silicate minerals. |
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Tertiary | A geologic era from 2.6 million to 65 million years ago. |
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S-K 1300 Definitions
Exploration Stage Issuer | An “exploration stage issuer” is an issuer that has no material property with mineral reserves disclosed. |
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Exploration Stage Property | An “exploration stage property” is a property that has no mineral reserves disclosed. |
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Development Stage Issuer | A “development stage issuer” is an issuer that is engaged in the preparation of mineral reserves for extraction on at least one material property. |
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Development Stage Property | A “development stage property” is a property that has mineral reserves disclosed, pursuant to this subpart, but no material extraction. |
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Indicated Mineral Resource | An “indicated mineral resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may only be converted to a probable mineral reserve |
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Inferred Mineral Resource | An “inferred mineral resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a mineral reserve. |
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Measured Mineral Resource | A “measured mineral resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve. |
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Mineral Reserve | A “mineral reserve” is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted |
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Mineral Resource | A “mineral resource” is a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled. |
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Modifying Factors | Modifying factors are the factors that a qualified person must apply to indicated and measured mineral resources and then evaluate in order to establish the economic viability of mineral reserves. A qualified person must apply and evaluate modifying factors to convert measured and indicated mineral resources to proven and probable mineral reserves. These factors include, but are not restricted to: Mining; processing; metallurgical; infrastructure; economic; marketing; legal; environmental compliance; plans, negotiations, or agreements with local individuals or groups; and governmental factors. The number, type and specific characteristics of the modifying factors applied will necessarily be a function of and depend upon the mineral, mine, property, or project. |
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Probable Reserve | A “probable mineral reserve” is the economically mineable part of an indicated and, in some cases, a measured mineral resource. |
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Production Stage Issuer | A “production stage issuer” is an issuer that is engaged in material extraction of mineral reserves on at least one material property. |
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Production Stage Property | A “production stage property” is a property with material extraction of mineral reserves. |
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Proven Reserve | A “proven mineral reserve” is the economically mineable part of a measured mineral resource and can only result from conversion of a measured mineral resource. |
USE OF NAMES
In this Annual Report on Form 10-K, unless the context otherwise requires, the terms "we", "us", "our", "Augusta Gold", "Augusta Gold Corp." or the "Company" refer to Augusta Gold Corp., a Delaware corporation, and its subsidiaries.
CURRENCY
References to CDN or C$ refer to Canadian currency and USD or $ to United States currency.
METRIC CONVERSION TABLE
To Convert Metric Measurement Units |
| To Imperial Measurement Units |
| Multiply by |
Hectares |
| Acres |
| 2.4710 |
Meters |
| Feet |
| 3.2808 |
Kilometers |
| Miles |
| 0.6214 |
Tonnes |
| Tons (short) |
| 1.1023 |
Liters |
| Gallons |
| 0.2642 |
Grams |
| Ounces (troy) |
| 0.0322 |
Grams per tonne |
| Ounces (troy) per ton (short) |
| 0.0292 |
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PART I
ITEM 1. BUSINESS
General Corporate Overview
Augusta Gold is a gold company that is an exploration stage issuer focused on building a long-term business that delivers stakeholder value through developing the Company’s Bullfrog Gold Project and pursing 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 all our properties are exploration stage properties 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 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. See “Part I - Item 2 - Properties” in this Annual Report on Form 10-K for a further description of the Bullfrog Gold Project.
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.
Augusta Gold Corp. was incorporated under the laws of the State of Delaware on July 23, 2007 as Kopr Resources Corp. On July 21, 2011, the Company changed its name to “Bullfrog Gold Corp.” On January 26, 2021, the Company changed its name to “Augusta Gold Corp.” and completed a consolidation of its shares of common stock on the basis of one (1) new share of common stock for every six (6) old shares of common stock (the “Consolidation”).
Recent Development of the Business
On October 9, 2020, the Company entered into a 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”).
Pursuant to the MIPA, the Company agreed to purchase from the Barrick Parties, and the Barrick Parties agreed to sell to the Company, all of the equity interests (the “Equity Interests”) in Bullfrog Mines LLC (“Bullfrog Mines”), the successor by conversion of Barrick Bullfrog Inc. (the “Acquisition Transaction”).
The Acquisition Transaction closed on October 26, 2020. Through the Company’s acquisition of the Equity Interests, the Company acquired rights to 1,500 acres of land adjoining the Company’s Bullfrog Gold deposit. Additional details on the Acquisition Transaction are set out in this Annual Report under “Part I - Item 2 - Properties” - “Location, Property Description and Ownership” - “Barrick Claims”.
Following closing of the Acquisition Transaction, the Company’s board and management was reconstituted to include Maryse Bélanger as President, CEO and director, and Messrs. Donald Taylor and Daniel Earle as directors of the Company joining Mr. David Beling as the sole pre-existing Company director.
On January 7, 2021, the Company announced the appointment of Mr. Richard Warke, Ms. Poonam Puri and Mr. John Boehner as directors of the Company, the resignation of Mr. David Beling as a director of the Company, and the appointments of new members of management. On January 20, 2021, the Company announced the appointment of Mr. Len Boggio as a director of the Company.
On April 13, 2021, the Company announced the appointment of Mr. Donald Taylor as President and Chief Executive Officer of the Company and the resignation of Maryse Belanger as President, Chief Executive Officer and a director.
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Availability of Raw Materials
All of the raw materials we require to carry on our business are readily available through normal supply or business contracting channels in Canada and the United States. As a result, we do not believe that we will experience any shortages of required personnel, equipment or supplies in the foreseeable future.
Dependence on a Few Contracts
Our business is not substantially dependent on any contract such as a contract to sell the major part of the Company’s products or services or to purchase the major part of its requirements for goods, services or raw materials, or on any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon which its business depends. Rather, our ability to continue making the holding, assessment, lease and option payments necessary to maintain our interest in our mineral projects is of primary concern. We do not presently anticipate any difficulties in this regard in the current financial year.
Competition
We compete with other mining companies in connection with the acquisition, exploration, financing and development of gold properties. There is competition among mining companies for a limited number of gold acquisition and exploration opportunities. We may compete with other mining companies for mining claims in regions adjacent to our existing claims. Some of these competing mining companies have substantially greater financial and technical resources than us. As a result, we may have difficulty acquiring attractive gold projects at reasonable prices.
We compete with other mining companies to retain expert consultants required to complete our geological, project development, and analytical and metallurgical studies. We also compete with other mining companies to hire mining engineers, geologists and other skilled personnel in the mining industry, and for exploration and development services. In competing for qualified mineral exploration personnel, we may be required to pay compensation or benefits relatively higher than those paid in the past, and the availability of qualified personnel may be limited in high-demand commodity cycles.
We will be subject to competition and unforeseen limited sources of supplies in the industry in the event spot shortages for certain equipment such as bulldozers and excavators and services, such as contract drilling that we will need to conduct exploration. There is also significant competition for power in Beatty, Nevada. If we are unsuccessful in securing the products, equipment, services and power we need, we may have to suspend our exploration plans until we are able to secure them.
Compliance with Government Regulation
The exploration and development of a mining property is subject to regulation by a number of federal and state government authorities. These include the United States Environmental Protection Agency (“EPA”) and the United States Bureau of Land Management (“BLM”) as well as the various state environmental protection agencies. The regulations address many environmental issues relating to air, soil and water contamination and apply to many mining related activities including exploration, mine construction, mineral extraction, ore milling, water use, waste disposal and use of toxic substances. In addition, we are subject to regulations relating to labor standards, occupational health and safety, mine safety, general land use, export of minerals and taxation. Many of the regulations require permits or licenses to be obtained and the filing of Notices of Intent and Plans of Operations, the absence of which or inability to obtain will adversely affect the ability for us to conduct our exploration, development and operation activities. The failure to comply with the regulations and terms of permits and licenses may result in fines or other penalties or in revocation of a permit or license or loss of a prospect.
Federal
On lands owned by the United States, mining rights are governed by the General Mining Law of 1872, as amended, which allows the location of mining claims on certain federal lands upon the discovery of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties and development and operation of mines is governed by both federal and state laws. Federal laws that govern mining claim location and maintenance and mining operations on federal lands are generally administered by the BLM. Additional federal laws, governing mine safety and health, also apply. State laws also require various permits and approvals before exploration,
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development or production operations can begin. Among other things, a reclamation plan must typically be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. Local jurisdictions may also impose permitting requirements (such as conditional use permits or zoning approvals).
Nevada
In Nevada, initial stage surface exploration activities that do not disturb the surface, do not require any permits. Notice-level exploration permits (“NOI”) are required (through the BLM) for the Bullfrog Gold Project to perform drilling or other surface disturbing activities with less than five acres extent. More extensive disturbance requires submittal and approval of a “Plan of Operations” and “Environmental Assessment” from the BLM.
In Nevada, we are also required to post bonds with the State of Nevada to secure our environmental and reclamation obligations on private land, with amount of such bonds reflecting the level of rehabilitation anticipated by the then proposed activities.
If in the future we are successful in defining a commercially viable mineral deposit on our property interests, then if and when we commence any mineral production, we will also need to comply with laws that regulate or propose to regulate our mining activities, including the management and handling of raw materials, disposal, storage and management of hazardous and solid waste, the safety of our employees and post-mining land reclamation.
We cannot predict the impact of new or changed laws, regulations or permitting requirements, or changes in the ways that such laws, regulations or permitting requirements are enforced, interpreted or administered. Health, safety and environmental laws and regulations are complex, are subject to change and have become more stringent over time. It is possible that greater than anticipated health, safety and environmental capital expenditures or reclamation and closure expenditures will be required in the future. We expect continued government and public emphasis on environmental issues will result in increased future investments for environmental controls at our operations.
Environmental Regulation
Our mineral projects are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. The development, operation, closure, and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to our proposed operations may be encountered. We are currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our operations are conducted in material compliance with applicable laws and regulations.
Changes to current local, state or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.
U.S. Federal Laws
The Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”), and comparable state statutes, impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such sites have been completed.
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The Clean Air Act (“CAA”), as amended, restricts the emission of air pollutants from many sources, including exploration, development, mining and processing activities. The Company’s current exploration activities and any future development, mining or processing operations by the Company may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring and/or control requirements under the CAA and state air quality laws. New facilities may be required to obtain permits before development, mining and processing work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on our production levels or result in additional capital expenditures in order to comply with the rules.
The National Environmental Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions. If a proposed action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental Impact Statement (“EIS”). The EPA, other federal agencies, and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS. This process can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.
The Clean Water Act (“CWA”), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The CWA regulates storm water mining facilities and requires a storm water discharge permit for certain activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.
The Safe Drinking Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The program requires that a permit be obtained before drilling a disposal or injection well. Violation of these regulations and/or contamination of groundwater by exploration, development. mining, processing or other related activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SWDA and state laws. In addition, third party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.
Nevada
Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes to these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating constraints, technical criteria, fees or surety requirements.
Employees
As of the date of this filing, the Company has seven employees (including shared employees). We continue to engage various independent contractors and consultants to fulfill additional needs. Additional employees will be hired on an as needed basis.
The Company’s management values the benefits that diversity can bring and seeks to maintain a management team and workforce comprised of talented and dedicated executives and employees with a diverse mix of experience, skills and backgrounds collectively reflecting the strategic needs of the business and the nature of the environment in which the Company operates. In identifying qualified candidates for available positions within the Company, the Company’s management will consider prospective candidates based on merit, having regard to those competencies, expertise, skills, background and other qualities identified from time to time by management being important in
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fostering a diverse and inclusive culture which solicits multiple perspectives and views and is free of conscious or unconscious bias and discrimination. The Company’s management will give due consideration to characteristics, such as gender, age, ethnicity, disability, sexual orientation and geographic representation.
Gold Price History
The price of gold is volatile and is affected by numerous factors, all of which are beyond our control, such as the sale or purchase of gold by various central banks and financial institutions, inflation, recession, fluctuation in the relative values of the U.S. dollar and foreign currencies, changes in global gold demand and political and economic conditions.
The following table presents the high, low and average afternoon fixed prices in U.S. dollars for an ounce of gold on the London Bullion Market over the past five years:
Year |
| High |
| Low |
| Average |
2017 |
| 1,346 |
| 1,151 |
| 1,257 |
2018 |
| 1,355 |
| 1,178 |
| 1,269 |
2019 |
| 1,546 |
| 1,270 |
| 1,393 |
2020 |
| 2,067 |
| 1,474 |
| 1,770 |
2021 |
| 1,943 |
| 1,684 |
| 1,797 |
Data Source: www.kitco.com
Seasonality
The Company’s business operations, including exploration of the Bullfrog Gold Project, are not subject to material restrictions on our operations due to seasonality.
Environmental Responsibility
Augusta Gold is committed to effective environmental stewardship. We have implemented and continue to develop business practices that are designed to reduce negative environmental impacts. We believe part of being a good corporate citizen requires a dedicated focus on how our industry, precious metals mining, affects the environment. In planning our development of the Bullfrog Gold Project we strive towards a more environmentally sound project development plan at the Bullfrog Gold Project and within the local community.
Available Information
We make available, free of charge, on or through our Internet website, at www.augustagold.com, our Annual Report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. Our Internet website and the information contained therein or connected thereto are not intended to be, and are not incorporated into this Annual Report on Form 10-K.
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ITEM 1A. RISK FACTORS
You should carefully consider the following risk factors in addition to the other information included in this Annual Report on Form 10-K. Each of these risk factors could materially and adversely affect our business, operating results and financial condition, as well as materially and adversely affect the value of an investment in our Common Shares. The risks described below are not the only ones facing the Company. Additional risks that we are not presently aware of, or that we currently believe are immaterial, may also adversely affect our business, operating results and financial condition. We cannot assure you that we will successfully address these risks or that other unknown risks exist that may affect our business.
Financial Risks
We have a history of losses and expect to continue to incur losses in the future.
With the exception of the current fiscal year, we have incurred losses since inception, have negative cash flow from operating activities and expect to continue to incur losses in the future.
