UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
| For
the fiscal year ended | ||
| OR | ||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the transition period from to
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(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:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
| Common Stock, $0.10 par value | GRMC | OTC Pink |
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o
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by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of
1934 (“Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o
Indicate
by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o | Accelerated filer o |
| Smaller reporting company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the Registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes o
As
of June 30, 2022, the aggregate market value of the voting and non-voting shares of common stock of the registrant issued and outstanding
on such date, excluding shares held by affiliates of the registrant as a group, was $
Number of shares of Common Stock outstanding as of July 5, 2023:
1
GOLDRICH
MINING COMPANY
FORM 10-K
December 31, 2022
TABLE OF CONTENTS
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include but are not limited to:
| ● | estimates of resources or reserves; |
| ● | our anticipated results and developments in future periods; |
| ● | statements regarding our exploration plans at our Chandalar property; |
| ● | statements regarding our plans to finance our operations; |
| ● | statements regarding future costs and expenditures; |
| ● | statements regarding our anticipated plan of operation; and |
| ● | other matters that may occur in the future. |
These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might”, “should” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:
| ● | risks related to our ability to continue as a going concern being in doubt; |
| ● | risks related to our history of losses; |
| ● | risks related to our outstanding gold forward sales contracts and notes; |
| ● | risks related to need to raise additional capital to fund our exploration and, if warranted, development and production programs; |
| ● | risks related to our property not having any proven or probable reserves; |
| ● | risk related to our limited history of commercial production; |
| ● | risk related to operating a mine; |
| ● | risk related to accurately forecasting, extraction and production; |
| ● | risks related to our dependence on a single property – the Chandalar property; |
| ● | risks related to climate and location restricting our exploration and, if warranted, development and production activities; |
| ● | risks related to our mineralization estimates being based on limited drilling data; |
| ● | risks related to our exploration activities not being commercially successful; |
| ● | risks related to actual capital costs, production or economic return being different than projected; |
| ● | risks related to mineral exploration; |
| ● | risks related to increased costs; |
| ● | risks related to a shortage of equipment and supplies; |
| ● | risk related to fluctuations in gold prices; |
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| ● | risks related to title to our properties being defective; |
| ● | risks related to title to our properties being subject to claims; |
| ● | risks related to estimates of resources or reserves; |
| ● | risks related to government regulation; |
| ● | risks related to environmental laws and regulation; |
| ● | risks related to land reclamation requirements; |
| ● | risks related to future legislation regarding mining laws; |
| ● | risks related to future legislation regarding climate change; |
| ● | risks related to our lack of insurance coverage for all risks; |
| ● | risks related to competition in the mining industry; |
| ● | risks related to our dependence on key personnel; |
| ● | risks related to our executive offices not dedicating 100% of their time to our company; |
| ● | risks related to potential conflicts of interest with our directors and executive officers; |
| ● | risks related to the deed of trust held by our secured debt holders; |
| ● | risks related to market conditions; |
| ● | risks related to our disclosure controls and procedures; and |
| ● | risks related to our shares of common stock. |
This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under “Item 1. Business,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Results of Operation” of this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.
We qualify all the forward-looking statements contained in this Annual Report by the foregoing cautionary statements.
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PART I
As used in herein, the terms “Goldrich,” the “Company,” “we,” “us,” and “our” refer to Goldrich Mining Company.
ITEM 1. BUSINESS
Overview and History
We are a minerals company in the business of acquiring and advancing mineral properties to the discovery point, where we believe maximum shareholder returns can be realized. Although we have conducted limited extraction of gold on one of our gold prospects, Goldrich is an exploration stage company as defined by the U.S. Securities and Exchange Commission (“SEC”) under Subpart 1300 of Regulation S-K under the Securities Exchange Act of 1934, as amended “Subpart 1300”), although over $50 million in revenue from gold has been extracted from its claims since 2015.
Incorporated in 1959, Goldrich Mining Company (OTC Pink trading symbol “GRMC”) has been a publicly traded company since October 9, 1970. Our executive office address is 2525 E. 29th Ave. Ste. 10B-160, Spokane, WA 99223, and our phone number is (509) 535-7367. Our website address is www.goldrichmining.com. Information contained on our website is not part of this annual report.
At this time, our major mineral exploration prospects are contained within our wholly-owned Chandalar property, located approximately 190 air miles north of Fairbanks, Alaska. The property is largely on land owned by the State of Alaska, which is one of the active and highly ranked mining jurisdictions in the world. Both patented federal mining claims and Alaska state mining claims provide exploration and mining rights to lode and placer mineral deposits. A more detailed description of our Chandalar property is set forth in “Item 2 – Properties” of this Annual Report.
The Chandalar property contains both our Chandalar hard-rock (lode) gold project, our primary target, and the Chandalar alluvial (placer) gold mine. The area has a long prospecting and mining history dating to the discovery of placer gold deposits in 1905, soon followed by the discovery of more than 30 separate high-grade lode gold mineralization prospects. Over the next 80 years the lode gold mineralization occurrences were intermittently explored or mined by various small operators, but because of the district’s remote location the readily mineable alluvial gold deposits received the most attention.
Although there is a history of past lode and alluvial extraction on our Chandalar property, it currently does not contain any known proven or probable ore reserves as defined in Subpart 1300 but, as detailed in Item 2. Properties below, it does contain alluvial resources of 119,000 ounces measured and indicated ounces and 16,000 indicated ounces of fine gold. The probability that ore reserves that meet SEC Subpart 1300 guidelines will be discovered on an individual hard rock prospect at Chandalar cannot be determined at this time. We commissioned an independent engineering firm to complete a mining plan and initial assessment for the Company’s Chandalar placer mine, completed in June 2021, according to the new amendments adopted by the SEC to modernize the property disclosure requirements for mining registrants as codified in Subpart 1300. The new disclosure requirements under Subpart 1300 replaced the SEC Industry Guide 7, and mining registrants on January 1, 2021. The new disclosure requirements under Subpart 1300 allow issuers to disclose inferred, indicated and measured resources as defined therein. The Company has yet to decide if a preliminary feasibility study should also be prepared for the Chandalar placer mine. A preliminary feasibility study allows an issuer to disclose any proven or probable mineral reserves on a mineral property.
The ownership and management of Goldrich changed in 2003. Beginning in 2004, we ended a twenty-year hiatus of hard-rock exploration on the property and began employing modern exploration techniques. Our focus is two-fold:
| (1) | Continue exploration of our Chandalar property where we have discovered and identified drilling targets for a potentially large bulk tonnage hard-rock intrusion-related gold deposit. |
| (2) | Continue gold extraction from the Chandalar placer gold deposit discovered on the property. |
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We have spent many millions of dollars in exploration and mining activities at our Chandalar property. Some of the highlights include (see details of highlights in the Properties section below):
2012: As described below in Joint Venture Agreement, we signed an agreement with NyacAU to form a joint venture, Goldrich NyacAU Placer, LLC (“GNP”) for the purpose of mining the alluvial gold deposits within the bounds of our Chandalar property.
2013: Achievements included GNP’s mobilization of drilling equipment and plant setup, approval of permits to expand mining operations, significant infrastructure improvements and extraction of 680 ounces of fine gold.
2014: We conducted a property-wide airborne radiometric and magnetic survey to generate and further refine exploration targets for bulk-tonnage low-grade mineralization and possible deeper sources of intrusion-related mineralization. We also completed advanced petrographic studies of drill core samples from the Chandalar gold property. The new data refined the orogenic model that has historically guided exploration at Chandalar and redirected our future exploration for intrusion-related mineralization.
2015: We completed reclamation of a mine waste road built in 2010 and received a confirmation of completion and satisfaction from the Army Corps of Engineers. GNP extracted approximately 3,600 ounces of fine gold.
2016: GNP extracted approximately 8,200 ounces of fine gold.
2017: We performed additional oxygen isotope studies to further confirm intrusion-related mineralization. In addition, GNP completed a sonic drill program and drilled 231 holes totaling 14,271 feet to further define the Chandalar placer deposit. GNP extracted approximately 12,300 ounces of fine gold.
2018: GNP extracted approximately 17,100 ounces of fine gold.
2019 – 2022: GNP was dissolved in 2019 due to its inability to reach commercial production, and no mining activities were undertaken from 2019 through 2022.
Although GNP extracted over 42,000 ounces of fine gold from 2013 to 2018, GNP failed to meet the minimum production requirements under the GNP Operating Agreement. Goldrich began arbitration proceedings against NyacAU and certain NyacAU related parties in 2017 (see Joint Venture Agreement and Arbitration below). GNP was dissolved in June 2019. Except for equipment needed for reclamation, most of the heavy equipment and the wash plant were removed in March through mid-April 2019. There was no gold extracted in the years 2019 through 2022. NyacAU is the operator of the mine permits and began reclamation of the mine in 2019, which is still ongoing.
Goldrich hired an independent mining engineering firm in 2019 to formulate a mine plan and complete an initial assessment under Subpart 1300 to determine if Goldrich should pursue production at the placer mine. The mine plan and initial assessment were completed in June 2021 and supplemented as of December 31, 2022 for full disclosures required by Subpart 1300. Any plan to continue future mining is contingent upon our success in raising sufficient capital to fund these activities or any portion of them.
On March 31, 2023, we entered into a settlement agreement concerning the arbitration proceedings with NyacAU, our former joint venture partner, and its related parties, whereunder we remitted a total of $105,000 to NyacAU and those related entities in consideration of all claims by both parties to the arbitration and legal proceedings being dismissed and all claims withdrawn. Concurrent with that settlement agreement, we entered into an option agreement with NyacAU whereunder, at our option, we would become the operator of the mining permit and would assume the remaining reclamation responsibilities for the Chandalar Mine. The exercise of the option agreement must be done by April 30, 2024, and requires a payment of $1,000,000 to NyacAU for the equipment, facilities, supplies and any other assets remaining at the Chandalar Mine site, which remain in place for the continuing reclamation work being performed by NyacAU under the mining permit and reclamation plan previously approved by the Army Corps of Engineers.
Concerning hard-rock exploration, although we are pleased with the progress that has been made, weak financial markets and the Company’s illiquidity during the last several years have been an important factor affecting the level of our exploration activities. If the placer mine enters into commercial production (by Goldrich or a third-party operator), we look forward to potential internal cash flow and additional opportunities for financing that will give us a unique advantage for growth over other junior mining exploration companies; however, finances must be obtained before we can continue mining activities.
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We also intend to list our shares on a recognized stock exchange in Canada in addition to maintaining our quotation on the OTC Pink Market in the United States. We believe these factors will increase our access to financial markets and positively affect our ability to raise the funds necessary to add value to our property and increase shareholder value. Our main focus in the future will continue to be the exploration of the hard-rock targets of our Chandalar property as funds become available.
Competition
There is aggressive competition within the minerals industry to discover and acquire mineral properties considered to have commercial potential. We compete for the opportunity to participate in promising exploration projects with other entities. In addition, we compete with others in efforts to obtain financing to acquire and explore mineral properties, acquire and utilize mineral exploration equipment and hire qualified mineral exploration personnel.
We may compete with other junior mining companies for mining claims in regions adjacent to our existing claims, or in other parts of the world should we dedicate resources to doing so in the future. These companies may be better capitalized than us and we may have difficulty in expanding our holdings through additional mining claims.
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 mining periods, such as have been experienced during the increased price of gold in recent years.
Employees
In October 2009, William Schara began employment as our President and Chief Executive Officer (“CEO”). We rely on consulting contracts for some of our management and administrative personnel needs, including for our Chief Financial Officer (“CFO”), Mr. Ted Sharp. The contract for Mr. Sharp expired on December 31, 2009; however, Mr. Sharp continues to provide services to the Company under the terms of that contract. We employ individuals and contractors on a seasonal basis to conduct exploration, mining and other required company activities, mostly during the late spring through early fall months. We currently have 2 full-time employees; our CEO and Controller.
Seasons
We conduct exploration activities at Chandalar between late spring and early autumn. Access during that time is exclusively by airplane. All fuel is supplied to the campsite by air transport. Access during winter months is by ice road, snowmobile and ski-plane. All heavy supplies and equipment are brought in by trucking over the ice road from Coldfoot. Snow melt generally occurs toward the end of May, followed by an intensive, though short, 90-day growing season with 24 hours of daylight and daytime temperatures that range from 60° to 80° Fahrenheit. Freezing temperatures return in late August and freeze-up typically occurs by early October. Winter temperatures, particularly in the lower elevations, can drop to -50° F or colder for extended periods. Annual precipitation is 15 to 20 inches, coming mostly in late summer as rain and during the first half of the winter as snow. Winter snow accumulations are modest. The area is essentially an arctic desert.
Regulation
Our mineral exploration activities are subject to various federal, state, and local laws and regulations governing prospecting, exploration, production, labor standards, occupational health and mine safety, control of toxic substances, land use, water use, land claims of local people and other matters involving environmental protection and taxation. New rules and regulations may be enacted, or existing rules and regulations may be applied in a manner that could limit or curtail exploration at our property. It is possible that future changes in these rules or regulations could have a significant impact on our business, causing those activities to be economically re-evaluated at that time.
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Taxes Pertaining to Mining
Alaska’s tax and regulatory policy is widely viewed by the mining industry as offering the most favorable environment for establishing new mines in the United States. The mining taxation regimes in Alaska have been stable for many years. There is regular discussion of taxation issues in the legislatures but no changes have been proposed that would significantly alter their current state mining taxation structures. The economics of any potential mining operation on our properties would be particularly sensitive to changes in the State of Alaska’s tax regimes. Amendments to current laws, regulations and permits governing our operations and the general activities of mining and exploration companies, or more stringent implementation thereof, could cause unanticipated increases in our exploration expenses, capital expenditures or future production costs, or could result in abandonment or delays in establishing operations at our Chandalar property. Although management has no reason to believe that new mining taxation laws that could adversely impact our Chandalar property will materialize, such an event could and may happen in the future.
At present, Alaska has a 7% net profits mining license tax on all mineral production (AS 43.65), a 3% net profits royalty on minerals from state lands (AS 38.05.212) (where we hold unpatented state mining claims), and a graduated annual mining claim rental beginning at $1.03/acre. Alaska state corporate income tax is 9.4% if net profit is more than a set threshold amount. Alaska has an exploration incentive credit program (AS 27.30.010) whereby up to $20 million in approved accrued exploration credits can be deducted from the state mining license tax, the state corporate income tax, and the state mining royalty. All qualified new mining operations are exempt from the mining license tax for 3½ years after production begins.
Environmental Regulations
Our Chandalar property contains an inactive small mining mill site on Tobin Creek with tailings impoundments, last used in 1983. The mill was capable of processing 100 tons of ore per day. A total of 11,884 tons were put through the mill, and into two small adjacent tailings impoundments. A December 19, 1990 letter from the Alaska Department of Environmental Conservation (the “Alaska DEC”) to the Alaska Division of Mining of the Department of Natural Resources (the “Alaska DNR”) states: “Our samples indicate the tailings impoundments meet Alaska DEC standards requirements and are acceptable for abandonment and reclamation.” The Alaska DNR conveyed acknowledgement of receipt of this report to us in a letter dated December 24, 1990. We subsequently reclaimed the tailings impoundments and expect that no further remedial action will be required. Vegetation has established itself on the tailings impoundments, thereby mitigating erosional forces.
In
1990, the Alaska DEC notified us that soil samples taken from a gravel pad adjacent to our Tobin Creek mill site contained elevated levels
of mercury. In response to the notification, we engaged a professional mineral engineer to evaluate procedures for remediating contamination
at the site. In 1994, the engineer evaluated the contamination and determined that it consists of approximately 160 cubic yards of earthen
material that could be cleansed by processing it through a simple gravity washing plant. This plan was subsequently approved by the state.
In 2000, the site was listed in the Alaska DEC’s contaminated sites database as a “medium” priority contaminated site.
We Are not aware of any changes in state environmental laws that would affect our state approved cleanup plan or impose a timetable for
it to be done. During 2008, our employees took a suite of samples at the contamination site to update the readings taken in 1990 or prior.
The results of this sampling reconfirmed the earlier findings, and also suggest that some attenuation of the mercury contamination has
occurred. An independent technical consultant assessed those results and believes that proper procedures for sampling and testing were
followed. During 2011, 2013 and 2014, we took additional samples that showed an overall reduction of mercury in the previously sampled
area. However, one sample on the margin of the sampled area yielded high mercury content, and that may necessitate continued expansion
of the area to be sampled in the future. The 2011, 2013 and 2014 sample results were submitted to the State for analysis and determination
of what additional sampling the State may require on the area around the mill. In 2013, we received a letter request from the Alaska
DEC to update our plan for remediating the contaminated site and in 2014, 2015, and 2016 continued communication with the Alaska DEC
to determine what remediation is necessary. We have engaged an independent environmental engineering company to perform an evaluation
of the remediation requirements based on locality, latitude, altitude, permafrost and other factors. During 2017, the environmental engineering
company performed an eco-scoping study on the site. The Alaska DEC has notified us that further sampling will need to be performed in
and around the streambed from the mine site to the stream’s confluence into Chandalar Lake. At December 31, 2022, we have an accrued
liability of $100,000 in our financial statements for sampling and remediation costs.
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ITEM 1A. RISK FACTORS
The following sets forth certain risks and uncertainties that could have a material adverse effect on our business, financial condition and/or results of operations, and the trading price of our common stock which may decline and investors may lose all or part of their investment. These risk factors should be considered along with the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial also may impair our business operations. We cannot assure you that we will successfully address these risks or that other unknown risks exist that may affect our business.
Risks Related to Our Operations
Our ability to operate as a going concern is in doubt.
The audit opinion and notes that accompany our consolidated financial statements for the year ended December 31, 2022, disclose a ‘going concern’ qualification to our ability to continue in business. The accompanying consolidated financial statements have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and raising additional funds. During the year ended December 31, 2022, we raised $278,840 net cash from senior secured notes payable to third-party and related-party persons, as described elsewhere, $133,157 in warrant exercises, as described elsewhere, and $30,000 from private placements, as described elsewhere. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured.
We currently have no historical recurring source of revenue and our ability to continue as a going concern is dependent on our ability to raise capital to fund our future exploration and working capital requirements or our ability to profitably execute our business plan. Our plans for the long-term return to and continuation as a going concern include financing our future operations through sales of our common stock and/or debt and the eventual profitable exploitation of our mining properties. Additionally, the current capital markets and general economic conditions in the United States are significant obstacles to raising the required funds. These factors raise substantial doubt about our ability to continue as a going concern.
GNP was dissolved in 2019. We are seeking to raise sufficient capital to continue profitably operating the mine. The current plant has been disassembled and it, as well as most of the equipment used by GNP, has been demobilized from the mine site. While we are working to replace the dissolved GNP operations with commensurate gold extraction by us or a qualified third-party operator, we cannot assure you we will have sufficient capital to implement our plan of operation, that we will be successful in beginning gold extraction operations in the future, the timing for any such operations or that the extraction results in future years will be similar to past results.
The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.
We have a history of losses and expect to continue to incur losses in the future.
We have incurred losses since inception and expect to continue to incur losses in the future. We had net income of $50,163 in the year ended 2015, but we incurred net losses during each of the following more recent periods:
| ● | $1,055,630 for the year ended December 31, 2022; |
| ● | $1,759,159 for the year ended December 31, 2021; |
| ● | $2,169,540 for the year ended December 31, 2020; and |
| ● | $2,603,065 for the year ended December 31, 2019. |
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We had an accumulated deficit of approximately $40.48 million as of December 31, 2022. We expect to continue to incur losses unless and until such time as the Chandalar Mine or one of our properties enters into commercial production and generates sufficient revenues to fund continuing operations. We recognize that if we are unable to generate significant revenues 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.
We may be unable to timely pay our obligations under our outstanding note payable in gold or our secured senior secured notes, which may result in us losing some of our rights to gold from Chandalar alluvial extraction operations and may adversely affect our assets, results of operations and future prospects.
At December 31, 2022, a portion of the Company’s notes payable in gold outstanding, with a net liability of $483,514, obligate the Company to deliver 266.788 ounces of fine gold on demand. To date, the gold notes have not been paid and the note holders have not demanded payment or delivery of gold. These notes were secured against our right to future distributions of gold extracted from subsequent gold mining operations by GNP, the former joint venture. At December 31, 2022, we owed secured senior notes to related parties totaling $4,195,979 and outstanding notes payable to unrelated parties of $1,250,169, payable within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder. These notes are secured against all of the assets and property of each of Goldrich Mining Company and Goldrich Placer, LLC, whether real, personal or mixed, in which the holders of any Notes (or their Collateral Agent) hold a security interest at such time, including any property subject to liens or security interest granted by the Deed of Trust.
Under our gold forward sales contracts, each of the following constitutes an event of default: (a) our failure to perform or observe any term, covenant or agreement contained in the gold forward sales contract; (b) any warranty made by us in the gold forward sales contract shall prove to have been incorrect in a material respect when made; or (c) we shall declare bankruptcy. Upon the occurrence of an event of default, the holders of the gold forward sales contracts may designate a termination date for the contract and upon termination receive the delivery date index price (as determined in the gold forward sales contract) of any quantities of gold we were deficient in delivering payable in either (i) cash or (ii) an amount of our shares of common stock equal such value converted into shares at the greater of $0.15 per share or 75% of the current market price per share on the delivery date.
Under our senior secured notes, each of the following constitutes an event of default: (a) the Company fails to pay (i) any portion of the principal amount of any Note when due or (ii) any accrued and unpaid Interest when due and such failure continues for three (3) Business Days or (iii) any other amount that is due and payable under this Amended Agreement, any Note, or the Deed of Trust and such failure continues for ten (10) Business Days after demand for such payment is made by the Holder; (b) the Company fails to observe or perform any other obligation, covenant, or agreement applicable to the Company under this Amended Agreement as and when due and fails to cure such failure within 10 Business Days of notice of such failure by the holder to the Company; (c) the Company fails to observe or perform any covenant or agreement applicable under the Guaranty and fails to cure such failure within 10 Business Days of notice of such failure by the holder to the Company; (d) an insolvency or liquidation proceeding or assignment is commenced with respect to the Company or its subsidiary; or (e) any alleged creditor other than the holders seeks to collect any amount allegedly due and owing to said creditor at that time.
If we are unable to timely satisfy our obligations under the notes payable in gold or the secured senior notes, including timely payment of gold on demand or interest when due and payment of the principal amount on demand for the secured senior notes and we are not able to re-negotiate the terms of such agreements, the holders will have rights against us, including potentially seizing or selling our assets. The notes payable in gold are specifically secured against our right to future gold distributions from subsequent gold mining operations by GNP, the former joint venture. The senior secured notes are secured against all our assets. Any failure to timely meet our obligations under these instruments may adversely affect our assets, results of operations and future prospects or cause us to declare bankruptcy.
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We are required to raise additional capital to fund our exploration and, if warranted, development and production programs on the Chandalar property.
We are an exploration stage company and currently do not have sufficient capital to fully fund any long-term plan of operation at the Chandalar gold property. We will require additional financing in the future to fund exploration of and development and production on our properties, if warranted, to attain self-sufficient cash flows. We expect to obtain financing through various means including, but not limited to, private or public placement offerings of debt or our equity securities, the exercise of outstanding warrants, the sale of a production royalty, the sales of gold from future production, joint venture agreements with other mining companies, or a combination of the above. The level of additional financing required in the future will depend on the results of our exploration work and recommendations of our management and consultants. Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration or even a loss of some property interest. Additional capital or other types of financing may not be available if needed or, if available, may not be available on favorable terms or terms acceptable to us. Failure to raise such needed financing could result in us having to discontinue our mining and exploration business.
We have only a brief, recent history of gold extraction.
We have only a brief recent history of gold extraction from 2013-2018 and have carried on our business at a loss. As a result of dissolution of GNP, the current plant has been disassembled and it, as well as most of the equipment used by GNP, has been demobilized from the mine site. While we are working to replace the GNP operations with commensurate gold extraction by us or a qualified third-party operator, we cannot assure you that similar results will be accomplished in future years. At this time, due to the risks and uncertainties described in this section, we cannot assure you that extraction activities in the future will generate revenues, profits or cash flow to us.
Estimates of cash flows, extraction costs, profitability and other financial and extraction measurements are subject to the inherent risks related to accurately forecasting extraction.
Estimates of future extraction costs and potential extraction profitability are dependent on numerous factors, which could affect the success and profitability of extraction activities. These risks include volatile gold prices, engineering and construction errors, changes or shortages in equipment and labor availability and costs, variances in grade, natural disasters and other events outside our control. The occurrence of such events could make anticipated results differ from actual results and could negatively affect our financial position.
We depend largely on a single property - the Chandalar property.
Our major mineral property at this time is the Chandalar property. We are dependent upon making a gold deposit discovery at Chandalar for the furtherance of the Company at this time. Should we be able to make an economic find at Chandalar, we would then be solely dependent upon a single mining operation for our revenue and profits, if any.
Chandalar is located within the remote Arctic Circle region and exploration and, if warranted, development and production activities may be limited by climate and location.
While we have conducted test mining and minor gold mining extraction in recent years, our current focus remains on exploration of our Chandalar property. With our current infrastructure at Chandalar, the arctic climate limits exploration activities to a summer field season that generally starts in early May and lasts until freeze-up in mid-September. The remote location of the Chandalar property limits access and increases exploration expenses. Costs associated with such activities are estimated to be between 25% and 50% higher than costs associated with similar activities in the lower 48 states in the United States. Transportation and availability of qualified personnel is also limited because of the remote location. Higher costs associated with exploration activities and limitations for the annual periods in which we can carry on exploration activities will increase the costs and time associated with our planned activities and could negatively affect the value of our property and securities.
