UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended:
or
For the transition period from ______ to ______
Commission
File No.
(Exact Name of Registrant as Specified in its Charter)
| (State or other Jurisdiction of | (I.R.S. Employer | |
| Incorporation or Organization) | Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code
n/a
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| OTC Pink |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 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.
Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 12, 2024 the number of shares outstanding of the issuer’s common stock, par value $ per share, is .
table of contents
| 2 |
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements
Nevada Canyon Gold Corp.
Condensed Consolidated Balance Sheets
(Unaudited)
| June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Investment in equity securities | ||||||||
| Mineral property and royalty interests | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Related party payables | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 4) | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred Stock: Authorized preferred shares, $ par, issued and outstanding as of June 30, 2024 and December 31, 2023 | ||||||||
| Common Stock: Authorized common shares, $ par, and issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Obligation to issue shares | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 3 |
Nevada Canyon Gold Corp.
Condensed Consolidated Statements of Operations
(Unaudited)
| For
the three months ended June 30, | For
the six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating expenses | ||||||||||||||||
| Investor awareness and marketing | $ | $ | $ | $ | ||||||||||||
| Consulting fees | ||||||||||||||||
| Director and officer compensation | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Transfer agent and filing fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other income (expense) | ||||||||||||||||
| Fair value gain (loss) on equity investments | ( | ) | ( | ) | ( | ) | ||||||||||
| Foreign exchange gain (loss) | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||
| Total other income (expense) | ( | ) | ||||||||||||||
| Net loss | $ | $ | $ | $ | ||||||||||||
| Net loss per common share - basic and diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average number of common shares outstanding : | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 4 |
Nevada Canyon Gold Corp.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
| Common Stock | Obligation | Additional | Total | |||||||||||||||||||||
| Shares | Amount | to Issue Shares | Paid-in Capital | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock-based compensation - consultants | ||||||||||||||||||||||||
| Stock-based compensation - officer | ||||||||||||||||||||||||
| Stock-based compensation - directors and CEO | - | |||||||||||||||||||||||
| Net loss for the three months ended March 31, 2023 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ||||||||||||||||||||||
| Stock-based compensation - consultants | ||||||||||||||||||||||||
| Stock-based compensation - officer | ||||||||||||||||||||||||
| Stock-based compensation - directors and CEO | - | |||||||||||||||||||||||
| Net loss for the three months ended June 30, 2023 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Shares issued on exercise of warrants | ( | ) | ||||||||||||||||||||||
| Shares to be issued on exercise of warrants | - | |||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Stock-based compensation - consultants | ||||||||||||||||||||||||
| Stock-based compensation - officer | ||||||||||||||||||||||||
| Stock-based compensation - directors and CEO | - | |||||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2024 | ( | ) | ||||||||||||||||||||||
| Shares issued on exercise of warrants | ( | ) | ||||||||||||||||||||||
| Shares to be issued on exercise of warrants | - | |||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Stock-based compensation - investor awareness and marketing | ||||||||||||||||||||||||
| Stock-based compensation - consultants | - | |||||||||||||||||||||||
| Stock-based compensation - officer | - | |||||||||||||||||||||||
| Stock-based compensation - directors and CEO | - | |||||||||||||||||||||||
| Net loss for the three months ended June 30, 2024 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 5 |
Nevada Canyon Gold Corp.
Condensed Consolidated Statements of Cash Flow
(Unaudited)
| For
the six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Cash flows used in operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash | ||||||||
| used in operating activities: | ||||||||
| Fair value loss (gain) on equity investments | ( | ) | ||||||
| Stock-based compensation - directors and CEO | ||||||||
| Stock-based compensation - consultants | ||||||||
| Stock-based compensation - officer | ||||||||
| Stock-based compensation - investor awareness and marketing | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Related party payables | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Acquisition of mineral property and royalty interests | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Cash received on exercise of warrants | ||||||||
| Share issuance cash costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Mineral interests acquired with related parties payables, net | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 6 |
NEVADA CANYON GOLD CORP.
NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2024 AND 2023
(UNAUDITED)
NOTE 1 - NATURE OF BUSINESS
Nevada
Canyon Gold Corp. (the “Company”) was incorporated under the laws of the state of
Going Concern
The Company’s condensed consolidated financial statements are prepared using accounting principles generally accepted in the United States of America (“US GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company is in the business of acquiring and exploring mineral properties and royalty interests and has not generated or realized any revenues from these business operations. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.
As of June 30, 2024, the Company’s management has assessed the Company’s ability to continue as a going concern. Management’s assessment is based on various factors, including historical and projected financial performance, liquidity, and other relevant circumstances. As of the date of these condensed consolidated financial statements, the Company has sufficient cash to meet its working capital requirements and fund its exploration programs and general day-to-day operations for at least the next 12 months. This assessment takes into account the Company’s current cash balances as a result of the sale of the Company’s common shares under offering statement on Form 1-A (the “Offering”), and expected future cash inflows from the Offering and future financing the management is planning to undertake.