We have an accumulated deficit of $20,173,541 as of December 31, 2021. We expect to continue to incur losses unless and until such time as our Bullfrog Gold Project or one of our future acquired properties enters into commercial production and generates sufficient revenues to fund continuing operations. We recognize that if we are unable to generate cash flows from mining operations and dispositions of our properties, we will not be able to earn profits or continue operations. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition.
Negative Operating Cash Flow
The Company is an exploration stage issuer and has not generated cash flow from operations. The Company is devoting significant resources to the exploration of its Bullfrog Gold Project and to actively pursue exploration and development opportunities, however, there can be no assurance that it will generate positive cash flow from operations in the future. The Company expects to continue to incur negative consolidated operating cash flow and losses until such time as it achieves commercial production at a particular project. The Company currently has negative cash flow from operating activities.
We have a limited operating history on which to base an evaluation of our business and prospects.
Since our inception we have had no revenue from operations. We have no history of producing metals from any of our properties. Our Bullfrog Gold Project is an exploration stage property. Advancing properties from exploration into the development stage requires significant capital and time, and successful commercial production from a property, if any, will be subject to completing feasibility studies, permitting and construction of the mine, processing plants, roads, and other related works and infrastructure. As a result, we are subject to all of the risks associated with developing and establishing new mining operations and business enterprises including:
·completion of feasibility studies to verify reserves and commercial viability, including the ability to find sufficient gold/silver mineral reserves to support a commercial mining operation;
·the timing and cost, which can be considerable, of further exploration, preparing feasibility studies, permitting and construction of infrastructure, mining and processing facilities;
·the availability and costs of drill equipment, exploration personnel, skilled labor and mining and processing equipment, if required;
·the availability and cost of appropriate smelting and/or refining arrangements, if required;
·compliance with environmental and other governmental approval and permit requirements;
·the availability of funds to finance exploration, development and construction activities, as warranted;
·potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants which may delay or prevent development activities;
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·potential increases in exploration, construction and operating costs due to changes in the cost of fuel, power, materials and supplies; and
·potential shortages of mineral processing, construction and other facilities related supplies.
The costs, timing and complexities of exploration, development and construction activities may be increased by the location of our properties and demand by other mineral exploration and mining companies. It is common in exploration programs to experience unexpected problems and delays during drill programs and, if commenced, development, construction and mine start-up. Accordingly, our activities may not result in profitable mining operations and we may not succeed in establishing mining operations or profitably producing metals at any of our properties.
We may need to obtain additional financing to fund our exploration programs.
If we raise additional funds by issuing additional equity or convertible debt securities, the ownership of existing stockholders may be diluted and the securities that we may issue in the future may have rights, preferences or privileges senior to those of the current holders of our common stock. If we raise additional funds by issuing debt, we could be subject to debt covenants that could place limitations on our operations and financial flexibility.
Increased costs could affect our financial condition.
We anticipate that costs at our projects and properties that we may explore or develop will frequently be subject to variation from one year to the next due to a number of factors, such as changing grade, metallurgy and revisions to mine plans, if any, in response to the physical shape and location of the body. In addition, costs are affected by the price of commodities such as fuel, steel, rubber, and electricity. Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in costs at any significant location could have a significant effect on our profitability.
Operating Risks
Our Bullfrog Gold Project is in the exploration stage.
The Bullfrog Gold Project has estimated mineral resources, but there has not been a mineral reserve estimation in accordance with S-K 1300. There is no assurance that we can establish the existence of any mineral reserves on the Bullfrog Gold Project in commercially exploitable quantities. Until we can do so, we cannot earn any revenues from the project and if we do not do so, we will lose all of the funds that we expend on exploration. If we do not discover any mineral reserves in a commercially exploitable quantity, the exploration component of our business could fail.
The probability of an individual prospect ever having a “reserve” that meets the requirements of the SEC’s S-K 1300 standards is extremely remote; in all probability our project does not contain any “reserves” and any funds that we spend on exploration could be lost. Even if we do eventually discover a mineral reserve on our project, there can be no assurance that they can be developed into producing mines and extract those minerals. Both mineral exploration and development involve a high degree of risk and few mineral properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the mineral deposit to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral deposit unprofitable.
We cannot be assured that the Bullfrog Gold Project is feasible or that a feasibility study will accurately forecast economic results.
The Bullfrog Gold Project is our principal asset. Our future profitability depends largely on the economic feasibility of the project. Before arranging financing for development and production at the Bullfrog Gold Project, we will have to complete a feasibility study. The results of our feasibility study may not be as favorable as the results of our prior studies. There can be no assurance that mining processes and results including potential gold production rates, revenue, capital and operating costs including taxes and royalties will not vary unfavorably from the estimates and assumptions included in such feasibility study.
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The Bullfrog Gold Project requires substantial capital investment and we may be unable to raise sufficient capital on favorable terms or at all.
The exploration and, if warranted, development and operation of the Bullfrog Gold Project will require significant capital. Our ability to raise sufficient capital and/or secure a development partner on satisfactory terms, if at all, will depend on several factors, including a favorable feasibility study, acquisition of the requisite permits, macroeconomic conditions, and future gold prices. Uncontrollable factors or other factors such as lower gold prices, unanticipated operating or permitting challenges, perception of environmental impact or, illiquidity in the debt markets or equity markets, could impede our ability to finance the Bullfrog Gold Project on acceptable terms, or at all, including the cost of such capital and other conditions of financing arrangements that impose restrictive covenants and security interests that may affect the Company’s ability to operate as intended and ultimately its ability to continue as a going concern.
We may not be able to get the required permits at the Bullfrog Gold Project in a timely manner or at all.
Any delay in acquiring the requisite permits, or failure to receive required governmental approvals could delay or prevent the start of exploration or, if warranted, development of the Bullfrog Gold Project. If we are unable to acquire permits to explore, develop or mine the property, then the Project cannot be developed and operated. In addition, the property would have no reserves under S-K 1300, which could result in an impairment of the carrying value of the project.
We are a junior gold exploration company with no mining operations, and we may never have any mining operations in the future.
Our business is exploring for gold and other minerals. In the event that we discover commercially exploitable gold or other deposits, we will not be able to generate any sales from them unless the gold or other minerals are actually mined, or we sell all or a part of our interest. Accordingly, we will need to find some other entity to mine our properties on our behalf, mine them ourselves or sell our rights to mine to third parties. 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 we assume any operational responsibility for mining our properties, it is possible that we will be unable to comply with current or future laws and regulations, which can change at any time. It is possible that changes to these laws will be adverse to any potential mining operations. Moreover, compliance with such laws may cause substantial delays and require capital outlays in excess of those we anticipate, adversely affecting any potential mining operations of ours. Our future mining operations, if any, may also be subject to liability for pollution or other environmental damage. It is possible that we will choose to not be insured against this risk because of high insurance costs or other reasons.
Difficulties we may encounter managing our growth could adversely affect our results of operations.
As our business needs expand, we may need to hire a significant number of employees. This expansion may place a significant strain on our managerial and financial resources. To manage the potential growth of our operations and personnel, we will be required to:
·improve existing, and implement new, operational, financial and management controls, reporting systems and procedures;
·install enhanced management information systems; and
·train, motivate and manage our employees.
We may not be able to install adequate management information and control systems in an efficient and timely manner, and our current or planned personnel, systems, procedures and controls may not be adequate to support our future operations. If we are unable to manage growth effectively, our business would be seriously harmed.
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If we lose key personnel or are unable to attract and retain additional qualified personnel, we may not be able to successfully manage our business and achieve our objectives.
We believe our future success will depend upon our ability to retain our key management. We may not be successful in attracting and retaining employees in the future and the loss of the key members of management would have a material adverse effect on our operations.
The outbreak of the coronavirus pandemic may impact the Company’s plans and activities
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.
Mining Risks
The nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses.
Exploration for minerals is highly speculative and involves much greater risk than many other businesses. Most exploration programs do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Our operations are, and any future development or mining operations we may conduct will be, subject to all of the operating hazards and risks normally incident to exploring for and development of mineral properties, such as, but not limited to:
·economically insufficient mineralized material;
·the ability to find sufficient gold, silver or other metal reserves to support a profitable mining operation;
·fluctuation in production costs that make mining uneconomical;
·labor disputes;
·unanticipated variations in grade and geological characteristics;
·environmental events such as storms and flooding;
·water availability;
·difficult surface or underground conditions;
·industrial accidents;
·unexpected metallurgical response;
·mechanical and equipment performance limitations;
·geotechnical constraints; and
·decrease in the value of mineralized material due to lower gold and/or silver prices.
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Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures, potential revenues and production dates. We currently have very limited insurance to guard against some of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write-down of our investment in these interests. All of these factors may result in losses in relation to amounts spent which are not recoverable, or result in additional expenses.
Estimates of mineral resources are subject to evaluation uncertainties that could result in project failure.
Unless otherwise indicated, mineral resource figures presented in this Annual Report and in our filings with securities regulatory authorities, press releases and other public statements that may be made from time to time are based upon estimates made by independent geologists and mining engineers. When making determinations about whether to advance any of our projects to development, we must rely upon such estimates as to mineral resources, mineral reserves and grades on our properties.
Our exploration and future mining operations, if any, are and would be faced with risks associated with being able to accurately predict the quantity and quality of resources/reserves using sampling techniques and known resource estimation methodologies. Estimates of resources/reserve on our properties would be made using samples obtained from drilling programs. There is an inherent variability of assays between paired samples (proximal to each other) that cannot be reasonably eliminated. Additionally, there also may be unknown geologic details that have not been identified or correctly defined at the current level of accumulated knowledge about our properties. This could result in uncertainties that cannot be reasonably eliminated from the process of estimating resources/reserves.
Any material changes in resources/reserve estimates and grades will affect the economic viability of placing a property into production and a property’s return on capital.
As we have not completed feasibility studies on our Bullfrog Gold Project and have not commenced actual production, resource estimates may require adjustments or downward revisions. In addition, the grade ultimately mined, if any, may differ from that indicated by our technical reports and drill results. Minerals recovered in small scale tests may not be duplicated in large scale tests under existing on-site conditions or in production scale.
The mineral resource estimates contained in this Annual Report have been determined based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in market prices for gold or silver may render portions of our mineral resources uneconomic and result in reduced reported mineralization or adversely affect any commercial viability determinations we may reach. Any material reductions in estimates of mineral resources, or of our ability to extract mineral resources, could have a material adverse effect on our share price and the value of our properties.
Our exploration activities on our properties may not be commercially successful, which could lead us to abandon our plans to develop our properties and our investments in exploration.
Our long-term success depends on our ability to identify mineral deposits on our existing Bullfrog Gold Project and other properties we may acquire, if any, that we can then develop into commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate equipment, or labor. The success of gold, silver and other commodity exploration is determined in part by the following factors:
·the identification of potential mineralization based on surficial analysis;
·availability of government-granted exploration permits;
·the quality of our management and our geological and technical expertise; and
·the capital available for exploration and development work.
Substantial expenditures are required to establish proven and probable mineral reserves through drilling and analysis, to develop metallurgical processes to extract metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. We may invest significant capital and resources in exploration activities and abandon
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such investments if we are unable to identify commercially exploitable mineral reserves. The decision to abandon a project may have an adverse effect on the market value of our securities and the ability to raise future financing.
The volatility of the price of gold and silver could adversely affect our future operations and, if warranted, our ability to develop our properties.
The potential for profitability of our operations, the value of our Bullfrog Gold Project or other properties we may acquire, the market price of our shares of common stock and our ability to raise funding to conduct continued exploration and development, if warranted, are directly related to the market price of gold and silver. Our decision to put a mine into production and to commit the funds necessary for that purpose must be made long before the first revenue from production would be received. A decrease in the price of gold and/or silver may prevent our properties from being economically mined or result in the write-off of assets whose value is impaired as a result of lower gold and silver prices. The prices of gold and silver are affected by numerous factors beyond our control, including inflation, fluctuation of the U.S. dollar and foreign currencies, global and regional demand, the sale of gold by central banks, and the political and economic conditions of major gold and silver producing countries throughout the world.
The volatility in gold prices is illustrated in the table presented under “Part I - Item 1. Business - Gold Price History” above.
The volatility of metal prices represents a substantial risk which no amount of planning or technical expertise can fully eliminate. In the event gold and/or silver prices decline or remain low for prolonged periods of time, we might be unable to develop our properties, which may adversely affect our results of operations, financial performance and cash flows.
We are subject to significant governmental regulations, which affect our operations and costs of conducting our business.
Our current and future operations are and will be governed by laws and regulations, including:
·laws and regulations governing mineral concession acquisition, prospecting, development, mining and production;
·laws and regulations related to exports, taxes and fees;
·labor standards and regulations related to occupational health and mine safety; and
·environmental standards and regulations related to waste disposal, toxic substances, land use and environmental protection.
Companies engaged in exploration activities often experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. Failure to comply with applicable laws, regulations and permits may result in enforcement actions, including the forfeiture of mineral claims or other mineral tenures, orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or costly remedial actions. We may be required to compensate those suffering loss or damage by reason of our mineral exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations and permits.
Existing and possible future laws, regulations and permits governing operations and activities of exploration companies, or more stringent implementation, could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in exploration.
Our business is subject to extensive environmental regulations which may make exploring for or mining prohibitively expensive, and which may change at any time.
All our operations are subject to extensive environmental regulations which can make exploration expensive or prohibit it altogether. We may be subject to potential liabilities associated with the pollution of the environment and the disposal of waste products that may occur as the result of exploring and other related activities on our properties. We may have to make payments to remedy environmental pollution, which may reduce the amount of money that we have available to use for exploration. This may adversely affect our financial position, which may cause shareholders to lose their investment. If we are unable to fully remedy an environmental problem, we might be
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required to suspend operations or to enter into interim compliance measures pending the completion of the required remedy. If our properties are mined and we retain any operational responsibility for doing so, our potential exposure for remediation may be significant, and this may have a material adverse effect upon our business and financial position. We have not purchased insurance for potential environmental risks (including potential liability for pollution or other hazards associated with the disposal of waste products from our exploration activities).