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Our resource estimate at Chandalar is based on a limited amount of drilling completed to date.
We commissioned an independent engineering firm to complete a mining plan and initial assessment (“IA”) for the Chandalar Alluvial Gold Deposit on our Chandalar property according to the new amendments adopted by the SEC to modernize the property disclosure requirements for mining registrants as codified in Subpart 1300. The IA was completed in June 2021 and supplemented as of December 31, 2022 for full disclosures required by Subpart 1300. The IA is based on a limited amount of drilling completed during 2007, 2013, and 2017. These estimates have a high degree of uncertainty. While we plan on conducting further drilling programs on the deposit, we cannot guarantee that the results of future drilling will return similar results or that our current estimate of resources will ever be established as proven and probable reserves as defined in the new SEC regulations in Subpart 1300. Any gold resources that may be discovered at Chandalar through our drilling programs may be of insufficient quantities to justify commercial operations.
Our exploration activities may not result in commercially successful mining operations.
Our operations are focused on mineral exploration, which is highly speculative in nature, involves many risks and is frequently non-productive. Unusual or unexpected geologic formations and the inability to obtain suitable or adequate machinery, equipment or labor are risks involved in the conduct of exploration programs. The focus of our current exploration plans and activities is conducting mineral exploration and deposit definition drilling at Chandalar. The success of this gold exploration is determined in part by the following factors:
| ● | identification of potential gold mineralization based on analysis; |
| ● | availability of government-granted exploration permits; |
| ● | the quality of our management and our geological and technical expertise; and |
| ● | capital available for exploration. |
Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to determine metallurgical processes to extract metal, and to establish commercial mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit at Chandalar would 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. Any gold resources that may be discovered at Chandalar may be of insufficient quantities to justify commercial operations.
Actual capital costs, operating costs, extraction and economic returns may differ significantly from those anticipated and there are no assurances that any future development activities will result in profitable mining operations.
We have limited operating history on which to base any estimates of future operating costs related to any future development of our properties. Capital and operating costs, extraction and economic returns, and other estimates contained in pre-feasibility or feasibility studies may differ significantly from actual costs, and there can be no assurance that our actual capital and operating costs for any future development activities will not be higher than anticipated or disclosed.
Mining and Exploration activities involve a high degree of risk.
Our operations on our properties will be subject to all the hazards and risks normally encountered in the mining of and exploration for deposits of gold. These hazards and risks include, without limitation, unusual and unexpected geologic formations, seismic activity, rock bursts, pit-wall failures, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and legal liability. Milling operations, if any, are subject to various hazards, including, without limitation, equipment failure and failure of retaining dams around tailings disposal areas, which may result in environmental pollution and legal liability.
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The parameters that would be used at our properties in estimating possible mining and processing efficiencies would be based on the testing and experience our management has acquired in operations elsewhere. Various unforeseen conditions can occur that may materially affect estimates based on those parameters. In particular, past mining operations at Chandalar indicate that care must be taken to ensure that proper mineral grade control is employed and that proper steps are taken to ensure that the underground mining operations are executed as planned to avoid mine grade dilution, resulting in uneconomic material being fed to the mill. Other unforeseen and uncontrollable difficulties may occur in planned operations at our properties that could lead to failure of the operation.
If we decide to exploit our Chandalar property and build a large gold mining operation based on existing or additional deposits of gold mineralization that may be discovered and proven, we plan to process the resource using technology that has been demonstrated to be commercially effective at other geologically similar gold deposits elsewhere in the world. These techniques may not be as efficient or economical as we project, and we may never achieve profitability.
Increased costs could affect our financial condition.
We anticipate that costs at our projects 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 ore grade, metallurgy and revisions to mine plans, if any, in response to the physical shape and location of the ore body. In addition, costs are affected by the price of commodities such as fuel, rubber, and electricity. Such commodities are at times subject to volatile price movements, including increases that could make extraction at certain operations less profitable. A material increase in costs at any significant location could have a significant effect on our profitability.
A shortage of equipment and supplies could adversely affect our ability to operate our business.
We are dependent on various supplies and equipment to carry out our mining exploration and, if warranted, development and production operations. The shortage of such supplies, equipment and parts could have a material adverse effect on our ability to carry out our operations and therefore limit or increase the cost of reaching production.
We may be adversely affected by a decrease in gold prices.
The value and price of our securities, our financial results, and our exploration activities may be significantly adversely affected by declines in the price of gold and other precious metals. Gold prices fluctuate widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation, fluctuation in the relative value of the United States dollar against foreign currencies on the world market, global and regional supply and demand for gold, and the political and economic conditions of gold producing countries throughout the world. The price for gold fluctuates in response to many factors beyond anyone’s ability to predict. The prices that would be used in making any economic assessment estimates of resources or reserves on our properties would be disclosed and would probably differ from daily prices quoted in the news media. Percentage changes in the price of gold cannot be directly related to any estimated resource quantities at any of our properties, as they are affected by a number of additional factors. For example, a ten percent change in the price of gold may have little impact on any estimated quantities of resources or reserves at Chandalar and would affect only the resultant cash flow. Because any future mining at Chandalar would occur over a number of years, it may be prudent to continue mining for some periods during which cash flows are temporarily negative for a variety of reasons, including a belief that a low price of gold is temporary and/or that a greater expense would be incurred in temporarily or permanently closing a mine there. Resource or reserve calculations and life-of-mine plans, if any, using significantly lower gold and precious metal prices could result in material write-downs of our investments in mining properties and increased reclamation and closure charges.
In addition to adversely affecting any of our resource or reserve estimates and its financial aspects, declining metal prices may impact our operations by requiring a reassessment of the commercial feasibility of a particular project. Such a reassessment may be the result of a management decision related to a particular event, such as a cave-in of a mine tunnel or open pit wall. Even if any of our projects may ultimately be determined to be economically viable, the need to conduct such a reassessment may cause substantial delays in establishing operations or may interrupt on-going operations, if any, until the reassessment can be completed.
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Title to our properties may be defective.
We hold certain interests in our Chandalar property in the form of State of Alaska unpatented mining claims. We hold no interest in any unpatented U.S. federal mining claims at Chandalar or elsewhere. Alaska state unpatented mining claims are unique property interests, in that they are subject to the paramount title of the State of Alaska, and rights of third parties to uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 – 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 – 86.600. The validity of all State of Alaska unpatented mining claims is dependent upon inherent uncertainties and conditions. These uncertainties relate to matters such as:
| ● | The existence and sufficiency of a discovery of valuable minerals; |
| ● | Proper posting and marking of boundaries in accordance with state statutes; |
| ● | Making timely payments of annual rentals for the right to continue to hold the mining claims in accordance with state statutes; |
| ● | Whether sufficient annual assessment work has been timely and properly performed and recorded; and |
| ● | Possible conflicts with other claims not determinable from descriptions of records. |
The validity of an unpatented mining claim also depends on: (1) the claim having been located on Alaska state land open to appropriation by mineral location, which is the act of physically going on the land and making a claim by putting corner stakes in the ground; (2) compliance with all applicable state statutes in terms of the contents of claim location notices or certificates and the timely filing and recording of the same; (3) timely payment of annual claim rental fees; and (4) the timely filing and recording of proof of annual assessment work. In the absence of a discovery of valuable minerals, the ground covered by an unpatented mining claim is open to location by others unless the owner is in actual possession of and diligently working the claim. We are diligently working and are in actual possession of all of our mining claims comprising our Chandalar, Alaska property. The unpatented state mining claims we own or control there may be invalid, or the title to those claims may not be free from defects. In addition, the validity of our claims may be contested by the Alaska state government or challenged by third parties.
Title to our property may be subject to other claims.
There may be valid challenges to the title to properties we own or control that, if successful, could impair our exploration activities on them. Title to such properties may be challenged or impugned due to unknown prior unrecorded agreements or transfers or undetected defects in titles.
A major portion of our mineral rights on our flagship Chandalar property consists of “unpatented” lode mining claims created and maintained on deeded state lands in accordance with the laws governing Alaska state mining claims. We have no unpatented mining claims on federal land in the Chandalar mining district, but do have unpatented state mining claims. Unpatented mining claims are unique property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of complex federal and state laws and regulations. Also, unpatented mining claims are always subject to possible challenges by third parties or validity contests by the federal and state governments. In addition, there are few public records that definitively determine the issues of validity and ownership of unpatented state mining claims.
We have attempted to acquire and maintain satisfactory title to our Chandalar mining property, but we do not normally obtain title opinions on our properties in the ordinary course of business, with the attendant risk that title to some or all segments our properties, particularly title to the State of Alaska unpatented mining claims, may be defective. We do not carry title insurance on our patented mining claims.
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Estimates of resources and reserves are subject to evaluation uncertainties that could result in project failure.
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 or reserves within the earth using statistical sampling techniques. Estimates of any resources or reserves on any of our properties would be made using samples obtained from appropriately placed trenches, test pits and underground workings and intelligently designed drilling. There is an inherent variability of assays between check and duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. Additionally, there also may be unknown geologic details that have not been identified or correctly appreciated at the current level of accumulated knowledge about our Chandalar property. This could result in uncertainties that cannot be reasonably eliminated from the process of estimating resources or reserves. If these estimates were to prove to be unreliable, we could implement a plan that may not lead to commercially viable operations in the future.
Government regulation may adversely affect our business and planned operations.
Our mineral exploration activities are subject to various laws governing prospecting, mining, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local residents and other matters in the United States. New rules and regulations may be enacted or existing rules and regulations may be applied in a manner that could limit or curtail exploration at our Chandalar property. The economics of any potential mining operation on our properties would be particularly sensitive to changes in the federal and State of Alaska’s tax regimes.
The generally favorable State of Alaska tax regime could be reduced or eliminated. Such an event could materially hinder our ability to finance the future exploitation of any gold deposit we might prove-up at Chandalar, or elsewhere on State of Alaska lands. Amendments to current laws, regulations and permits governing our operations and the general activities of mining and exploration companies, or more stringent implementation thereof, could cause unanticipated increases in our exploration expenses, capital expenditures or future extraction or production costs, or could result in abandonment or delays in establishing operations at our Chandalar property.
Our activities are subject to environmental laws and regulation that may materially adversely affect our future operations, in which case our operations could be suspended or terminated.
We are subject to a variety of federal, state and local statutes, rules and regulations in connection with our exploration activities. We are required to obtain various governmental permits to conduct exploration at and development of our property. Obtaining the necessary governmental permits is often a complex and time-consuming process involving numerous federal, state and local agencies. The duration and success of each permitting effort is contingent upon many variables not within our control. In the context of permitting, including the approval of reclamation plans, we must comply with known standards, existing laws, and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations implemented by the permitting authority. The failure to obtain certain permits or the adoption of more stringent permitting requirements could have a material adverse effect on our business, plans of operation, and property in that we may not be able to proceed with our exploration programs. Compliance with statutory environmental quality requirements may require significant capital investments, significantly affect our earning power, or cause material changes in our intended activities. Environmental standards imposed by federal, state, or local governments may be changed or become more stringent in the future, which could materially and adversely affect our proposed activities. As a result of these matters, our operations could be suspended or cease entirely.
Mineral exploration and mining are subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production. Insurance against environmental risk (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) is not generally available to us (or to other companies in the minerals industry) at a reasonable price. To the extent that we become subject to environmental liabilities, the remediation of any such liabilities would reduce funds otherwise available to us and could have a material adverse effect on our financial condition. Laws and regulations intended to ensure the protection of the environment are constantly changing and are generally becoming more restrictive.
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Federal legislation and regulations adopted and administered by the U.S. Environmental Protection Agency, Forest Service, Bureau of Land Management (“BLM”), Fish and Wildlife Service, Mine Safety and Health Administration, and other federal agencies, and legislation such as the Federal Clean Water Act, Clean Air Act, National Environmental Policy Act, Endangered Species Act, and Comprehensive Environmental Response, Compensation, and Liability Act, have a direct bearing on U.S. exploration and mining operations within the United States. These regulations will make the process for preparing and obtaining approval of a plan of operations much more time-consuming, expensive, and uncertain. Plans of operation will be required to include detailed baseline environmental information and address how detailed reclamation performance standards will be met. In addition, all activities for which plans of operation are required will be subject to review by the BLM, which must make a finding that the conditions, practices or activities do not cause substantial irreparable harm to significant scientific, cultural, or environmental resource values that cannot be effectively mitigated.
U.S. federal initiatives are often administered and enforced through state agencies operating under parallel state statutes and regulations. Although some mines continue to be approved in the United States, the process is increasingly cumbersome, time-consuming, and expensive, and the cost and uncertainty associated with the permitting process could have a material effect on exploring and mining our properties. Compliance with statutory environmental quality requirements described above may require significant capital investments, significantly affect our earning power, or cause material changes in our intended activities. Environmental standards imposed by federal, state, or local governments may be changed or become more stringent in the future, which could materially and adversely affect our proposed activities. As a result of these matters, our operations could be suspended or cease entirely.
At this time, our Chandalar property does not include any federal lands and therefore we do not file plans of operations with the BLM. However, we are subject to obtaining watercourse diversion permits from the U.S. Army Corp of Engineers.
Land reclamation requirements for our properties may be burdensome and expensive.
Although variable depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies (as well as companies with mining operations) in order to minimize long term effects of land disturbance.
Reclamation may include requirements to:
| ● | control dispersion of potentially deleterious effluents; and |
| ● | reasonably re-establish pre-disturbance land forms and vegetation. |
In order to carry out reclamation obligations imposed on us in connection with our potential development activities, we must allocate financial resources that might otherwise be spent on further exploration and development programs. We plan to set up a provision for our reclamation obligations on our properties, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.
Future legislation and administrative changes to the mining laws could prevent us from exploring and operating our properties.
New local, state and U.S. federal laws and regulations, amendments to existing laws and regulations, administrative interpretation of existing laws and regulations, or more stringent enforcement of existing laws and regulations, could have a material adverse impact on our ability to conduct exploration and mining activities. Any change in the regulatory structure making it more expensive to engage in mining activities could cause us to cease operations. We are at this time unaware of any proposed Alaska state or U.S. federal laws and regulations that would have an adverse impact on the future of our Alaska mining properties.
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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 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.
We do not insure against all risks.
Our insurance policies will not cover all the potential risks associated with our operations. We may also be unable to maintain insurance coverage to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurances against risks such as environmental pollution or other hazards as a result of exploration and production are not generally available to us or to other companies in the mining industry on acceptable terms. We might also become subject to liability for pollution or other hazards for which we may not be insured against or for which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon our financial condition and results of operations.
We compete with larger, better capitalized competitors in the mining industry.
The mining industry is acutely competitive in all of its phases. We face strong competition from other mining companies in connection with the acquisition of exploration stage properties, or properties capable of producing precious metals. Many of these companies have greater financial resources, operational experience and technical capabilities than us. As a result of this competition, we may be unable to maintain or acquire attractive mining properties on terms we consider acceptable or at all. Consequently, our revenues, operations and financial condition and possible future revenues could be materially adversely affected by actions by our competitors. At our property at Chandalar, Alaska, we face no other competitors at this time.
We may experience cybersecurity threats.
We rely on secure and adequate operations of information technology systems in the conduct of our operations. Access to and security of the information technology systems are critical to our operations. Given that cyber risks cannot be fully mitigated and the evolving nature of these threats, we cannot assure that our information technology systems are fully protected from cybercrime or that the systems will not be inadvertently compromised, or without failures or defects. Potential disruptions to our information technology systems, including, without limitation, security breaches, power loss, theft, computer viruses, cyber-attacks, natural disasters, and noncompliance by third party service providers and inadequate levels of cybersecurity expertise and safeguards of third party information technology service providers, may adversely affect our operations as well as present significant costs and risks including, without limitation, loss or disclosure of confidential, proprietary, personal or sensitive information and third party data, material adverse effect on its financial performance, compliance with its contractual obligations, compliance with applicable laws, damaged reputation, remediation costs, potential litigation, regulatory enforcement proceedings and heightened regulatory scrutiny.
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 became effective in the Company’s fiscal year beginning on January 1, 2021. The new rules are codified in subpart 1300 of Regulation S-K under the Securities Exchange Act of 1934, as amended (“Subpart 1300”). The new rules may require the preparation and filing of technical reports on the Company’s properties on a more frequent basis than the Company’s historical practice. Such changes to the Company’s reporting requirements and the preparation of technical reports and assessments could result in increased compliance costs. The Company completed an initial assessment on its Chandalar property in 2021 in compliance with the new rules.
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Risks related to the Company
We are dependent on our key personnel.
Our success depends in a large part on our key executives: William Schara, our President and CEO, and Ted Sharp, our Corporate Secretary and CFO. The loss of their services could have a material adverse effect on us. Mr. Sharp is a licensed Certified Public Accountant and an independent contractor, with business management and consulting interests that are independent of the consulting agreement he currently has in place with the Company—he is not an employee of the Company.
At such time as we again undertake mineral exploration activities, we will need to fill positions such as Vice President of Exploration, Vice President of Operations and Chandalar Project Manager with persons possessing requisite skills. Our ability to manage our mineral exploration activities at our Chandalar gold property or other locations where we may acquire mineral interests will depend in large part on the efforts of these individuals. We may face competition for qualified personnel, and we may not be able to attract and retain such personnel.
Certain of our executive officers do not dedicate 100% of their time on our business.
William V. Schara, our CEO, devotes 100% of his time to company business. Ted Sharp, our CFO, provides services under a consulting arrangement, which permits him to provide services to other companies. Mr. Sharp dedicates approximately 20% of his business time to Goldrich, and currently provides consulting services to a variety of small business clients, which may detract from the time Mr. Sharp can spend on our business. Mr. Sharp often conducts business remotely by internet communication. In the event of a failure of laptop or telecommunications, or at times of internet connection disruption, Mr. Sharp’s ability to communicate with other company personnel or conduct company transactions may be obstructed.
Our officers and directors may have potential conflicts of interest due to their responsibilities with other entities.
The officers and directors of the Company serve as officers and/or directors of other companies in the mining industry, which may create situations where the interests of the director or officer may become conflicted. The consulting arrangement of Mr. Sharp allows him to provide services to other companies. The companies to which Mr. Sharp provides services may be potential competitors with the Company at some point in the future. The directors and officers owe the Company fiduciary duties with respect to any current or future conflicts of interest.
Risks related to our Common Stock
The market for our common stock has been volatile in the past and may be subject to fluctuations in the future.
The market price of our common stock has ranged from a high of $0.086 and a low of $0.0002 during the twelve-month period ended December 31, 2022. The market price for our common stock closed at $0.03 on December 30, 2022, the last trading day of 2022. The market price of our common stock may fluctuate significantly from its current level. The market price of our common stock may be subject to wide fluctuations in response to quarterly variations in operating results, announcements of technological innovations or new products by us or our competitors, changes in financial estimates by securities analysts, or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations for a number of reasons, including the failure of the operating results of certain companies to meet market expectations that have particularly affected the market prices of equity securities of many exploration stage companies that have often been unrelated to the operating performance of such companies. These broad market fluctuations, or any industry-specific market fluctuations, may adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, class action securities litigation has been instituted against such a company. Such litigation, whether with or without merit, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, operating results and financial condition.
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We have convertible securities and convertible debt outstanding, which if fully exercised could require us to issue a significant number of shares of our common stock and result in substantial dilution to existing shareholders.
As of December 31, 2022, we had 185,448,412 shares of common stock issued and outstanding. We may be required to issue the following shares of common stock upon exercise of options and warrants or conversion of convertible securities:
| ● | 1,050,000 shares of common stock issuable upon exercise of vested options outstanding as of December 31, 2022; |
| ● | 30,190,475 shares of common stock issuable upon conversion of preferred shares outstanding as of December 31, 2022; |
| ● | 18,114,446 shares of common stock issuable upon exercise of warrants outstanding as of December 31, 2022; |
| ● | 4,333,333 shares of common stock issuable for subscription payable as of December 31, 2022; and |
| ● | 143,431,051 shares of common stock issuable if Nicholas Gallagher (“Gallagher”), a related party and member of the Company’s Board of Directors and a secured note holder, exercises his option to be paid in shares for unpaid interest as of December 31, 2022. |
If these convertible and exercisable securities are fully converted or exercised, we would issue an additional 197,119,305 shares of common stock, and our issued and outstanding share capital would increase to 382,567,717 shares. The convertible securities are likely to be exercised or converted at the time when the market price of our common stock exceeds the conversion or exercise price of the convertible securities. Holders of such securities are likely to sell the common stock upon conversion, which could cause our share price to decline.
Broker-dealers may be discouraged from effecting transactions in our common stock because they are considered a penny stock and are subject to the penny stock rules.
Rules 15g-1 through 15g-9 promulgated under the United State Securities and Exchange Act of 1934, as amended (the “Exchange Act”) impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a “penny stock.” Subject to certain exceptions, a penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. The market price of our common stock on the FINRA OTC Pink during the twelve-month period ended December 31, 2022, ranged between a high of $0.086 and a low of $0.0002, and our common stock is deemed penny stock for the purposes of the Exchange Act. The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of the stock and impede the sale of our stock in the secondary market.
A broker-dealer selling penny stock to anyone other than an established customer or “accredited investor,” generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the United States Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.
In the event that your investment in our shares is for the purpose of deriving dividend income or in expectation of an increase in market price of our shares from the declaration and payment of dividends, your investment will be compromised because we do not intend to pay dividends, except as required by the terms of the Series A Convertible Preferred Shares.
We have never paid a dividend to our shareholders, and we intend to retain our cash for the continued growth of our business. We do not intend to pay cash dividends on our common stock in the foreseeable future. As a result, your return on investment will be solely determined by your ability to sell your shares in a secondary market. The terms of the Series A Convertible Preferred Shares require payment of a dividend to the holders at the time they convert their shares; however, this dividend can and likely will be paid in the form of additional shares of common stock sufficient to satisfy the dividend provision.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
In September 2022, we received an SEC Comment Letter dated September 7, 2022, which specified that:
| 1. | The Company was required to file interim reports on Form 10-Q pursuant to Rule 131-13 of Regulation 13A. The quarterly reports for the periods ended March 31, 2022 and June 30, 2022 were due May 16, 2022, and August 15, 2022, respectively. |
| a. | We filed all quarterly reports for Q1, Q2, Q3 2022 by November 21, 2022. The reports were not filed previously because the Company did not have sufficient funds to pay its auditors to review the quarterly reports to ensure that complete, thorough and accurate disclosures of all material information were made. |
| 2. | Several deficiencies in disclosure of mineral resource estimates, their location on a map and the variables used in their calculation were identified, each requiring remediation by us. We needed to obtain author consent to a new Technical Report Summary, which would disclose each of the required points of data, and attach those documents to an Amended Form 10-K. |
| a. | We contracted with GRE to issue the prescribed Technical Report Summary, which was in the process of completion at December 31, 2022. On March 1, 2023, we filed Form 10-K/A to incorporate all required amendments and disclosures. Those amended disclosures and data are included in this Form 10-K for the year ended December 31, 2022. |
All staff comments have been resolved as of the date of filing of this report.
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ITEM 2. PROPERTIES
Map 1 – Location of the Chandalar, Alaska Mining District
Chandalar Property, Alaska
The Chandalar gold property is currently our only mineral property. It is an exploration stage property. We were attracted to the Chandalar district because of its similarities to productive mining districts, its past positive exploration results, and the opportunity to control multiple attractive gold quartz-vein prospects and adjacent unexplored target areas for large bulk tonnage deposits. We believe that our dominant land control eliminates the risk of a potential competitor finding ore deposits located within adjacent claims. Summarily, we believe the scale, number and frequency of the Chandalar district gold-bearing exposures and geochemical anomalies compare favorably to similar attributes of productive mining districts.
Location, Access & Geography of Chandalar
Our Chandalar property essentially envelops the entire historic Chandalar mining district and lies approximately 70 miles north of the Arctic Circle at a latitude of about 67°30’. It is about 190 air miles north of Fairbanks, Alaska, a full-service support center for the oil and mining industry, and 48 air miles east of the Dalton Highway, the major all-weather north-south route that links Fairbanks to the Prudhoe Bay oil fields on the Arctic Ocean to the north, and 48 air miles east-northeast of the town of Coldfoot (Map 1). Access to our Chandalar Squaw Lake mining camp and nearby Chandalar Gold Mine is either by aircraft from Fairbanks, or overland during the winter season via a 95-mile-long ice road from Coldfoot through the community of Chandalar Lake to Squaw Lake.
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Map 2 – Chandalar Mining Claim Block
Geographically, our Chandalar property is situated in rugged terrain just within the south flank of the Brooks Range where elevations range from 1,900 feet in the lower valleys to just over 5,000 feet on the surrounding mountain peaks. The region has undergone glaciation due to multiple ice advances originating from the north and, while no glacial ice remains, the surficial land features of the area reflect abundant evidence of past glaciation.
The property is characterized by deeply incised creek valleys that are actively down-cutting the terrain. The steep hill slopes are shingled with frost-fractured slabby slide rock, which is the product of arctic climate mass wasting and erosion. Consequently, bedrock exposure is mostly limited to ridge crests and a few locations in creek bottoms. Vegetation is limited to the peripheral areas at lower elevations where there are relatively continuous spruce forests in the larger river valleys. The higher elevations are characterized by arctic tundra.