While the Company believes it has the financial resources to continue its operations for the next 12 months, it is important to note that there are inherent uncertainties in projecting future cash flows, and there can be no assurance that these projections will be realized. The Company continues to closely monitor its financial position, market conditions, and other factors that may impact its ability to continue as a going concern. Management’s assessment is based on the information available as of the date of this report. If unforeseen events, adverse market conditions, or other factors negatively affect the Company’s financial position in the future, there may be a need to adjust the going concern assessment. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In the event that the Company’s ability to continue as a going concern becomes doubtful, adjustments to the carrying values of assets and liabilities, as well as additional disclosures, would be necessary.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements of the Company have been prepared in accordance with US GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by US GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
| 7 |
The Company’s basic earnings per share (“EPS”) is calculated by dividing its net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period, excluding unvested portion of restricted stock. Restricted stock that has been distributed but not yet vested and thus excluded from the weighted average shares calculation, was at June 30, 2024 and December 31, 2023.
The Company’s diluted EPS is calculated by dividing its net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. Dilutive earnings per share includes any additional dilution from common stock equivalents, such as stock options, warrants, and convertible instruments, if the impact is not antidilutive. At June 30, 2024 and December 31, 2023, all of the Company’s outstanding warrants and undistributed restricted stock awards are excluded from the diluted earnings per share calculation because their impact would be anti-dilutive.
Recent Accounting Pronouncements
In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05 Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement. The new guidance addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. The objectives of the amendments are to (1) provide decision useful information to investors and other allocators of capital in a joint venture’s financial statements and (2) reduce diversity in practice. The guidance is applied prospectively and effective for all newly formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 (Topic 740) Improvements to Income Tax Disclosures. The new guidance requires additional disclosures of disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of this disclosure guidance on its condensed consolidated financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
NOTE 3 – RELATED PARTY TRANSACTIONS
Amounts due to related parties at June 30, 2024 and December 31, 2023:
June
30, 2024 | December
31, 2023 | |||||||
| Amounts due to the Chairman of the Board and Chief Financial Officer (“CFO”) (a) | $ | $ | ||||||
| Amounts due to a company controlled by the Chairman of the Board and CFO (a) | ||||||||
| Amounts due to companies controlled by the Chief Executive Officer (“CEO”), President, and director (a,b) | ||||||||
| Total related party payables | $ | $ | ||||||
| (a) | |
| (b) |
| 8 |
During the three- and six-month periods ended June 30, 2024 and 2023, the Company had the following transactions with its related parties:
| Three
months ended June 30, | Six
months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Director stock-based compensation incurred to the Chairman of the Board and CFO | $ | $ | $ | $ | ||||||||||||
| Director stock-based compensation incurred to a director | ||||||||||||||||
| Director stock-based compensation incurred to CEO, President, and director | ||||||||||||||||
| Officer stock-based compensation incurred to VP of Operations | ||||||||||||||||
| Related party transactions | $ | $ | $ | $ | ||||||||||||
See Note 4 – Mineral Property and Royalty Interests for further information on related party transactions and Note 6 – Stockholders’ Equity for further information regarding stock issued to related parties.
NOTE 4 – MINERAL PROPERTY AND ROYALTY INTERESTS
As
of June 30, 2024, the Company’s mineral property interests are comprised of the Lazy Claims Property, the Loman Property, and the
Agai-Pah Property located in Mineral County, Nevada, the Swales Property located in Elko County, Nevada, and the Belshazzar Property
located in Quartzburg mining district, Boise County, Idaho. In addition, the Company acquired an option to acquire
| June
30, 2024 | December
31, 2023 | |||||||
| Mineral Property Interests | ||||||||
| Lazy Claims | $ | $ | ||||||
| Loman | ||||||||
| Agai-Pah | ||||||||
| Belshazzar | ||||||||
| Swales | ||||||||
| Sub-total, Mineral Property Interests | ||||||||
| Royalty Interests | ||||||||
| Olinghouse | ||||||||
| Palmetto | ||||||||
| Lapon Canyon (including Sleeper claims) | ||||||||
| Pikes Peak | ||||||||
| Sub-total, Royalty Interests | ||||||||
| Total Mineral Property and Royalty Interests | $ | $ | ||||||
Lazy Claims Property
On
August 2, 2017, the Company entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources
US Inc. (“Tarsis”), a Nevada corporation, to lease the Lazy Claims, consisting of three claims.
| 9 |
During the three- and six-month periods ended June 30, 2024 and 2023, the Company did not incur any expenses associated with the Lazy Claims.