If we mine one or more of our properties and retain operational responsibility for mining, then such insurance may not be available to us on reasonable terms or at a reasonable price. All of our exploration and, if warranted, development activities may be subject to regulation under one or more local, state and federal environmental impact analyses and public review processes. Future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have significant impact on some portion of our business, which may require us to re-evaluate our business from time to time. These risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements beyond our financial capability. Inasmuch as posting of bonding in accordance with regulatory determinations is a condition to the right to operate under all material operating permits, increases in bonding requirements could prevent operations even if we are in full compliance with all substantive environmental laws.
Our property titles may be challenged. We are not insured against any challenges, impairments or defects to our mineral claims or property titles. We have not fully verified title to our properties.
Unpatented claims were created and maintained in accordance with the federal General Mining Law of 1872. Unpatented claims are unique U.S. property interests and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented claims is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations under the General Mining Law. Although the annual payments and filings for these claims, permits and patents have been maintained, we have conducted limited title search on our properties. The uncertainty resulting from not having comprehensive title searches on the properties leaves us exposed to potential title suits. Defending any challenges to our property titles may be costly, and may divert funds that we could otherwise use for exploration activities and other purposes. In addition, unpatented claims are always subject to possible challenges by third parties or contests by the federal government, which, if successful, may prevent us from exploiting our discovery of commercially extractable gold. Challenges to our title may increase our costs of operation or limit our ability to explore on certain portions of our properties. We are not insured against challenges, impairments or defects to our property titles, nor do we intend to carry extensive title insurance in the future.
Possible amendments to the General Mining Law could make it more difficult or impossible for us to execute our business plan.
The U.S. Congress has considered proposals to amend the General Mining Law of 1872 that would have, among other things, permanently banned the sale of public land for mining. The proposed amendment would have expanded the environmental regulations to which we are subject and would have given Indian tribes the ability to hinder or prohibit mining operations near tribal lands. The proposed amendment would also have imposed a royalty of 8% of gross revenue on new mining operations located on federal public land, which would have applied to substantial portions of our properties. The proposed amendment would have made it more expensive or perhaps too expensive to recover any otherwise commercially exploitable gold deposits which we may find on our properties. While at this time the proposed amendment is no longer pending, this or similar changes to the law in the future could have a significant impact on our business.
Market forces or unforeseen developments may prevent us from obtaining the supplies and equipment necessary to explore for gold and other minerals.
Gold exploration, and resource exploration in general, requires engaging contractors, and may result in unforeseen shortages of supplies and/or equipment that could result in the disruption of our planned exploration activities. Current demand for exploration drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable at scheduled times for our exploration program. Fuel prices are extremely volatile as well. We will attempt to locate suitable equipment, materials, manpower and fuel if we have sufficient funds to do so. If we cannot find the equipment and supplies needed for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower become available. Any such disruption in our activities may adversely affect our exploration activities and financial condition.
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We may not be able to maintain the infrastructure necessary to conduct exploration activities.
Our exploration activities depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our exploration activities and financial condition.
Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on our business.
A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us, our venture partners and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of our operations.
Our relationship with the communities in which we operate impacts the future success of our operations.
Our relationship with the communities in which we operate is important to ensure the future success of our existing operations. While we believe our relationships with the communities in which we operate are strong, there is an increasing level of public concern relating to the perceived effect of mining activities on the environment and on communities impacted by such activities. Certain non-governmental organizations (“NGOs”), some of which oppose globalization and resource development, are often vocal critics of the mining industry and its practices. Adverse publicity generated by such NGOs or others related to extractive industries generally, or its operations specifically, could have an adverse effect on our reputation or financial condition and may impact its relationship with the communities in which we operate. While we believe that we operate in a socially responsible manner, there is no guarantee that our efforts in this respect will mitigate this potential risk.
Newly adopted rules regarding mining property disclosure by companies reporting with the SEC may result in increased operating and legal costs.
On October 31, 2018, the SEC adopted new rules to modernize mining property disclosure in reports filed with the SEC in order to harmonize SEC disclosure requirements with international standards. These rules are not effective until the Company’s first full fiscal year beginning on or after January 1, 2021. The Company currently reports mineralized material and reserves in Canada in compliance with NI 43-101. Because the Company files its reports with the SEC on U.S. domestic forms, under the new rules, the Company will be required to comply with the new SEC mining property disclosure requirements. These changes to the Company’s reporting requirements could result in increased compliance costs.
General Risks
Our business is subject to evolving corporate governance and public disclosure regulations that have increased both our compliance costs and the risk of noncompliance, which could have an adverse effect on our stock price.
We are subject to changing rules and regulations promulgated by a number of governmental and self-regulated organizations, including the SEC, applicable securities regulatory authorities in Canada, the Canadian Securities Exchange, applicable Canadian authorities and the Financial Accounting Standards Board. These rules and regulations continue to evolve in scope and complexity and many new requirements have been created in response to laws enacted by Congress, making compliance more difficult and uncertain. Our efforts to comply with new
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regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
We are required to comply with Canadian securities regulations and are subject to additional regulatory scrutiny in Canada.
We are a “reporting issuer” in Canada. As a result, our disclosure outside the United States differs from the disclosure contained in our SEC filings. Our reserve and resource estimates disseminated outside the United States are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally report reserves and resources in accordance with Canadian practices. These practices are different from the practices used to report reserve and resource estimates in reports and other materials filed with the SEC. It is Canadian practice to report measured, indicated, and inferred resources, which are generally not permitted in disclosures filed with the SEC. In the United States, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. Further, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Disclosure of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report “resources” as in-place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization, reserves, and resources contained in disclosures released outside the United States may not be comparable to information made public by other United States companies subject to the reporting and disclosure requirements of the SEC.
We are also subject to increased regulatory scrutiny and costs associated with complying with securities legislation in Canada. For example, we are subject to civil liability for misrepresentations in written disclosure and oral statements. Legislation has been enacted in these provinces which creates a right of action for damages against a reporting issuer, its directors and certain of its officers in the event that the reporting issuer or a person with actual, implied, or apparent authority to act or speak on behalf of the reporting issuer releases a document or makes a public oral statement that contains a misrepresentation or the reporting issuer fails to make timely disclosure of a material change. We do not anticipate any particular regulation that would be difficult to comply with. However, failure to comply with regulations may result in civil awards, fines, penalties, and orders that could have an adverse effect on us.
Our stock price may be volatile.
The stock market in general has experienced volatility that often has been unrelated to the operating performance of any specific public company. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
·changes in our industry;
·competitive pricing pressures;
·our ability to obtain working capital financing;
·additions or departures of key personnel;
·limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market prices of our common stock;
·sales of our common stock;
·our ability to execute our business plan;
·operating results that fall below expectations;
·loss of any strategic relationship;
·regulatory developments;
·economic and other external factors; and
·period-to-period fluctuations in our financial results.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
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We have never paid nor do we expect in the near future to pay dividends.
We have never paid cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock for the foreseeable future. Investors should not rely on an investment in our Company if they require income generated from dividends paid on our capital stock. Any income derived from our common stock would only come from rise in the market price of our common stock, which is uncertain and unpredictable.
Broker-dealers may be discouraged from effecting transactions in shares of common stock because they are considered a penny stock and are subject to the penny stock rules.
Our shares of common stock are currently considered a “penny stock.” The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. The shares of common stock are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors.” The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the shares of common stock. Consequently, these penny stock rules may affect the ability of broker-dealers to trade in the shares of common stock.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period, under Rule 144, or issued upon the exercise of outstanding options or warrants or upon the conversion of our Series B Preferred Stock, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity related securities in the future at a time and price that we deem reasonable or appropriate.
We are dependent upon information technology systems, which are subject to disruption, damage, failure and risks associated with implementation and integration.
We are dependent upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design. Cybersecurity incidents, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data. Various measures have been implemented to manage our risks related to information technology systems and network disruptions. However, given the unpredictability of the timing, nature and scope of information technology disruptions, we could potentially be subject to operational delays, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Bullfrog Gold Project, Nye County, Nevada
Summary Disclosure
The Company has only one material mining property, the Bullfrog Gold Project located in Nye County, Nevada. We hold the Bullfrog Project through our wholly-owned subsidiaries Bullfrog Mines, Rocky Mountain Minerals Corp., a Nevada corporation (“RMMC”) and Standard Gold Corp., a Nevada corporation (“SGC”).
Technical Report Summary
The S-K 1300 Technical Report for the Bullfrog Gold Project is the technical report summary, prepared pursuant to S-K 1300, is filed as an exhibit to this Form 10-K and is entitled “S-K 1300 Technical Report, Mineral Resource Estimate, Bullfrog Gold Project, Nye County, Nevada” with an effective date of December 31, 2021 and an issue date of March 16, 2022 (the “Technical Report”).
The Technical Report was prepared by Forte Dynamics, Inc. under the supervision of Russ Downer, P. Eng. and Adam House, MMSA QP, each of whom is a qualified person under S-K 1300 (of the United States Securities and Exchange Commission) and NI 43-101 (of the Canadian Securities Administrators).
The following description of the Bullfrog Gold Project has been sourced, in part, from the Technical Report and readers should consult the Technical Report to obtain further particulars regarding the Bullfrog Gold Project. The Technical Report is filed as an exhibit to this 10-K and is available for review at www.sec.gov.
Certain capitalized terms in this section not otherwise defined have the meanings ascribed to them in the Technical Report.
Qualified Person
The scientific and technical disclosures about the Bullfrog Gold Project in this annual report on Form 10-K have been reviewed and approved by Russ Downer and Adam House of Forte Dynamics, who are qualified persons as defined by S-K 1300 and NI 43-101. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and mineral resources included in this Form 10-K, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the Technical Report Summary for the Bullfrog Gold Project which is included as an exhibit to, and incorporated by reference into, this Form 10-K.
Property Location and Access
The Bullfrog Gold Project is located in the Bullfrog Hills of Nye County, Nevada and in the southern half of the Bullfrog Mining District (Figure 1). Project properties are located in Sections 3, 4, 5, 6, 8, 9, 10, 14, 15, 16, 17, 21, 22, 23, 25, 26, 35 and 36 of T11S, R46E and Sections 1, 2, 3, 4, 5, 6, 8 9, 10, 11, 12, 13, 14, 15, 16, 17, and 23 of T12S, R46E, Mt. Diablo Meridian.
The Bullfrog Gold Project is accessible via a 2½ hour (120 mile) drive north of Las Vegas, Nevada on US Highway 95. Las Vegas, the largest city in Nevada, is serviced by a major international airport, and has ample equipment, supplies and services to support many of the project’s needs. The project is 4 miles west of the Town of Beatty, Nevada via a paved highway. Beatty has a population of approximately 1,000 and can provide basic housing, services, and supplies. Access around the project is by a series of reasonably good gravel roads that extend to the open pit mines and most of the significant exploration areas.
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Figure 1: Location Map
(Scale bar is approximately 22.5 km long)
Project Stage
The Bullfrog Gold Project is an exploration stage property with measured, indicated and inferred mineral resources but no known mineral reserves.
Mineral Resources Estimates
Mineral resources utilize all new drilling through the end of 2021 in addition to updated geologic models and database improvements by the Company’s staff. Three-dimensional block models for each area (Bullfrog, Montgomery-Shoshone and Bonanza) were created using Vulcan software. Surfaces and solids representing topography, overburden, geologic units, historic stope shapes and gold mineralization were incorporated into the resource models. Resource estimates utilize drill hole, survey, analytical and bulk density information provided by the project personnel. Gold and silver values have been given null values for all material that has been historically mined by both open pit and underground methods. Bulk density has been adjusted for backfill material placed in the historical open pit and underground operations.
Mineral resources are pit constrained using reasonable cost assumptions, however detailed costing and economic evaluations have not been performed. The resources only consider mining mineralization and waste that will take place on lands controlled by the Company. Pit slope parameters are based on the existing pit wall angles and vary by geology, depth and lateral extent. Different metallurgical recoveries were assigned to oxide and sulphide material and used in the calculation of the optimized pit shells.
Mineral resources are reported inside optimized pit shells with Minemax software using high-level economic assumptions, geotechnical pit slope parameters and property boundaries. Estimated mineral resources for the Bullfrog Project are being reported for the Bullfrog, Montgomery-Shoshone and Bonanza areas, respectively.
The following table presents the combined global gold and silver mineral resources for the three areas, Bullfrog, Montgomery-Shoshone and Bonanza, at the Bullfrog Gold Project.
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Bullfrog Gold Project - Summary of Gold and Silver Mineral Resources at the End of the Fiscal Year Ended December 31, 2021 Based on $1,550/oz. Gold and $20/oz. Silver
Combined Global Resources - Oxide and Sulphide | |||||
Classification | Tonnes (Mt) | Au grade (g/t) | Ag grade (g/t) | Au Contained (koz) | Ag Contained (koz) |
Measured | 30.13 | 0.544 | 1.35 | 526.68 | 1,309.13 |
Indicated | 40.88 | 0.519 | 1.18 | 682.61 | 1,557.49 |
Measured and Indicated | 71.01 | 0.530 | 1.26 | 1,209.29 | 2,866.62 |
Inferred | 16.69 | 0.481 | 0.96 | 257.90 | 515.72 |
Notes:
1.Oxide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 82% for Au and silver price of US$20/oz and a recovery of 20% For Ag.
2.Sulphide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 50% for Au and silver price of US$20/oz and a recovery of 12% for Ag. No sulphide material was reported for Montgomery-Shoshone or Bonanza.
3.Mining costs for mineralized material and waste are US$2.25/tonne.
4.Processing, general and administration, and refining costs are US$5.00/tonne, US$0.50/tonne, and US$0.05/tonne respectively.
5.Due to rounding, some columns or rows may not compute as shown.
6.Estimated Mineral Resources are stated as in situ dry metric tonnes.
7.The estimate of Mineral Resources may be materially affected by legal, title, taxation, socio-political, marketing, or other relevant issues.
The following tables present the gold and silver mineral resources for each of the three project areas, Bullfrog, Montgomery-Shoshone and Bonanza.