Snow melt generally occurs toward the end of May, followed by an intensive, though short, 90-day growing season with 24 hours of daylight and daytime temperatures that range from 60 to 80° Fahrenheit. Freezing temperatures return in late August and freeze-up typically occurs by early October. Winter temperatures, particularly in the lower elevations, can drop to -50° F or colder for extended periods. Annual precipitation is 15 to 20 inches, coming mostly in late summer as rain and during the first half of the winter as snow. Winter snow accumulations are modest. The area is essentially an arctic desert.
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Map 3 – Gold Prospects and Geologic Structure of Chandalar
Chandalar Mining Claims
We have a block of contiguous mining claims at Chandalar that cover a net area of about 22,858 acres (approximately 35.7 square miles) (Map 2), and which are maintained by us specifically for the exploration and possible exploitation of placer and lode gold deposits. The mining claims were located to secure most of the known gold bearing zones occurring within an area approximately five miles by eight miles. Within the claim block, we own in fee simple 426.5 acres as twenty-one federal lode claims, one patented federal placer claim, and one patented federal mill site. The 23 federal patented claims cover the most important of the known gold-bearing structures. In addition, there are 197 Traditional and MTRSC 40-acre State of Alaska claims. The 197 Traditional and MTRSC state mining claims provide exploration and mining rights to both lode and placer mineral deposits on an additional 22,432 acres of unpatented claims. Unlike federal mining claims, State of Alaska mining claims cannot be patented, but the locator has the exclusive right of possession and extraction of the minerals in or on the claim.
Alaska state unpatented mining claims are unique property interests in that they are subject to the paramount title of the State of Alaska, and rights of third parties to non-interfering uses of the surface within their boundaries, and are generally considered to be subject to greater title risk than other real property interests. There are few public records that definitively determine the issues of validity and ownership of unpatented state mining claims and possible conflicts with other claims are not always determinable from the descriptions contained in public records. The rights to deposits of minerals lying within the boundaries of the unpatented state claims are subject to Alaska Statues 38.05.185 – 38.05.280, and are governed by Alaska Administrative Code 11 AAC 86.100 – 86.600.
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The validity of an Alaska state unpatented mining claim depends on: (1) the claim having been located on state land open to appropriation by mineral location, which is the act of physically going on the land and making a claim by putting stakes in the ground; (2) compliance with all applicable state statutes in terms of the contents of claim location notices or certificates and the timely filing and recording of the same; (3) timely payment of annual claim rental fees; and (4) the timely filing and recording of proof of annual assessment work. In the absence of a discovery of valuable minerals, the ground covered by an unpatented mining claim is open to location by others unless the owner is in actual possession of and diligently working the claim. We are diligently working and are in actual possession of all our claims at Chandalar.
The locator of a mining claim on land belonging to the State of Alaska does not have an option to patent the claim. Instead, rights to deposits of minerals on Alaska state land that is open to claim staking may be acquired by discovery, location and recording as prescribed in Alaska state statutes, as previously noted. The locator has the exclusive right of possession and extraction of the minerals in or on the claim, subject to state statutes governing mining claims. We are not in default of any annual assessment work filing or annual claim rental payment required by the state of Alaska to keep our title to the mining rights at Chandalar in good standing.
An important part of our Chandalar property is patented federal mining claims owned by us. Patented mining claims, which are real property interests that are owned in fee simple, are subject to less risk than unpatented mining claims. We have done a title chain search of our patented federal mining claims and believe we are the owner of the private property, and that the property is free and clear of liens and other third-party claims except for the 2% mineral production royalty. The 2% mineral production royalty was formerly held by our previous management (Anderson Partnership, also known as Jumbo Basin). During 2012, NyacAU loaned $250,000 to GNP and GNP purchased the royalty from Anderson Partnership. The loan to GNP for the royalty carried interest at the greater of prime plus 2% or 10% and was repaid from Goldrich’s portion of production (as defined in the joint venture agreement). GNP conveyed the royalty back to Goldrich by means of a Special Warranty Deed which was recorded in the Fairbanks Recording District on May 11, 2023.
The Company entered into First Amendment to the Amended and Restated Loan, Security, and Intercreditor Agreement dated November 1, 2019 with Nicholas Gallagher (“Gallagher”), a related party and member of the Company’s Board of Directors, in his capacity as Agent for and on behalf of Gallagher and other lenders to amend the Senior Secured Note financing effective as of August 25, 2021. Under the Agreement, the borrower and holders entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and similar assets. For more information see Notes Payable and Notes Payable – Related Party below.
Chandalar Geology and Mineralization
Refer to Maps 3 and 4 for graphic representation of both the hard-rock (lode) prospects and alluvial (placer) fans on which we are focusing varying degrees of exploration effort, as determined by exploration activities already completed in prior years.
The Chandalar lode occurrences are part of a regionally mineralized schist belt that extends east-west across the 600-mile width of Alaska along the south flank of the Brooks Range. The geology and mineralization of the Chandalar lode gold systems are quite similar to many important productive gold deposits that have been variously categorized as greenstone-hosted, orogenic, shear-zone related, low-sulfide, mesothermal, amongst other names and which, collectively, account for a major part of the world’s gold production. Although there is a history of past lode and alluvial extraction on our Chandalar property, it currently does not contain any known proven or probable ore reserves as defined in Subpart 1300. The probability that ore reserves that meet Subpart 1300 guidelines will be discovered on an individual hard rock prospect at Chandalar cannot be determined at this time. However, in June 2021 and supplemented as of December 31, 2022 for full disclosures required by Subpart 1300, Goldrich released the results of an independent Initial Assessment Report (the “IA”), prepared in accordance with the new SEC Subpart 1300 property disclosure requirements, for the Company’s Chandalar placer mine in the Chandalar Gold District in Alaska as discussed below in Historical Mining and Exploration Activities in the Modern Era.
Infrastructure
We have established a substantial exploration infrastructure at our Chandalar property, including a 25-person camp, heavy and light-duty equipment, a 5,000-foot airstrip, and a network of roads that offer all-weather access to all of the major gold prospects. Current surface access to the camp from the Dalton Highway is restricted to the winter months via a winter trail from Coldfoot along the Dalton Highway. The State of Alaska has a right-of-way to construct a permanent all-season road along this trail which, when built, will allow year-around surface access to the project site. We are not aware of any plans to build this road at the present time.
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Historical Mining and Exploration Activities in the Modern Era
We maintain an extensive file of the prospecting and exploration of the Chandalar Mining district, cataloging documents dated as early as 1904. Most of the previous work was by mining companies and individuals who were focused on mining the gold placers and quartz veins but who conducted little organized geologically based exploration. Even less attention was given beyond existing vein exposures.
When new management began exploration in 2004, we ended a twenty-year hiatus of hard-rock exploration on the property and began employing modern exploration techniques. We have spent many millions of dollars in exploration and mining activities of our Chandalar property as discussed below.
2004
In 2004, we contracted an independent geological consulting company to review and analyze previous work done on Chandalar. A technical report produced by the consultants recommended an initial exploration program to better assess the gold lodes and the placer gold deposits.
We also commissioned a remote sensing technical study of the Chandalar district by another independent contractor who studied high altitude air photography available for the region. The purpose of the study was to identify geological structures that may be associated with gold occurrences in a schist belt containing greenstones. The lineament study identified fifty-nine sites thought to be favorable for discovery of mineralization. Major linears, especially where they may form a regional rift, are an excellent exploration tool in the search for gold. The consultant recommended making field examinations of known gold occurrences associated with the linears and other structural features identified by the study.
During the 2004 summer field season at Chandalar, using independent certified professional geologists, we followed up on the work recommended by the remote sensing consultant’s studies. We also expanded our claim block to cover outlying vein showings and reconnaissance sampling of rocks, soils and stream sediments for geochemical analyses. The objective of the field program was to assess the validity of historic records, refine known drilling targets and identify new drilling targets. Several prospects of previously unevaluated or unknown gold mineralization were found.
2005
During 2005, we completed a modest prospecting and geologic mapping program at Chandalar, which was limited by our lack of funds. In all, 189 exploratory samples of stream sediments, soils and rock chips were taken, and mapping was completed on a series of ten prospects. That work was successful in identifying additional gold prospects within our claim block, and also in developing specific drilling targets on several of the prospects.
2006
During early 2006, we acquired sufficient funds to undertake a substantial exploration program on the Chandalar property. During the 2006 summer field season, a geological contractor completed a 1:20,000 scale geologic map of the Chandalar district, and we drilled 39 reverse circulation drill holes for 7,763 feet on nine of some thirty gold prospects within our Chandalar claim block. In the process, several miles of old roads were repaired and three miles of new roads were constructed. We established an exploration base camp (Mello Bench camp) capable of housing 20 people, and accomplished environmental clean ups of two abandoned mining campsites that predate our management takeover in 2003.
2007
Concerning hard-rock exploration, the 2007 Chandalar exploration program expanded our understanding of several hard-rock gold prospects through trenching and associated sampling. In all, forty prospect areas were mapped in detail and 1,342 samples of rock (including trench and placer drill holes to bedrock) and soil were collected and analyzed. Forty-five trenches for 5,927 feet were accomplished using an excavator, of which 4,954 feet cut into bedrock and were sampled. Some 534 trench samples were taken continuously along the lengths of all trenches. Additionally, ground magnetic surveys on fifteen of the prospects were conducted with survey lines totaling 28 miles.
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Concerning placer exploration, we conducted 15,000 feet (4,572 meters) of reverse circulation drilling on the Little Squaw Creek drainage. Of 107 holes collared, 87 were completed to their targeted depths. We engaged an independent geological contractor to conduct all sampling in our drilling program, complete all drill sample gold recovery, evaluate ore, maintain drill sample security and report the results of their work.
2008
The analytical processing of the 3,031 drill samples and report on the final results of the samples gold contents from our 2007 placer drill program was completed by March of 2008. From these results, we concluded that we discovered a relatively large alluvial gold deposit of sufficient grade to be potentially economical to mine under prevailing gold prices. This drill program delineated approximately 10.5 million cubic yards of mineralized material at an average grade of 0.025 ounces (0.78 grams) gold per cubic yard containing an estimated 250,000 ounces of gold (This mineralized material was not a mineral reserve as defined in SEC Industry Guide 7 but, as noted above and detailed below, an Initial Assessment was completed in 2021 according to the new SEC disclosure requirements in Subpart 1300). We believe that with continued drilling, the mineralized body may be substantially increased.
The deposit is geologically characterized as an aggradational placer gold deposit. It is unusual in the sense that it is the only such known alluvial, or placer, gold deposit in Alaska, although many exist in Siberia. Our discovery contrasts to others in Alaska that are commonly known as bedrock placer gold deposits. Aggradational alluvial gold deposits contain gold particles disseminated through thick sections of unconsolidated stream gravels in contrast to bedrock placer deposits where thin but rich gold-bearing gravel pay streaks rest directly on bedrock surfaces. Aggradational placer gold deposits are generally more uniform and thus more conducive to bulk mining techniques incorporating economies of scale. This contrasts with bedrock placer gold deposits where gold distribution tends to be erratic and highly variable. The plan view of our discovery is somewhat funnel-shaped, and as such has been divided into two distinct geomorphological zones: a Gulch, or narrower channel portion, and a Fan, or broad alluvial apron portion.
2009
We began a placer gold test mining operation on Little Squaw Creek. We also started to execute on the recommended plan in April 15, 2009 technical report prepared by an independent consultant. Some exploration of the various other placer gold creeks on the Chandalar property took place. Prospecting work on the hard-rock gold deposit possibilities was also accomplished. That work led to some key understandings of the geology. The work also resulted in the generation of an internal Company memorandum by Mr. Barker proposing an exploratory diamond-core drill program of about 40 drill holes aggregating 20,000 feet. The proposed drill program would evaluate the degree of mineralization occurring as a large strata-bound unit nearly 5 miles in length, as explained in the report Interpretation of Exploratory Findings at Chandalar.
In the 2009 test mining operation, we accomplished a major step in assessing the economic potential of this mineralized body. Most importantly, we found that the mineralized material is a continuous but variably mineralized horizon. There are specific horizons within it that are up to 20 feet thick containing the richest gold grades. The mineralized material is about forty percent composed of gravel, cobbles and boulders set in a sixty percent matrix of fine silt. It is nicely compacted and stands well when opened up. Because of the high silt content, the mineralized material, and the overburden as well, expands by over forty percent in volume when it is mined and converted into loose cubic yards. During 2009 mining test, we stripped approximately 40,000 bank cubic yards of waste material and processed about 9,875 bank cubic yards of gold bearing gravels through our wash plant. About 593.5 ounces of alluvial gold were recovered which, when smelted, yielded 497.5 ounces of fine gold.
The 2009 alluvial gold test mining operation successfully yielded valuable geological, mining and engineering data that lead us to the decision to ramp-up the project into gold extraction in the spring of 2010.
2010
During the winter of 2009/2010, we raised additional funds to ramp-up the Little Squaw Creek Gold Mine into extraction. The ramp-up process involved substantial infrastructure upgrades, including building a new 30-man mining camp located about two miles from the exploration camp that had been in use since 2004. Infrastructure and mining development at the Little Squaw Creek alluvial gold mine was initiated in late May 2010, with the first gold extraction being delivered to a smelter-refinery on July 15, 2010.
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The 2010 gold extraction was limited by the lack of capital to get a second wash plant on line. The 2009 wash plant was re-modeled with improvements (primarily an enlarged hopper with a wet grizzly style in-feed) and put on line for the 2010 extraction. Unfortunately, the plant turned out to be capable of processing only about 29 bank cubic yards per hour on a consistent basis. Attempts at higher processing rates led to overloading the machine and frequent break downs. The plant ran for 1,094 hours, extracting at an average rate of about 1.45 ounces of fine gold per hour.
While there were no drill holes within 400 feet of the perimeter of the 2009 test pit, there was mineralized material exposed in three walls of the pit which encouraged management’s decision to expand the mine by following the mineralized material, using in-pit grade control, and mining material to the physical and economic extent possible. No estimate of metallurgical recovery balances could be made regarding the mined mineralized material in 2010 for lack of sufficient prior data about the gold content in the block of ground that was mined. The gold recovery performance of the plant was checked on a consistent basis by panning its tailings. No significant gold was ever found in the tailings, leading management to conclude that the wash plant, albeit undersized for the job, was working properly.
The mining operation ultimately involved stripping an estimated 131,000 bank cubic yards of waste material and the mining and processing of about 31,680 bank cubic yards of gold bearing gravels. During the 2010 extraction season, 1,503 ounces of fine gold and 259 ounces of silver were recovered at the refinery. Additionally, 24.1 ounces of gold nuggets estimated to contain 19.2 ounces of fine gold were extracted and either sold to jewelers or retained by the Company. Our gross precious metal sales in 2010 came to $1,904,124.
Map–4 - Chandalar Exploratory Gold Deposit Drill Target with Holes Proposed in 2009 and Drilled in 2011
2011
Our 2011 hard-rock drilling plan was extrapolated from a 2007 exploration plan that was not undertaken previously due to financial limitations. Independent third-party professionals analyzed the 2006 hard-rock rotary drill results and the surface exploration work performed in intervening years and recommended prioritized hard-rock drill targets for the 2011 exploration season. The 2011 exploration program included a diamond-core drilling exploration program on a series of hard-rock gold targets on our Chandalar claims. These targets contain numerous gold showings which we believed were the source areas of the alluvial gold deposits in the creek drainages. We believe we have accumulated a body of knowledge on the Chandalar claims which points us toward significant areas of interest for discovery of very large tonnages of mineralization, and our drilling program has been designed to further qualify those targets for potential commercialization.
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We completed our 2011 diamond core drilling campaign at Chandalar, Alaska along with a property-wide, grid-based soil sampling and a detailed airborne magnetometer survey. We completed a 25-hole, 4,404-meter (14,444-foot) exploratory program, using HQ size core, tested six prospect areas located along a 4-km (2.5-mile) long northeast trending belt of gold showings. The drilling contractor completed the last hole on September 30, 2011.
The HQ diameter diamond drill holes were generally sampled using a five-foot sample length and overall core recovery averaged greater than 90%. Six quality control samples (one blank and five standards) were inserted into each batch of 120 samples. The drill core was sawn, with half sent to the ALS Minerals sample preparation in Fairbanks, Alaska, where the samples were prepared for assay and then sent to the ALS Minerals Lab in Sparks, Nevada for analyses. Gold was analyzed by fire assay and Atomic Absorption Spectrometry finish and a four-acid sample digestion with Inductively Coupled Plasma Spectrometry method was used to analyze a full suite of elements. Samples were securely transported from the project site to the ALS Minerals preparation laboratory in Fairbanks via chartered aircraft hired by the Company.
Donald G. Strachan, Certified Professional Geologist and Goldrich’s contracted project manager for Chandalar, managed the drill program and confirmed that all procedures, protocols and methodologies used in the drill program conform to industry standards.
The results of this first diamond core exploration drilling on our Chandalar gold property have exposed what we believe is a wide-spread system of gold mineralization at intervals from surface to depths of up to 120 meters (about 400 feet). We also believe the mass of rock affected by the mineralizing system to be large, as more than 50 gold showings are scattered over about six square miles (fifteen square kilometers), only a fraction of which has yet been drill-tested. The drill cores contain a total of 56 mineralized intervals of 0.5 or greater grams per tonne gold (g/t Au) that average 2.3 meters (7.5 feet) in length and have a weighted average grade of 1.66 g/t Au. Gold-bearing intercepts were obtained in 72% of the holes, with many having multiple intercepts.
Drilling results draw us to focus on two prospects – Aurora and Rock Glacier – which we believe are geologically associated and related to the same controlling mineralizing features. Intercepts include:
| ● | 1.5 meters (5.0 feet) at 6.57 g/t Au in Hole LS11-0063 on the Aurora prospect; |
| ● | 2.1 meters (7.0 feet) at 6.02 g/t Au in Hole LS11-0041 on Rock Glacier |
A map and tables showing drill hole locations, drill depths, data and intercepts can be found in our annual reports filed with the SEC for 2011 and 2012.
These and other intercepts are associated with much longer core runs of strongly anomalous gold (> 0.10 g/t Au) between 4.3 meters (14 feet) and 21.3 meters (70 feet) in length. Also worth noting, while constructing a road to a proposed drill site, we encountered two zones of shearing with sheeted and stockwork quartz veinlets, approximately 5 meters (16 feet) and 15 meters (49 feet) wide. These zones are located 135 meters vertically above and 200 meters southwest of Aurora drill holes #61 to #64. Representative continuous chip sampling of these zones yielded assays of 2.8 g/t gold and 2.1 g/t gold, respectively. We believe the mineralized Aurora drill hole intercepts may represent an extension of these zones and that additional drilling could extend these zones even further.
While the silver (Ag) values associated with these and most of the other gold intercepts are generally less than 2 g/t, unusually, native silver is observed in one core interval of 0.46 meters (1.5 feet) from 80.01 meters (262.5 feet) to 80.47 meters (264.0 feet) in Hole LS11-0042, which assays greater than 690 g/t Ag (> 20.1 oz/st Ag [st = short ton]) with only a trace of gold. A second curious silver rich interval occurs in Hole LS11-0040 for 2.1 meters (7.0 feet) from 23.47 meters (77.0 feet) to 25.60 meters (84.0 feet), which returned 397 g/t (11.6 oz/st Ag), again accompanied with only a trace of gold. We believe this silver mineralization may represent a separate mineralizing event within a large and complex precious metal bearing mineral system.
Chandalar’s wide-spread precious metal system is hosted by carbonaceous, pyrrhotite-arsenopyrite-pyrite bearing schist. Significantly, extensive intercepts of hydrothermal alteration manifested by massive chloritization and strong silicification of the schist are associated with the mineralization, and are often geochemically anomalous (> 0.05 g/t) in gold as well. Mineralized intercepts have now been intersected by drilling over a vertical elevation difference of 550 meters (1,800 feet), with the lowest exposure being in the northeast at the Aurora prospect which is close to the Little Squaw alluvial gold deposit.
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Additional core drilling is necessary to assess the continuity and extent of outcropping and any projection from the gold-mineralized intercepts as well as determine the limits of the mineralizing system. In addition to drilling, the 2011 Chandalar gold exploration program included a grid soil sampling survey consisting of 1,150 samples for multi-element analyses.
The soil sampling, prioritized to first cover known mineralized trends, consisted of over 1,100 samples collected on a reconnaissance scale grid over approximately 65 percent of the 22,858-acre Chandalar property. In the airborne geophysical survey, approximately 750 line miles (1,246 line kilometers) were flown by an international geophysical contractor over the entire Chandalar property along flight lines 100 meters apart.
The 2011 exploration season was successful in significantly expanding our existing body of geological knowledge about our Chandalar property. The combination of core, soil and magnetic data is expected to provide a solid foundation for going forward with a thorough exploration and evaluation of the numerous gold occurrences on the property.
2012
As described below in Joint Venture Agreement, we signed an agreement with NyacAU to form a joint venture, Goldrich NyacAU Placer, LLC (“GNP”) for the purpose of mining the alluvial gold deposits within the bounds of our Chandalar property.
2013
Achievements included GNP’s mobilization of drilling equipment and plant setup, approval of permits to expand mining operations, significant infrastructure improvements and extraction of 680 ounces of fine gold.
2014
In 2014, we completed advanced petrographic studies of drill core samples from the Chandalar gold property. The new data refined the orogenic model that has historically guided exploration at Chandalar and redirected our future exploration for intrusion-related mineralization. We also conducted a property-wide airborne radiometric and magnetic survey to generate and further refine exploration targets for bulk-tonnage low-grade mineralization and possible deeper sources of intrusion-related mineralization.
Our geologists concurred the studies are important for exploration as the pegmatite textures in outcrop and drilling and the radiogenic activity from accessory minerals associated with pegmatite-veins may indicate proximity to intrusive-related mineralization and may provide us a highly useful tool for gold mineralization discovery.
The petrologic study involved detailed microprobe examination of samples taken from veins in the Chandalar gold system that exhibit characteristics of pegmatite, an igneous rock deposited during emplacement of a granitic intrusive body. All of the samples contain numerous accessory minerals that commonly derive from magma or late-stage magmatic fluids, including monazite, thorite and xenotime. Some of the accessory minerals co-precipitated with gold, indicating that late intrusive stage hydrothermal fluids migrated upward along shear zones within which the lode gold mineralization is emplaced. Importantly, radiogenic activity is associated with the accessory mineral suite.
We believe rigorous follow-up rock sampling and radiogenic surveys may result in more effective selection of high-priority drill sites, an important factor considering the expansive size of the Chandalar system.
In August 2014, we engaged a contractor and geologists to perform additional airborne magnetic and radiometric studies across the entire Chandalar property. An airborne radiometric and magnetic survey was conducted to test an intrusion-related model for emplacement of lode quartz-gold occurrences. Results of the airborne study demonstrate a broad northwest-trending belt of elevated potassium values with a centrally located, kilometer-scale feature where thorium values are elevated relative to potassium. The potassium/thorium feature anomaly is closely associated with magnetic anomalies to form a circular kilometer-scale feature in the highlands above and adjacent to the Goldrich-NYAC Placer operation consistent with an intrusive body at depth and is central to the northeast-trend of lode quartz-gold occurrences.
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The data obtained from these studies will be compiled with data already derived from sampling, trenching, drilling and geophysical testing to present a comprehensive 3D model of the Chandalar prospects and their geological setting. The results of these studies will assist us in determining methods and targets for exploration.
2015
We completed reclamation of mine waste road built in 2010 and received a confirmation of completion and satisfaction from the Army Corps of Engineers. GNP extracted approximately 3,600 ounces of fine gold.
2016
GNP extracted approximately 8,200 ounces of fine gold.
2017
We performed additional oxygen isotope studies to further confirm intrusion-related mineralization. In addition, GNP completed a sonic drill program and drilled 231 holes totaling 14,271 feet to further define the Chandalar placer deposit and extracted approximately 12,300 ounces of fine gold.
2018
GNP extracted approximately 17,100 ounces of fine gold.
2019
Due to the failure of the joint venture to meet the minimum production requirements under its Operating Agreement, GNP was dissolved in June 2019 (see Joint Venture Agreement and Arbitration below). Except for equipment needed for reclamation, most the heavy equipment and the wash plant were removed on a winter trail in March through mid-April 2019. There was no gold production in 2019. NyacAU is the holder of the mine permits and began reclamation of the mine in 2019. Goldrich owns the claims but NyacAU is the named operator on the mining permits. Goldrich hired an independent mining engineering firm in 2019 year to formulate a mine plan and complete an Initial Assessment to determine if Goldrich should resume production. Any plan to continue future mining is contingent upon our success in raising sufficient capital to fund these activities or any portion of them.
2020
No mining or exploration activities were conducted. We continued our work with the independent mining engineering firm to formulate a mining plan for conducting a future mining operation. Management focus was also directed to moving the arbitration process toward conclusion.
2021, 2022 and plans for 2023 and beyond
In June 2021, Goldrich released the results of an independent Initial Assessment Report (the “IA”), prepared in accordance with the new SEC Subpart 1300 property disclosure requirements, for the Company’s Chandalar placer mine in the Chandalar Gold District in Alaska. The IA was prepared by Global Resources Engineering (“GRE”), a widely-respected mining engineering firm in Denver, Colorado.