Loman Property
In
December 2019, the Company acquired
During the three- and six-month periods ended June 30, 2024 and 2023, the Company did not incur any expenses associated with the Loman Claims.
Agai-Pah Property
On
May 19, 2021, the Company entered into exploration lease with option to purchase agreement (the “Agai-Pah Property Agreement”)
with MSM Resource, L.L.C. (“MSM”), a
Full
consideration of the Agai-Pah Property Agreement consists of the following: (i) an initial cash payment of $
During the three- and six-month periods ended June 30, 2024 and 2023, the Company did not incur any expenses associated with the Agai-Pah Property.
Belshazzar Property
On
June 4, 2021, the Company entered into exploration lease with option to purchase agreement (the “Belshazzar Property Agreement”)
with Belshazzar Holdings, L.L.C. (“Belshazzar”),
| 10 |
Full
consideration of the Belshazzar Property Agreement consists of the following: (i) an initial cash payment of $
During the three- and six-month periods ended June 30, 2024 and 2023, the Company did not incur any expenses associated with the Belshazzar Property.
Swales Property
On
December 27, 2021, the Company entered into exploration lease with option to purchase agreement (the “Swales Property Agreement”)
with Mr. W. Wright Parks III., (“Mr. Parks”) on
Full
consideration of the Swales Property Agreement consists of the following: (i) an initial cash payment of $
The
Company made the initial cash payment of $
During the three- and six-month periods ended June 30, 2024 and 2023, the Company did not incur any expenses associated with the Swales Property.
Olinghouse Project
On
December 17, 2021, the Company’s wholly-owned subsidiary, Nevada Canyon, LLC, entered into an Option to Purchase Agreement (the
“Olinghouse Agreement”) with Target Minerals, Inc (“Target”), a private
The
Company has the exclusive right and option (the “Olinghouse Purchase Option”), exercisable at any time during
| 11 |
The
term of the Olinghouse Purchase Option shall be the later of one year, or 60 days after the date on which the Company delivers to Target
a written notice to exercise the Olinghouse Purchase Option, subject to further extension if Target’s conditions to closing are
not fully satisfied or otherwise waived by the Company. Full consideration of the Olinghouse Agreement consists of the following: (i)
an initial cash option payment of $
| ● | if the Company’s 10-day volume weighted average price (“VWAP”) Calculation is less than $ per share, the Olinghouse Purchase Price shall be paid in cash; or | |
| ● | if the Company’s 10-day VWAP Calculation is more than $ per share, the Olinghouse Purchase Price shall be paid in the form of Shares of the Company’s common stock. |
On
December 23, 2022, the Company and Target agreed to extend the Olinghouse Purchase Option for an additional one-year term, expiring on
December 17, 2023, for a one-time cash payment of $
During the three- and six-month periods ended June 30, 2024 and 2023, the Company did not incur any expenses associated with the Olinghouse Project.
Palmetto Project
On
January 27, 2022,
To
acquire the
During the three- and six-month periods ended June 30, 2024 and 2023, the Company did not incur any expenses associated with the Palmetto Project.
Lapon Canyon Project
On
May 24, 2024,
The
Lapon Canyon Project consists of 96 unpatented lode mining claims identified as the Sleeper and Lapon Rose claim groups situated in Mineral
County, Nevada, within the northern portion of the Walker Lane gold trend. In order to finalize the Royalty Purchase Agreement, the Company
was required to acquire an additional
Pikes Peak Project
On
June 12, 2024, the Company acquired a
| 12 |
NOTE 5 – INVESTMENT IN EQUITY SECURITIES
As at June 30, 2024 and December 31, 2023, the Company’s equity investment consisted of common shares of WRR.
At
June 30, 2024 and December 31, 2023, the fair value of the equity investment was $
During
the three-month period ended June 30, 2024, the revaluation of the equity investment in WRR resulted in a $
During
the six-month period ended June 30, 2024, the revaluation of the equity investment in WRR resulted in a $
The Company did not sell any WRR Shares during the three- and six-month periods ended June 30, 2024 and 2023.
NOTE 6 – STOCKHOLDERS’ EQUITY
The
Company was formed with one class of common stock, $ par value, and is authorized to issue common shares and one class
of preferred stock, $ par value, and is authorized to issue preferred shares.