Bullfrog Gold Project - Bullfrog Area, Gold and Silver Mineral Resources at the End of the Fiscal Year Ended December 31, 2021 Based on $1,550/oz. Gold and $20/oz. Silver
Mineral Resources - Bullfrog | ||||||
Redox | Classification | Tonnes (Mt) | Au grade (g/t) | Ag grade (g/t) | Au Contained (koz) | Ag Contained (koz) |
Oxide | Measured | 24.50 | 0.537 | 1.28 | 422.77 | 1,010.02 |
Indicated | 36.32 | 0.515 | 1.14 | 602.02 | 1,332.18 | |
Measured and Indicated | 60.82 | 0.524 | 1.20 | 1,024.79 | 2,342.20 | |
Inferred | 14.40 | 0.460 | 0.77 | 213.06 | 358.49 | |
| ||||||
Sulphide | Measured | 1.30 | 0.710 | 1.28 | 29.77 | 53.52 |
Indicated | 1.99 | 0.625 | 1.32 | 39.94 | 84.47 | |
Measured and Indicated | 3.29 | 0.659 | 1.30 | 69.72 | 137.99 | |
Inferred | 1.05 | 0.657 | 1.14 | 22.14 | 38.53 | |
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Total - Oxide and Sulphide | Measured | 25.80 | 0.545 | 1.28 | 452.55 | 1,063.54 |
Indicated | 38.31 | 0.521 | 1.15 | 641.96 | 1,416.65 | |
Measured and Indicated | 64.12 | 0.531 | 1.20 | 1,094.51 | 2,480.19 | |
Inferred | 15.44 | 0.474 | 0.80 | 235.20 | 397.02 | |
Notes:
1.Oxide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 82% for Au and silver price of US$20/oz and a recovery of 20% For Ag.
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2.Sulphide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 50% for Au and silver price of US$20/oz and a recovery of 12% for Ag.
3.Mining costs for mineralized material and waste are US$2.25/tonne.
4.Processing, general and administration, and refining costs are US$5.00/tonne, US$0.50/tonne, and US$0.05/tonne respectively.
5.Due to rounding, some columns or rows may not compute as shown.
6.Estimated Mineral Resources are stated as in situ dry metric tonnes.
7.The estimate of Mineral Resources may be materially affected by legal, title, taxation, socio-political, marketing, or other relevant issues.
Bullfrog Gold Project - Montgomery-Shoshone Area, Gold and Silver Mineral Resources at the End of the Fiscal Year Ended December 31, 2021 Based on $1,550/oz. Gold and $20/oz. Silver
Mineral Resources - Montgomery-Shoshone | ||||||
Redox | Classification | Tonnes (Mt) | Au grade (g/t) | Ag grade (g/t) | Au Contained (koz) | Ag Contained (koz) |
Oxide | Measured | 1.97 | 0.637 | 3.35 | 40.35 | 212.12 |
Indicated | 1.35 | 0.555 | 2.85 | 24.04 | 123.66 | |
Measured and Indicated | 3.32 | 0.603 | 3.15 | 64.38 | 335.78 | |
Inferred | 1.05 | 0.586 | 3.45 | 19.76 | 116.41 | |
Notes:
1.Oxide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 82% for Au and silver price of US$20/oz and a recovery of 20% For Ag.
2.Sulphide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 50% for Au and silver price of US$20/oz and a recovery of 12% for Ag. No sulphide material was reported for Montgomery-Shoshone.
3.Mining costs for mineralized material and waste are US$2.25/tonne.
4.Processing, general and administration, and refining costs are US$5.00/tonne, US$0.50/tonne, and US$0.05/tonne respectively.
5.Due to rounding, some columns or rows may not compute as shown.
6.Estimated Mineral Resources are stated as in situ dry metric tonnes.
7.The estimate of Mineral Resources may be materially affected by legal, title, taxation, socio-political, marketing, or other relevant issues.
Bullfrog Gold Project - Bonanza Area, Gold and Silver Mineral Resources at the End of the Fiscal Year Ended December 31, 2021 Based on $1,550/oz. Gold and $20/oz. Silver
Mineral Resources - Bonanza | ||||||
Redox | Classification | Tonnes (Mt) | Au grade (g/t) | Ag grade (g/t) | Au Contained (koz) | Ag Contained (koz) |
Oxide | Measured | 2.35 | 0.446 | 0.44 | 33.78 | 33.48 |
Indicated | 1.22 | 0.422 | 0.44 | 16.61 | 17.17 | |
Measured and Indicated | 3.58 | 0.438 | 0.44 | 50.40 | 50.65 | |
Inferred | 0.19 | 0.473 | 0.37 | 2.94 | 2.28 | |
Notes:
1.Oxide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 82% for Au and silver price of US$20/oz and a recovery of 20% For Ag.
2.Sulphide estimated Mineral Resources are reported within a pit shell using the Lerch Grossman algorithm, a gold price of US$1,550/oz and a recovery of 50% for Au and silver price of US$20/oz and a recovery of 12% for Ag. No sulphide material was reported for Bonanza.
3.Mining costs for mineralized material and waste are US$2.25/tonne.
4.Processing, general and administration, and refining costs are US$5.00/tonne, US$0.50/tonne, and US$0.05/tonne respectively.
5.Due to rounding, some columns or rows may not compute as shown.
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6.Estimated Mineral Resources are stated as in situ dry metric tonnes.
7.The estimate of Mineral Resources may be materially affected by legal, title, taxation, socio-political, marketing, or other relevant issues
A more detailed summary of the material assumptions and criteria used in the mineral resource modeling is contained in Section 11 “Mineral Resource Estimates” of the Technical Report.
Property Holdings
We have four option/lease/purchase agreements in place and, with the additional claims it has located, give it control of 734 unpatented lode mining claims and mill site claims, and 87 patented mining claims. The claims do not have an expiration date, as long as the fees and obligations are maintained.
NPX Assignment of Lands
In September 2011, we issued 14.4 million shares of the Company to the shareholders of SGC to acquire 100% of SGC and its assets. SGC is a private Nevada corporation and now wholly owned by the Company. Concurrently, NPX Metals, Inc. (“NPX”) and Bull Frog Holding, Inc. (“BHI”) assigned all title and interests in 79 claims and two patents to SGC. The Company granted a production royalty of 3% NSR on the property to NPX and BHI, plus an aggregate 3% NSR cap on any acquired lands within one mile of the 2011 boundary. Thus, NPX and BHI would not receive any royalty on acquisitions having a 3% or greater NSR.
Mojave Gold Option
In March 2014, we formed RMMC, a private Nevada corporation, as a wholly owned subsidiary, specifically for holding and acquiring assets. On October 29, 2014, RMMC exercised an option to purchase from Mojave Gold Mining Co. 12 patents west and adjacent to our initial property holdings and that cover the NE half of the M-S pit. Mojave was paid 750,000 shares of our common stock plus $16,000. RMMC agreed to make annual payments totaling $180,000 over nine years to fully exercise the option, and expend as a minimum work commitment for the benefit of the Property $100,000 per year and a total of $500,000 over five years on the properties and surrounding lands within one-half mile of the 12 Mojave patents. Alternatively, RMMC can pay cash to Mojave at 50% of the difference between the minimum required and the actual expenditures. Mojave retained a sliding scale Net Smelter Return royalty ranging from 1% for gold prices below $1,200/ounce and up to 4% for gold prices above $3,200 per ounce.
Lunar Landing Lease
On July 1, 2017, RMMC entered a lease with Lunar Landing LLC on 24 patents in the Bullfrog District:
·Two patents are adjacent and west of the M-S pit that could allow potential expansion of the pit down dip of the Polaris vein and stock work system.
·Ten patents have provided the Company with contiguous and connecting lands between the M-S and Bullfrog pits. These patents will also allow further expansions of the Bullfrog pit to the north and east.
·Four patents are within 0.5 to 1.2 miles west of the Bullfrog pit in the vicinity of the Bonanza Mountain open pit mine.
·Eight patents are in an exploration target area located about 1.5 miles NW of the Bullfrog pit and where the Company has owned the Aurium patent since 2011.
The lease includes the following:
·The Company paid $26,000 on signing and is scheduled to annually pay $16,000 for years 2-5, $21,000 for years 6-10, $25,000 for years 11-15, $30,000 for years 16-20, $40,000 for years 21-25 and $45,000 for years 26-30.
·Production royalty of 5% net smelter returns with the right to buy-down to 2.5%.
·The Company is to expend as a work commitment not less than $50,000 per year and $500,000 in total to maintain the lease.
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·The Company has rights to commingle ores and the flexibility to operate the Project as a logical land and mining unit.
Brown Claims
On January 29, 2018, RMMC purchased two patented claims (the “Brown Claims”), thereby eliminating minor constraints to expand the Bullfrog pit to the north. As partial consideration for the Brown Claims, RMMC granted the sellers of the Brown Claims a 5% net smelter returns royalty on the Brown Claims, of which 2.5% can be purchased by RMMC for aggregate consideration of US$37,500.
Barrick Claims
On October 26, 2020, the Company completed its acquisition of Bullfrog Mines pursuant to the MIPA with the Barrick Parties.
Pursuant to the MIPA, the Company purchased from the Barrick Parties all of the Equity Interests in Bullfrog Mines for aggregate consideration of (i) 54,600,000 units of the Company, each unit consisting of one share of common stock of the Company and one four-year warrant purchase one share of common stock of the Company at an exercise price of C$0.30 (such number of units and exercise price are set out on a pre-Consolidation basis), (ii) 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”), (iii) the Company granting indemnification to the Barrick Parties pursuant to an indemnity deed, dated October 26, 2020 by and among the Company, the Barrick Parties and Bullfrog Mines, and (iv) certain investor rights, including anti-dilution rights, pursuant to the investor rights agreement, dated October 26, 2020, among the Company, Augusta Investments Inc., and Barrick.
Through the Company’s acquisition of the Equity Interests, the Company acquired rights to the 1,500 acres of claims adjoining the Company’s Bullfrog Gold deposit.
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%.
Abitibi Royalties Option
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. Bullfrog Mines made an initial payment to Abitibi of C$25,000 and can exercise the Abitibi Option by:
·Paying to Abitibi C$50,000 in cash or shares of Company common stock by December 9, 2021;
·Paying to Abitibi C$75,000 in cash or shares of Company common stock by December 9, 2022; and
·Granting to Abitibi a 2% net smelter royalty on the claims subject to the Abitibi Option by December 9, 2022, of which Bullfrog Mines would have the option to purchase 0.5% for C$500,000 on or before December 9, 2030.
In order to exercise the Abitibi Option, Bullfrog Mines is also required to keep the underlying claims in good standing.
Other Property Holding Payments
All the unpatented lode mining claims are on U.S. public land administered by the Bureau of Land Management (“BLM”) and, therefore, are subject to exploration and development permits as required by the several current regulations. The unpatented lode mining claims require annual payments of $155 per claim to the BLM and $12 per claim to Nye County.
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Infrastructure
Augusta Gold maintains sufficient surface rights to support mining operations, including areas for potential waste disposal, tailings storage, heap leach pads and potential mill sites. The Company recently located additional mining claims and is pursuing the acquisition of other lands in the area. Most claim blocks are contiguous, and the water rights that Barrick held through Bullfrog Mines were indirectly acquired by Augusta Gold as part of its acquisition of Bullfrog Mines.
The towns of Beatty, Pahrump and Tonopah in Nye County have populations that support mining operations in the area.
Valley Electric Association based in Pahrump, Nevada owns a 138 KV transmission line and a 24.9 KV distribution line that remain on-site and serviced mining at the site previously. The substation connected to the 24.9 KV line remains on-site, but the transformers and switchgear have been removed. Current monthly demand and energy rates are $4.00/kw and $0.096/kw-h, respectively.
Pumping from relatively shallow wells completed near the bottom of the Bullfrog pit is required to access deeper mineralization and could produce most of the Project water needs. Water may also be available from Barrick’s production wells located a few miles south of Highway 374, possibly from the Town of Beatty wellfield in Section 2, and to a limited extent from deepening the M-S pit.
Geological Setting, Mineralization, and Deposit Type
The Bullfrog Gold Project is in the southern Walker Lane trend within brittle upper-plate volcanic host rocks that were severely broken from dominant detachment faulting and associated dip-slip and strike-slip displacements. Epithermal solutions permeated the broken host rocks in the Montgomery-Shoshone (M-S) and Bullfrog deposits precipitating micron-sized and relatively high-grade gold (Au) within major quartz-calcite veins and disseminated gold in associated stock-work veins. The veins contain gangue minerals other than quartz, such as calcite and manganese oxides, the latter of which contributes associated silver (Ag) recoveries and gold. The district geology map is shown below.
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Figure 2: District Geology Map
The strike length of the Bullfrog mineralization is about 1,600 m, including the underground portion which accounts for about 600 m of the strike length. True widths mined in the underground, where the ore cutoff was 3.0 g/t Au, typically average 5-10 m and local zones may be as much as 15-20 m wide. The highest grades typically correlate with zones of black manganese-rich material, where much of the early manganiferous calcite has been leached out, rendering the vein a rubble zone of quartz, calcite, and wad. Veins continue up dip and down dip, but the gold grades and thicknesses diminish rapidly above and below these elevations.
As in the underground mine, the highest grades in the open pit were associated with veins and vein breccias along the MP fault and its immediate hanging wall. Higher ore grades also occurred in veins along the UP fault, but widths were generally narrow. Zones of quartz stockwork veins and breccia were developed between the MP and UP faults in intensely silicified and adularized wall rocks. The ore zone in the hanging wall of the MP fault, was termed the upper stockwork zone (Jorgensen et al., 1989). Many of the stockwork veins are subparallel in strike to the MP and UP faults, but dip more steeply. A zone of stockwork quartz veins also occurs in the footwall latite lavas (Tr1g) immediately beneath the MP fault, but here the ore zone is usually <10-15 m thick. This was termed
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the lower stockwork zone (Jorgensen et al., 1989). In this zone individual veins are often subparallel to the MP fault, and vein densities are typically in the range of 5-15%.
In most parts of the open pit, mineralized rock is truncated by the erosional surface and gravels. The ore zone thinned up-dip and only a modest amount of ore was probably lost to erosion. Below the open pit, ore grade values persist.