Subsequent to release of the IA, a Revised and Amended Initial Assessment Report (the “RAIA”) was prepared by GRE and has a revised and amended date of February 24, 2023 and an effective date of May 31, 2021. The RAIA did not change the results of the economic analysis.
Both the IA and RAIA completed the economic analysis based on a 0.004 raw troy ounce per bank cubic yard cutoff pit constrained mineral resource that utilized a 0.002 raw troy ounce per bank cubic yard grade shell for grade estimation so there was no change in the economic analysis. However, the RAIA reported the pit constrained mineral resources at a 0.004 raw troy ounce per bank cubic yard cutoff while the IA pit constrained mineral resource used a 0.002 raw troy ounce per bank cubic yard cutoff. This difference caused measured and indicated mineral resources to decrease from 120,000 ounces of fine gold in the IA to 119,000 ounces of fine gold in the RAIA and inferred mineral resources to decrease from 17,000 ounces of fine gold in the IA to 16,000 ounces of fine gold in the RAIA. The RAIA was also revised to include additional information requested by the SEC and to add statements of opinions of qualified persons on the adequacy of sample preparation, security, analytical procedures, and the adequacy of the data.
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Using a base case gold price of $1,650, the key economic results of the RAIA with a summarized gold price sensitivity analysis were as follows (A complete copy of the RAIA may be downloaded at https://www.goldrichmining.com/chandalar-gold-district/technical-reports.html).
| Parameter | Base
Case $1,650 Gold |
Gold Price Sensitivity Analysis | ||
| $1,500 | $2,000 | $2,500 | ||
| Undiscounted Pre-Tax Net Cash Flow: | $75 million | $57 million | $116 million | $175 million |
| After-tax NPV@5%(1): | $64 million | $50 million | $92 million | $129 million |
| After-tax IRR(1): | 139% | 112% | 195% | 275% |
| Undiscounted After-tax Net Cash Flow(1): | $72 million | $57 million | $103 million | $145 million |
| After-tax Payback Period (years): | 1.3 | 1.4 | 1.2 | 1.1 |
| All-in Sustaining Costs: | $799/Au oz. | |||
| All-in Costs: | $1,064/Au oz. | |||
| Total Operating Costs: | $646/Au oz. | |||
The RAIA pit-constrained mineral resources for the Little Squaw Creek Placer deposit at a 0.004 raw troy ounce per bank cubic yard cutoff is as follows:
| Classification | Resource
Volume (1000s bcy) |
Raw
Gold Grade (t.oz./bcy) |
Raw
Gold (1000s t. oz) |
Fine
Gold (1000s t. oz) |
| Measured | 2,609 | 0.0302 | 79,000 | 69,000 |
| Indicated | 2,188 | 0.0265 | 58,000 | 50,000 |
| Measured & Indicated | 4,797 | 0.0285 | 137,000 | 119,000 |
| Inferred | 771 | 0.0245 | 19,000 | 16,000 |
| (1) | Raw Gold - Gold as recovered from the placer deposit, historically 84% gold and 16% other metals like silver and copper (referred to as 840 fine). The Mineral Resource is constrained by a 0.002 raw troy ounce per bank cubic yard grade shell and a 0.004 raw troy ounce per bank cubic yard cutoff (840 fineness) at an assumed gold price of 1,600 $/tr oz, assumed mining cost of 4.50 $/bcy, assumed processing and administrative cost of 7.25 $/bcy, an assumed gold purity of 84%, and pit slopes of 45 degrees. These costs are preliminary estimates (prior to economic analysis). |
| (2) | Fine Gold - Gold that is 99.99% pure (referred to as 9999 fine). |
A complete copy of the IA may be downloaded at https://www.goldrichmining.com/chandalar-gold-district/technical-reports.html. Goldrich will decide if a preliminary feasibility study should also be prepared for the Chandalar Mine. A preliminary feasibility study would allow Goldrich to disclose any reserves of the Chandalar Mine.
In December 2021, Goldrich submitted a permit application to the Alaska Department of Natural Resources (“DNR”) to carry out a multi-year, 25,000-foot diamond core drill program at the Company’s Chandalar Property. The permit was received in February 2022. Subject to financing, Goldrich plans to commence the program in May 2024.
The target zone of this hard-rock (lode) drill program, located on the Little Squaw Creek (“LSC”) drainage, is immediately above and partially overlapping the LSC placer deposit and mine. The target zone sits at the heart of a zone surrounded by historic placer workings in every creek and four historic hard-rock gold mines. The angularity of the placer gold nuggets also indicates close proximity to a hard-rock source.
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Figure 1 – Proposed 2024 Drill Pad Sites:
Interpretation of Exploratory Findings at Chandalar
Since the 2011 diamond drill coring program, continued processing of prospecting information along with compilation of geophysical survey data, core re-logging and an associated stream of petrographic studies (relevantly referenced to 2014 activities presented above) has resulted in the re-thinking of the geologic model guiding the Chandalar gold exploration program. That model started with a preliminary theory derived from the available evidence of the time that the Chandalar gold mineralization was likely a stratabound indigenous feature of the Mikado phyllite/schist photoliths (parent rocks), enhanced by compressional mountain building activity (orogenesis). That theory has now largely been discarded as evidence builds that the gold mineralization is related to a magmatic-hydrothermal alteration system driven by an underlying pluton (a body of intrusive igneous rock).
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There are more than 50 bedrock gold showings are contained in a North-Easterly (“NE”) trending zone about 3 km (2 miles) wide and 6 km (4 miles) long. The host rock formation of this distinct zone is mainly pyrrhotitic (magnetic iron sulfide) schist. These prospects are generally associated with the presence of North-Westerly (“NW”) fault zones where they transgress the NE zone of prospects. The numerous gold mineralized prospects can be grouped into three distinct populations: A - massive quartz veins, B - shear and fault gouge zones, and C – dikelets of pegmatite (coarsely crystalline igneous rock). Group A are invariably NW striking, repeatedly sheared and boudinized (segmented like a string of sausages) massive quartz veins containing gold, lead, zinc and arsenic sulfide minerals. Group B, also NW striking, are encased in heavily chloritized host schist, contain crushed or pulverized quartz vein and/or dikelet material, all of which have disseminated arsenopyrite with free-milling gold in them. Group C are intensely hydrothermally altered pegmatite dikelets (generally 5 to 50 cm thick) consisting mostly of secondary clay minerals (after original feldspars, micas and other minerals) mixed with iron carbonates (siderite) and by-product or remnant quartz, all of which have some degree of gold and arsenic mineralization, sometimes also with lead and zinc.
The mapped (surface and drill holes) distribution of the different Groups reflects a general zoning pattern of the gold-mineralized magmatic-hydrothermal alteration system. Group A appears to be the result of lower temperature crystallization and deposition which is peripheral to the massively chloritized sheared schist host rocks of Group B and furthermore to what appear to be swarms of hydrothermally altered pegmatitic dikelets of Group C recorded in some of the drilling. It is important to note the altered gold-bearing dikelets are so soft with pervasive clays they rarely survive weathering erosion to form outcrops, which makes it very difficult to determine their distribution, except as noted in drill intercepts. As explained in the 2014 project activities discussion above, these dikelets contain high-temperature accessory minerals and other minerals which give radiometric responses that help identify their aggregated location. Notably, the dikelets intercepted in the drill holes are usually seen to be intruding and/or replacing schist host rock and are not usually in rock faults, although fault zones may be nearby.
The dikelets of Group C are almost certainly the offspring of larger but hidden intrusive igneous bodies yet to be discovered. The metamorphic grade of the region appears to never have been high enough to melt the indigenous rock, and it is also doubtful it could have produced the selective types of rock alterations now recognized. Since virtually all those of Group C exposed by drilling are mineralized to some degree with gold, geologists servicing the Company clearly believe a parent pluton will also be mineralized, most likely as disseminations, fracture fillings or quartz stockworks within its cupola (roof pendant) where fractionated hydrothermal fluids pregnant with gold would crystalize. Such a deposit of gold mineralization is considered by the Company to be an inspiring exploration target as it could host millions of ounces of gold at economically mineable grades as other intrusive-related gold deposits around the world do.
The Company’s geologists have compiled and analyzed all available geophysical, geochemical, and geological technical data with the objective of identifying the best spots to proceed with exploratory drilling. The most useful component in the data portfolio is the record of the number and intensity of dikelet intercepts in each drill hole. This is found to be most pronounced in the lowest 62-meter (203 ft.) interval of diamond drill core hole LS 11-0060 drilled at -55° for 263 meters (863 ft.). This drill hole hit a vertical section of a gold bearing dikelet swarm for some 50 meters (164 ft.) and terminated within it at a vertical depth of 180 meters below the surface cover of the Rock Glacier prospect. There are no other drill tests of this location. Combined with other supporting technical data (such as the Little Squaw Creek gold placer deposit about 2.6 km ((1.6 miles)) downstream from it), this site constitutes the best target choice for discovery of a mineralized pluton deeper under or in the immediate vicinity of the Rock Glacier. The next drill test is designed to penetrate 300 meters below the Rock Glacier. The possibility also exists that a more prolific zone of higher density gold-mineralized dikelets could be intersected, which could constitute a gold deposit discovery.
The Company believes it is progressing step by step in solving the more than century-old puzzle of how the more than 50 scattered gold prospects of the Chandalar gold mining district may be genetically related or what other commonality they may have. It is variously manifested in abundant gold showings within an oval NE-oriented zone some 3 km wide and 6 km long (about 18 km²). The Chandalar magmatic-hydrothermal alteration “system” is recognized as a geological fact by those studying it and is being used as a working model on which to base future explorations. There may be several plutons along this stretch of this zone feeding the “system”. Going forward, the Company will be focused on identifying “hot spots” within this zone for drill testing.
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Joint Venture Agreement
On April 3, 2012, Goldrich Placer, LLC (“GP”), a subsidiary of Goldrich, entered into a term sheet for a joint venture with NyacAU, LLC (“NyacAU”), an Alaskan private company, to bring Goldrich’s Chandalar placer gold properties into production as defined in the joint venture agreement (the “Operating Agreement”), which was subsequently signed and made effective April 2, 2012. In each case as used herein in reference to the JV, ‘production’ is as defined by the JV agreement. As part of the agreement, Goldrich Placer, LLC (“GP”), a subsidiary of Goldrich and NyacAU (together the “Members”) formed a 50:50 joint venture company, Goldrich NyacAU Placer LLC (“GNP”), to operate the Chandalar placer mines, with NyacAU acting as managing partner. Goldrich has no significant control or influence over the JV, and therefore accounts for its investment using the cost less impairment method.
In 2017, we began arbitration proceedings against our JV partner and its affiliates (see Arbitration below). As of December 31, 2018, the JV had not achieved commercial production as required under the Operating Agreement, and as a result the JV was formally dissolved in May 2019. Prior to a Settlement Agreement (see below), the Arbitration Panel had jurisdiction over the liquidation process and ruled that NyacAU should continue as the manager of the liquidation. Except for equipment needed for reclamation, most the heavy equipment and the wash plant were removed on a winter trail in March through mid-April 2019.
Under the terms of the joint venture agreement (the “Agreement”), the JV was to make annual Member’s Distributions of 10% of the balance of revenue generated by the Joint Venture after deducting Operating Expenses as defined by the GNP Operating Agreement. Related to these distributions, on June 23, 2015, the Company raised net proceeds of $1.1 million through the sale of 12.5% of the cash flows GP, Goldrich’s subsidiary, receives in the future from its interest in GNP (“Distribution Interest”), paid in cash, to Chandalar Gold, LLC (“CGL”) and GVC Capital, LLC, (“GVC”), both of which are non-related entities. Goldrich retained its ownership of its 50% interest in GNP but, after the transaction, subject to the terms of the GNP operating agreement, Goldrich will effectively receive approximately 44%, CGL will effectively receive 6% (12% of Goldrich’s 50% of GNP = 6%) and GVC will effectively receive 0.25% (0.5% of Goldrich’s 50% of GNP = 0.25%) of any distributions produced by GNP. At December 31, 2020 and 2019, an amount of $35,794 has been accrued for the distribution which is included in accrued liabilities for distributions to us that were applied to Loan3. No amount was accrued for the 2018 distribution due to the dissolution of the JV, although during arbitration proceedings, Loan3 was determined and agreed to be paid in full (see Arbitration below). During the year ended December 31, 2020, Goldrich purchased 595,000 membership units, or approximately 49% of CGL’s membership units for $25,000. This provides Goldrich with 47% of any distributions produced by GNP and paid to CGL. The Company accounts for its investment in CGL using the equity method. The Company does not anticipate any distributions from CGL until the placer resumes production.
Concerning Loan3, in 2012, the joint venture purchased, on Goldrich’s behalf, a 2% royalty interest, payable on all production from certain Goldrich mining claims at the Chandalar, Alaska property for $250,000 from Jumbo Basin Corporation. This transaction gave rise to Loan3, was carried at an interest rate of the greater of prime plus 2% or 10%, and was to be repaid from distributions to Goldrich as defined in the Operating Agreement, prior to any distributions in cash to Goldrich. The 2016 and 2017 Members’ Distributions, as adjusted by the rulings of the arbitration Panel, were first applied against Loan3 in accordance with the terms of the Operating Agreement, the distributions were sufficient to pay all of Loan3 principal and interest in full.
Arbitration
In 2017, we, our subsidiary and the joint venture, as claimants, filed an arbitration statement of claim before a three-member Arbitration Panel (“the Panel”), against our JV partner and its affiliates; NyacAU, LLC (“NyacAU”), BEAR Leasing, LLC, and Dr. J. Michael James, as respondents. In 2018, the respondents filed a counter-claim against the Company, its subsidiaries and certain members of our current and former management, the counterclaim respondents. The arbitration claim alleged, amongst other things, claims concerning related-party transactions, accounting issues including capital vs. operating leases, interpretation of the joint venture operating agreement, allocation of tax losses between the joint venture partners, and unpaid amounts due Goldrich relating to the Chandalar Mine.
During the years ended December 31, 2019, 2020, and 2021, the Panel has released various awards relating to the allegations of both parties. Some of which have been in favor of our positions and some have been in favor of our JV partner and its affiliates. The financial effect of these awards were reflected in the financial statements for the year ended December 31, 2021.
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Settlement Agreement
On March 31, 2023, we signed a settlement agreement between the Company, NyacAU, LLC (“NyacAU”), Goldrich Placer, LLC (“GP”), Goldrich NyacAU Placer, LLC (“GNP”), Dr. J. Michael James, individually (“Dr. James”), and Bear Leasing, LLC (“Bear Leasing”) (each a “Party” and, collectively, the “Parties”).
Subject to Goldrich making a payment of $105,000 to NyacAU by April 30, 2023, which was made, the settlement agreement, among other things, resolves all outstanding arbitration issues, awards, and orders including mutual release of all outstanding issues before the Alaska superior court and all court-entered judgments. The agreement also terminates and supersedes all prior agreements between all Parties except a security agreement between NyacAU and GNP to secure repayment of fifty percent (50%) of a funding mechanism known as Line of Credit 1 (LOC1), which was advanced by NyacAU to GNP. GNP was formally dissolved in 2019.
Option Agreement
Concurrent with signing the settlement agreement, Goldrich also signed an option agreement with the Parties. The option agreement, among other things, grants Goldrich, or its designee, the right, but not the obligation, to become operator of the Chandalar placer mining permits. If the option is exercised, Goldrich or its designee would also obtain ownership of all camp facilities and mining equipment remaining at the Chandalar placer mine site owned by NyacAU and its affiliates. Currently Goldrich owns the claims but NyacAU is the named operator on the mining permits.
To exercise the option, Goldrich, or its designee, must give written and electronic notice of its intent to do so by April 30, 2024 and pay $1,000,000 into escrow within five business days of giving notice. Upon exercise of the option, Goldrich or its designee would assume all reclamation responsibilities and liability and NyacAU would be released from any reclamation liability. Also, NyacAU would be entitled to limited payments out of the production of placer gold at the Chandalar placer mine up to the greater of eight million five hundred thousand dollars ($8,500,000) or 4,860 ounces of fine gold (the Maximum Amount). No production payment shall be due to NyacAU on the first 5,000 ounces of fine gold production. Thereafter, NyacAU would receive at least five percent (5%) of all production from the Chandalar placer mine until the Maximum Amount is paid. Additionally, after the first 5,000 ounces of fine gold production, NyacAU would be entitled to a minimum annual payment equal to the value of $120,000 or 68 fine gold ounces, whichever is greater, and such payment would apply towards the satisfaction of the Maximum Amount.
Financial Effect of the Settlement Agreement and the Option Agreement
Even though the settlement agreement was consummated subsequent to the end of the 2022 year, the arbitration claim was filed and has been open since 2018; therefore, the event requires the financial effects to be reflected in the financial statement for the year ended December 31, 2022. As a result, the previous expense accruals of $638,193 made in 2021 and prior years were removed and the settlement amount of $105,000 was recorded. This resulted in a gain on settlement being recorded of $533,193 at December 31, 2022.
Because the exercise of the option agreement is at the election of the Company, no financial effects of the option have been recognized at December 31, 2022. If the option agreement is exercised by April 2024, the $1,000,000 payment would be recorded for the purchase of equipment, Goldrich would become the named operator on the Chandalar placer mining permits, the $8,500,000 liability would be recognized and a reclamation liability would be recognized. While the GRE Revised and Amended Initial Assessment Report reflects ample resources to justify a mining activity at the Chandalar Mine, the option would only be exercised if we were able to secure financing sufficient to start up a mining operation or secure a mining partner to economically extract the gold in a mining operation.
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ITEM 3. LEGAL PROCEEDINGS
We are subject to legal proceedings and claims, which arise from time to time. These can include, but are not limited to, legal proceedings and/or claims pertaining to environmental or safety matters. With the exception of the arbitration actions detailed below, there are no pending material legal proceedings in which the Company is a party or any of their respective properties is subject. Also, with the exception of the arbitration actions detailed throughout this Annual Report on Form 10-K, there are no pending legal proceedings to which any director, officer or affiliate of the Company, any owner of record or beneficiary of more than 5% of the common stock of the Company, or any security holder of the Company is a party adverse to the Company or has a material interest adverse to the Company.
ITEM 4. MINE SAFETY DISCLOSURES
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95.1 to this Annual Report.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is currently quoted on the FINRA OTC Pink but in March 2021, Goldrich qualified to be quoted under the symbol “GRMC” on the OTCQB of the OTC Markets. However, because of a lack of finances to pay its auditors, Goldrich was unable to keep current in its SEC filings and was disqualified from being quoted on the OTCQB. The OTCQB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network which provides information on current “bids” and “asks” as well as volume information. Neither the OTC Pink nor the OTCQB are considered a “national securities exchange.” Subject to financing, it is Goldrich’s intention to become current in its SEC filings and requalify to be quoted on the OTCQB as soon as possible.
The closing price for our common stock on the OTC Pink was $0.0003 on June 28, 2023. Goldrich intends to seek a listing of its shares on a recognized stock exchange in Canada, but has not yet filed application to do so as of the date of this Annual Report.
Holders of Record
As of May 24, 2023, there were 2,934 shareholders of record of our common stock and an unknown number of additional shareholders whose shares are held through brokerage firms or other institutions.
Dividends
We have not paid any dividends and do not anticipate the payment of dividends on our common stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E Convertible Preferred Stock, or Series F Convertible Preferred Stock in the foreseeable future. Our Series A Convertible Preferred Stock (the “Series A Preferred Stock”) earns dividends as follows:
| ● | Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from our surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividend shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year. |
| ● | Preferential and Cumulative. The Series A Dividends shall be payable before any dividends will be paid upon, or set apart for, our common stock and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company. |
| ● | Payment of Dividend: If we shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any dividend by our Board of Directors in compliance with the Alaska Code and our Articles of Incorporation and Bylaws, the holder of Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold. Payment of Series A dividends in gold shall be paid only if we are producing gold in sufficient quantities as of the dividend payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from our Chandalar property. We have total dividends in arrears of $138,410 as of December 31, 2022. Total dividends of $30,618 were declared and payable as a result of conversion of preferred stock during 2011 and 2016 and are included in current liabilities on our Balance Sheet. |
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We issued Series A Preferred Stock to two U.S. Persons (as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) who are accredited investors, relying on the exemptions from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act. These two U.S. Persons have exercised their conversion privileges and are now holders of our Common Stock. In addition, we issued Series A Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.
We issued Series B Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.
We issued Series C Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.
We issued Series D Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.
We issued Series E Preferred Stock to five U.S. Persons who are accredited investors, and two person who are “accredited investors” and not U.S. Persons, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.
We issued Series F Preferred Stock to one person who is an “accredited investor” and not a U.S. Person, relying on the exception from the Securities Act registration requirements available under Regulation S of the Securities Act.
Securities Authorized for Issuance under Equity Compensation Plans
A vote of shareholders at our Shareholder Meeting held on November 13, 2020 authorized an increase in the total shares in the Restated 2008 Equity Incentive Plan (the “Plan”) to 16,129,304 shares of common stock, an amount that represented 10% of the outstanding shares of our common stock at that time. At December 31, 2022, we have the following options outstanding and available for issuance:
| Plan Category | Number
of securities to |
Weighted
average |
Number
of |
| Equity compensation plans approved by security holders | 1,050,000 | $0.05 | 8,954,304 |
| Equity compensation plans not approved by security holders | 0 | 0 | 0 |
| Total | 1,050,000 | $0.05 | 8,954,304 |
The Plan permits the grant of: (i) incentive stock options; (ii) nonqualified stock options; (iii) restricted stock or restricted stock units; and (iv) stock appreciation rights. The Board of Directors administers the Plan and has the authority to interpret the Plan and the awards granted under the Plan and establish rules and regulations for the administration of the Plan. The Compensation Committee of the Board of Directors makes recommendations to the Board regarding the administration of the 2008 Plan.
Unless otherwise provided in the applicable award agreement or any severance agreement, vested awards are granted under the 2008 Plan will expire, terminate, or otherwise be forfeited as follows:
| ● | Ninety (90) days after the date of termination of a participant’s continuous status as a participant, other than in the circumstances described below; |
| ○ | Immediately upon termination of a participant’s continuous status as a participant for cause as defined in a Company subplan or award agreement; |
| ○ | Twelve (12) months after the date on which a participant ceased performing services as a result of his or her Disability (as defined in the Plan); and |
| ○ | Twelve (12) months after the death of a participant who was a participant whose continues status as a participant terminated as a result of their death. |
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Issuer Purchase of Equity Securities
We and our affiliates did not repurchase any of our securities during the year ended December 31, 2022.
Sale of Unregistered Securities
All sales of unregistered securities during the period covered by this Annual Report were previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Overview
Our Chandalar, Alaska gold mining property contains both hard-rock (lode) targets and placer deposits and has seen over a hundred years of intermittent mining exploration and extraction history. There has been extraction of gold from several alluvial, or placer gold streams, and from an array of small quartz veins that dot the property. However, only in very recent times is the primary source of the gold becoming evident. As a result of our exploration, considering structural geology, petrographic, geochemical and geophysical evidence, we have realized that all of the gold is sourced within a system of magmatic hydrothermal alteration features such as small pegmatitic dikes and chloritized schist. We believe these features are common to and link all of the hard-rock (lode) prospects, the weathering of which generated the gold placer deposits, and furthermore are an outlying expression of an underlying gold bearing pluton.
We have defined drilling targets for a hard-rock (lode) gold deposit in an area of interest approximately 1,800 feet wide and over five miles long, possibly underlain by a series of mineralized magmatic intrusions (plutons). Exploration therefore has taken on two directions; one toward defining a low-grade, large tonnage body of mineralization running beneath the headwaters of Little Squaw Creek where dense swarms of gold mineralized pegmatitic dikelets are seen, the other a deeper, larger mineralized plutonic body(ies) from which the district’s mineralizing fluids may have emanated and migrated through Chandalar country rock.
In December 2021, Goldrich submitted a permit application to the Alaska Department of Natural Resources (“DNR”) to carry out a multi-year, 25,000-foot diamond core drill program at the Company’s Chandalar Property. The permit was received in February 2022. The target zone of this hard-rock (lode) drill program, located on the Little Squaw Creek (“LSC”) drainage, is immediately above and partially overlapping the LSC placer deposit and mine. The target zone sits at the heart of a zone surrounded by historic placer workings in every creek and four historic hard-rock gold mines. Previous exploration, including drill programs, soil and rock samples, airborne magnetic and radiometric studies, and advanced petrographic studies in addition to the angularity of the placer gold nuggets indicates close proximity of the LSC placer deposit to a hard-rock source. Subject to financing, Goldrich plans to commence the program in May 2024.
Although our main focus continues to be the exploration of these hard-rock targets, we also endeavor to develop our placer properties as a source of internal cash to protect us from future market fluctuations and to provide funds for future exploration. In 2012, Goldrich and NyacAU formed Goldrich NyacAU Placer LLC (“GNP”), a 50/50 joint-venture company, managed by NyacAU, to mine Goldrich’s various placer properties at Chandalar.