On
June 7, 2024, the Company issued Common Shares valued at $
During
the six-month period ended June 30, 2024, the Company issued Common Shares for total proceeds to the Company of $
Subsequent
to June 30, 2024, the Company issued further Common Shares for total proceeds to the Company of $
Warrants
The changes in the number of warrants outstanding for the six-month period ended June 30, 2024, and for the year ended December 31, 2023, are as follows:
Six months ended June 30, 2024 | Year ended December 31, 2023 | |||||||||||||||||||
| Number of warrants | Weighted average exercise price | Number of warrants | Weighted average exercise price | |||||||||||||||||
| Warrants outstanding, beginning | $ | $ | ||||||||||||||||||
| Warrants issued - offering | $ | |||||||||||||||||||
| Warrants issued - agent | $ | |||||||||||||||||||
| Warrants exercised | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Warrants outstanding, ending | $ | $ | ||||||||||||||||||
| 13 |
Number of warrants exercisable | Expiry date | Exercise price | ||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| (1) | $ | |||||||
| $ | ||||||||
| $ | ||||||||
| (1) | $ | |||||||
| (1) |
At June 30, 2024, the weighted average life of the warrants was years.
Share-based compensation
| Three
months ended June 30, | Six
months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Directors and CEO | $ | $ | $ | $ | ||||||||||||
| Officer – VP of Operations | ||||||||||||||||
| Consultants | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Directors:
On December 30, 2021, the Company distributed a total of shares of common stock to the Company’s directors (the “Director Shares”). The Director Shares are subject to the terms and conditions included in 3-year lock-up and vesting agreements (the “Lock-up Agreements”), which contemplate that the Director Shares will vest in equal annual installments over a -year term during which term the shareholders agreed not to sell, directly or indirectly, or enter into any other transactions involving the Company’s common shares regardless if the shares have vested or not.
The fair value of the shares was determined to be approximately $ or $ per share based on the trading price of the Company’s common stock on the issue date adjusted for the restrictions under the Lock-up Agreements. The shares vest over a three-year time period.
As stated above, the Company distributed all of the awarded shares prior to vesting. As at June 30, 2024, shares have vested and shares will vest on December 31, 2024. As of June 30, 2024, unvested compensation related to the Director Shares of $ will be recognized over the next .
Officer – VP of Operations:
On February 24, 2023, the Company entered into a consulting agreement with the Company’s newly appointed Vice President of Operations (the “VP Agreement”). The Company agreed to issue shares of its common stock for the services. The shares vest ratably over a two-year period, beginning March 1, 2023, and vested shares are distributed quarterly. The fair value of the shares was $ or $ per share based on the trading price of the Company’s common stock on the date the service period began. As at June 30, 2024, the Company had distributed a total of shares under the VP Agreement and had recorded an obligation to issue further Common Shares, which were issued on July 1, 2024.
Unvested compensation related to the shares to be issued under the VP Agreement of $ will be recognized over the next .
| 14 |
Consultants:
On February 24, 2023, the Company entered into two separate consulting agreements with consultants (the “Consulting Agreements”) in exchange for a total of shares of its common stock. All shares vest ratably over a three-year period, beginning March 1, 2023, and vested shares are distributed quarterly . The fair value of the shares was $ or $ per share based on the trading price of the Company’s common stock on the date the service period began. As at June 30, 2024, the Company had distributed a total of shares under the Consulting Agreements and had recorded an obligation to issue further Common Shares, which were issued on July 1, 2024.
Unvested compensation related to the Shares to be issued under the Consulting Agreements of $ will be recognized over the next years.
NOTE 7 – PREPAID EXPENSES
Prepaid expenses at June 30, 2024 and December 31, 2023:
June 30, 2024 | December 31, 2023 | |||||||
| Prepaid investor awareness and marketing | $ | $ | ||||||
| Prepaid filing and listing fees | ||||||||
| Prepaid consulting fees | ||||||||
| Total | $ | $ | ||||||
| 15 |
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
Forward-looking Statements
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include some statements that are not purely historical and that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such, may involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, perceived opportunities in the market and statements regarding our mission and vision. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein are based on various assumptions, many of which are based, in turn, upon further assumptions. Our expectations, beliefs and forward-looking statements are expressed in good faith on the basis of management’s views and assumptions as of the time the statements are made, but there can be no assurance that management’s expectations, beliefs or projections will result or be achieved or accomplished.
Examples of forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our ability to generate operating cash flows and to fund our working capital and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our future products, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include:
| ● | management’s plans, objectives and budgets for its future operations and future economic performance; | |
| ● | capital budget and future capital requirements; | |
| ● | meeting future capital needs; | |
| ● | our dependence on management and the need to recruit additional personnel; | |
| ● | limited trading for our common stock; | |
| ● | the level of future expenditures; | |
| ● | impact of recent accounting pronouncements; | |
| ● | the outcome of regulatory and litigation matters; and | |
| ● | the assumptions described in this report underlying such forward-looking statements. |
Actual results and developments may materially differ from those expressed in, or implied by, such statements due to a number of factors, including:
| ● | those described in the context of such forward-looking statements; | |
| ● | future product development and marketing costs; | |
| ● | the markets of our domestic operations; | |
| ● | the impact of competitive products and pricing; | |
| ● | the political, social and economic climate in which we conduct operations; and | |
| ● | the risk factors described in other documents and reports filed with the Securities and Exchange Commission, including our Registration Statement on Form S-1/A (SEC File No. 333-196075). |
We operate in an extremely competitive environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them in light of new information or future events.