In the Bullfrog mineralization, the high-grade zones do not comprise obvious discrete plunging ore shoots. Instead high-grade ore zones are developed along the plane of the MP fault/vein, within 10-20° of the dip of the fault. The overall geometry of these zones is that of elongate lenses in the plane of the fault, with long dimensions that strike roughly north-south at a low angle of plunge. The highest gold grades roughly coincided with the oxidation-reduction boundary in the deposit and the pre-mining water table, and modest localized supergene enrichment of precious metals near this boundary is suggested.
The gold deposits of the southern Bullfrog Hills are contained in epithermal quartz-calcite veins and stockworks.
Historical Operations
In 1904 the Original Bullfrog and Montgomery-Shoshone mines were discovered by local prospectors. Prospecting activity was widespread over the Bullfrog Hills and encompassed a 200 square mile area but centered within a two-mile radius around the town of Rhyolite and included part of the Company’s property. The Montgomery-Shoshone mine reportedly produced about 67,000 ounces of gold averaging 0.47 gold opt prior to its closure in 1911. The District produced about 94,000 ounces of gold prior to 1911. Mines in the District were sporadically worked from 1911 through 1941, but the Company has no production records of such limited activities.
The Company’s Providence lode mining claim designated by the Surveyor General as Survey No. 2470 was located in October 1904, surveyed in April 1906, patented in May 1906 and recorded in Nye County Nevada in June 1908. The unpatented Lucky Queen claim is immediately east and adjacent to the Providence patent and is believed to have been located in the same time period but was not patented.
With the rise of precious metal prices in the early 1970's, the Bullfrog District again underwent intense prospecting and exploration activity for gold as well as uranium. Companies exploring the area included Texas Gas Exploration, Inc., Phillips Uranium, Tenneco /Copper Range, U.S. Borax, Western States Minerals, Rayrock, St. Joe American and successors Bond, Lac and Barrick Minerals, Noranda, Angst Mining Company, Placer Dome, Lac-Sunshine Mining Company Joint Venture, Homestake, and others. In addition to these major companies, several junior mining companies and individuals were involved as prospectors, promoters and owners. These scientific investigations yielded a new deposit model for the gold deposits that were mined by others in the Bullfrog District. The identification and understanding of the detachment fault system led to significant changes in exploration program techniques, focus, and success.
In 1982 St. Joe American, Inc. initiated drilling in the Montgomery-Shoshone mine area. By 1986, sixty holes had been drilled and a mineral inventory was defined. Subsequent drilling outlined a reported 2.9 million ounces of gold equivalent in the Bullfrog deposit. A series of corporate takeovers transferred ownership from St. Joe, to Bond Gold, to Lac Minerals and eventually to Barrick Minerals. Production started in 1989 and recovered approximately 200,000 ounces of gold annually from a conventional, 9,000 ton/day cyanidation mill mainly fed from open pit operations and later supplemented with underground production. Barrick discontinued production operations in 1999 and completed reclamation in 2003. Thereafter several groups continued exploration on a limited basis on some of the lands currently held by the Company, but no reserves were ever defined by these companies on those portions of the Company’s lands.
Exploration and Drilling
The Company’s exploration activities to date have focused on the following:
·Exploration drilling, data acquisition and geologic modeling;
·Acquiring, organizing, digitizing and vetting electronic and paper data bases obtained from Barrick mainly related to drill data, metallurgy and project infrastructure; and
·Maintaining and expanding the land holdings.
30
The project drilling includes 1,311 holes, for a total of 263,757 meters completed between 1983 and early 2021. The holes were drilled using both core and reverse circulation methods, as detailed in the drilling section of this report.
The following table summarizes project drilling by year:
Table 1: Project Drilling by Year
Year | Total Drilling | Coring | Reverse Circulation | |||
Holes | Meters | Holes | Meters | Holes | Meters | |
1983 | 6 | 975 | 6 | 975 | 0 | 0 |
1984 | 37 | 3,560 |
| 0 | 37 | 3,560 |
1985 | 3 | 303 |
| 0 | 3 | 303 |
1986 | 29 | 3,364 |
| 0 | 29 | 3,364 |
1987 | 163 | 29,479 | 3 | 732 | 163 | 28,747 |
1988 | 321 | 66,325 | 32 | 6,121 | 321 | 60,204 |
1989 | 71 | 12,285 |
| 0 | 71 | 12,285 |
1990 | 154 | 37,114 | 33 | 3,676 | 154 | 33,438 |
1991 | 79 | 22,954 | 42 | 3,627 | 79 | 19,327 |
1992 | 23 | 4,907 |
| 0 | 23 | 4,907 |
1993 | 9 | 387 |
| 0 | 9 | 387 |
1994 | 210 | 31,362 | 9 | 1,412 | 210 | 29,951 |
1995 | 99 | 22,370 | 3 | 248 | 99 | 22,122 |
1996 | 58 | 15,254 | 19 | 3,329 | 45 | 11,924 |
2020 | 26 | 4,405 | 1 | 502 | 25 | 3,903 |
2021 | 43 | 14,820 | 38 | 12,749 | 5 | 2,071 |
Total | 1,331 | 269,864 | 186 | 33,371 | 1,273 | 236,493 |
A total of 69 drill holes, 30 reverse circulation (RC) and 39 core holes have been drilled by Augusta from 2020-2021. The purpose of the drilling was to further define resources and the ultimate limits of the Bullfrog and Montgomery-Shoshone pits and gather data to support advanced geotechnical and metallurgical studies. The 2020 program also fulfilled a final work commitment for the Company to purchase a 100% interest in lands under lease from Barrick by mid-September 2020. Two holes were drilled at the Paradise Ridge target.
2020-2021 Drilling
Twenty-seven RC holes and twenty-two core holes were drilled by Augusta Gold in 2020 - early 2021 and were available for inclusion in the June resource model update. An additional three RC holes and seventeen core holes were drilled later in 2021 and were available for the end-of-year model update presented in this technical report. The purpose of this drilling program was to further define resources and ultimate limits of the Bullfrog and Montgomery-Shoshone pits. Two holes were drilled at the Paradise Ridge Target. Twenty new core and RC drillholes were completed in the 2021 additional drilling program.
Table 2: Location and Depth of 2020-2021 Drill Holes
Hole ID | Easting | Northing | Elevation | Azimuth | Dip | Total Depth |
BM-20-1 | 10,040 | 9,995 | 1,117 | 135 | -70 | 68.58 |
BM-20-2 | 9,979 | 9,967 | 1,120 | 100 | -57 | 89.92 |
BM-20-3 | 9,823 | 9,868 | 1,139 | 130 | -53 | 120.4 |
BH-20-4 | 9,450 | 8,910 | 1,143 | 90 | -60 | 190.49 |
BH-20-5 | 9,431 | 8,875 | 1,144 | 90 | -60 | 220.98 |
BH-20-6 | 9,409 | 8,839 | 1,138 | 90 | -60 | 227.08 |
BH-20-7 | 9,419 | 8,790 | 1,128 | 90 | -60 | 71.63 |
BH-20-7A | 9,416 | 8,787 | 1,128 | 90 | -65 | 71.63 |
BH-20-8 | 9,560 | 8,864 | 1,128 | 90 | -57 | 141.73 |
31
Hole ID | Easting | Northing | Elevation | Azimuth | Dip | Total Depth |
BH-20-9 | 9,491 | 8,764 | 1,119 | 90 | -80 | 193.55 |
BH-20-10 | 9,449 | 8,723 | 1,116 | 90 | -60 | 199.64 |
BH-20-11 | 9,530 | 8,764 | 1,127 | 90 | -60 | 199.64 |
BH-20-12 | 9,575 | 8,737 | 1,127 | 120 | -60 | 138.68 |
BH-20-13 | 9,580 | 8,613 | 1,110 | 285 | -70 | 169.16 |
BH-20-14 | 9,584 | 8,615 | 1,111 | 50 | -54 | 120.4 |
BH-20-15 | 9,552 | 8,703 | 1,117 | 0 | -90 | 163.07 |
BH-20-16 | 9,609 | 8,797 | 1,123 | 90 | -60 | 120.4 |
BH-20-17 | 9,656 | 8,768 | 1,122 | 90 | -60 | 114.3 |
BH-20-18 | 9,611 | 8,548 | 1,109 | 0 | -90 | 105.16 |
BH-20-19 | 9,682 | 8,494 | 1,104 | 90 | -60 | 105.16 |
BM-20-20 | 9,805 | 10,048 | 1,223 | 135 | -58 | 211.84 |
BM-20-21 | 9,952 | 10,103 | 1,226 | 155 | -60 | 217.93 |
BM-20-22 | 10,026 | 10,122 | 1,226 | 155 | -57 | 187.45 |
BP-20-23 | 11,560 | 8,102 | 1,110 | 65 | -60 | 187.45 |
BP-20-24 | 11,560 | 8,099 | 1,110 | 135 | -60 | 266.7 |
BFG20-MS01 | 9,858 | 10,072 | 1,223 | 114 | -55 | 502.01 |
BFG21-MS02 | 9,858 | 10,072 | 1,223 | 114 | -70 | 626.06 |
BFG21-MS03 | 9,783 | 9,851 | 1,143 | 115 | -80 | 245.67 |
BFG21-MS04 | 9,954 | 9,632 | 1,270 | 115 | -57 | 498.96 |
BFG21-MS05 | 10,139 | 10,142 | 1,226 | 114 | -60 | 648.61 |
BFG21-MS06 | 9,954 | 9,632 | 1,270 | 115 | -45 | 449.88 |
BFG21-MS07 | 10,139 | 10,142 | 1,226 | 114 | -85 | 558.09 |
BFG21-MS08 | 9,936 | 9,581 | 1,273 | 115 | -65 | 432.21 |
BFG21-MS09 | 9,792 | 9,644 | 1,247 | 115 | -45 | 392.28 |
BFG21-MS10 | 10,054 | 10,132 | 1,228 | 114 | -85 | 572.11 |
BFG21-MS11 | 9,792 | 9,644 | 1,247 | 115 | -65 | 161.24 |
BFG21-MS12 | 9,670 | 9,707 | 1,201 | 115 | -45 | 295.05 |
BFG21-MS13 | 9,714 | 9,927 | 1,205 | 114 | -45 | 350.22 |
BFG21-MS14 | 9,669 | 9,708 | 1,201 | 115 | -65 | 230.43 |
BFG21-MS15 | 9,738 | 9,558 | 1,266 | 115 | -45 | 258.47 |
BFG21-MS16 | 9,714 | 9,927 | 1,205 | 114 | -65 | 299.92 |
BFG21-MH17 | 9,670 | 8,496 | 1,104 | 90 | -45 | 204.83 |
BFG21-MS18 | 10,016 | 9,983 | 1,117 | 90 | -45 | 373.38 |
BFG21-MS19 | 9,816 | 10,017 | 1,214 | 114 | -70 | 365.15 |
BFG21-MS20 | 9,725 | 9,609 | 1,259 | 115 | -45 | 288.95 |
BFG21-MH21 | 9,608 | 8,555 | 1,110 | 90 | -65 | 346.86 |
BFG21-MS22 | 9,959 | 9,943 | 1,123 | 114 | -45 | 373.38 |
BFG21-MS23 | 9,948 | 10,099 | 1,219 | 155 | -70 | 360.58 |
BFG21-MS24 | 9,751 | 9,729 | 1,218 | 115 | -45 | 380.39 |
32
Table 3: Drilling Results from 2020-2021 Drilling Programs
Hole ID | Interval in meters | Au | Ag | Zone | ||
From | To | Length | g/t | g/t | ||
BM-20-1 | 0 | 41 | 41 | 0.42 | 2.26 | MS Vein Zone |
includes | 0 | 23 | 23 | 0.55 | 1.95 | MS Vein Zone |
| ||||||
BM-20-2 | 0 | 26 | 26 | 0.33 | 1.04 | MS Vein Zone |
includes | 0 | 20 | 20 | 0.37 | 1.15 | MS Vein Zone |
| ||||||
BM-20-3 | 49 | 59 | 11 | 0.26 | 0.33 | MS Vein Zone |
| ||||||
BH-20-4 | 76 | 81 | 5 | 0.35 | 1.54 | Mystery Hills |
BH-20-4 | 85 | 119 | 34 | 0.27 | 0.6 | Mystery Hills |
BH-20-4 | 157 | 184 | 27 | 0.32 | 0.93 | Mystery Hills |
| ||||||
BH-20-5 | 101 | 108 | 8 | 0.26 | 1.22 | Mystery Hills |
BH-20-5 | 117 | 168 | 50 | 0.24 | 0.49 | Mystery Hills |
BH-20-5 | 175 | 209 | 34 | 0.58 | 0.82 | Mystery Hills |
| ||||||
BH-20-6 | 90 | 200 | 110 | 0.41 | 0.61 | Mystery Hills |
includes | 120 | 146 | 26 | 0.91 | 0.91 | Mystery Hills |
| ||||||
BH-20-7 | 46 | 53 | 8 | 3.23 | 3.36 | Mystery Hills |
| ||||||
BH-20-8 | 35 | 40 | 5 | 1.13 | 0.21 | Mystery Hills |
BH-20-8 | 47 | 53 | 6 | 0.38 | 0.25 | Mystery Hills |
| ||||||
BH-20-9 | 23 | 29 | 6 | 0.53 | 0.91 | Mystery Hills |
BH-20-9 | 37 | 43 | 6 | 0.31 | 0.45 | Mystery Hills |
BH-20-9 | 46 | 53 | 8 | 0.31 | 0.33 | Mystery Hills |
BH-20-9 | 104 | 195 | 91 | 0.33 | 0.32 | Mystery Hills |
| ||||||
BH-20-10 | 41 | 55 | 14 | 2.42 | 2.19 | Mystery Hills |
includes | 41 | 47 | 6 | 4.89 | 4.14 | Mystery Hills |
BH-20-10 | 104 | 110 | 6 | 0.58 | 0.26 | Mystery Hills |
| ||||||
BH-20-11 | 27 | 40 | 12 | 0.3 | 0.2 | Mystery Hills |
BH-20-11 | 49 | 56 | 8 | 0.31 | 0.08 | Mystery Hills |
BH-20-11 | 67 | 91 | 24 | 0.35 | 0.18 | Mystery Hills |
BH-20-11 | 128 | 139 | 11 | 0.2 | 0.34 | Mystery Hills |
| ||||||
BH-20-12 | 32 | 52 | 20 | 0.35 | 0.33 | Mystery Hills |
BH-20-12 | 79 | 91 | 12 | 0.45 | 0.18 | Mystery Hills |
| ||||||
BH-20-13 | 0 | 21 | 21 | 0.24 | 0.28 | Mystery Hills |