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As shown below, the placer gold extracted by GNP increased each year from 2015 through 2018, trending toward production figures that were anticipated by a preliminary economic assessment authored by qualified geologists for us:
| Year | Ounces
of |
Ounces
of Fine Gold |
| 2015 | 4,400 | 3,900 |
| 2016 | 10,200 | 8,200 |
| 2017 | 15,000 | 12,300 |
| 2018 | 20,900 | 17,100 |
Although GNP’s extraction increased over the years, ultimately the extraction numbers attained over those years fell short of the Minimum Production Requirements required in the GNP Operating Agreement. According to the terms of the agreement, GNP was required to pay a Minimum Production Requirement of 1,100 ounces for 2016, 1,200 ounces for 2017, and 1,300 ounces for 2018 to both Goldrich and NyacAU by October 31, 2018. This payment was not made. Under the joint venture Operating Agreement, GNP would be dissolved if GNP failed to meet the Minimum Production Requirement. On August 20, 2018, we announced the intended dissolution of the GNP joint venture. GNP was formally dissolved in May 2019.
Subsequent to 2019, Goldrich commissioned an independent third-party mining engineering firm to complete a mining plan and initial assessment for the Company’s Chandalar Mine. In June, 2021, Goldrich released the results of an independent Initial Assessment Report (the “IA”), prepared in accordance with the new SEC Subpart 1300 property disclosure requirements, for the Company’s Chandalar placer mine. The IA was prepared by Global Resources Engineering (“GRE”), a widely-respected mining engineering firm in Denver, Colorado.
After the release of the IA, a Revised and Amended Initial Assessment Report (the “RAIA”) was prepared by GRE and has a revised and amended date of February 24, 2023 and an effective date of May 31, 2021. The RAIA did not change the results of the economic analysis.
Both the IA and RAIA completed the economic analysis based on a 0.004 raw troy ounce per bank cubic yard cutoff pit constrained mineral resource that utilized a 0.002 raw troy ounce per bank cubic yard grade shell for grade estimation so there was no change in the economic analysis. However, the RAIA reported the pit constrained mineral resources at a 0.004 raw troy ounce per bank cubic yard cutoff while the IA pit constrained mineral resource used a 0.002 raw troy ounce per bank cubic yard cutoff. This difference caused measured and indicated mineral resources to decrease from 120,000 ounces of fine gold in the IA to 119,000 ounces of fine gold in the RAIA and inferred mineral resources to decrease from 17,000 ounces of fine gold in the IA to 16,000 ounces of fine gold in the RAIA. The RAIA was also revised to include additional information requested by the SEC and to add statements of opinions of qualified persons on the adequacy of sample preparation, security, analytical procedures, and the adequacy of the data.
Using a base case gold price of $1,650, the key economic results of the RAIA with a summarized gold price sensitivity analysis were as follows (A complete copy of the RAIA may be downloaded at https://www.goldrichmining.com/chandalar-gold-district/technical-reports.html).
| Parameter | Base
Case $1,650 Gold |
Gold Price Sensitivity Analysis | ||
| $1,500 | $2,000 | $2,500 | ||
| Undiscounted Pre-Tax Net Cash Flow: | $75 million | $57 million | $116 million | $175 million |
| After-tax NPV@5%(1): | $64 million | $50 million | $92 million | $129 million |
| After-tax IRR(1): | 139% | 112% | 195% | 275% |
| Undiscounted After-tax Net Cash Flow(1): | $72 million | $57 million | $103 million | $145 million |
| After-tax Payback Period (years): | 1.3 | 1.4 | 1.2 | 1.1 |
| All-in Sustaining Costs: | $799/Au oz. | |||
| All-in Costs: | $1,064/Au oz. | |||
| Total Operating Costs: | $646/Au oz. | |||
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The RAIA pit-constrained mineral resources for the Little Squaw Creek Placer deposit at a 0.004 raw troy ounce per bank cubic yard cutoff is as follows:
| Classification | Resource
Volume (1000s bcy) |
Raw
Gold Grade (t.oz./bcy) |
Raw
Gold (1000s t. oz) |
Fine
Gold (1000s t. oz) |
| Measured | 2,609 | 0.0302 | 79,000 | 69,000 |
| Indicated | 2,188 | 0.0265 | 58,000 | 50,000 |
| Measured & Indicated | 4,797 | 0.0285 | 137,000 | 119,000 |
| Inferred | 771 | 0.0245 | 19,000 | 16,000 |
| (1) | Raw Gold - Gold as recovered from the placer deposit, historically 84% gold and 16% other metals like silver and copper (referred to as 840 fine). The Mineral Resource is constrained by a 0.002 raw troy ounce per bank cubic yard grade shell and a 0.004 raw troy ounce per bank cubic yard cutoff (840 fineness) at an assumed gold price of 1,600 $/tr oz, assumed mining cost of 4.50 $/bcy, assumed processing and administrative cost of 7.25 $/bcy, an assumed gold purity of 84%, and pit slopes of 45 degrees. These costs are preliminary estimates (prior to economic analysis). |
| (2) | Fine Gold - Gold that is 99.99% pure (referred to as 9999 fine). |
Goldrich will decide if a preliminary feasibility study should also be prepared for the Chandalar Mine. A preliminary feasibility study would allow Goldrich to disclose any reserves of the Chandalar Mine. The Company is encouraged by the results of the IA as it helps establish the value of the placer deposit, shows a large geochemical anomaly indicative of a potential large hard-rock (lode) gold source, and may provide financing opportunities.
Looking forward, our ability to develop either hard-rock (lode) targets or placer deposits is subject to financing. The on-going development of the hard-rock gold targets, the recent change in SEC regulations which allow us to release the new information in the IA, and significant increases in the price of gold since 2019 appear to have increased the availability of funds so we are hopeful to secure sufficient funds for a major exploration program and for reopening the placer mine.
Liquidity and Capital Resources
We are an exploration stage company and have incurred losses since our inception. We currently do not have sufficient cash to support the Company through 2023 and beyond. We anticipate that we will incur approximately $700,000 for general operating expenses and property maintenance, $275,000 for interest, and $630,000 for interest – related party, over the next 12 months, in addition to the current liabilities on the balance sheet at December 31, 2022 of $11,976,360. Additional funds will be needed for any exploration expenditures, should any be undertaken. We also anticipate additional unknown and undeterminable costs for arbitration. We plan to raise the financing through a combination of debt and/or equity placements, sale of mining property interests, and revenue from placer operations.
On March 31, 2023, we signed a settlement agreement between the Company, NyacAU, LLC (“NyacAU”), Goldrich Placer, LLC (“GP”), Goldrich NyacAU Placer, LLC (“GNP”), Dr. J. Michael James, individually (“Dr. James”), and Bear Leasing, LLC (“Bear Leasing”) (each a “Party” and, collectively, the “Parties”).
Subject to Goldrich making a payment of $105,000 to NyacAU by April 30, 2023, the settlement agreement, among other things, resolves all outstanding arbitration issues, awards, and orders including mutual release of all outstanding issues before the Alaska superior court and all court-entered judgments. The agreement also terminates and supersedes all prior agreements between all Parties except a security agreement between NyacAU and GNP to secure repayment of fifty percent (50%) of a funding mechanism known as Line of Credit 1 (LOC1), which was advanced by NyacAU to GNP. GNP was formally dissolved in 2019.
Even though the settlement agreement was consummated subsequent to the end of the 2022 year, the nature and magnitude of the event requires the financial effects to be reflected in the financial statement for the year ended December 31, 2022. As a result, the previous expense accruals of $638,193 made in 2021 and prior years were removed and the settlement amount of $105,000 was recorded, resulting in a gain on settlement of $533,193 at December 31, 2022.
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Because the exercise of the option agreement is at the election of the Company, no financial effects of the option have been recognized at December 31, 2022. If the option agreement is exercised by April 2024, the $1,000,000 payment would be recorded for the purchase of equipment, Goldrich would become the named operator on the Chandalar placer mining permits, the $8,500,000 liability would be recognized and a reclamation liability would be recognized. While the GRE Revised and Amended Initial Assessment Report reflects ample resources to justify a mining activity at the Chandalar Mine, the option would only be exercised if we were able to secure financing sufficient to start up a mining operation or secure a mining partner to economically extract the gold in a mining operation.
The audit opinion and notes that accompany our consolidated financial statements for the year ended December 31, 2022, disclose a ‘going concern’ qualification to our ability to continue in business. The accompanying consolidated financial statements have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain current liabilities and raising additional funds. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured.
We currently have only a brief, recent history of a recurring source of revenue and in 2016 received our first cash distribution from the joint venture. If we profitably execute a production business plan, our ability to continue as a going concern may improve and become less dependent on our ability to raise capital to fund our future exploration and working capital requirements. Our plans for the long-term include the profitable exploitation of our mining properties and financing our future operations through sales of our common stock and/or debt. Additionally, the capital markets and general economic conditions in the United States are constantly changing and may present significant obstacles to raising the required funds. These factors raise substantial doubt about our ability to continue as a going concern.
During the year ended December 31, 2022, we completed financings of $441,997, compared to $814,414 net cash for note financings and placements of our securities during the year ended December 31, 2021. On November 1, 2019, the Company and lenders entered into the Amended and Restated Loan Security and Intercreditor Agreement (the “Agreement”). Under the Agreement, the borrower and holders entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like.
If we are unable to timely satisfy our obligations under these secured senior notes payable, the notes payable in gold, originally due November 2018 and subsequently amended to be on demand, and the interest on both the secured senior note due quarterly and the notes payable in gold, and we are not able to re-negotiate the terms of such agreements, the holders will have rights against us, including potentially seizing or selling our assets. The notes payable in gold are secured against our right to future distributions of gold extracted by our joint venture with NyacAU or subsequent gold production. At December 31, 2022, we had outstanding total notes payable in gold of $483,514, representing 266.789 ounces of fine gold due on demand. To date, the gold notes have not been paid, the note holders have not demanded payment and have indicated willingness to work with the Company to extend the due date.
At December 31, 2022, the Company had outstanding Notes payable of $1,250,169 and outstanding Notes payable – related party of $4,195,979. The Notes payable and Notes payable – related party had matured on October 31, 2018. In November 2019, the Company and the holders of the notes amended the notes, and the notes are now due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder.
We believe we will be able to secure sufficient financing for further operations and exploration activities of our Company, but we cannot give assurance we will be successful in attracting financing on terms acceptable to us, if at all. Additionally, anticipating continued placer production after dissolution of GNP, we look forward to internal cash flow and additional options for financing. A successful mining operation may provide the long-term financial strength for the Company to remove the going concern condition in future years. To increase its access to financial markets, Goldrich, which is currently on the OTC Pink, intends to requalify to be quoted on the OTCQB of the OTC Markets and intends to also seek a listing of its shares on a recognized stock exchange in Canada.
The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.
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Results of Operations
On December 31, 2022 we had total liabilities of $11,976,360 and total assets of $761,924. This compares to total liabilities of $11,055,036 and total assets of $763,073 on December 31, 2021. As of December 31, 2022, our liabilities consist of $275,424 for remediation and asset retirement obligations, $483,514 of notes payable in gold, $4,195,979 of notes payable to related parties, $1,250,169 of notes payable, $1,534,863 of trade payables and accrued liabilities, $1,264,216 due to related parties, $2,151,466 of interest payable to related parties, $720,111 of interest payable, $70,000 of stock subscription payable and $30,618 for dividends payable. Of these liabilities, $11,630,936 are due within 12 months. The increase in liabilities compared to December 31, 2021 is largely due to an increase in the secured senior notes payable and notes payable related party and the interest associated with the notes. The increase in total assets was due to an increase in prepaid expenses.
On December 31, 2022 we had negative working capital of $11,520,440 and a stockholders’ deficit of $11,214,436 compared to negative working capital of $10,634,714 and a stockholders’ deficit of $10,291,963 for the year ended December 31, 2021. Working capital decreased because of increased deferred compensation to the Company’s officers as well as an increase in the notes payable and notes payable related party which are due on demand and classified as current liabilities.
During the year ended December 31, 2022, the Company reported total operating expense of $748,683, compared to $997,863 for the year ended December 31, 2021. Office supplies, mineral property maintenance, and settlement expense increased slightly while all other expenses decreased. The most significant decreases were mine preparation costs, other general and administrative expense and arbitration expense. Total other (income) expense for the year ended December 31, 2022 was $306,947 compared to $761,296 for the same period of 2021, mainly due to the gain on settlement being recorded in 2022.
During 2022, we used cash from operating activities of $441,790 compared to $812,583 for 2021. Net loss of $1,055,630 for 2022 compared to net loss of $1,759,159 for 2021. At the end of 2022, we have accumulated approximately $48.2 million and $44.8 million in federal and state net operating losses, respectively, which may enable us to generate like amounts in net income prior to incurring any significant income tax obligation. Net operating losses of $36.6 million will expire in various amounts from 2023 through 2037, with another $11.6 million having no expiration date but limited to 80% of taxable income.
During 2022 and 2021, we had no investing activities.
During 2022, cash of $441,997 was provided by financing activities, compared to cash of $814,414 provided during the year ended December 31, 2021. Cash of $133,157 was provided from warrant exercises, $30,000 from stock subscription payable, $125,180 net of offering costs for notes payable related party and $153,660 net of offering costs for notes payable. This compares to cash of $422,000 provided and $20,000 repaid from notes payable related party, net of offering costs, $25,000 from notes payable, net of offering costs, $347,414 from warrant exercises, and $40,000 from stock subscription payable during the year ended December 31, 2021.
Private Placement Offerings
During the year ended December 31, 2022, the Company raised $30,000 from investors for a private placement of common stock at a price of $0.01 per share, and is included in stock subscription payable. No private placement offerings occurred during 2021.
Warrant Exercises
During the year ended December 31, 2022, the Company received $133,157 cash as a result of the exercise of Class R and T warrants, resulting in the issuance of 3,660,817 common shares. 1,555,555 Class R warrants were exercised at a price of $0.045 per common share, 1,000,000 Class R warrants and 1,105,262 Class S warrants were exercised at a price of $0.03 per common share. Of the warrants exercised, 1,000,000 were formerly owned by Mr. Gallagher and had been transferred to unrelated parties. The unrelated parties then exercised the warrants for cash.
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During the year ended December 31, 2021, the Company received $347,414 cash as a result of the exercise of Class S and T warrants at an exercise price of $0.03 per common share, resulting in the issuance of 11,580,467 common shares. Of the warrants exercised, 7,458,303 were formerly owned by Mr. Gallagher and had been transferred to unrelated parties. The unrelated parties then exercised the warrants for cash. The Company received an additional $40,000 for the exercise of Class T warrants which are included in stock subscription payable at December 31, 2021. Once the exercise is complete, the Company will issue 1,333,333 common shares for the exercise.
Warrant Extensions
On June 30, 2021, the Company’s Board of Directors, voted to extend the expiry dates for all Class R warrants not already expired, by two years. Prior to this change, the Class R warrants were set to expire at various times throughout 2021, with the last one expiring on December 9, 2021. With this change, 11,666,668 Class R warrants were modified to expire on various dates from August 1 to December 9, 2023.
Notes Payable in Gold, Notes Payable & Notes Payable – Related Party
At December 31, 2022, we owed $483,514 for Notes payable in Gold, $1,250,169 for Notes payable and $4,195,979 for Notes payable – related party. Interest payable on these borrowings totaled $2,860,359. These borrowings have matured beyond their original due dates and have been amended to be due upon demand.
At December 31, 2021, we owed $481,780 for Notes payable in Gold, $1,088,421 for Notes payable and $4,064,211 for Notes payable – related party. Interest payable on these borrowings totaled $2,028,104. These borrowings have matured beyond their original due dates and have been amended to be due upon demand.
During the year ended December 31, 2021, one holder of the Notes payable, received shares in lieu of cash for interest. A total of 280,752 common shares were issued in exchange for interest payable of $4,211 at $0.015 per share.
Effective November 1, 2019, we entered into an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) and effective August 25, 2021, we entered into First Amendment to the Amended and Restated Loan, Security, and Intercreditor Agreement dated November 1, 2019 (“First Amendment”) with Nicholas Gallagher, a related party and member of our Board of Directors, in his capacity as agent for and on behalf of the holders of the Notes payable.
As a result of the borrowings under the Notes payable in gold, Notes payable and Notes payable – related party (collectively, the “Notes”), we are faced with a significant hurdle in financing the Company going forward, whether to conduct exploration programs or initiate a mining program at the Chandalar mine. Our near-term cash requirements are greater than the assets we have available to satisfy them, and the holders of the Notes could choose to exercise their rights to demand payment, which would result in a default situation relative to the Notes. Mr. Gallagher is secured in his lending to the Company by means of the Amended Agreement, and if he were to demand payment, the Company would not be able to pay him the amounts due and he would be entitled to sell the assets secured under his deed of trust in order to pay his debt. We believe these holders to be friendly to the Company and that they will refrain from demanding payment, but the Company cannot control the potential demands nor the consequences that would be extracted as a result of default on the Notes.
Subsequent Events
Subsequent to December 31, 2022, the Company received $162,667 cash as a result of exercise of Class R warrants at an exercise price of $0.024 per common share. Ownership of these warrants had been in the hands of a related party and were sold by him personally to unrelated parties. The unrelated parties then exercised the warrants for cash, resulting in the issuance of 6,777,778 common shares.
Subsequent to December 31, 2022, the Company received cash of $25,000 of additional notes payable and $27,500 of additional notes payable – related party.
Subsequent to December 31, 2022, the Company received cash of $1,500 for a short-term note payable from a related party.
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Mining Permit and Future Mining Activities
The upward movements in the price of gold to a range of $1,800 to $2,000 per ounce or higher during 2022 and early 2023 have created renewed interest in gold mining, gold exploration and investments in companies engaging in those activities, including the junior mining/exploration sector in which we participate. Additionally, the fact that we own a mine that has produced over 44,000 ounces in recent years along an annual increasing trend has caught the interest of placer mining companies and investors who support placer mining operations. We believe we have the fundamentals to raise capital and continue our primary strategy of exploration and secondarily placer mining.
If we can attract sufficient financing to reinstate the placer mining operation, we may have a viable and productive path forward toward obtaining financing in the short-term to achieve long-term profitability. To effectively pursue this strategy, we have negotiated the option agreement described above to provide for facilities, equipment and mining permit to commence work, while taking on the reclamation liability for the Chandalar placer mine. While the GRE Revised and Amended Initial Assessment Report reflects ample resources to justify a mining activity at the Chandalar placer mine, the option would only be exercised if we were able to secure financing sufficient to start up a mining operation or secure a mining partner to economically extract the gold in a mining operation.
We do believe there are investors motivated to provide funding for exploration programs to locate and exploit the hard rock deposits from which the placer mineralization is coming from. This strategy can be pursued independent of any mining activities.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Inflation
We do not believe that inflation has had a significant impact on our consolidated results of operations or financial condition.
Contractual Obligations
See Subsequent Events above.
Critical Accounting Policies
We have identified our critical accounting policies, the application of which may materially affect the financial statements, either because of the significance of the financials statement item to which they relate, or because they require management’s judgment in making estimates and assumptions in measuring, at a specific point in time, events which will be settled in the future. The critical accounting policies, judgments and estimates which management believes have the most significant effect on the financial statements are set forth below:
| ● | Estimates of the recoverability of the carrying value of our mining and mineral property assets. We use publicly available pricing or valuation estimates of comparable property and equipment to assess the carrying value of our mining and mineral property assets. However, if future results vary materially from the assumptions and estimates used by us, we may be required to recognize an impairment in the assets’ carrying value. |
| ● | Estimates of our environmental liabilities. Our potential obligations in environmental remediation, asset retirement obligations or reclamation activities are considered critical due to the assumptions and estimates inherent in accruals of such liabilities, including uncertainties relating to specific reclamation and remediation methods and costs, the application and changing of environmental laws, regulations and interpretations by regulatory authorities. |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Goldrich Mining Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Goldrich Mining Company (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has generated no revenues and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
We have served as the Company’s independent auditor since 2003.
/s/Assure CPA, LLC
July 5, 2023
Firm
ID:
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Goldrich Mining Company Consolidated Balance Sheets |
| December 31, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Mineral interests: | ||||||||
| Mineral interests | ||||||||
| Total mineral interests | ||||||||
| Other assets: | ||||||||
| Investment in CGL LLC | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Interest payable | ||||||||
| Interest payable – related party | ||||||||
| Related party payable | ||||||||
| Notes payable | ||||||||
| Notes payable – related party | ||||||||
| Notes payable in gold | ||||||||
| Dividends payable on preferred stock | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Stock subscription payable | ||||||||
| Remediation and asset retirement obligation | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Notes 4, 9, 10, 12) | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock; par value, shares authorized; shares issued or outstanding | ||||||||
| Convertible preferred stock series A; 5% cumulative dividends, par value, shares authorized; shares issued and outstanding, $ | ||||||||
| Convertible preferred stock series B; par value, shares authorized, shares issued and outstanding, $ | ||||||||
| Convertible preferred stock series C; par value, shares authorized, issued and outstanding, $ | ||||||||
| Convertible preferred stock series D; par value, shares authorized, and shares issued and outstanding, $ | ||||||||
| Convertible preferred stock series E; par value, shares authorized, issued and outstanding, $ | ||||||||
| Convertible preferred stock series F; par value, shares authorized, shares issued and outstanding, $ | ||||||||
| Common stock; $ par value, shares authorized; and issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Goldrich Mining Company Consolidated Statements of Operations |
| Year Ended | Year Ended | |||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Operating expenses: | ||||||||
| Mine preparation costs | $ | $ | ||||||
| Exploration expense | ||||||||
| Management fees and salaries | ||||||||
| Professional services | ||||||||
| General and administrative | ||||||||
| Office supplies and other | ||||||||
| Directors’ fees | ||||||||
| Mineral property maintenance | ||||||||
| Arbitration costs (Note 4) | ||||||||
| Total operating expenses | ||||||||
| Other (income) expense: | ||||||||
| Accounts payable forgiveness | ( | ) | ||||||
| Change in fair value of notes payable in gold | ( | ) | ||||||
| Interest expense and finance costs | ||||||||
| Interest expense and finance costs – related party | ||||||||
| Gain on settlement of arbitration (Note 4) | ( | ) | ||||||
| Gain on forgiveness of CARES Act PPP loan | ( | ) | ||||||
| Total other (income) expense | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Preferred dividends | ( | ) | ( | ) | ||||
| Net loss available to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Goldrich Mining Company Consolidated Statements of Changes in Stockholders’ (Deficit) For the Years Ended December 31, 2022 and 2021 |
| Common Stock Shares | Common Stock Par Value | Preferred Stock Shares | Preferred Stock No Par Value | Additional Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Warrants exercised | - | ( | ) | |||||||||||||||||||||||||
| Shares issued for interest | - | ( | ) | |||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Warrants exercised | - | ( | ) | |||||||||||||||||||||||||
| Preferred D conversion | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Goldrich Mining Company Consolidated Statements of Cash Flows |
Year
Ended | Year
Ended | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Change in fair value of notes payable in gold | ( | ) | ||||||
| Accretion of asset retirement obligation | ||||||||
| Accounts payable forgiveness | ( | ) | ||||||
| Gain on forgiveness of CARES Act PPP loan and interest | ( | ) | ||||||
| Amortization of discount on notes payable and notes payable related party | ||||||||
| Gain on settlement of arbitration | ( | ) | ||||||
| Change in: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Interest payable | ||||||||
| Interest payable – related party | ||||||||
| Related party payable | ||||||||
| Net cash used - operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from stock subscription payable | ||||||||
| Proceeds from warrant exercises | ||||||||
| Proceeds from notes payable, net | ||||||||
| Proceeds from notes payable – related party, net | ||||||||
| Payments on notes payable – related party | ( | ) | ||||||
| Net cash provided - financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of year | ||||||||
| Cash and cash equivalents, end of year | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Issuance of shares of common stock for interest payable | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Goldrich Mining Company
Notes to the Consolidated Financial Statements
| 1. | ORGANIZATION AND DESCRIPTION OF BUSINESS |
Goldrich Mining Company (“Company”) was incorporated under the laws of the State of Alaska on March 26, 1959. The Company is engaged in the business of acquiring and exploring mineral properties throughout the Americas, primarily those containing gold and associated base and precious metals. During 2022, all of the Company’s activities were focused on the Chandalar property in Alaska. The Company’s common stock trades on the OTC Pink exchange under the ticker symbol GRMC.
Going Concern
The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses since its inception and does not have sufficient cash to fund normal operations and meet all obligations for the next 12 months without deferring payment on certain current liabilities and/or raising additional funds.
The
Company currently has no historical recurring source of revenue, an accumulated deficit of $
The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Consolidation of and Accounting for Subsidiaries
The consolidated financial statements include the accounts of the Company and the accounts of its 100% owned subsidiary Goldrich Placer, LLC as of and for the years ended December 31, 2022 and December 31, 2021, with all intercompany balances eliminated.
Accounting for Joint Ventures and Investments
For joint ventures and investments in which the Company does not have joint control or significant influence, the cost method is used. For joint ventures and investments in which there is joint control between the parties, the equity method is utilized whereby the Company’s share of the ventures’ earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. The Company periodically assesses its investments in joint ventures for impairment. If management determines that a decline in fair value is other than temporary it will write-down the investment and charge the impairment against operations.
GNP:
The Company has cost method investment in Goldrich NyacAU Placer LLC, a 50%-owned joint venture in which the Company does not have joint control or significant influence. See Note 4 Joint Venture. The carrying amount of this investment was $nil as of December 31, 2022 and 2021, respectively.
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Goldrich Mining Company
Notes to the Consolidated Financial Statements
CGL:
The Company invested $25,000 in a 49% interest in Chandalar Gold LLC (“CGL”) during the year ended December 31, 2020. The Company does not have control but does have significant influence over CGL and accounts for it using the equity method. During the year ended December 31, 2022 and 2021, CGL had no operating activities. Goldrich has accrued a distribution to CGL of $35,794 in accrued liabilities; if and when that distribution is remitted to CGL, the Company would in turn receive a distribution of approximately 49% of that distribution back from CGL as a result of its ownership.