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The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying unaudited condensed consolidated financial statements and notes to help provide an understanding of our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited condensed consolidated financial statements.
In this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our” refer to Nevada Canyon Gold Corp. and its wholly-owned subsidiaries, Nevada Canyon LLC and Canyon Carbon LLC, incorporated in Nevada, unless the context requires otherwise.
We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three- and six-month periods ended June 30, 2024 and 2023. You should refer to the Condensed Financial Statements and related Notes in conjunction with this discussion.
General
We were incorporated under the laws of the state of Nevada on February 27, 2014. On December 15, 2021, we incorporated two subsidiaries, Nevada Canyon LLC and Canyon Carbon LLC. Both subsidiaries were incorporated under the laws of the state of Nevada.
We are a US-based natural resource company headquartered in Reno, Nevada. The Company has a large, strategic land position and royalties, in multiple projects, within some of Nevada’s highest-grade historical mining districts. As of the date of the filing of this Quarterly report on Form 10-Q our mineral property and royalty interests are comprised of the Lazy Claims Property, the Loman Property, and the Agai-Pah Property located in Mineral County, Nevada, the Swales Property located in Elko County, Nevada, and the Belshazzar Property located in Quartzburg mining district, Boise County, Idaho. In addition, we acquired an option to acquire 100% interest of Target Minerals, Inc’s (“Target”) 1% production royalty on the Olinghouse Project, located in the Olinghouse Mining District, Washoe County, Nevada, acquired 2% net smelter returns royalty (“NSR”) on the Palmetto Project located in Esmeralda County, Nevada, 2% NSR on the Lapon Canyon Project, 1% NSR on 36 Sleeper claims included in the Lapon Canyon Project, and 2% NSR on the Pikes Peak Project which are located in Mineral County, Nevada.
Critical Accounting Policies and Estimates
Our consolidated financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States of America (“GAAP”) and are presented in US dollars. GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our consolidated financial statements.
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements for the three- and six-month periods ended June 30, 2024 and 2023, together with notes thereto, which are included in this Quarterly Report on Form 10-Q, as well as our most recent audited consolidated financial statements on Form 10-K for the year ended December 31, 2023.
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Results of Operations
Three- and six-month periods ended June 30, 2024, compared to the three- and six-month periods ended June 30, 2023:
| Three months ended June 30, | Changes between the | Six months ended June 30, | Changes between the | |||||||||||||||||||||
| 2024 | 2023 | periods | 2024 | 2023 | periods | |||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Investor awareness and marketing | $ | 359,367 | $ | 41,593 | $ | 317,774 | $ | 777,642 | $ | 48,518 | $ | 729,124 | ||||||||||||
| Consulting fees | 124,166 | 124,167 | (1 | ) | 248,646 | 179,493 | 69,153 | |||||||||||||||||
| Director and officer compensation | 420,768 | 421,440 | (672 | ) | 841,534 | 723,506 | 118,028 | |||||||||||||||||
| General and administrative expenses | 22,272 | 9,258 | 13,014 | 38,279 | 27,047 | 11,232 | ||||||||||||||||||
| Professional fees | 7,250 | 70,320 | (63,070 | ) | 27,715 | 76,320 | (48,605 | ) | ||||||||||||||||
| Transfer agent and filing fees | 4,559 | 3,868 | 691 | 15,274 | 8,590 | 6,684 | ||||||||||||||||||
| Total operating expenses | 938,382 | 670,646 | 267,736 | 1,949,090 | 1,063,474 | 885,616 | ||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Fair value gain (loss) on equity investments | (38,524 | ) | (6,224 | ) | 32,300 | 18,674 | (94,962 | ) | (113,636 | ) | ||||||||||||||
| Foreign exchange gain (loss) | (1 | ) | 4 | (5 | ) | (7 | ) | 4 | (11 | ) | ||||||||||||||
| Interest income | 111,578 | 7,321 | 104,257 | 225,649 | 13,813 | 211,836 | ||||||||||||||||||
| Total other income (expense) | 73,053 | 1,101 | 71,952 | 244,316 | (81,145 | ) | (325,461 | ) | ||||||||||||||||
| Net loss | $ | 865,329 | $ | 669,545 | $ | 195,784 | $ | 1,704,774 | $ | 1,144,619 | $ | 560,155 | ||||||||||||
Revenues
We had no revenues for the three- and six-month periods ended June 30, 2024 and 2023. Due to the exploration rather than the production nature of our business, we do not expect to have significant operating revenue in the foreseeable future.