BH-20-13 | 38 | 50 | 12 | 0.44 | 0.34 | Mystery Hills |
BH-20-13 | 94 | 140 | 46 | 0.3 | 0.2 | Mystery Hills |
| ||||||
BH-20-14 | 0 | 12 | 12 | 0.22 | 0.3 | Mystery Hills |
BH-20-14 | 23 | 29 | 6 | 0.3 | 0.21 | Mystery Hills |
BH-20-14 | 49 | 55 | 6 | 0.28 | 0.2 | Mystery Hills |
BH-20-14 | 67 | 79 | 12 | 0.44 | 0.47 | Mystery Hills |
BH-20-14 | 84 | 93 | 9 | 0.4 | 0.16 | Mystery Hills |
BH-20-14 | 116 | 122 | 6 | 0.24 | 0.46 | Mystery Hills |
| ||||||
33
Hole ID | Interval in meters | Au | Ag | Zone | ||
From | To | Length | g/t | g/t | ||
BH-20-14 | 0 | 12 | 12 | 0.22 | 0.3 | Mystery Hills |
BH-20-14 | 23 | 29 | 6 | 0.3 | 0.21 | Mystery Hills |
BH-20-14 | 49 | 55 | 6 | 0.28 | 0.2 | Mystery Hills |
BH-20-14 | 67 | 79 | 12 | 0.44 | 0.47 | Mystery Hills |
BH-20-14 | 84 | 93 | 9 | 0.4 | 0.16 | Mystery Hills |
BH-20-14 | 116 | 122 | 6 | 0.24 | 0.46 | Mystery Hills |
| ||||||
BH-20-15 | 11 | 40 | 29 | 0.29 | 0.26 | Mystery Hills |
BH-20-15 | 96 | 111 | 15 | 0.26 | 0.19 | Mystery Hills |
BH-20-15 | 120 | 165 | 44 | 0.31 | 0.39 | Mystery Hills |
| ||||||
BH-20-18 | 5 | 11 | 6 | 0.23 | 0.21 | Mystery Hills |
BH-20-18 | 40 | 69 | 29 | 0.22 | 0.16 | Mystery Hills |
BH-20-18 | 75 | 96 | 21 | 0.24 | 0 | Mystery Hills |
| ||||||
BH-20-19 | 0 | 35 | 35 | 0.44 | 0.3 | Mystery Hills |
includes | 2 | 17 | 15 | 0.64 | 0.31 | Mystery Hills |
BH-20-19 | 43 | 59 | 17 | 0.27 | 0.25 | Mystery Hills |
BH-20-19 | 70 | 78 | 8 | 0.21 | 0.09 | Mystery Hills |
| ||||||
BM-20-20 | 171 | 184 | 12 | 0.3 | 0.76 | MS Vein Zone |
| ||||||
BFG20-MS01 | 114.77 | 154.35 | 39.58 | 0.34 | 2.82 | MS Vein Zone |
BFG20-MS01 | 246.21 | 259.37 | 13.16 | 1.30 | 2.79 | MS Vein Zone |
BFG20-MS01 | 275.23 | 284.77 | 9.54 | 0.89 | 5.60 | MS Vein Zone |
| ||||||
BFG21-MS02 | 125.56 | 166.62 | 41.06 | 0.35 | 1.39 | MS Vein Zone |
BFG21-MS02 | 229.73 | 254.04 | 24.31 | 0.31 | 0.23 | MS Vein Zone |
BFG21-MS02 | 298.31 | 310.53 | 12.22 | 0.22 | 0.55 | MS Vein Zone |
| ||||||
BFG21-MS03 | 105.19 | 115.39 | 10.20 | 0.49 | 0.37 | Polaris Vein |
| ||||||
BFG21-MS04 | 121.15 | 122.67 | 1.52 | 0.60 | 0.50 | Other |
| ||||||
BFG21-MS05 | 99.95 | 102.99 | 3.04 | 0.39 | 0.35 | MS Vein Zone |
| ||||||
BFG21-MS06 | NSV | Other | ||||
| ||||||
BFG21-MS07 | 149.96 | 151.49 | 1.53 | 0.29 | 1.50 | MS Vein Zone |
BFG21-MS07 | 175.87 | 177.32 | 1.45 | 0.35 | 0.10 | MS Vein Zone |
| ||||||
BFG21-MS08 | NSV | Other | ||||
| ||||||
BFG21-MS09 | 81.82 | 109.12 | 27.30 | 0.42 | 5.03 | Polaris Vein |
including | 93.88 | 98.50 | 4.62 | 1.10 | 13.22 | Polaris Vein |
BFG21-MS09 | 133.50 | 141.07 | 7.57 | 0.19 | 0.94 | Polaris Vein |
BFG21-MS09 | 163.98 | 168.16 | 4.18 | 0.27 | 0.10 | Polaris Vein |
BFG21-MS09 | 179.70 | 185.32 | 5.62 | 0.39 | 0.27 | Polaris Vein |
| ||||||
34
Hole ID | Interval in meters | Au | Ag | Zone | ||
From | To | Length | g/t | g/t | ||
BFG21-MS10 | 203.00 | 229.21 | 26.21 | 0.52 | 3.29 | MS Vein Zone |
including | 216.52 | 219.50 | 2.98 | 1.38 | 5.34 | MS Vein Zone |
and including | 224.00 | 229.21 | 5.21 | 0.90 | 8.66 | MS Vein Zone |
| ||||||
BFG21-MS11 | 79.75 | 84.31 | 4.56 | 0.23 | 0.33 | Polaris Vein |
BFG21-MS11 | 99.30 | 160.00 | 60.70 | 0.35 | 2.12 | Polaris Vein |
| ||||||
BFG21-MS12 | 170.08 | 184.52 | 14.44 | 0.26 | 0.44 | Polaris Vein |
| ||||||
BFG21-MS13 | 105.45 | 116.33 | 10.88 | 0.39 | 0.55 | MS Vein Zone |
including | 105.94 | 108.20 | 2.26 | 0.91 | 0.75 | MS Vein Zone |
BFG21-MS13 | 179.22 | 211.75 | 32.53 | 0.88 | 1.58 | Polaris Vein |
including | 183.79 | 192.40 | 8.61 | 2.32 | 4.61 | Polaris Vein |
| ||||||
BFG21-MS14 | 179.30 | 189.89 | 10.59 | 0.17 | 0.11 | Polaris Vein |
| ||||||
BFG21-MS15 | 135.33 | 138.38 | 3.05 | 0.32 | 5.38 | Polaris Vein |
BFG21-MS15 | 153.62 | 161.22 | 7.60 | 0.52 | 0.72 | Polaris Vein |
| ||||||
BFG21-MS16 | 178.00 | 205.18 | 27.18 | 0.26 | 0.32 | MS Vein Zone |
| ||||||
BFG21-MH17 | 0.00 | 36.88 | 36.88 | 0.27 | 0.12 | Mystery Hills |
BFG21-MH17 | 47.55 | 99.61 | 52.06 | 0.19 | 0.25 | Mystery Hills |
| ||||||
BFG21-MS18 | 0.00 | 51.82 | 51.82 | 0.33 | 2.02 | MS Vein Zone |
including | 0.00 | 4.57 | 4.57 | 0.73 | 3.29 | MS Vein Zone |
| ||||||
BFG21-MS19 | 145.00 | 157.80 | 12.80 | 0.48 | 1.08 | MS Vein Zone |
BFG21-MS19 | 188.06 | 205.44 | 17.38 | 0.33 | 0.56 | MS Vein Zone |
BFG21-MS19 | 211.56 | 217.68 | 6.12 | 0.41 | 0.15 | MS Vein Zone |
| ||||||
BFG21-MS20 | 151.18 | 197.51 | 46.33 | 0.42 | 0.98 | Polaris Vein |
including | 159.71 | 163.07 | 3.36 | 1.58 | 4.39 | Polaris Vein |
| ||||||
BFG21-MH21 | 7.46 | 10.05 | 2.59 | 0.20 | 0.10 | Mystery Hills |
BFG21-MH21 | 54.25 | 62.00 | 7.75 | 0.22 | 0.10 | Mystery Hills |
BFG21-MH21 | 73.76 | 76.81 | 3.05 | 0.19 | 0.10 | Mystery Hills |
BFG21-MH21 | 95.11 | 101.96 | 6.85 | 0.35 | 0.25 | Mystery Hills |
BFG21-MH21 | 128.38 | 131.20 | 2.82 | 0.24 | 0.30 | Mystery Hills |
| ||||||
BFG21-MS22 | 15.24 | 16.76 | 1.52 | 0.45 | 0.30 | MS Vein Zone |
BFG21-MS22 | 94.49 | 96.01 | 1.52 | 0.23 | 0.50 | MS Vein Zone |
| ||||||
BFG21-MS23 | 93.68 | 163.98 | 70.30 | 0.32 | 4.12 | MS Vein Zone |
including | 94.94 | 106.07 | 11.13 | 0.63 | 16.04 | MS Vein Zone |
BFG21-MS23 | 229.10 | 238.05 | 8.95 | 0.75 | 2.36 | MS Vein Zone |
BFG21-MS23 | 257.27 | 298.65 | 41.38 | 0.36 | 0.51 | MS Vein Zone |
including | 276.75 | 286.54 | 9.79 | 0.89 | 0.91 | MS Vein Zone |
BFG21-MS23 | 325.87 | 331.96 | 6.09 | 0.27 | 0.17 | MS Vein Zone |
| ||||||
BFG21-MS24 | 123.58 | 157.08 | 33.50 | 0.34 | 1.63 | Polaris Vein |
including | 144.86 | 147.90 | 3.04 | 0.82 | 2.25 | Polaris Vein |
BFG21-MS24 | 166.13 | 173.73 | 7.60 | 0.23 | 1.24 | Polaris Vein |
BFG21-MS24 | 191.00 | 195.22 | 4.22 | 0.27 | 0.61 | Polaris Vein |
35
Table 4: Location and Depth of 2021 Additional Drill Holes
Hole ID | Easting | Northing | Elevation | Azimuth | Dip | Total Depth |
BFG21-MH25 | 9,438 | 8,908 | 1,142 | 90 | -70 | 419.1 |
*BFG21-IS26 | 11,782 | 12,882 | 1,189 | 90 | -45 | 470.9 |
BFG21-MS27 | 9,947 | 10,101 | 1,224 | 155 | -60 | 380.4 |
BFG21-MH28 | 9,437 | 8,908 | 1,142 | 90 | -85 | 353.3 |
BFG21-MS29 | 9,836 | 9,695 | 1,237 | 117 | -50 | 258.5 |
BFG21-IS30 | 10,667 | 12,927 | 1,219 | 45 | -45 | 639.2 |
BFG21-MH31 | 9,411 | 8,786 | 1,127 | 90 | -45 | 358.8 |
*BFG21-IS32 | 11,391 | 13,286 | 1,211 | 90 | -45 | 449.6 |
*BFG21-IS33 | 11,641 | 14,190 | 1,304 | 115 | -45 | 403.9 |
BFG21-MH34 | 9,411 | 8,786 | 1,127 | 90 | -65 | 394.7 |
BFG21-MS35 | 10,012 | 9,985 | 1,116 | 90 | -45 | 179.2 |
BFG21-MS36 | 9,868 | 9,718 | 1,231 | 115 | -45 | 224.9 |
BFG21-MH37 | 9,411 | 8,786 | 1,127 | 90 | -85 | 346.6 |
BFG21-IS38 | 10,666 | 12,926 | 1,219 | 45 | -70 | 328.6 |
BFG21-IS39 | 10,668 | 12,930 | 1,219 | 90 | -45 | 403.9 |
BFG21-MS40 | 9,847 | 9,550 | 1,267 | 115 | -45 | 180.8 |
BFG21-BF41 | 9,063 | 8,728 | 1,135 | 90 | -45 | 343.1 |
BFG21-BF42 | 9,071 | 8,788 | 1,135 | 90 | -50 | 349.5 |
BFG21-BF45 | 9,072 | 8,788 | 1,135 | 90 | -75 | 505.4 |
BFG21-BF44 | 9,065 | 8,728 | 1,135 | 90 | -75 | 999.0 |
BFG21-MH25 | 9,438 | 8,908 | 1,142 | 90 | -70 | 419.1 |
Table 5: Drilling Results from 2021 Additional Drilling Program
Hole ID | Interval in meters | Au | Ag | Zone | ||
From | To | Length | g/t | g/t | ||
BFG21-MH25 | 80.40 | 175.20 | 94.80 | 0.27 | 0.44 | BF Vein |
BFG21-MH25 | 236.17 | 242.25 | 6.08 | 0.61 | 2.42 | Mystery Hills |
| ||||||
BFG21-IS26 | 138.68 | 146.30 | 7.62 | 0.36 | 0.84 | Indian Springs |
| ||||||
BFG21-MS27 | 90.19 | 143.71 | 53.52 | 0.97 | 8.24 | MS Vein Zone |
includes | 139.15 | 143.71 | 4.56 | 7.02 | 39.70 | MS Vein Zone |
BFG21-MS27 | 224.60 | 235.24 | 10.64 | 1.39 | 1.31 | MS Vein Zone |
| ||||||
BFG21-MH28 | 92.24 | 114.00 | 21.76 | 1.04 | 1.00 | BF Vein |
includes | 93.73 | 96.72 | 2.99 | 5.73 | 5.86 | BF Vein |
BFG21-MH28 | 217.62 | 223.72 | 6.10 | 0.34 | 0.10 | Mystery Hills |
BFG21-MH28 | 241.30 | 249.85 | 8.55 | 0.31 | 0.10 | Mystery Hills |
| ||||||
BFG21-MS29 | 61.86 | 80.16 | 18.30 | 0.60 | 5.48 | Polaris Vein |
includes | 70.40 | 74.98 | 4.58 | 1.43 | 8.02 | Polaris Vein |
BFG21-MS29 | 85.95 | 87.78 | 1.83 | 0.72 | 5.50 | Polaris Vein |
BFG21-MS29 | 123.00 | 124.21 | 1.21 | 0.85 | 3.50 | Polaris Vein |
| ||||||
BFG21-IS30 | 274.89 | 276.45 | 1.56 | 0.83 | 0.30 | Indian Springs - Main Gap |
| ||||||
BFG21-MH31 | 75.44 | 87.22 | 11.78 | 1.62 | 3.38 | BF Vein |
BFG21-MH31 | 125.54 | 197.55 | 72.01 | 0.24 | 0.13 | Mystery Hills |
BFG21-MH31 | 203.04 | 207.70 | 4.66 | 0.26 | 0.10 | Mystery Hills |
BFG21-MH31 | 223.42 | 233.69 | 10.27 | 0.23 | 0.15 | Mystery Hills |
BFG21-MH31 | 256.66 | 278.09 | 21.43 | 0.22 | 0.10 | Mystery Hills |
| ||||||
36
Hole ID | Interval in meters | Au | Ag | Zone | ||
From | To | Length | g/t | g/t | ||
BFG21-IS30 | NSV |
|
|
|
| Indian Springs South |
BFG21-IS33 | NSV |
|
|
|
| Indian Springs South |
| ||||||
BFG21-MH34 | 77.88 | 221.00 | 143.12 | 0.32 | 0.57 | Mystery Hills |
| ||||||
BFG21-MS35 | 1.83 | 54.50 | 52.67 | 0.39 | 1.60 | MS Vein Zone |
includes | 3.30 | 7.92 | 4.62 | 1.13 | 3.30 | MS Vein Zone |
| ||||||
BFG21-MS36 | 64.61 | 80.97 | 16.36 | 0.34 | 3.27 | Polaris Vein |
BFG21-MS36 | 112.60 | 115.09 | 2.49 | 0.21 | 0.15 | Polaris Vein |
BFG21-MH37 | ||||||
BFG21-MH37 | 85.04 | 134.72 | 49.68 | 0.57 | 6.65 | BF Vein |
includes | 92.35 | 100.42 | 8.07 | 2.54 | 5.25 | BF Vein |
BFG21-MH37 | 147.55 | 178.19 | 30.64 | 0.20 | 0.11 | Mystery Hills |
BFG21-MH37 | 205.44 | 221.74 | 16.30 | 0.32 | 0.17 | Mystery Hills |
| ||||||
BFG21-IS38 | NSV |
|
|
|
| Indian Springs - Main Gap |
| ||||||
BFG21-IS39 | 250.50 | 251.52 | 1.02 | 1.74 | 0.50 | Indian Springs - Main Gap |
| ||||||
BFG21-MS40 | NSV |
|
|
|
| Other |
| ||||||
BFG21-BF41 | 177.76 | 182.60 | 4.84 | 0.39 | 1.44 | BF Hanging Wall |
BFG21-BF41 | 296.53 | 324.78 | 28.25 | 0.25 | 2.99 | BF Hanging Wall |
BFG21-BF41 | 329.79 | 339.55 | 9.76 | 0.59 | 2.80 | BF Vein |
includes | 329.79 | 332.72 | 2.93 | 1.29 | 2.70 | BF Vein |
| ||||||
BFG21-BF42 | 129.13 | 140.40 | 11.27 | 0.82 | 17.38 | BF Hanging Wall |
BFG21-BF42 | 163.21 | 176.17 | 12.96 | 0.21 | 0.23 | BF Hanging Wall |
BFG21-BF42 | 232.56 | 329.78 | 97.22 | 0.41 | 2.45 | BF Hanging Wall |
BFG21-BF42 | 335.00 | 340.77 | 5.77 | 13.55 | 33.17 | BF Vein |
BFG21-BF42 | 346.25 | 349.45 | 3.20 | 0.50 | 5.39 | BF Foot Wall |
| ||||||
BFG21-BF44 | 213.97 | 217.21 | 3.24 | 0.49 | 1.26 | BF Hanging Wall |
BFG21-BF44 | 274.93 | 282.30 | 7.37 | 0.20 | 0.78 | BF Hanging Wall |
BFG21-BF44 | 290.96 | 313.42 | 22.46 | 0.26 | 1.32 | BF Hanging Wall |
BFG21-BF44 | 325.67 | 338.94 | 13.27 | 0.26 | 0.79 | BF Hanging Wall |
BFG21-BF44 | 344.13 | 353.40 | 9.27 | 0.27 | 0.70 | BF Hanging Wall |
BFG21-BF44 | 357.17 | 371.25 | 14.08 | 0.29 | 0.94 | BF Hanging Wall |
BFG21-BF44 | 371.25 | 376.28 | 5.03 | 2.11 | 5.07 | BF Vein |
BFG21-BF44 | 376.28 | 390.29 | 14.01 | 0.26 | 0.67 | BF Foot Wall |
| ||||||
BFG21-BF45 | 137.92 | 144.00 | 6.08 | 0.37 | 8.72 | BF Hanging Wall |
BFG21-BF45 | 160.93 | 177.82 | 16.89 | 0.33 | 0.36 | BF Hanging Wall |
BFG21-BF45 | 303.06 | 308.90 | 5.84 | 0.24 | 0.56 | BF Hanging Wall |
BFG21-BF45 | 325.22 | 335.98 | 10.76 | 0.64 | 0.96 | BF Hanging Wall |
BFG21-BF45 | 340.77 | 369.57 | 28.80 | 0.53 | 1.96 | BF Hanging Wall |
includes | 350.58 | 353.66 | 3.08 | 1.47 | 1.70 | BF Hanging Wall |
BFG21-BF45 | 375.80 | 382.57 | 6.77 | 1.54 | 4.55 | BF Vein |