Contingencies
In determining accruals and disclosures with respect to loss contingencies, the Company evaluates such accruals and contingencies for each reporting period. Estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that a liability could be incurred, and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred but not accrued.
For the years ended December 31, 2022 and 2021, the effect of the Company’s outstanding convertible preferred shares, convertible interest, stock options, and warrants totaling and for each of the years ended, respectively, have not been included in the Company’s net income (loss) per share as their inclusion would have been anti-dilutive.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06 Debt – Debt With Conversion And Other Options (Subtopic 470-20) And Derivatives and Hedging – Contracts In Entity’s Own Equity (Subtopic 815-40): Accounting For Convertible Instruments And Contracts In An Entity’s Own Equity. The update simplifies the accounting for and disclosures related to company debt that is convertible or can be settled in a company’s own equity securities. The update is effective for fiscal years beginning after December 15, 2021. The Company adopted this update on January 1, 2022. This adoption did not have a material effect on the Company’s consolidated financial statements.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, we consider all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these financial statements include those assumed in estimating the recoverability of the mineral interests, investments, accrued remediation costs, asset retirement obligations, stock-based compensation, deferred tax assets and related valuation allowances and other contingencies. Actual results could differ from those estimates.
53
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Mineral Interests
The Company capitalizes costs for acquiring mineral properties, claims and royalty interests and expenses costs to maintain mineral rights and leases as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral properties are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.
Exploration Costs & Mine Preparation Costs
Exploration costs are expensed in the period in which they occur. Costs to prepare mineral properties for mining, such as economic assessments and mine plans are expensed in the period in which they occur.
Income Taxes
Income taxes are recognized in accordance with Accounting Standards Codification (“ASC”) 740 Income Taxes, whereby deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.
Uncertain tax positions are evaluated in a two-step process, whereby (i) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority would be recognized.
Stock-Based Compensation
The Company periodically issues common shares or options to purchase shares of the Company’s common shares to its officers, directors or other parties. These issuances are recorded at fair value. The Company uses a Black Scholes valuation model for determining fair value of options to purchase shares, and compensation expense is recognized ratably over the vesting periods on a straight-line basis. Compensation expense for grants that vest immediately is recognized in the period of grant.
Remediation and Asset Retirement Obligation
The Company’s operations have been, and are subject to, standards for mine reclamation that have been established by various governmental agencies. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of tangible long-lived assets. The Assert Retirement Obligation (ARO) is accreted over the estimated life of the mine and is reviewed annually for adjustments. A corresponding asset is also recorded and depreciated over the life of the long-lived asset using a units of production method. After the initial measurement of the asset retirement obligation, the ARO liability and corresponding ARO asset will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation. Determination of any amounts recognized is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates, time periods and the credit-adjusted risk-free interest rates.
For non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Such costs are based on management’s estimate of amounts expected to be incurred when the remediation work is performed.
54
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Fair Value Measurements
When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date.
At 2022 and 2021, the Company determined fair value on a recurring basis and non-recurring basis as follows:
| Balance December 31, 2022 | Balance December 31, 2021 | Fair Value Hierarchy level | ||||||||||
| Liabilities | ||||||||||||
| Recurring: Notes payable in gold (Note 7) | $ | $ | 2 | |||||||||
The carrying amounts of financial instruments, including notes payable, approximate fair value at December 31, 2022 and 2021. The inputs to the valuation of Level 2 liabilities are described in Note 7 Notes Payable in Gold.
| 3. | MINERAL INTERESTS |
At December 31, 2022 and 2021, the Company’s mining properties claims, and royalty interest were as follows:
| 2022 | 2021 | |||||||
| Chandalar property and claims | $ | $ | ||||||
| Chandalar 2003 purchased claims | ||||||||
| Chandalar Unpatented state claims staked | ||||||||
| Asset retirement costs | ||||||||
| Jumbo Basin royalty interest | ||||||||
| Total | $ | $ | ||||||
| 4. | JOINT VENTURE |
On April 2, 2012, Goldrich Placer, LLC, a subsidiary of Goldrich, entered into a term sheet for a joint venture with NyacAU, LLC (“NyacAU”), an Alaskan private company, to bring Goldrich’s Chandalar placer gold properties into production as defined in the joint venture agreement (the “Operating Agreement”) which was subsequently signed and made effective April 2, 2012. As part of the Operating Agreement, GP and NyacAU (together the “Members”) formed a 50:50 joint venture company, Goldrich NyacAU Placer LLC (“GNP”), to operate the Chandalar placer mines, with NyacAU acting as managing partner.
Arbitration
In December 2017, the Company filed an arbitration statement of claim against NyacAU and other parties. The claim challenged certain accounting treatment of capital leases, allocations of tax losses, charges to the JV for funding costs related to the JV manager’s financing, related-party transactions, and other items of dispute in a previous mediation that was unsuccessful in reaching an agreement. As a result, the Company participated in an arbitration before a panel of three independent arbitrators during 2018 through 2022 to address these items.
Settlement Agreement
On March 31, 2023, the Company signed a settlement agreement between the Company, NyacAU, GP, GNP, Dr. J. Michael James, individually (“Dr. James”), and Bear Leasing, LLC (“Bear Leasing”) (each a “Party” and, collectively, the “Parties”).
55
Goldrich Mining Company
Notes to the Consolidated Financial Statements
In April 2023, all outstanding arbitration issues were resolved with a settlement agreement whereby Goldrich paid $105,000 to NyacAU. The resolution includes all outstanding arbitration issues, awards, and orders including mutual release of all outstanding issues before the Alaska superior court and all court-entered judgments. The agreement also terminates and supersedes all prior agreements between all Parties except a security agreement between NyacAU and GNP to secure repayment of fifty percent (50%) of a funding mechanism known as Line of Credit 1 (LOC1), which was advanced by NyacAU to GNP. GNP was formally dissolved in 2019.
Even
though the settlement agreement was consummated subsequent to the end of the 2022 year, the arbitration claim was filed and has been
open since 2018; therefore, the event requires the financial effects to be reflected in the financial statement for the year ended December
31, 2022. As a result, the previous expense accruals of $
Option Agreement
Concurrent with signing the settlement agreement, Goldrich also signed an option agreement with the Parties. The option agreement, among other things, grants Goldrich, or its designee, the right, but not the obligation, to become operator of the Chandalar placer mining permit. If the option is exercised, Goldrich or its designee would also obtain ownership of all camp facilities and mining equipment remaining at the Chandalar placer mine site owned by NyacAU and its affiliates. Currently Goldrich owns the claims but NyacAU is the named operator on the mining permits.
To exercise the option, Goldrich, or its designee, must give written and electronic notice of its intent to do so by April 30, 2024 and pay $1,000,000 into escrow within five business days of giving notice. Upon exercise of the option, Goldrich or its designee would assume all reclamation responsibilities and liability and NyacAU would be released from any reclamation liability. Also, NyacAU would be entitled to limited payments out of the production of placer gold at the Chandalar placer mine up to the greater of $8,500,000 or 4,860 ounces of fine gold (the Maximum Amount). No production payment shall be due to NyacAU on the first 5,000 ounces of fine gold production. Thereafter, NyacAU would receive at least five percent (5%) of all production from the Chandalar placer mine until the Maximum Amount is paid. Additionally, after the first 5,000 ounces of fine gold production, NyacAU would be entitled to a minimum annual payment equal to the value of $120,000 or 68 fine gold ounces, whichever is greater, and such payment would apply towards the satisfaction of the Maximum Amount.
56
Goldrich Mining Company
Notes to the Consolidated Financial Statements
| 5. | RELATED PARTY TRANSACTIONS |
In addition to related party transactions described in Notes 6 and 9, the Company has accrued amounts to the Company’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and board of directors fees for amounts earned but not yet paid. Beginning in January 2016 and through December 31, 2022, the CEO’s salary has not been paid in full. Salary due to the CFO have been accrued and remain unpaid, as have board of directors fees:
| CEO | Year ended 12/31/22 | Year ended 12/31/21 | ||||||
| Balance at beginning of period | $ | $ | ||||||
| Deferred salary | ||||||||
| Deferred expenses | ||||||||
| Payments | ( | ) | ||||||
| Ending Balance | ||||||||
| CFO | ||||||||
| Balance at beginning of period | ||||||||
| Deferred fees | ||||||||
| Payments | ( | ) | ||||||
| Ending Balance | ||||||||
| Board fees and expenses payable(1, 2) | ||||||||
| Total Related party payables | $ | $ | ||||||
| 1) |
| 2) |
| 6. | NOTES PAYABLE & NOTES PAYABLE – RELATED PARTY |
At
December 31, 2022, the Company has outstanding notes payable of $
During
the year ended December 31, 2022, the Company received additional notes payable of $293,516 principal, of which $
During
the years ended December 31, 2022 and December 31, 2021, the Company incurred finder fees totaling $3,755 and $13,410, respectively,
of which $
57
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Inter-Creditor Agreement
As a result of an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) dated November 1, 2019 and a First Amendment dated August 25, 2021, for each holder of the notes payable, whether or not a related party:
| 1. | The borrower and holder entered into a Deed of Trust whereunder the notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like. |
| 2. | The Company entered into a written Guaranty (“Guaranty”) whereunder, among other conditions, the Company unconditionally guarantees and promises to pay to the order of each holder the principal sum and all interest payable on each note payable held by such holder when and as the same becomes due, whether at the stated maturity thereof, by acceleration, call for redemption, tender, or otherwise. The Company is not in default as no demand has been made for payment or delivery. |
| 3. | Mr. Gallagher, at his option, has the right to convert outstanding but unpaid and future interest on his note into shares of the Company’s common stock at $0.015 per share. |
| 4. | All loans by Mr. Gallagher and any additional loans made by Mr. Gallagher are designated as Senior Notes, and accounted for as Notes payable – related party and all loans by the other holders made prior to August 25, 2021 were designated as Junior Notes. Additionally, notes arising in the future to certain unrelated parties are also designated as Senior notes. Senior Notes, which include principal and interest are entitled to be repaid in full before any of the Junior Notes are repaid. |
| 5. | The Company confirmed that the written Guaranty extends to the repayment of additional loans made by the holders. |
| 6. | The Company confirmed that repayment of additional loans will be and remain secured by the Deed of Trust. |
In
a separate agreement dated September 10, 2020, the Company and certain note holders, agreed to convert $36,813 of unpaid interest into
shares of the Company’s common stock at $0.015 per share. During the year ended December 31, 2021, a total of common shares
were issued to one holder in exchange for interest payable of $
| 7. | NOTES PAYABLE IN GOLD |
During 2013, the Company issued notes payable in gold totaling $820,000, less a discount of $205,000, for net proceeds of $615,000. Under the terms of the notes, the Company agreed to deliver gold to the holders at the lesser of $1,350 per ounce of fine gold or a 25% discount to market price as calculated on the contract date and specify delivery of gold in November 2014.
After several amendments to the terms of the note agreements, through the date of the issuance of these financial statements, the gold notes have not been paid and the note holders have not demanded payment or delivery of gold. At December 31, 2022 and 2021, 266.788 ounces of fine gold was due and deliverable to the holders of the notes. No demand has been made for payment.
The
Company estimates the fair value of the notes, based on the market approach with Level 2 inputs of gold delivery contracts based upon
previous contractual delivery dates, using the market price of gold on December 31, 2022 of approximately $1,812 per ounce as quoted
on the London PM Fix market or $
58
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Interest
of $
| 8. | CARES ACT PPP LOAN |
On
April 15, 2020, the Company was granted a loan (the “Loan”) from Washington Trust Bank, in the aggregate amount of $
During
May 2021, the Company received loan forgiveness of its Cares Act PPP Loan in the amount of $
| 9. | STOCKHOLDERS’ DEFICIT |
Common Stock:
During the year ended December 31, 2022, the Company received cash of $30,000 which is included in stock subscription payable at December 31, 2022, for a private placement of common shares priced at $0.01 per share, of which $5,000 was from William Orchow, a related party. Upon closing, the Company will issue 3,000,000 common shares.
Series A Convertible Preferred Stock:
The Company has shares of Series A Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated shares of Series A Preferred Stock, par value, with the following rights and preferences:
| ● | Liquidation
Preference: Upon a liquidation event, an amount in cash equal to $ |
| ● | Voting:
|
| ● | Conversion: Any share of Series A Preferred Stock may, at the option of the holder, be converted at any time into six shares of common stock. The Company has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the third anniversary of its issuance if the weighted average trading price of the common stock exceeds $1.00 per share for ten consecutive trading days. The Company also has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the tenth anniversary from the date of issuance. |
| ● | Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from the surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividend shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year. |
59
Goldrich Mining Company
Notes to the Consolidated Financial Statements
| ● | Preferential and Cumulative. The Series A dividends shall be payable before any dividends will be paid upon, or set apart for, the common stock of the Company and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company. |
| ● | Payment
of Dividend: If the Company shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any
dividend by the Board in compliance with the Alaska Code and the Company’s Articles of Incorporation and Bylaws, the holder of
Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold.
Payment of Series A dividends in gold shall be paid only if the Company is producing gold in sufficient quantities as of the dividend
payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from the Company’s Chandalar property.
The Company has total dividends in arrears of $ |
Conversion of outstanding shares of Series A Preferred stock would have resulted in dilution of common shares for the years ended December 31, 2022 and 2021.
Series B Convertible Preferred Stock:
The Company has shares of Series B Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated shares of Series B Preferred Stock, par value, with the following rights and preferences:
| ● | Liquidation
Preference: Upon a liquidation event, an amount in cash equal to $ |
| ● | Voting:
|
| ● | Conversion: Shares of Series B Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series B shares by $1,000, then dividing by the Series B conversion price of $0.07 per common share. The Series B conversion price is subject to adjustment in accordance with the provisions of the statement of designation. |
| ● | Dividend Rate: The holders of Series B Preferred Stock shall not be entitled to receive dividends. |
Conversion of outstanding shares of Series B Preferred stock would result in dilution of common shares for the years ended December 31, 2022 and 2021.
60
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Series C Convertible Preferred Stock:
The Company has shares of Series C Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated shares of Series C Preferred Stock, par value, with the following rights and preferences:
| ● | Liquidation
Preference: Upon a liquidation event, an amount in cash equal to $ |
| ● | Voting:
|
| ● | Conversion: Shares of Series C Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series C shares by $1,000, then dividing by the Series C conversion price of $0.03 per common share. The Series C conversion price is subject to adjustment in accordance with the provisions of the statement of designation. |
| ● | Dividend Rate: The holders of Series C Preferred Stock shall not be entitled to receive dividends. |
Conversion of outstanding shares of Series C Preferred stock would result in dilution of common shares for the years ended December 31, 2022 and 2021.
Series D Convertible Preferred Stock:
The Company has and shares of Series D Convertible Preferred Stock outstanding at December 31, 2022 and 2021, respectively. These shares were issued from the designated shares of Series D Preferred Stock, no par value. Conversion of outstanding shares of Series D Preferred stock would result in dilution of and common shares for the years ended December 31, 2022 and 2021.
During the year ended December 31, 2022, two holders of Series D Convertible Preferred Stock converted a total of preferred shares into common shares of the Company.
Series E Convertible Preferred Stock:
The Company has shares of Series E Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated shares of Series E Preferred Stock, no par value. Conversion of outstanding shares of Series E Preferred stock would result in dilution of common shares for the years ended December 31, 2022 and 2021.
Series F Convertible Preferred Stock:
The Company has shares of Series F Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated shares of Series F Preferred Stock, no par value. Conversion of outstanding shares of Series F Preferred stock would result in dilution of common shares for the years ended December 31, 2022 and 2021.
61
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Series D, E and F Preferred Stock were issued with the following rights and preferences:
| ● | Liquidation
Preference: Upon a liquidation event, an amount in cash equal to $ |
| ● | Voting:
|
| ● | Conversion: Shares of Series D, E and F Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series D, E and F shares by $1,000, then dividing by the Series D, E and F conversion price of $0.03 per common share. The Series D, E and F conversion price is subject to adjustment in accordance with the provisions of the statement of designation. |
| ● | Dividend Rate: The holders of Series D, E and F Preferred Stock shall not be entitled to receive dividends. |
| ● | The Series D, E and F Preferred Stock includes a redemption feature as described above. |
A related party and member of the Company’s board of directors, Nicholas Gallagher, holds and controls all of the outstanding shares of the Series A, B and C Preferred Stock, 50 shares of the Series D Preferred Stock, 280 shares of the Series E Preferred Stock and all of the Series F Preferred Stock.
Warrants:
The following is a summary of warrants at December 31, 2022:
| Shares | Exercise Price ($) | Expiration Date | ||||||||
| Class R Warrants: (Issued for Private Placement) | ||||||||||
| Outstanding and exercisable at January 1, 2021 | Aug 1 to Dec 9, 2023 | |||||||||
| Warrants expired | ( | ) | ||||||||
| Outstanding and exercisable at December 31, 2021 | ||||||||||
| Warrants exercised | ( | ) | ||||||||
| Outstanding and exercisable at December 31, 2022 | ||||||||||
| Class S Warrants: (Issued for Private Placement of Preferred Stock) | ||||||||||
| Outstanding and exercisable at January 1, 2021 | Dec 30, 2021 to Mar 30, 2022 | |||||||||
| Warrants exercised | ( | ) | ||||||||
| Outstanding and exercisable at December 31, 2021 | ||||||||||
| Outstanding and exercisable at December 31, 2022 | ||||||||||
| Class T Warrants: (Issued with Senior Secured Notes Payable) | ||||||||||
| Outstanding and exercisable at January 1, 2021 | Jun. 4, 2023 to Oct 31, 2024 | |||||||||
| Warrants exercised | ( | ) | ||||||||
| Outstanding and exercisable at December 31, 2021 | ||||||||||
| Warrants exercised | ( | ) | ||||||||
| Warrants expired | ( | ) | ||||||||
| Outstanding and exercisable at December 31, 2022 | ||||||||||
| Warrants outstanding at December 31, 2021 were with a weighted average exercise price of $0.038. Total Warrants outstanding and weighted average exercise price at December 31, 2022 | ||||||||||
62
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Warrant Exercises
During the year ended December 31, 2022, the Company received $133,157 cash as a result of the exercise of Class R and T warrants at an exercise price of $0.03 per common share and Class R warrants at an exercise price of $0.045 per common share, resulting in the issuance of 3,660,817 common shares. Of that amount, 1,555,555 of the warrants exercised were owned by Mr. Gallagher and were transferred to unrelated parties. The unrelated parties then exercised the warrants for cash.
During the year ended December 31, 2021, the Company received $347,414 cash as a result of the exercise of Class S and T warrants at an exercise price of $0.03 per common share, resulting in the issuance of 11,580,467 common shares. Of that amount, 7,458,303 of the warrants exercised were owned by Mr. Gallagher and were transferred to unrelated parties. The unrelated parties then exercised the warrants for cash. The Company received an additional $40,000 for the exercise of Class T warrants which are included in stock subscription payable at December 31, 2021 and 2022. To complete the exercise, the Company will issue 1,333,333 common shares for the exercised warrants.
Warrant Extensions
On June 30, 2021, the Company’s Board of Directors, voted to extend the expiry dates for all Class R warrants not already expired, by two years. Prior to this change, the Class R warrants were set to expire at various times throughout 2021, with the last one expiring on December 9, 2021. With this change, 11,666,668 Class R warrants were modified to expire on various dates from August 1 to December 9, 2023.
Stock Options and Stock-Based Compensation:
Under the Company’s 2008 Equity Incentive Plan, as amended by shareholder vote on November 13, 2020 (the “Plan”), options to purchase shares of common stock may be granted to key employees, contract management and directors of the Company. The Plan permits the granting of nonqualified stock options, incentive stock options and shares of common stock. Upon exercise of options, shares of common stock are issued from the Company’s treasury stock or, if insufficient treasury shares are available, from authorized but unissued shares. Options are granted at a price equal to the closing price of the common stock on the date of grant. The stock options are generally exercisable immediately upon grant and for a period of 10 years.
In the event of cessation of the holder’s relationship with the Company, the holder’s exercise period terminates 90 days following such cessation. The Plan authorizes the issuance of up to 16,129,304 shares of common stock, subject to adjustment for certain events, such as a stock split or other dilutive events. As of December 31, 2022, there were a total of 8,954,304 shares available for grant in the Plan, 6,075,000 shares issued, 50,000 options exercised in prior years, and 1,050,000 options exercisable and outstanding.
| Shares | Weighted- Average Exercise Price (per share) | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Options outstanding and exercisable at December 31, 2020 | $ | 5.24 | $ | |||||||||||||
| Options expired | ( | ) | $ | |||||||||||||
| Options outstanding and exercisable at December 31, 2021 | $ | 4.35 | $ | |||||||||||||
| Options outstanding and exercisable at December 31, 2022 | $ | 3.35 | $ | |||||||||||||
63
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Interest Payable Satisfied with Common Stock
During the year ended December 31, 2021, a total of 280,752 common shares were issued to one note holder in exchange for interest payable of $4,212 at $0.015 per share.
| 10. | REMEDIATION AND ASSET RETIREMENT OBLIGATION |
On an ongoing basis, management evaluates its estimates and assumptions; however, actual amounts could differ from those based on such estimates and assumptions. Changes to the Company’s asset retirement obligation on its Chandalar property are as follows:
| December 31, 2022 | December 31, 2021 | |||||||
| Asset Retirement Obligation – beginning balance | $ | $ | ||||||
| Accretion | ||||||||
| Asset Retirement Obligation – ending balance | $ | $ | ||||||
The
Company is responsible to remediate areas previously disturbed by mining activities, with the exception of certain access roads, airstrips
or other amenities that are permanent in nature and improve the general access and maintainability of state lands covered by the Company’s
mining claims. The Company has accrued $
NyacAU, the operator of the mining permit for the Chandalar placer mine, is responsible for the reclamation work to be done on that mine for activities performed from 2012 through 2018. Should the Company exercise its option as described in Note 4 Joint Venture, it would perform an estimation of reclamation costs at that date to determine the amount of obligation to be recorded in a future year.
| 11. | INCOME TAXES |
The Company did not recognize a tax provision due to ongoing losses, for the years ended December 31, 2022 and 2021.
Following are the components of deferred tax assets, liabilities and allowances at December 31, 2022 and 2021:
| 2022 | 2021 | |||||||
| Deferred tax assets arising from: | ||||||||
| Capitalized exploration and development costs | $ | $ | ||||||
| Unrecovered promotional and exploratory costs | ||||||||
| Accrued remediation costs | ||||||||
| Notes payable in gold | ||||||||
| Share based compensation | ||||||||
| Net operating loss carryforwards | ||||||||
| Total deferred tax assets | ||||||||
| Less valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax liabilities arising from: | - | 7,000 | ||||||
| Notes payable in gold | ( | ) | ||||||
| Total deferred tax liabilities | ( | ) | ||||||
| Net deferred tax | $ | $ | ||||||
64
Goldrich Mining Company
Notes to the Consolidated Financial Statements
Management has determined that it is more likely than not that the Company will not realize the benefit of its deferred tax assets. Therefore, a valuation allowance equal to 100% of deferred tax asset has been recognized. The deferred tax assets were calculated based on an effective tax rate of 30% for 2022 and 2021.
At
December 31, 2022, the Company had federal and state tax-basis net operating loss carryforwards, prior to giving effect to the probable
changes resulting from the IRS audit of the joint venture as described above, totaling $
The differences between the provision (benefit) for federal income taxes and federal income taxes computed using the U.S. statutory tax rate of 21% were as follows:
| 2022 | 2021 | |||||||||||||||
| Federal income tax expense (benefit) based on statutory rate | $ | ( | ) | % | $ | ( | ) | % | ||||||||
| State income tax expense (benefit), net of federal taxes | ( | ) | % | ( | ) | % | ||||||||||
| Revision of NOL estimates, state apportionment factors and state effective tax rates | % | ( | )% | |||||||||||||
| Increase (decrease) in valuation allowance | ( | )% | ( | )% | ||||||||||||
| Total taxes on income (loss) | $ | % | $ | % | ||||||||||||
The Company has assessed its tax positions other than the NOL issue above and has determined that it has taken no uncertain tax position that is probable to give rise to an unrecognized tax liability. In the event that the Company is assessed penalties and/or interest, penalties would be charged to other operating expense and interest would be charged to interest expense.
The Company files federal income tax returns in the United States only. Tax attributes, mainly net operating losses after 2014, may be adjusted as a result of a completed audit of 2015, 2016 and 2017, as described above. The Company is no longer subject to federal income tax examination by tax authorities for years before 2019. No federal or state income tax returns have been filed since 2019.
| 12. | COMMITMENTS AND CONTINGENCIES |
The Company has one near-term commitment:
| ● | A $46,500 liability for a consulting contract for market research and analysis services, for which services have not been received. |
The Company is subject to Alaska state annual claims rental fees in order to maintain our non-patented claims. In addition to the annual claims rental fees of $125,945 due November 30 of each year, we are also required to meet annual labor requirements of approximately $61,100 due November 30 of each year. The Company is able to carry forward costs for annual labor that exceed the required yearly totals for four years. The Company has significant carryovers to 2023 to satisfy its annual labor requirements. This carryover expires in the years 2023 through 2027 if unneeded to satisfy requirements in those years.
| 13. | SUBSEQUENT EVENTS |
Subsequent to December 31, 2022, the Company received $162,667 cash as a result of exercise of Class R warrants at an exercise price of $0.024 per common share. Ownership of these warrants had been in the hands of a related party and were sold by him personally to unrelated parties. The unrelated parties then exercised the warrants for cash, resulting in the issuance of 6,777,778 common shares.