Operating Expenses
Our operating expenses for the three- and six-month periods ended June 30, 2024 and 2023 included investor awareness and marketing expenses, director and officer compensation, consulting fees, professional fees, transfer agent and filing fees, and general and administrative expenses.
During the three-month period ended June 30, 2024, our operating expenses increased by $267,736 or 40%, to $938,382 as compared to $670,646 for the three months ended June 30, 2023. This change was associated with $359,367 we incurred in investor awareness and marketing expenses, which during the three-month period ended June 30, 2024, increased by $317,774, from $41,593 we incurred during the three-month period ended June 30, 2023. Our general and administrative expenses increased by $13,014, from $9,258 for the three-month period ended June 30, 2023 to $22,272 for the three-month period ended June 30, 2024. These increases were in part offset by a $63,070 decrease in professional fees from $70,320 for the three-month period ended June 30, 2023 to $7,250 for the three-month period ended June 30, 2024.
Other operating expenses included $420,768 in director and officer compensation for the vesting of shares that we issued to our three directors on December 30, 2021 and with shares we granted to our VP of Operations on February 24, 2023 (2023 - $421,440), consulting fees of $124,166 (2023 – 124,167), and $4,559 in transfer agent and filing fees (2023 - $3,868).
On a year-to-date basis, our operating expenses increased by $885,616 or 83%, to $1,949,090 as compared to $1,063,474 for the six months ended June 30, 2023. This change was associated with $777,642 we incurred in investor awareness and marketing expenses, which during the six-month period ended June 30, 2024, increased by $729,124, from $48,518 we incurred during the six-month period ended June 30, 2023. Our general and administrative expenses increased by $11,232, from $27,047 for the six-month period ended June 30, 2023 to $38,279 for the three-month period ended June 30, 2024. Our director and officer compensation increased by $118,028 from $723,506 we incurred during the three-month period ended June 30, 2023 to $841,534 we incurred during the six-month period ended June 30, 2024; the director and office compensation was associated with the shares that we issued to our three directors on December 30, 2021, and with shares we granted to our VP of Operations on February 24, 2023. Our consulting fees increased by $69,153, from $179,493 we incurred during the six-month period ended June 30, 2023 to $248,646 we incurred during the six-month period ended June 30, 2024, and our transfer agent and filing fees increased by $6,684 from $8,590 we incurred during the six-month period ended June 30, 2023 to $15,274 we incurred during the six-month period ended June 30, 2024.
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These increases were in part offset by a $48,605 decrease in professional fees from $76,320 for the six-month period ended June 30, 2023 to $27,715 for the six-month period ended June 30, 2024.
Other Income (Expenses)
During the three-month period ended June 30, 2024, we recognized $38,524 loss on fair value of investments in equity securities (2023 – $6,224). The loss resulted from revaluation of WRR Shares and was caused mainly by decreased market price of WRR’s Shares from CAD$0.30 per share at March 31, 2024, to CAD$0.20 per share at June 30, 2024, and to a smaller degree from fluctuation of exchange rates between the US and Canadian dollars. In addition, we earned $111,578 in interest income, which increased in comparison to $7,321 we earned during the three months ended June 30, 2023, as a result of larger cash balances from capital raise.
During the six-month period ended June 30, 2024, we recognized $18,674 gain on fair value of investments in equity securities (2023 – $94,962 loss). The loss resulted from revaluation of WRR Shares and was caused mainly by decreased market price of WRR’s Shares from CAD$0.145 per share at December 31, 2023, to CAD$0.20 per share at June 30, 2024, and to a smaller degree from fluctuation of exchange rates between the US and Canadian dollars. In addition, we earned $225,649 in interest income, which increased in comparison to $13,813 we earned during the six months ended June 30, 2023, as a result of larger cash balances from capital raise.
Net Loss
During the three months ended June 30, 2024, we incurred net loss of $865,329, as compared to net loss of $669,545 we incurred during the three-month period ended June 30, 2023. This change mainly resulted from increased investor awareness and marketing expenses which were in part offset by increased interest income and decreased professional fees.
During the six months ended June 30, 2024, we incurred net loss of $1,704,774, as compared to net loss of $1,144,619 we incurred during the six-month period ended June 30, 2023. This change mainly resulted from increased investor awareness and marketing expenses which were in part offset by increased interest income and decreased professional fees.
Liquidity and Capital Resources
June 30, 2024 | December 31, 2023 | |||||||
| Current assets | $ | 9,650,245 | $ | 10,285,426 | ||||
| Current liabilities | 1,308,267 | 1,306,307 | ||||||
| Working capital | $ | 8,341,978 | $ | 8,979,119 | ||||
As of June 30, 2024, we had a cash balance of $9,106,886 and working capital of $8,341,978 with cash flows used in operations totaling $568,670 for the period then ended. During the six months ended June 30, 2024, our operations were funded with cash on hand. The cash that we had on hand at June 30, 2024, was generated from the issuance of 12,499,343 Units under the offering statement on Form 1-A (the “Offering”) for net cash proceeds of $9,598,012, which we closed during the year ended December 31, 2023, and from exercise of Warrants we issued as part of the Offering.