For a more detailed discussion of the exploration history on the Bullfrog Gold Project see Section 7 “Exploration” in the Technical Report.
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Sampling, Analysis and Data Verification
Historic
Drilling and coring information used in this mineralization estimate was obtained from several drill programs that began in 1983 with St. Joe Minerals, continued with Bond Gold and Lac Minerals, and ended by Barrick in late 1996. Of 1,262 total holes drilled in the area, 147 holes included core and 1,243 holes were drilled using reverse circulation methods. Most of the cored holes included intervals of core plus RC segments. Percent recovery and RQD measurements were made on all core intervals. An assessment was made of the quality of the orientation data and the core was marked accordingly. The core was then logged, recording lithological, alteration, mineralization, and structural information including the orientation of faults, fault lineation’s, fractures, veins, and bedding. With few exceptions, the entire lengths of the holes were sampled. Sample intervals were 5 feet and occasionally based on the geological logging, separating different lithologies and styles of mineralization and alteration. Samples were marked and tagged in the core box before being photographed, after which the core was sawed in half, with one half sent for assay and one half retained for future reference. Each sample interval was bagged separately and shipped to the lab for analysis.
Cuttings from nearly all reverse circulation drill programs were divided into two streams, one was sampled and the other was disposed during the reclamation of each drill site. Using a Jones splitter, the sample stream was further divided into two sample bags, one designated for assaying and the second duplicate designated as a field reject. Samples were collected at five-foot intervals and bagged at the drill site. Each five-foot sample was sealed at the drill site and not opened until it reached the analytical lab. At each 20-foot rod connection, the hole was blown clean to eliminate material that had fallen into the hole during the connection. The designated assay samples for each five-foot interval were collected by the site geologist and moved to a secure sample collection area for shipment to accredited laboratories off site. When duplicate samples were collected, they were retained at the drill site as a reference sample, if needed. If the duplicate samples were not used, they were blended with site materials during site reclamation.
The sampling QA/QC program was originally established by St. Joe Minerals. Subsequent owners followed the procedures with any necessary updates to meet quality assurance standards of the time. The standard practices included the supervision of drilling, logging of core, as well as in-stream sample submittal for blanks, certified standards, and duplicate testing to ensure laboratory performance. All assay testing was completed by outside laboratories, such as Skyline, Legend, Iron King, Barringer, American Assay, and Chemex. Assay certificates are available and have been electronically scanned to complete the project drilling database.
Sampling, Analysis and QA/QC for Recent Drilling
We commenced exploration on the Bullfrog Gold Project in 2020, continuing through the second quarter of 2021. Work performed consisted of oriented diamond core drilling, conventional Reverse Circulation (RC) drilling and reconnaissance mapping and surface sampling for drill target generation. A digital, Access based database (GeoSpark) has been maintained by Augusta Gold, including all assays from drill samples and geochemical analysis from surface rock chip samples, completed on the project.
2020
To ensure reliable sample results, we have a QA/QC program in place that monitors the chain-of-custody of samples and includes the insertion of blanks and certified reference materials (CRMs). Barren coarse-grained blanks were inserted at lithology changes. Three CRMs with variations in gold grade were inserted at the end of each batch by random selection. All testing for the 2020 program was done by American Assay Laboratories (AAL), an independent ISO/IEC 17025 certified laboratory in Sparks, Nevada.
2021
Oriented diamond core drilling (HQ3) was performed using two track-mounted LF-90 drills and one truck mounted LF-90 drill. Core orientation was collected using Reflex ACTIII tooling, overseen by staff geologists and verified by a third-party contractor. All drill core was logged, photographed, split and sampled on-site.
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Conventional Reverse Circulation drilling was performed using a single Atlas Copco RD 10+, with a hole diameter of 6.75 inches. All RC samples were logged and sampled on-site. Samples were air dried, sealed in bulk bags on-site. Additionally, surface rock chip samples were collected during field reconnaissance. These samples were collected, described, and geolocated in the field before being sealed in rice bags for transport. All samples were stored in sealed bulk bags and transported weekly to Paragon Geochemical in Reno, Nevada, USA. Paragon is independent of the Company and is ISO 9001 compliant.
All surface rock chip samples collected were described in the field and located using hand-held global positioning system (GPS) methods. Sample descriptions were completed either in field notebooks or using a tablet computer. Hard copy notes were digitized for archive, and field notebooks were retained. All sample descriptions were compiled into a master Excel spreadsheet before being imported into the GeoSpark database maintained by Augusta Gold. Samples were bagged and stored in a secure building before being shipped to the lab.
Drill core was transported from the rig to the logging facility daily by staff geologists, where washing, logging, photographing, and sampling were completed. Logging data was recorded directly into the GeoSpark database on laptop computers. All core logs and digital core photos were backed up on Microsoft Teams.
Rock chip samples from RC drilling were transported from the rig to the logging facility daily by staff geologists, where they were air-dried and placed in sealed bulk bags for transport. A geologist was present at the drill rig during all drilling operations, where they oversaw sample collection, built chip trays with representative material, and logged chips on-site. Bulk reject bags were stacked out adjacent to the drill pad and were retained until lab results were received and checked.
Surface Rock Chip Sampling: Grab samples were collected from outcrop or rubble crop. These were spot samples taken from well-mineralized or altered rock. Float samples represent transported rock of uncertain origin. All rock samples were located in the field using GPS methods and field descriptions and notes were entered into a master digital database at the end of each field day.
Diamond Drill Core Processing: Drill core was transported by pickup truck from the drill site to the logging facility located eight miles north of Beatty, Nevada, proximal to the project area. Upon arrival at the core shack, core was laid out on outdoor quick-logging tables where it was washed, and RQD and recovery.
First, the quality of orientation marks and lines were checked, and any necessary corrections were made. Core was then marked up using china markers and permanent marking pens to identify important features for logging and recording in photographs. Oriented structural measurements were recorded using the Reflex IQ logger where possible, and manual protractor methods when rock quality precluded the use of the logging device. Sample tags were stapled inside the wax-impregnated cardboard core boxes at geologically determined intervals by the geologist, leaving every fifteenth sample tag available for either a blank or a standard.
Core was cut using Husqvarna masonry saws, and core techs were instructed to cut core along the orientation line. Split core was then placed back in the core boxes until it was sampled. During sampling, one half of the split core from each sample interval was placed in a cloth bag with the sample number written on it. A corresponding barcode sample tag was placed in each bag, and the bag was tied closed. Sample bags were then stacked in 1-ton super sacks, sealed, and stored in the core yard while waiting for shipment to the lab.
The remnant half core was retained in the core boxes, which were palletized and tarped for storage in the core yard at the logging facility. Significant intercepts and holes of interest were stored in locked shipping containers at the logging facility.
Reverse Circulation Chip-Sample Processing: Samples were collected from a rotary splitter mounted to the cyclone discharge on the drill rig. The rotary splitter was adjusted to provide a sample with a nominal weight of 15 lbs (6.8 kg). A small split was collected in a mesh screen for populating chip trays for geologic logging, and the remaining sample reject was bagged separately and stacked next to the drill pad to be retained until laboratory results had been received and quality checked. Chips collected in the screen were washed and put into chip trays, which were labelled with the corresponding interval footage. The chips were quick-logged at the drill rig by a geologist using a hand lens, and were then transported back to the logging facility at the end of each day for detailed logging under a binocular microscope.
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RC samples were collected in cloth bags with the sample number and footage interval written on them and a corresponding sample tag inside. As with diamond core samples, every fifteenth sample number was reserved for either a blank or a standard. Samples were transported to the logging facility by pickup truck each day, where they were stacked outside on metal trays for airdrying. Once deemed sufficiently dry, the sample bags were stacked in 1-ton super sacks, sealed, and stored in the core yard while waiting for shipment to the lab.
All samples collected during the 2020-2021 exploration program at the Bullfrog Project were stored at the logging facility until being transported directly to Paragon Geochemical in Reno, Nevada. A chain-of-custody form was signed by on-site staff at the time of sample pickup by the laboratory courier service.
Data Verification
The data for this mineral resource estimate comes from historical exploration and operations. The original laboratory certificates were available for most of the drilling. Data collected by previous operators has in part been verified by the corroborating data in the original laboratory certifications, as well as existing physical and digital records. Blind entry spot checks were run against the database and the laboratory certificates to ensure the quality of the database. No additional exploration drilling has been performed since the closure of the Bullfrog Mine, until the program carried out by Augusta in 2020. QA/QC protocols were followed and reviewed for the 2020 drilling program, including blanks, standards, and duplicates. Lab certificates were available for the 2020 drilling program.