Subsequent to December 31, 2022, the Company received cash of $25,000 of additional notes payable and $27,500 of additional notes payable – related party.
Subsequent to December 31, 2022, the Company received cash of $1,500 for a short-term note payable from a related party.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements between the Company and its accountants regarding any matter or accounting principles or practice or financial statement disclosures.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
At the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out under the supervision of and with the participation of our management, including the Principal Executive Officer and the Principal Financial Officer of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Disclosure controls and procedures were not effective due primarily to a material weakness in the segregation of duties in the Company’s internal control of financial reporting as discussed below.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company (including its consolidated subsidiaries) and all related information appearing in our Annual Report on Form 10-K. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that:
| 1. | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
2. |
provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of management and/or of our Board of Directors; and |
| 3. | provide reasonable assurance regarding the prevention or timely detection of any unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, 2022, based on the criteria in a framework developed by the Company’s management pursuant to and in compliance with the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, walkthroughs of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of December 31, 2022, because management identified a material weakness in the Company’s internal control over financial reporting related to the segregation of duties as described below.
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While the Company does adhere to internal controls and processes that were designed and implemented by an experienced accounting firm, it is difficult with a very limited staff to maintain appropriate segregation of duties in the initiating and recording of transactions, thereby creating a segregation of duties weakness. Due to: (i) the significance of segregation of duties to the preparation of reliable financial statements; (ii) the significance of potential misstatement that could have resulted due to the deficient controls; and (iii) the absence of sufficient other mitigating controls, we determined that this control deficiency resulted in more than a remote likelihood that a material misstatement or lack of disclosure within the annual or interim financial statements may not be prevented or detected.
Management’s Remediation Initiatives
Management has evaluated, and continues to evaluate, avenues for mitigating our internal controls weaknesses, but mitigating controls to completely mitigate internal control weaknesses have been deemed to be impractical and prohibitively costly, due to the size of our organization at the current time. Management expects to continue to use reasonable care in following and seeking improvements to effective internal control processes that have been and continue to be in use at the Company. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks.
Management’s remediation initiatives include having retained the Company’s Chief Financial Officer. He is well-versed in internal control environments, having implemented, documented and tested multiple control environments over 18 years and has served as a CFO in publicly-traded companies for 22 years. The offices of Principal Executive Officer and Principal Financial Officer have remained separate. The Company has only two employees, and management has concluded that minimal staffing continues to inhibit the effectiveness of the Company’s internal controls over financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)), that occurred during our fourth fiscal quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Members of the Board of Directors and Executive Officers
Our directors hold office until the next annual meeting of the stockholders and the election and qualification of their successors. Officers are elected annually by the Board of Directors and serve at the direction of the Board of Directors. Each member of the Board of Directors was elected to membership on the Board on November 26, 2013. The Board of Directors held two meetings in 2022 and four meetings in 2021.
The following table and information that follows sets forth, as of December 31, 2022, the names, and positions of our directors and executive officers:
| Name | Age | Recent Business and Professional Experience |
David S. Atkinson Director |
53 | Mr. Atkinson became a Director of the Company on May 7, 2007. Mr. Atkinson spends about 15 hours a month on matters related to Goldrich. He is currently managing FQI Research LLC, Market Analytics LLC, and Forza Quantitative Investments. In April 1999, he co-founded Forza Partners, L.P. and currently serves as portfolio manager. Forza Partners, L.P. is a hedge fund focused on the precious metals sector. In April 1997, he co-founded and, until December 1999, managed Tsunami Partners, LP, a fund located in Fort Worth, Texas. Mr. Atkinson has been an affiliate of the Market Technicians Association (MTA) since March 1994 and received MTA accreditation as a Chartered Market Technician (CMT) in July 2001. Mr. Atkinson received a B.A. in Economics from the University of Texas at Austin. |
Nicholas Gallagher Director |
49 | Mr. Gallagher became a director on November 1, 2016. Mr. Gallagher spends approximately 15 hours per month on matter related to Goldrich. In 2004 to the present, Mr. Gallagher incorporated NGB Capital, a private equity investment firm that manages personal and syndicated private equity and property investments in Europe, the United Kingdom and the United States of America. In 2000, Mr. Gallagher co-founded Powerscourt Capital Partners, a niche investment management firm structured to manage funds on behalf of high net worth individuals in the public and private equity markets. He served there until Powerscourt was acquired in 2004. He obtained a Bachelor of Law degree from the University of Newcastle in 1996. Mr. Gallagher then completed the Legal Practice Course at the College of Law in London and practiced as a solicitor at Memery Crystal, a law firm in the city of London from 1997 to 2000. |
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| Name | Age | Recent Business and Professional Experience |
Garrick A. Mendham Former Director |
62 | Mr. Mendham became a consulting director on August 12, 2013 and was appointed director on November 26, 2013. While a director, Mr. Mendham spent about 15 hours a month on matters related to Goldrich. Since February 2017 to the present, Mr. Mendham serves as Executive Director, and from May 2012 to January 2017 was Vice President of Operations and Project Development for RH Mining Resources, a Hong Kong based resources development company. From 2008 to 2012, he served as Director of Technical Services and General Manager of Technical Services for a mine development and investor group, Regent Pacific Group in Hong Kong and Beijing, China, respectively. From 2006 to 2008, Mr. Mendham served as Manager of Technical Services for Rio Tinto Coal Australia, a subsidiary of Rio Tinto Group. From 2004 to 2006, he served as Manager of Mine Technical for Lihir Management Company in Papua, New Guinea. Prior to 2004, Mr. Mendham served in technical, corporate, planning and mining positions with Rio Tinto, BHP Billiton, Bond Corporation, and Queensland Nickel, including two years working in an Australian 20,000-ounces per year placer operation. Mr. Mendham brings over 35 years of mining experience in operations, technical work, and mining finance for both junior and large mining companies. Mr. Mendham was the founding Chairman of the Australasian Institute of Mining and Metallurgy Hong Kong branch. He received a Bachelor of Mine Engineering from the University of New South Wales, a Graduate Diploma in Finance from the Financial Services Institute of Australasia, and holds Mine Manager Certificates in Australia for both New South Wales and Western Australia and is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr. Mendham resigned from the Board in August 2022. |
William Orchow Director |
77 | Mr. Orchow became a director on July 20, 2004. Mr. Orchow spends approximately 10 hours per month on matters related to Goldrich. He is currently a member of the board of directors of Cordoba Minerals Corp, a Canadian public company with projects in Colombia. Mr. Orchow sits on the boards of directors of several private junior mining companies. He served as a director of Revett Minerals, Inc., a Canadian company trading on the Toronto Stock Exchange, from September 2003 to June 2009. He also served as President and Chief Executive Officer of Revett Minerals from September 2003 to October 2008. Prior to Revett, Mr. Orchow took time off, from January 2003 to August 2003. From November 1994 to December 2002, Mr. Orchow was President and Chief Executive Officer of Kennecott Minerals Company, where he was responsible for the operation and business development of all of Kennecott’s mineral mines with the exception of its Bingham Canyon mine. From June 1993 to October 1994, he was President and Chief Executive Officer of Kennecott Energy Company, the third largest producer of domestic coal in the United States, and prior to that was Vice President of Kennecott Utah Copper Corporation. Mr. Orchow has also held senior management and director positions with Kennecott Holdings Corporation, the parent corporation of the aforementioned Kennecott entities. He has also been a director and member of the executive committee of the Gold Institute, a director of the National Mining Association and a director of the National Coal Association. Mr. Orchow is currently a member of the board of trustees of Westminster College in Salt Lake City and has been a member of the board of trustees, executive committee and past President of the Northwest Mining Association until December 31, 2011. He graduated from the College of Emporia in Emporia, Kansas with a B.S. in business. |
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| Name | Age | Recent Business and Professional Experience |
Michael G. Rasmussen Director |
77 | Dr. Rasmussen became a consulting director on April 15, 2013 and was appointed director on November 26, 2013. Dr. Rasmussen spends about 15 hours a month on matters related to Goldrich. In February 2013 to present, he launched a private consultancy providing geologist services to mining companies, including Goldrich, Kinross Gold Corp, Nevada Milling and Mining LLC and several others. From 2008 to 2013, Dr. Rasmussen served as the Vice President, Exploration and consulting geologist for Mines Management, Inc., a public company trading on the NYSE and TSX. From 2007 to 2008, he served as Vice President, Exploration for Aztec Metals Corp, and concurrently as consulting geologist for Endeavour Silver Corp, a Canadian public company trading on the NYSE and TSX, and Canarc Gold Corp, a Canadian public company trading on the FINRA OTCBB and TSX, From 2005 to 2007, Dr. Rasmussen served as Vice President, Exploration for Endeavour Silver Corporation and from 2004 to 2005 as Vice President, Exploration for International Wayside Gold Mines Ltd, a Canadian public company trading on the TSX. From 1990 to 2004, he held senior geologist roles at Echo Bay Mines and its parent Kinross Gold Corp, a public company trading on the NYSE and TSX. Dr. Rasmussen earned a PhD in Economic Geology from the University of Washington and a Master’s Degree in Geological Sciences from Loma Linda University. Dr. Rasmussen is licensed as a Professional Geologist by the Washington State Board of Geologists and the American Institute of Professional Geologists. Dr. Rasmussen has evaluated precious metals prospects and conducted exploration extensively throughout Mexico, Peru, British Colombia, and the western United States, and is credited with the discovery of the Emanuel Creek epithermal gold deposit for Echo Bay Mines. |
William V. Schara Chief Executive Officer, Director |
66 | On October 19, 2009, Mr. Schara was appointed by the Board of Directors as Chief Executive Officer of the Company. From March 14, 2007 to October 19, 2009, Mr. Schara served as Chairman of the Board. Mr. Schara is a Certified Public Accountant, and has a Bachelor of Science Degree in Accounting from Marquette University. Mr. Schara spends fulltime on matters related to Goldrich. He was also appointed to the Company’s Audit Committee on February 13, 2006 and relinquished that position concurrent with his appointment as Chief Executive Officer. From October 2007 to September 2009, Mr. Schara served as President, Chief Executive Officer and Director of Nevoro, Inc., a Canadian company trading on the Toronto Stock Exchange. Beginning December 2004, he was employed as a management consultant for, and then from July 2005 to November 2007 as the Chief Financial officer of Minera Andes Inc., a Canadian development stage mining company listed on the Toronto Ventures Exchange and the FINRA OTCBB exchange. He previously worked for Yamana Gold Inc. and its predecessor companies from July 1995 to September 2003, the last four years of which were in the capacity of Vice President of Finance and Chief Financial Officer. Yamana Gold Inc. is a production stage Canadian public company trading on the Toronto Stock Exchange, the NYSE Amex and the London Alternative Investment Market Exchange. From September 2004 through April 2015, Mr. Schara served as a director of Marifil Mines Limited, an exploration stage Canadian public company traded on the Canadian Ventures Exchange. Mr. Schara has more than 35 years of experience in finance and accounting with extensive experience in business start-ups, international business, and managing small public companies and mining company joint ventures. |
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| Name | Age | Recent Business and Professional Experience |
Stephen M. Vincent Director |
74 | Mr. Vincent became a consulting director on August 12, 2013 and was appointed director on November 26, 2013. Mr. Vincent spends about 15 hours a month on matters related to Goldrich. Mr. Vincent has over 30 years of experience as a finance specialist. From February 2013 to the present, Mr. Vincent is principal of SMV Enterprises, Inc, providing financing services to clients. From 2005 to 2013, he worked at Northland Securities, providing investment bank services and developing a junior mining investment banking practice. From 1992 to 2004, Mr. Vincent worked at Allison Williams Company, providing structures and securitized financings including leasing and corporate debt. Prior to 1992, he held a range of positions with various companies including Moore Juran and Co., Miller and Schroeder Financial, and Piper Jaffray. His roles have included metals distribution, debt instrument structuring, and private equity financing. Mr. Vincent raised capital for companies developing the copper-nickel mining district of northeastern Minnesota. Mr. Vincent completed strategic equity investments for Duluth Metals Ltd., Franconia Minerals and Encampment Minerals. While at Northland Securities, Mr. Vincent completed a private placement financing for Goldrich in 2010. Mr. Vincent received a Bachelor’s degree in History from Boston College and attended the William Mitchell School of Law. |
Ted R. Sharp Chief Financial Officer |
66 | Mr. Sharp was appointed as our Chief Financial Officer, Secretary, and Treasurer effective March 2006. We have a management consulting contract with Mr. Sharp, engaging him on a part-time basis. Mr. Sharp spends approximately 10% of his business hours each month on matters related to Goldrich. Mr. Sharp is a Certified Public Accountant, and has Bachelor of Business Administration Degree in Accounting from Boise State University. Since 2003, he has been President of Sharp Executive Associates, Inc., a privately-held accounting firm providing Chief Financial Officer services to clients. Concurrent with his position with Goldrich, from July 2012 through March 2022, Mr. Sharp is a principal and served part-time as Chief Executive and Financial Officer of US Calcium LLC, a privately-held natural resource company. Concurrent with his position with Goldrich, from August 2018 through the present, Mr. Sharp serves part-time as Chief Financial Officer of Timberline Resources Corporation, a natural resource company trading on the OTCQB and TSX:V exchanges. In the past, concurrent with his position with Goldrich, from January 2019 through September 2020, Mr. Sharp served part-time as Chief Financial Officer of US Gold Corporation, a natural resource company trading on the NASDAQ exchange. Concurrent with his position with Goldrich, from May 2011 through January 2012, Mr. Sharp served part-time as Chief Financial Officer of Gryphon Gold Corporation, a natural resource company formerly trading on the FINRA OTCBB, and from September 2008 through November 2010, Mr. Sharp served part-time as Chief Executive Officer, President and Chief Financial Officer of Texada Ventures, Inc, a natural resource exploration company formerly trading on the FINRA OTCBB. Also concurrent with his position with Goldrich, from November of 2006 to June 2009, Mr. Sharp served part-time as Chief Financial Officer of Commodore Applied Technologies, Inc., an environmental solutions company formerly trading on the FINRA OTCBB. Prior to 2003, he worked for 14 years in positions of Chief Financial Officer, Managing Director of European Operations and Corporate Controller for Key Technology, Inc., a publicly-traded manufacturer of capital goods. Mr. Sharp has more than 35 years of experience in treasury management, internal financial controls, SEC reporting and Corporate Governance. |
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Qualification of Directors
David S. Atkinson: Mr. Atkinson’s extensive experience in the capital markets and his specific experience in financing exploration stage mining companies as described above along with his current position as Investment Manager of Forza Partners and Forza Partners II, each of which are affiliates of the Company, led the Board to conclude that Mr. Atkinson should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.
Nicholas Gallagher: Mr. Gallagher’s extensive experience in legal matters and as an investment manager, as well as his numerous years as a significant investor and affiliate of the Company, led the Board to conclude that Mr. Gallagher should join the Board and serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.
William Orchow: Mr. Orchow’s extensive experience in executive management of large production companies and his specific experience as a director on multiple industry organizations and mining companies as described above along with his current position as Chairman of the Board led the Board to conclude that Mr. Orchow should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.
Michael G. Rasmussen: Mr. Rasmussen’s extensive experience as a geologist with exploration stage companies and his skills in interpreting multifaceted geological data as described above led the Board to conclude that Mr. Rasmussen should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company with an extensive property with challenging geological traits.
Stephen M. Vincent: Mr. Vincent’s extensive experience in the capital markets and his specific experience in financing exploration stage mining companies as described above along with his current position as Chairman of the Audit Committee led the Board to conclude that Mr. Vincent should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.
William A. Schara: Mr. Schara’s extensive experience in finance and accounting and his specific experience in financing for both production and exploration stage mining companies as described above along with his current position as CEO of the Company led the Board to conclude that Mr. Schara should continue to serve as a director of the Company given the Company’s position as an exploration stage mining company and its need to seek financing to continue its operations in the coming fiscal year.
Arrangements Between Directors and Officers
To our knowledge, there is no arrangement or understanding between any of our officers and any other person pursuant to which the officer was selected to serve as an officer.
Family Relationships
There are no family relationships between, or among any of our directors or executive officers.
Other Directorships
No directors of the Company are also directors of issuers with a class of securities registered under Section 12 of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or which otherwise are required to file periodic reports under the Exchange Act).
Code of Ethics
The Board of Directors considers and implements our business and governance policies.
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On November 7, 2005, our Board of Directors adopted a Code of Business Conduct and Ethics for directors, officers and executive officers of Goldrich Mining Company and its subsidiaries and affiliates. All our directors and employees have been provided with a copy of the Code, and it is posted on our website at www.goldrichmining.com. The document is intended to provide guidance for all directors and employees (including officers) and other persons who may be considered associates of the company to deal ethically in all aspects of its business and to comply fully with all laws, regulations, and company policies. If we make any amendments to this Code other than technical, administrative or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of the Code to our chief executive officer, or chief financial officer, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies on our website. A copy of the Code will be sent without charge to anyone requesting a copy by contacting us at our principal office.
The Code is in addition to other detailed policies relevant to business ethics that we may adopt from time to time.
Committees of the Board of Directors
The Board of Directors has an Audit Committee, a Compensation Committee, a Corporate Governance and Nominating Committee, a Technical Committee, an Operating Committee, and a Financing Committee.
Audit Committee
The Corporation has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee during 2022 were Mr. Orchow and Mr. Vincent. Mr. Vincent is the Chairman of the Committee. Each of the Directors is considered “independent” as defined under Rule 5605(c)(2) of the NASDAQ listing rules and under Rule 10A-3 of the Exchange Act. The Committee operates under a formal written charter approved by the Committee and adopted by the Board of Directors. The Audit Committee held two meetings during 2022 and four meetings during 2021. The responsibilities of the Audit Committee include monitoring compliance with Company policies and applicable laws and regulations, making recommendations to the full Board of Directors concerning the adequacy and accuracy of internal systems and controls, the appointment of auditors and the acceptance of audits, and monitoring management’s efforts to correct any deficiencies discovered in an audit or supervisory examination.
Compensation Committee
The members of the Compensation Committee during 2022 were Mr. Vincent, and Mr. Orchow; this Committee does not have a charter. Mr. Vincent is the Chairman of the Committee. This Committee receives and considers recommendations from the Chief Executive Officer for compensation for consultants, management and the Directors. Compensation matters regarding Mr. Schara and Mr. Sharp are recommended to the Board of Directors for their consideration. The Committee also is responsible for the administration of all awards made by the Board of Directors pursuant to the Restated 2008 Equity Incentive Plan (the “Plan”). The Compensation Committee makes recommendations to the Board of Directors regarding administration of the Plan. The Board of Directors, however, administers the Plan. The Company does not use compensation consultants. This Committee held no meetings in 2022 and 2021.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee is composed of Mr. Orchow, Mr. Atkinson, and Mr. Schara. Mr. Orchow is the Chairman of this Committee. This Committee adopted a Charter at a meeting held May 7, 2007. The Charter does not include a policy with regard to consideration of director candidates recommended by shareholders. The Committee believes that it is in a better position than the average shareholder to locate and select qualified candidates for the Board of Directors, as the Company is a small gold exploration company that requires its directors to have knowledge regarding the risks and opportunities in the gold mining industry. The Committee did not hold any meetings in 2022 and 2021.
Operating Committee
The Operating Committee is composed of Mr. Orchow and Mr. Schara. Mr. Schara is the Chairman of this Committee. The Committee oversees the Company’s interest in GNP. The Committee held one meeting in 2022 and none in 2021.
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Financing Committee
The Financing Committee is composed of Mr. Atkinson, Mr. Gallagher, Mr. Orchow, Mr. Schara, and Mr. Vincent. Mr. Schara is the Chairman of this Committee. The Committee advises the Chief Executive Officer on acquiring financing and evaluating financial alternatives. The Committee held three meetings in 2022 and no meetings in 2021.
Financial Expert
Stephen M. Vincent is Chairman of the Audit Committee and its designated Financial Expert as set forth in Item 401 of Regulation S-K, as promulgated by the SEC. Mr. Vincent is independent as defined under Rule 5605(c)(2) of NASDAQ listing rules and under Rule 10A-3 of the Exchange Act.
Recommendations to the Board of Directors
There have been no changes in the Company’s procedures by which shareholders of the Company may recommend nominees to the Company’s Board of Directors.
Legal Proceedings, Cease Trade Orders and Bankruptcy
In 2018, we filed a claim before an Arbitration panel consisting of 3 independent arbitrators against our joint venture partner to obtain relief from certain accounting practices employed by the manager of the joint venture. In response to our filing, the managing partner, NyacAU LLC, filed an Arbitration Counter Claim against us, naming the officers and directors of the Company as they were constituted in 2012, at the time the JV’s Operating Agreement was signed by the respective partners. On March 31, 2023, the Company signed a settlement agreement between the Company, NyacAU, LLC (“NyacAU”), Goldrich Placer, LLC (“GP”), Goldrich NyacAU Placer, LLC (“GNP”), Dr. J. Michael James, individually (“Dr. James”), and Bear Leasing, LLC (“Bear Leasing”) (each a “Party” and, collectively, the “Parties”).
Goldrich made a payment of $105,000 to NyacAU by April 30, 2023, and the settlement agreement, among other things, resolved all outstanding arbitration issues, awards, and orders including mutual release of all outstanding issues before the Alaska superior court and all court-entered judgments. The agreement also terminates and supersedes all prior agreements between all Parties except a security agreement between NyacAU and GNP to secure repayment of fifty percent (50%) of a funding mechanism known as Line of Credit 1 (LOC1), which was advanced by NyacAU to GNP. GNP was formally dissolved in 2019.
As of the date of this Annual Report, no director or executive officer of our Company and no shareholder holding more than 5% of any class of our voting securities, or any associate of any such director, officer or shareholder is a party adverse to us or any of our subsidiaries or has an interest adverse to us or any of our subsidiaries.
During the past ten years, no director, director nominee or executive of Goldrich has:
(a) filed or has had filed against such person, a petition under the U.S. federal bankruptcy laws or any state insolvency law, nor has a receiver, fiscal agent or similar officer been appointed by a court for the business or property of such person, or any partnership in which such person was a general partner, at or within two years before the time of filing, or any corporation or business association of which such person was an executive officer, at or within two years before such filings;
(b) been convicted or pleaded guilty or nolo contendere in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offences);
(c) been the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting such person’s activities in any type of business, securities, trading, commodity or banking activities;
(d) been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any U.S. federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business, securities, trading, commodity or banking activities, or to be associated with persons engaged in any such activity;
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(e) been found by a court of competent jurisdiction in a civil action or by the U.S. Securities and Exchange Commission, or by the U.S. Commodity Futures Trading Commission to have violated a U.S. federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
(f) been the subject of, or a party to, any U.S. federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any U.S. federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(g) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the U.S. Commodity Exchange Act (7 U.S.C.1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers, directors, and persons who beneficially own more than 10% of the Company’s common stock (“10% Stockholders”), to file reports of ownership and changes in ownership with the SEC. Such officers, directors, and 10% Stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms that they file.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2022, all filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation Agreements and Summary of Executive Compensation:
William V. Schara, Principal Executive Officer:
We entered into an employment arrangement with William V. Schara on October 19, 2009 in conjunction with his appointment as our Chief Executive Officer. Mr. Schara is a Certified Public Accountant, and has a Bachelor of Science Degree in Accounting from Marquette University. His annual salary was fixed at $180,000 and 750,000 options to purchase our common stock were issued to him, with 250,000 vesting immediately, 250,000 vesting on October 19, 2010 and 250,000 vesting on October 19, 2011. These options expired in October 2019. Mr. Schara has a three-year employment contract that is renewed and reviewed on an annual basis by the Board of Directors for appropriate changes in salary, benefits or other employment matters. Mr. Schara received only a partial salary in 2016, 2017, 2018, 2019, and 2020 due to the Company’s lack of finances. At December 31, 2022 a total of $933,500 of unpaid salary was accrued and included in payable to related parties, including $180,000 accrued during 2022.
Ted R. Sharp, Principal Financial Officer:
We entered into a written Independent Contractor Agreement, effective March 1, 2006, with Sharp Executive Associates, Inc. and the owner of that firm, Ted R. Sharp CPA, for Mr. Sharp to act as a Management Consultant to serve as Secretary, Treasurer and Chief Financial Officer and to provide through his extended staff and firm all services typical of an accounting department for a small company. Mr. Sharp is a Certified Public Accountant and his firm is an independent contractor, with business management and consulting interests with other companies that are independent of the consulting agreement he currently has in place with the Company. The term of the original Agreement was through December 31, 2006, and has been renewed on an annual basis, with the basis of fees changed from the monthly fee and to terms that would allow Mr. Sharp to bill the activities performed by members of his firm at hourly rates. In 2010, we hired an internal accountant to provide normal accounting functions for the Company and the use of Mr. Sharp’s staff was eliminated. Fees paid to Mr. Sharp’s firm subsequent to this date are for Mr. Sharp’s services only. When the ability to pay under a renewed agreement is assured, the terms of the contract will be reviewed and renewed. Either party may terminate the Agreement upon 15 days written notice. Mr. Sharp also will be reimbursed for reasonable expenses previously approved by us. Mr. Sharp serves on a part time basis. Mr. Sharp billed a total of $12,863 in fees in 2022. At December 31, 2022, a total of $104,844 is accrued and payable to Mr. Sharp.