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Due to the exploration rather than the production nature of our business, our operating activities do not generate cash flows, and cannot satisfy our cash requirements. However, we believe that the cash we were able to generate from the Offering will allow us to support our operations including our planned exploration programs and the general day-to-day business activities for the next 12-month period. We will continue to look for opportunities to generate additional cash through future equity or debt financings.
Cash Flow
Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows used in operating activities | $ | (568,670 | ) | $ | (207,820 | ) | ||
| Cash flows used in investing activities | (495,000 | ) | (20,000 | ) | ||||
| Cash flows provided by financing activities | 426,164 | - | ||||||
| Net decrease in cash during the period | $ | (637,506 | ) | $ | (227,820 | ) | ||
Net cash used in operating activities
During the six months ended June 30, 2024, our net cash used in operating activities increased by $360,850, or 174%, to $568,670 for the six months ended June 30, 2024, compared with $207,820 for the comparative period in 2023. During the six months ended June 30, 2024, we used $548,305 to cover our cash operating costs, which were determined by reducing the net loss of $1,704,774 the Company incurred during the period, by non-cash items included in the net loss of $1,156,469; $18,040 to decrease our accounts payable and $2,325 to increase our prepaid expenses.
During the six months ended June 30, 2023, we used $207,820 in our operating activities. During the six months ended June 30, 2023, we used $170,595 to cover our cash operating costs, which were determined by reducing the net loss of $1,144,619 the Company incurred during the period, by non-cash items included in the net loss of $974,024; we used $5,027 to increase our prepaid expenses, and $17,031 to reduce amounts due to our related parties. These uses of cash were further increased by $15,167 decrease in accounts payable and accrued liabilities.
Adjustments to reconcile net loss to net cash used in operating activities
During the six months ended June 30, 2024, we recognized $18,674 gain on revaluation of fair value of our investments in WRR Shares. In addition, we recognized $491,534 in director and CEO compensation associated with the par-value shares we distributed to our directors and CEO on December 30, 2021, $350,000 and $233,334 we recorded on vesting of shares awarded to our VP of Operations and to our consultants, respectively, in accordance with the agreements we executed in February of 2023, and $100,275 we recorded on issuance of 35,000 shares to our consultant for investor awareness and marketing services.
During the six months ended June 30, 2023, we recognized $94,962 loss on revaluation of fair value of our investments in WRR Shares. In addition, we recognized $490,173 in director compensation associated with the par-value shares we distributed to our directors on December 30, 2021, $233,333 and $155,556 we recorded as the vesting of shares awarded to our VP of Operations and to our consultants, respectively, in accordance with the consulting agreements we executed in February of 2023.
Net cash used in investing activities
During the six-month period ended June 30, 2024 and 2023, we spent $20,000, to make option payments on our Swales Property, which was initially accrued at December 31, 2023, $325,000 to acquire NSR on Lapon Canyon Project, and $150,000 to acquire NSR on Pikes Peak Project.
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During the six-month period ended June 30, 2023, we used $20,000 to make an option payment on our Swales Property, which we accrued in December of 2022.
Net cash provided by financing activities
During the six-month period ended June 30, 2024, we issued 363,625 shares for total proceeds of $436,350 on exercise of the Warrants issued as part of the Offering, which the Company closed in its fiscal 2023 year. Of this amount, $18,000 was received during the year ended December 31, 2023, and $10,500 were received during the six-month period ended June 30, 2024, for which 5,750 Common Shares were issued subsequent to June 30, 2024, and 3,000 Common Shares remain to be issued as of the date of the filing of this Quarterly Report on Form 10-Q. The Company paid $2,686 in share issuance costs associated with exercise of these Warrants.
During the six-month period ended June 30, 2023, we did not generate any funds from our financing activities.
Going Concern
At June 30, 2024, we had a working capital surplus of $8,341,978 and cash on hand of $9,106,886, which is sufficient to support our current plan of operations including exploration programs for the next 12-month period. Our investment in equity security is represented by 511,750 WRR Shares valued at $74,779.
To support our operations beyond the 12-month period, we are planning to continue actively pursuing other means of financing our operations including equity and/or debt financing. However, given the current market and industry conditions, we cannot be sure that we will be able to procure additional funding. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from operations, we may be limited in our ability to pursue our business plan. Moreover, if our resources from obtaining additional capital or cash flows from operations, once we commence them, do not satisfy our operational needs or if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders’ investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences, or privileges senior to those of existing stockholders.
Impact of Inflation
We believe that inflation has had a negligible effect on operations over the past fiscal quarter.