A site visit was performed in by Patrick Garretson in June 2021 with the purpose of observing and reviewing the site infrastructure, exploration drilling program, core logging and sample preparation facilities. All three existing pits were observed from the highwall or from within the pit. Special attention was given to pit limit boundaries, pit highwall integrity, waste dump placement and pit backfill areas. Infrastructure in terms of roads, claim boundaries and previous site infrastructure were observed and cross-referenced with available property maps and diagrams. The geology of each area was discussed with the project geologists and important geologic features such as faults, veins and lithologic contacts were observed in the exposed pit walls or on surface outcrops.
The core storage, sample preparation area and logging facility were visited and site personnel were observed while performing these activities. The facilities have recently been built and the area was very clean and well organized. The core logging facility was well lit and core tables were constructed to allow personnel to log core in an ergonomic position. The core boxes and core within were properly marked for downhole measurements. Geologic data was being logged via laptop computers using a logging program (GeoSpark) with dropdown fields for the selection of geologic features. Sample preparation, bagging and labeling took place in a separate area to avoid cross-contamination. Samples were properly bagged, labeled and prepared for transport to the assay lab. A large whiteboard posted in the logging facility was used to track the progress of a drillhole from the time it was received at the facility to the time it was bagged and ready for transport. A procedure and process for measuring specific gravity via the wax and water immersion process was in place.
Core and chip trays from the pre-2020 drilling are no longer available.
During the later half of 2021, Augusta Gold Corp. staff conducted an in-depth review and update of legacy data in the Bullfrog drilling database. During the process, previously missing assay information was found on old assay certificates, was verified against drill logs, and added to the database. Additionally, assay grades were checked throughout the legacy data set and consistent conversions from imperial to metric grade units were updated where needed. During the process, it was discovered that some series of older drillholes had improper imperial-metric grade conversions and were subsequently updated, resulting in grade increases for the majority of affected drillholes.
In order to verify the updated database, Forte Dynamics requested and received assay certificate and logging data for approximately 10% of the relevant legacy drillholes in the economically important portions of the three gold deposits at Bullfrog. Although there were a few random, single assay discrepancies, most of the drillholes had all their assays match between the new database and assay certificates. Some of the drillholes checked were ones earlier identified with problematic imperial-metric grade conversions and those now show to match certificate grades and now have correct converted metric grades. Legacy drillholes with newly found assay data were also checked against scans of the assay certificates and they were shown to be correct in the new database. Some of the drillholes that were selected for verification had missing runs of assay data and it was verified from the logs and certificates that there were data gaps for those drillholes.
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Mineral Processing and Metallurgical Testing
Metallurgical testing programs that are relevant to the development plans of the project are summarized below.
In 1986 St. Joe American performed two large column tests on 20 t (22 short tons) composites of M-S samples and recovered 56% of the gold after 59 days of leaching material grading 0.034 opt and crushed to -19 mm (-3/4 inch). The other column recovered 49% of the gold after 59 days of leaching minus 304.8 mm (-12-inch) material grading 0.037 opt. Projected 90-day recoveries were 61% and 54% respectively.
Results from leach tests performed in 1994 by Kappes Cassiday of Reno, Nevada on 250 kg of sub-grade material from the Bullfrog mine are shown below:
Table 3: 1994 Leach Test Results
| Bottle | Column | Column |
Size, mesh, & mm (inch) | -100 mesh | -38 mm (-1.5”) | -9.5 mm (-3/8”) |
Calc. Head, opt Au | 0.029 | 0.035 | 0.029 |
Rec % | 96.6 | 71.4 | 75.9 |
Leach time, days | 2.0 | 41 | 41 |
NaCN, kg/t (lb/short ton) | 0.5 (0.1) | 0.385 (0.77) | 5.35 (10.7) |
Lime, kg/t (lb/short ton | 1.0 (2.0) | 0.155 (0.31) | 1.75 (0.35) |
In 1995 Barrick performed pilot heap leach tests on 765t (844 short tons) of BF subgrade material and 730 t (805 short tons) from the M-S pit. Both composites were crushed to 0.8 mm (-1/2 inch). Results are shown below.
Table 4: 1995 Pilot Heap Leach Test Results
| BF Low-Grade | M-S Ore |
Calc. Head, opt Au | 0.019 | 0.048 |
Calc. Head, opt Ag | 0.108 | 0.380 |
Projected Au Rec % | 67 | 74 |
Projected Ag Rec % | 9 | 32 |
Leach Time, days | 41 | 37 |
NaCN, kg/t (lb/short ton) | 0.10 (0.20) | 0.125 (0.25) |
Lime, kg/t (lb/short ton) | Nil (Nil) | Nil (Nil) |
In 2018 and 2019, standard column leach tests were performed on materials from the Bullfrog property by McClelland Laboratories, located in Reno, NV. The sample tested in 2018 was a composite sample created from a bulk sample representing “Brecciated Vein Ore Type”. The exact location (or locations) of the sample is not known, and it is unclear whether these samples can be considered representative of the entire deposit. The results of the 2018 program are summarized in Table 5 below.
Table 5: Column Leach Test Results (2018)
Feed Size | Crush Method | Test | Time | Au Recovery, % |
9.5mm (3/8”) | Conventional | Column | 60 days | 58 |
9.5mm (3/8”) | Conventional | Bottle Roll | 4 days | 59 |
1.7mm (10 mesh) | HPGR | Column | 60 days | 77 |
1.7mm (10 mesh) | HPGR | Bottle Roll | 4 days | 70 |
150µm | Conventional/Grind | Bottle Roll | 4 days | 89 |
The 2018 column leach test results suggest a crush size dependency where HPGR crushing (high pressure grinding rolls) may have the potential to significantly improve recovery. The lime requirement for protective alkalinity was low and cyanide consumption was moderate. The samples tested in 2019 were prepared from three (3) bulk samples.The exact location (or locations) of these samples is not known, and it is unclear whether these samples can be considered representative of the entire deposit. The results of the 2019 program are summarized in Table 6 below.
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Table 6: Column Leach Test Results (2019)
Sample | Feed Size | Crush Method | Test | Time | Au Rec., % |
Composite E | 9.5mm (3/8”) | Conventional | Column | 151 days | 75 |
Composite E | 6.3mm (1/4”) | HPGR | Column | 122 days | 77 |
Composite E | 1.7mm (10 mesh) | HPGR | Column | 102 days | 89 |
MS-M-1 | 9.5mm (3/8”) | Conventional | Column | 108 days | 66 |
MS-M-1 | 6.3mm (1/4”) | HPGR | Column | 108 days | 77 |
MS-M-1 | 1.7mm (10 mesh) | HPGR | Column | 89 days | 85 |
MH-M-2 | 9.5mm (3/8”) | Conventional | Column | 109 days | 83 |
MH-M-2 | 6.3mm (1/4”) | HPGR | Column | 105 days | 88 |
MH-M-2 | 1.7mm (10 mesh) | HPGR | Column | 86 days | 91 |
The 2019 column leach test results further highlight the size dependency on recovery and suggest that HPGR crushing may have the potential to significantly improve gold recovery. The cement required for agglomeration of the samples was adequate for maintaining protective alkalinity. The cyanide consumption was low. Based on these test programs, Bullfrog mineralization types appear amenable to heap leach recovery methods. Further testing is required to properly assess the benefit of HPGR crushing and better define the optimal particle size for heap leaching.
Conclusions for Heap Leaching
Based on the test work completed to-date that is applicable to the remaining mineralization in the BF and M-S pits, preliminary ultimate heap leach recoveries are projected as follows:
Table 7: Estimated Heap Leach Recovery
Leach Size | 80% - 9.5 mm (3/8 inch) | ROM Low Grade |
Estimated Recovery | 70% | 50% |
* Silver Recovery is estimated at 1.07 x gold recovered ounces, which is the typical recovery attained by Barrick.
All mineralization known to-date would be heap leached and the pregnant solutions would be processed through a carbon ADR plant to be constructed on site.
In 2020, cyanidation bottle rolls tests were conducted on 14 variability composites from the Bullfrog project.
Permitting
Baseline studies necessary to advance permitting are in progress. Refinement of the hydrologic model is expected to commence in Q2 2022. Augusta Gold expects to have all baseline surveys completed in Q12023 with an expected Mine Plan of Operations to follow shortly thereafter.
The following outlines the general framework for permitting a mine in Nevada and the required permits. Many of the permits discussed herein apply to the construction stage and are not currently being pursued.
Exploration activities on Federal mining claims on BLM lands requires a Notice of Intent (NOI) for exploration activities under five acres of disturbance and a Plan of Operations for larger scale exploration activities. A Plan of Operations is also required with the Nevada Department of Environmental Protection (NDEP) to fulfill the State of Nevada permitting obligations on private and public lands, respectively. Reclamation bonds related to environmental liabilities need to be calculated and posted to cover activities on the Project. Additional permits and bonding will be required for developing, constructing, operating, and reclaiming the Project.
Additional Baseline Studies will be required to update the historical studies completed by Barrick. This will include geochemistry, hydrologic studies of the in-pit water and water in existing wells, plant, wildlife and threatened and endangered species surveys, meteorological information, and cultural surveys:
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·Water Pollution Control Permits (WPCP): The WPCP application must address the open pit, heap leach pad, mining activities and water management systems with respect to potentially degrading of the waters of Nevada. Sufficient engineering, design and modeling data must be included in the WPCP. A Tentative Permit Closure Plan must be submitted to the NDEP-BMRR in conjunction with the WPCP. A Final Permanent Closure Plan will be needed two years prior to Project closure.
·Air Quality: An application for a Class II Air Quality Permit must be prepared using Bureau of Air Pollution Control (BAPC) forms. The application must include descriptions of the facilities, a detailed emission inventory, plot plans, process flow diagrams and a fugitive dust control plan for construction and operation of the Project. A Mercury Operating Permit and a Title V Operating permit will also be necessary for processing loaded carbon or electro-winning precipitates.
·Water Right: Additional water rights will need to be acquired from third parties or obtained from the Nevada Division of Water Resources (NDWR) for producing Project water.
·Industrial Artificial Pond: Water storage ponds, which are part of the water management systems, will require Industrial Artificial Pond permits (IAPP) from the Nevada Department of wildlife. Approval from the Nevada State Engineer’s Office is also required if embankments exceed specified heights.
Additional minor permits will be required for the project to advance to production and are listed in Table 8.
Table 8: Additional Minor Permits Required
Notification/Permit | Agency |
Mine Registry | Nevada Division of Minerals |
Mine Opening Notification | State Inspector of Mines |
Solid Waste Landfill | Nevada Bureau of Waste Management |
Hazardous Waste Management Permit | Nevada Bureau of Waste Management |
General Storm Water Permit | Nevada Bureau of Water Pollution Control |
Hazardous Materials Permit | State Fire Marshall |
Fire and Life Safety | State Fire Marshall |
Explosives Permit | Bureau of Alcohol, Tobacco, Firearms & Explosives |
Notification of Commencement of Operation | Mine Safety and Health Administration |
Radio License | Federal Communications Commission |
Public Water Supply Permit | NV Division of Environmental Protection |
MSHA Identification Number and MSHA Coordination | U.S. Department of Labor Mine Safety and Health Administration (MSHA) |
Septic Tank | NDEP-Bureau of Water Pollution Control |
Petroleum Contaminated Soils | NV Division of Environmental Protection |
2022 Project Exploration Plans and Budget
The Company’s focus in 2022 is de-risking the project through environmental and engineering studies that will form the foundation for the Company’s permit applications. The Company is in the process of preparing a budget for 2022 that takes into account the results of the Company’s updated mineral resource estimate announced on March 10, 2022.
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ITEM 3. 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, nor is our property the subject of any material legal proceedings. 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 4. MINE SAFETY DISCLOSURES
Pursuant to Section 1503(a) of 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 specified information about mine health and safety in their periodic reports. These reporting requirements are based on the safety and health requirements applicable to mines under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) which is administered by the U.S. Department of Labor’s Mine Safety and Health Administration (“MSHA”). During the fiscal year ended December 31, 2021, none of the Company’s or its subsidiaries’ properties or projects was subject to regulation by MSHA under the Mine Act and thus no disclosure is required under Section 1503(a) of the Dodd-Frank Act.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company’s common stock is quoted for trading on the OTCQB under the symbol “AUGG” and in traded on the Canadian Securities Exchange (or CSE) under the symbol “G”. Over-the-counter market quotations on the OTCQB reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
As at March 16, 2022, there were 70,519,188 Common Shares issued and outstanding, and the Company had approximately 95 shareholders of record. On March 16, 2022, the closing price of the shares of common stock as reported by the Toronto Stock Exchange was C$1.28 and as quoted on OTCQB was $1.00.
Dividend Policy
The Company has not paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future.
Unregistered Sales of Equity Securities
All unregistered sales of equity securities by the Company were previously reported on Form 8-K.
Recent Repurchases of Securities
None.
Securities Authorized for Issuance under Equity Compensation Plans
On September 30, 2011, the Company’s Board of Directors adopted the 2011 Equity Incentive Plan. The 2011 Equity Incentive Plan reserves 750,000 shares of common stock for grant to directors, officers, consultants, advisors or employees of the Company. There was a total of 750,000 options granted from the 2011 Plan in March 2015 (the “March 2015 Options”), with no outstanding options as of December 31, 2021.
On December 1, 2017, our Board of Directors adopted the 2017 Equity Incentive Plan. The 2017 Equity Incentive Plan reserves 2,300,000 shares of common stock for grant to directors, officers, consultants, advisors or employees of the Company. There was a total of 675,000 options granted from the 2017 Plan in December 2017 (the “December 2017 Options”), with 225,002 outstanding as of December 31, 2021.
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. The Company granted 5,825,000 options to officers, directors and employees of the Company in February 2021, with 4,575,000 outstanding as of December 31, 2021.
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The following table sets forth equity compensation plan information as of December 31, 2021.