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Executive Compensation and Related Information
Summary Compensation Table
A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and the other named executives for the most recent two fiscal years is as follows:
Name(1) and Principal Position |
Year |
Salary ($) |
Stock Awards ($) |
Total |
| (a) | (b) | (c) | (e) | (j) |
| William V. Schara | 2022 | 180,000 | - | 180,000 |
| Principal Executive Officer | 2021 | 180,000 | - | 180,000 |
| Ted R. Sharp | 2022 | 12,863 | - | 12,863 |
| Principal Financial Officer | 2021 | 27,768 | - | 27,768 |
| a. | No other executive or person earned more than $100,000 for the year. Columns for certain forms of compensation have been omitted from the table because no compensation was paid for those forms of compensation during the period reported. |
Material factors necessary to an understanding of the compensation in this table are set forth in the description of the compensation agreements. No performance targets or grants were modified or waived during the last fiscal year.
Outstanding Equity Awards at Fiscal Year-end (2022)
| Stock Awards | |||
| Name | Number
of |
Option
Exercise |
Option Expiration Date |
| (a) | (b) | (e) | (f) |
William V. Schara Principal Executive Officer |
- |
- |
- |
Ted R. Sharp Principal Financial Officer |
- | - | - |
Retirement, Resignation or Termination Plans
With the exception of the following, we sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our Company or as a result of a change in the responsibilities of an executive following a change in control of our Company.
The employment plan for Mr. Schara includes a two-year severance provision (or a three-year provision under a change in control), wherein the Company would be required to pay him a lump-sum severance equal of two years (or three years under a change of control) of his annual salary at termination due to reasons other than termination for cause.
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Director Compensation
The Directors receive $500 for each board meeting and $300 for each committee meeting. Any officer who is also a board member does not receive fees for service on the board.
Stock Awards and Option Awards were made under our Restated 2008 Equity Incentive Plan. The fair values were computed in accordance with ASC 718. The grant, vesting and forfeiture information and assumptions made in valuation may be found in Note 8 to our consolidated financial statements for the year ended December 31, 2022 included in this Annual Report on Form 10-K. Grants to officers and directors under the 2008 Equity Incentive Plan are made as partial compensation for services rendered as well as to retain qualified persons in those positions and provide incentive for involvement and performance. Aggregate awards outstanding at December 31, 2022 are included in the Beneficial Ownership table and notes below.
| Name | Fees
Earned |
All
Other |
Total |
| (a) | (b) | (g) | (h) |
| David S. Atkinson | 1,000 | - | 1,000 |
| Garrick A. Mendham(3) | 500 | - | 500 |
| William Orchow | 1,600 | - | 1,600 |
| Michael G. Rasmussen(4) | 1,000 | - | 1,000 |
| Stephen M. Vincent(5) | 1,600 | - | 1,600 |
| Nicholas Gallagher | 1,000 | - | 1,000 |
| (1) | The Directors receive $500 for each board meeting and $300 for each committee meeting. |
| (2) | Stock Awards and Option Awards, when made, are made under our 2008 Equity Incentive Plan. The fair values were computed in accordance with ASC 718. |
| (3) | Mr. Mendham holds options to purchase a total of 50,000 shares of common stock, all of which are vested. |
| (4) | Mr. Rasmussen holds options to purchase a total of 350,000 shares of common stock, all of which are vested. |
| (5) | Mr. Vincent holds options to purchase a total of 50,000 shares of common stock, all of which are vested. |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of May 24, 2023 by:
| i. | each director and nominee for director; |
| ii. | each of our executive officers named in the Summary Compensation Table under “Executive Compensation and Related Information” (the “Named Executive Officers”); |
| iii. | all our executive officers and directors as a group, and, based on currently available Schedules 13D and 13G filed with the SEC, the beneficial owners of more than 5% of our common stock. |
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| iv. |
Title of Class |
Name
of Beneficial Owner |
Address |
Amount
and Nature |
Percent of
Class | |
| Directors and Named Executive Officers | |||||
| Common Stock | David S. Atkinson, Director | Via Mal Masso, 58 Conegliano, Italy 31015 |
8,106,824 | (2) | 4.15% |
| Common Stock | Garrick A. Mendham, Director | PO Box 339 Gordon, NSW, 2072 Australia |
1,348,943 | (3) | * |
| Common Stock | William Orchow, Chairman, Director | 67 P Street Salt Lake City, UT 84103 |
2,663,262 | (4) | 1.36% |
| Common Stock | Michael G. Rasmussen, Director | 3311 S. Grand Blvd. Spokane, WA 99203 |
975,145 | (5) | * |
| Common Stock | William V. Schara, Chief Executive Officer, Director | 3221 S. Rebecca Spokane, WA 99223 |
9,397,804 | (6) | 4.67% |
| Common Stock | Ted R. Sharp, Secretary, Treasurer and Chief Financial Officer | 15148 Pinehurst Way Caldwell, ID 83607 |
2,170,182 | (7) | 1.11% |
| Common Stock | Stephen M. Vincent, Director | 255 Maple Hill Rd. Hopkins, MN 55343 |
2,212,029 | (8) | 1.13% |
| Common Stock | Nicholas Gallagher, Director | 5 Churchfields The K Club, Straffan Kildare, Ireland |
50,519,113 | (9) | 23.91% |
| Common Stock | All current executive officers and directors as a group | 77,393,302 | 37.51% | ||
| 5% or greater shareholders | |||||
| Common Stock | NGB Nominees | 5 Churchfields The K Club, Straffan Kildare, Ireland |
19,382,138 | (9) | 9.35% |
| Common Stock | Randy Johnson | 4111 Heatherton Pl. Minnetonka, MN 55345 |
10,281,427 | (10) | 5.27% |
| Common Stock | Chris Johnson | 8615 Eagle Creek Cir. Savage, MN 55378 |
13,274,901 | (11) | 6.80% |
| * | Less than 1%. |
| (1) | This table is based upon information supplied by officers and directors. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 195,226,190 shares outstanding on May 24, 2023, adjusted on a partially diluted basis for each shareholder as required by rules promulgated by the SEC. |
| (2) | Mr. Atkinson is general partner and holds positions as director and general manager of Forza Partners, L.P. and Forza Partners II, L.P. Mr. Atkinson is the sole investment decision maker for Forza Partners, L.P. and Forza Partners II, L.P. The shares total includes 2,123,182 shares of common stock, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2023 held personally by Mr. Atkinson. Also includes 5,850,308 shares of common stock, held for the account of Forza Partners II. Mr. Atkinson is also a director to the Company. |
| (3) | Includes 1,165,609 shares of common stock, 2 shares of Preferred E stock convertible into 66,667 shares of common stock, 50,000 shares of common stock acquirable upon exercise of vested options exercisable before August 12, 2023, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2023. |
| (4) | Includes 2,529,928 shares of common stock, 2 shares of Preferred E stock convertible into 66,667 shares of common stock, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2023. |
| (5) | Includes 625,145 shares of common stock, 50,000 shares of common stock acquirable upon exercise of vested options exercisable before July 7, 2023, and 300,000 shares of common stock acquirable upon exercise of vested options exercisable before December 19, 2024. |
| (6) | Includes 3,264,470 shares of common stock, 2 shares of Preferred E stock convertible into 66,667 shares of common stock, 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2023, and 6,000,000 shares of common stock acquirable upon exercise of Class T warrants before October 4, 2024. |
| (7) | Includes 1,170,182 shares of common stock and 1,000,000 shares of common stock acquirable upon exercise of Class T warrants before October 5, 2023. |
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| (8) | Includes 1,362,029 shares of common stock, 12 shares of Preferred E stock convertible into 400,000 shares of common stock, 50,000 shares of common stock upon exercise of vested options exercisable before August 12, 2023, 333,333 shares of common stock acquirable upon exercise of Class R warrants before November 2, 2023, and 66,667 shares of common stock acquirable upon exercise of Class R warrants before December 9, 2023. |
| (9) | Mr. Gallagher is general partner and holds positions as director and general manager of NGB Nominees, which is a greater than 5% shareholder. Mr. Gallagher is the sole investment decision maker for NGB Nominees. Includes 22,328,638 shares of common stock, 150,000 shares of Preferred A stock convertible into 900,000 shares of common stock, 200 shares of Preferred B stock convertible into 2,857,142 shares of common stock, 250 shares of Preferred C stock convertible into 8,333,333 shares of common stock, 50 shares of Preferred D stock convertible into 1,666,667 shares of common stock, 280 shares of Preferred E stock convertible into 9,333,333 shares of common stock, and 153 shares of Preferred F stock convertible into 5,100,000 shares of common stock. |
| (10) | Includes 10,281,427 shares of common stock. |
| (11) | Includes 13,271,567 shares of common stock and 3,334 shares of common stock acquirable upon exercise of Class T warrants before June 4, 2023. |
We have no knowledge of any other arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of our company.
We are not, to the best of our knowledge, directly or indirectly owned or controlled by another corporation or foreign government.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
In October 2009, we employed one of our existing directors, Mr. Schara, to serve as our President and Chief Executive Officer. At December 31, 2022, $933,500 has been accrued for deferred compensation and $60,517 has been accrued for expenses to Mr. Schara, of which $180,000 and $20,102, respectively, was accrued during the year ended December 31, 2022.
At December 31, 2021, a total of $91,981 had been accrued for fees due to Mr. Sharp, the Company’s Chief Financial Officer. During the year ended December 31, 2022, fees of $12,863 were accrued. At December 31, 2022, a total of $104,844 has been accrued for fees due to Mr. Sharp.
At December 31, 2022, $37,844 has been accrued for expenses due to related parties for expenses, of which $36,542 was accrued during the year ended December 31, 2022.
A total of $137,100 has been accrued for directors and related party consultants, of which $6,700 was accrued during the year ended December 31, 2022.
At December 31, 2022, the Company had outstanding Notes payable of $4,195,979 to Nicholas Gallagher, a shareholder and director of the Company. At December 31, 2021, the Company had outstanding Notes payable of $4,064,211 to Mr. Gallagher. The Notes payable to Mr. Gallagher had matured on October 31, 2018. Effective November 1, 2019, the Company entered into an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) with Mr. Gallagher, in his capacity as agent for and on behalf of himself and other holders of the Notes payable. No compensation was paid or accrued for Mr. Gallagher, either in cash or warrants, for his services as agent for other holders. Under the Amended Agreement, the Company and Mr. Gallagher and the other holders entered into a Deed of Trust whereunder the Notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like and the notes are now due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder. See Note 6 - Notes Payable & Notes Payable – Related Party in the financial statements for details concerning the note payable. During the year ended December 31, 2022, $nil was paid for finders fees to a related party.
In an agreement separate from the Amended Agreement, Goldrich and Mr. Gallagher agreed that Mr. Gallagher, at his option, has the right to convert outstanding but unpaid and future interest on his note payable into stock of the Company at $0.015 per share. If Mr. Gallagher were to convert his outstanding interest, at December 31, 2022, the Company would issue 143,431,067 additional shares of common stock in exchange for $2,151,466 interest payable – related party
Director Independence
Our Board of Directors has analyzed the independence of each director and nominee and has determined that the members of our Board of Directors listed below are independent as that term is defined under Rule 5605(a)(2) of the NASD listing rules. Each director is free of relationships that would interfere with the individual exercise of independent judgment. Based on these standards, the Board determined that each of the following non-employee directors, including nominated and continuing directors, is independent and has no relationship with us, except as a director and shareholder:
| ● William Orchow | ● Michael G. Rasmussen |
| ● Stephen M. Vincent |
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The Board of Directors selected Assure CPA, LLC (formerly “DeCoria, Maichel & Teague, P.S.”), 7307 N. Division, Suite 222, Spokane, WA 99208 as the independent registered public accounting firm to examine the consolidated financial statements of the Company and its subsidiary for the fiscal year ending December 31, 2022. Assure CPA, LLC have audited the financial statements of the Company since the fiscal year ended December 31, 2003.
The following table summarizes the fees that Assure charged the Company for the listed services during 2022 and 2021:
| Type of fee: | 2022 | 2021 | Description | |
| Audit fees: | $48,000 | $88,886 | Services in connection with the audit of the annual financial statements and the review of the financial statements included in our reports on Forms 10-Q and 10-K. | |
| Audit related fees: | -0- | -0- | For assurance and related services that were reasonably related to the performance of the audit or review of financial statements and not reported under “Audit Fees”. | |
| Tax fees: | -0- | -0- | ||
| All other fees | -0- | 900 | ||
| Total | $48,000 | $89,786 | ||
All of the services described above were approved by the Audit Committee.
The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of the independent registered public accounting firm. The Audit Committee requires its pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. The Audit Committee considers whether such services are consistent with the rules of the SEC on auditor independence.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Documents Filed as Part of Report
Financial Statements
The following Consolidated Financial Statements of the Company are filed as part of this report:
| 1. | Report of Independent Registered Public Accounting Firm. |
| 2. | Consolidated Balance Sheets – At December 31, 2022 and 2021. |
| 3. | Consolidated Statements of Operations – Years ended December 31, 2022 and 2021. |
| 4. | Consolidated Statements of Changes in Stockholders’ (Deficit) – Years ended December 31, 2022 and 2021. |
| 5. | Consolidated Statements of Cash Flows– Years ended December 31, 2022 and 2021. |
| 6. | Notes to Consolidated Financial Statements. |
See “Item 8. Financial Statements and Supplementary Data”.
Financial Statement Schedules
No other financial statement schedules are filed as part of this report because such schedules are not applicable or the required information is shown in the Consolidated Financial Statements or notes thereto. See “Item 8. Financial Statements and Supplementary Data”.
Exhibits
The following exhibits are filed as part of this Annual Report:
Exhibit Number |
Description |
| 3.1 | Amended and Restated Articles of Incorporation, incorporated by reference to Appendix C of the Company’s Definitive Proxy Statement on Schedule 14A (001-06412), as filed on October 23, 2013 |
| 3.2 | Amended Bylaws incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014 |
| 4.1 | Statement of Designation of Shares of Series A Preferred Stock, dated November 30, 2008, incorporated by reference to exhibit 4.1 to Form S-1/A (333-140899), as filed January 6, 2009 |
| 4.2 | Statement of Designation of Shares of Series B Preferred Stock, incorporated by reference to exhibit 3.1 the Current Report on Form 8-K, as filed January 27, 2014 |
| 4.3 | Statement of Designation of Shares of Series C Preferred Stock, incorporated by reference to exhibit 4.10 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016 |
| 4.4 | Statement of Designation of Shares of Series D Preferred Stock, incorporated by reference to exhibit 4.18 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016 |
| 4.5 | Form of Class R Warrant, incorporated by reference to exhibit 4.19 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016 |
| 4.6 | Form of Class R-2 Warrant, incorporated by reference to exhibit 4.20 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016 |
| 4.7 | Form of Class S Warrant, incorporated by reference to exhibit 4.1 to the Current Report on Form 8-K, as filed January 11, 2017 |
| 4.8 | Statement of Designation of Shares of Series E Preferred Stock, incorporated by reference to exhibit 3.1 to the Current Report on Form 8-K, as filed October 5, 2016 |
| 4.9 | Statement of Designation of Shares of Series F Preferred Stock, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, as filed January 10, 2017 |
| 4.10 | Form of Class T Warrant, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, as filed herewith (a) |
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| 4.11(1) | Description of the Registrant’s Securities |
| 10.1+ | Goldrich Mining Company 2008 Equity Incentive Plan, incorporated by reference to Appendix B to Form DEF 14A (001-06412), as filed April 16, 2008 |
| 10.2+ | Independent Contractor Agreement, dated as of January 1, 2009, among Goldrich Mining Company, Ted Sharp, CPA and Sharp Executive Associates, Inc., incorporated by reference to exhibit 10.36 to Form 10-K (001-06412), as filed April 3, 2009 |
| 10.3+ | Oral agreement to extend Independent Contractor Agreement, dated February 10, 2010, among Goldrich Mining Company, Ted R. Sharp, CPA and Sharp Executive Associates, Inc., incorporated by reference to exhibit 10.38 to Form 10-K (001-06412), as filed April 6, 2010 |
| 10.4+ | Employment Agreement, dated as of December 20, 2010, between Goldrich Mining Company and William V. Schara, incorporated by reference to exhibit 10.46 to Form S-1 (333-171550), as filed January 4, 2011 |
| 10.5 | Form of Alluvial Gold Forward Sales Contract Conversion Agreement, incorporated by reference to exhibit 10.1 to Form 8-K (001-06412), as filed February 8, 2011 |
| 10.6 | Form of First Amendment to Alluvial Gold Forward Sales Contract, incorporated by reference to exhibit 10.2 to Form 8-K (001-06412), as filed February 8, 2011 |
| 10.7 | Form of Fine Gold Forward Sales Contract Conversion Agreement - October 2010 Delivery, incorporated by reference to exhibit 10.3 to Form 8-K (001-06412), as filed February 8, 2011 |
| 10.8 | Form of Fine Gold Forward Sales Contract Conversion Agreement - October 2011 Delivery, incorporated by reference to exhibit 10.4 to Form 8-K (001-06412), as filed February 8, 2011 |
| 10.9 | Form of Binding Letter of Intent dated April 3, 2012, incorporated by reference to exhibit 99.1to the Form 8-K (001-06412), as filed April 10, 2012 |
| 10.10 | Definitive Operating Agreement dated April 2, 2012, incorporated by reference to exhibit 10.1 for the Form 8-K (001-06412), as filed May 10, 2012 |
| 10.11 | Mining Claims and Lease Assignment Agreement dated April 2, 2012, incorporated by reference to exhibit 10.2 for the Form 8-K (001-06412), as filed May 10, 2012 |
| 10.12 | Form of Alluvial Gold Forward Sales Contract for Notes payable in gold dated March 13, 2013, incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 16, 2018 |
| 10.13 | Form of Note Purchase Agreement by and between the Company and Gold Rich Asia Investment Limited dated effective January 24, 2014, incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014 |
| 10.14 | Form of Note by and between the Company and Gold Rich Asia Investment Limited, incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014 |
| 10.15 | Form of Finder’s Agreement dated effective January 24, 2014, incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014 |
| 10.16 | Addendum to Note Purchase Agreement dated January 29, 2014, incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014 |
| 10.17 | Form of Guaranty dated January 24, 2014, incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K (001-06412), as filed on April 15, 2014 |
| 10.18 | Purchase Agreement between the Company, its subsidiary Goldrich Placer LLC, and Chandalar Gold LLC, incorporated by reference to exhibit 10.1 to the Current Report on Form 8-K, as filed July 02, 2015 |
| 10.19 | Form of Second Amendment to Gold Forward Sales Contract, incorporated by reference to exhibit 10.19 to the Company’s Annual Report on Form 10-K (001-06412), as filed April 14, 2016 |
| 10.20 | Form of Third Amendment to Gold Forward Sales Contract, incorporated by reference to exhibit 10.20 to the Company’s Annual Report on Form 10-K (001-06412), as filed June 9, 2017 |
| 10.21 | Form of Fourth Amendment to Gold Forward Sales Contract, incorporated by reference to Exhibit 8.1 to the Current Report on Form 8-K, as filed December 11, 2017 |
| 10.22 | Amended 2019 Loan Agreement, incorporated by reference to exhibit 10.1 to the Current Report on Form 8-K, as filed March 24, 2020 |
| 10.23 | Senior Secured Promissory Note, incorporated by reference to exhibit 10.2 to the Current Report on Form 8-K, as filed March 24, 2020 |
| 10.24 | Guarantee, incorporated by reference to exhibit 10.3 to the Current Report on Form 8-K, as filed March 24, 2020 |
| 10.25 | Deed of Trust, incorporated by reference to exhibit 10.4 to the Current Report on Form 8-K, as filed March 24, 2020 |
| 10.26 | Initial Assessment Report authored by Global Resource Engineering Ltd, incorporated by reference to exhibit 96.1 to the Current Report on Form 8-K, as filed June 17, 2021 |
| 10.27 | Revised and Amended Initial Assessment Report authored by Global Resource Engineering Ltd, incorporated by reference to exhibit 10.27 to the Company’s Annual Report on Form 10-K/A (001-06412), as filed March 1, 2023 |
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| 10.28 | Technical Report Summary authored by Terre Lane, Principal Mining Engineer, Global Resource Engineering Ltd, incorporated by reference to exhibit 10.27 to the Company’s Annual Report on Form 10-K/A (001-06412), as filed March 1, 2023 |
| 10-29 | Consent of the Author by Terre Lane, Principal Mining Engineer, Global Resource Engineering Ltd, incorporated by reference to exhibit 10.27 to the Company’s Annual Report on Form 10-K/A (001-06412), as filed March 1, 2023 |
| 10-30 | Settlement Agreement dated March 31, 2023, incorporated by reference to exhibit 10.1 to the Current Report on Form 8-K, as filed April 6, 2023 |
| 10-31 | Option Agreement dated March 31, 2023, incorporated by reference to exhibit 10.2 to the Current Report on Form 8-K, as filed April 6, 2023 |
| 21.1(1) | Subsidiaries of the Corporation |
| 31.1(1) | Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act |
| 31.2(1) | Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act |
| 32.1(1) | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2(1) | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 95.1(1) | Mine Safety Disclosure pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act |
| 99.1 | Interim Award, issued by Arbitration Panel, dated May 25, 2019, incorporated by reference to exhibit 99.1 to the Company’s Annual Report on Form 10-K (001-06412), as filed on November 4, 2020 |
| 99.2 | Partial Final Award, issued by Arbitration Panel, dated November 30, 2019, incorporated by reference to exhibit 99.2 to the Company’s Annual Report on Form 10-K (001-06412), as filed on November 4, 2020 |
| 99.3 | Second Interim Award RE Dissolution/Liquidation of GNP and Related Issues, issued by Arbitration Panel, dated November 30, 2019, incorporated by reference to exhibit 99.3 to the Company’s Annual Report on Form 10-K (001-06412), as filed on November 4, 2020 |
| 99.4 | Final Post Award Orders, issued by Arbitration Panel, dated September 4, 2020, incorporated by reference to exhibit 99.4 to the Company’s Annual Report on Form 10-K (001-06412), as filed on November 4, 2020 |
| 99.5 | Ruling of State of Alaska Superior Court, dated April 29, 2020, incorporated by reference to exhibit 99.5 to the Company’s Annual Report on Form 10-K (001-06412), as filed on November 4, 2020 |
| 99.6 | Order on Respondents’ Motion to Confirm Judgment, issued by Arbitration Panel, dated April 7, 2021, incorporated by reference to exhibit 99.6 to the Company’s Annual Report on Form 10-K (001-06412), as filed on March 30, 2022 |
| 99.7 | Order on Respondents’ Motion to Preserve Confidentiality of Arbitration Proceedings, issued by Arbitration Panel, dated April 7, 2021, incorporated by reference to exhibit 99.7 to the Company’s Annual Report on Form 10-K (001-06412), as filed on March 30, 2022 |
| 99.8 | Second Partial Final Award, issued by Arbitration Panel, dated August 30, 2021, incorporated by reference to exhibit 99.8 to the Company’s Annual Report on Form 10-K (001-06412), as filed on March 30, 2022 |
| 99.9 | Modified Second Interim Award re Dissolution/Liquidation of GNP and Related Issues, issued by Arbitration Panel, dated August 30, 2021, incorporated by reference to exhibit 99.9 to the Company’s Annual Report on Form 10-K (001-06412), as filed on March 30, 2022 |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document |
| 101.SCH(1) | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL(1) | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF(1) | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB(1) | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE(1) | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| (1) | Filed herewith. | |
| + - | Management Contract or Compensatory Plan |
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, we caused this report to be signed on our behalf by the undersigned thereunto duly authorized.
GOLDRICH MINING COMPANY
| By: /s/ William V. Schara | |
| William V. Schara, Chief Executive Officer, Principal Executive Officer | |
Date: July 5, 2023
In accordance with Section 13 or 15(d) of the Exchange Act, we caused this report to be signed on our behalf by the undersigned thereunto duly authorized.
GOLDRICH MINING COMPANY
| By: /s/ Ted R. Sharp | |
| Ted R. Sharp, Chief Financial Officer, Principal Accounting Officer | |
Date: July 5, 2023
In accordance with the Exchange Act, this report has been signed below by the following persons on our behalf and in the capacities and on the dates indicated.
| Date: | July 5, 2023 | /s/ David S. Atkinson | |
| David S. Atkinson, Director | |||
| Date: | July 5, 2023 | /s/ Nicholas Gallagher | |
| Nicholas Gallagher, Director | |||
| Date: | July 5, 2023 | /s/ William Orchow | |
| William Orchow, Director | |||
| Date: | July 5, 2023 | /s/ Michael G. Rasmussen | |
| Michael G. Rasmussen, Director | |||
| Date: | July 5, 2023 | /s/ William V. Schara | |
| William V. Schara, Director and Chief Executive Officer | |||
| Date: | July 5, 2023 | /s/ Stephen M. Vincent | |
| Stephen M. Vincent, Director | |||
| Date: | July 5, 2023 | /s/ Ted R. Sharp | |
| Ted R. Sharp, Chief Financial Officer |
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