Capital Expenditures
During the six months ended June 30, 2024 and 2023, we used $20,000, each, to make annual option payments on Swales Property. In addition, during the six-month period ended June 30, 2024, we used $475,000 to acquire royalty interests.
Unproved Mineral Properties and Royalty Interests
As of the date of this Quarterly report on Form 10-Q, our mineral property and royalty interests are comprised of the Lazy Claims Property, the Loman Property, and the Agai-Pah Property located in Mineral County, Nevada, the Swales Property located in Elko County, Nevada, and the Belshazzar Property located in Quartzburg mining district, Boise County, Idaho. In addition, we acquired a 2% net smelter returns royalty (“NSR”) on the Palmetto Project, located in Esmeralda County, Nevada, a 2% NSR on the Lapon Canyon Project, a 1% NSR on 36 Sleeper claims included in the Lapon Canyon Project, a 2% NSR on the Pikes Peak Project which are located in Mineral County, Nevada, and have an option to acquire 100% interest of Target Minerals, Inc’s (“Target”) 1% production royalty on the Olinghouse Project, located in the Olinghouse Mining District, Washoe County, Nevada.
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The Company is presently focused on exploration of its Swales and Agai Pah Properties in Nevada. Remaining mineral property and royalty interests are considered secondary, and exploration efforts on these may be rescheduled to accommodate exploration programs scheduled for Swales and Agai Pah Properties.
Lazy Claims Property (Exploration Phase)
On August 2, 2017, we entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc. (“Tarsis”), a Nevada corporation, to lease rights to three Lazy Claims totaling 60 acres (the “Lazy Claims”). The term of the Lazy Claims Agreement is ten years and is subject to extension for an additional two consecutive 10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, which we paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. We agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, we will not be required to pay a $2,000 annual minimum payment. As of the date of this Quarterly Report on Form 10-Q, we retain our leasing rights to the Lazy Claims.
As of June 30, 2024, the total cost of the Lazy Claims Property was $Nil, and had no plant nor equipment associated with it.
Loman Property (Exploration Phase)
In December 2019 we acquired 27 unpatented mining claims for a total of $10,395 (the “Loman Property”). Due to certain regulatory restrictions associated with COVID-19 pandemic, we were required to delay the re-registration of the Loman Property claims into the Company’s name. The Loman claims were transferred and re-registered into our name in the fourth quarter of fiscal year 2021.
As of June 30, 2024, the total cost of the Loman Property was $10,395, and had no plant nor equipment associated with it.
Agai-Pah Property (Exploration Phase)
On May 19, 2021, we entered into an exploration lease with option to purchase agreement (the “Agai-Pah Property Agreement”) with MSM Resource, L.L.C., (“MSM”) a Nevada limited liability Corporation on the Agai-Pah Property, consisting of 20 unpatented mining claims totaling 400 acres (the “Agai-Pah Property”). Alan Day, the managing member of MSM, is the CEO, President, and director of the Company.
The term of the Agai-Pah Property Agreement commenced on May 19, 2021, and continues for ten years, subject to the Company’s right to extend the Agai-Pah Property Agreement for two additional terms of ten years each, and subject to the Company’s option to purchase the Property.
Full consideration of the Agai-Pah Property Agreement consists of the following: (i) an initial cash payment of $20,000 to be paid within 90 days from the execution of the Agai-Pah Property Agreement on May 19, 2021 (the “Effective Date”), and (ii) annual payments of $20,000 to be paid on the anniversary of the Effective Date while the Agai-Pah Property Agreement remains in effect.
The Company has the exclusive option and right to acquire 100% ownership of the Agai-Pah Property (the “Agai-Pah Purchase Option”). To exercise the Agai-Pah Purchase Option, the Company will be required to pay $750,000 (the “Agai-Pah Purchase Price”). The Agai-Pah Purchase Price can be paid in either cash and/or equity of the Company, or a combination thereof, at the election of MSM. The annual payments paid by the Company to MSM, shall not be applied or credited against the Purchase Price. As at June 30, 2024, the Company had recorded $60,000 in acquisition costs associated with the Agai-Pah Property, and accrued the third $20,000 anniversary payment, which was paid Subsequent to June 30, 2024.
As of June 30, 2024, the total cost of the Agai-Pah Property was $80,000, and had no plant nor equipment associated with it.
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Belshazzar Property (Exploration Phase)
On June 4, 2021, we entered into an exploration lease with option to purchase agreement (the “Belshazzar Property Agreement”) with Belshazzar Holdings, L.L.C., (“Belshazzar”) a Nevada limited liability Corporation on the Belshazzar Property, consisting of ten unpatented lode mining claims and seven unpatented placer mineral claim totaling 200 acres (the “Belshazzar Property”). Alan Day, the managing member of Belshazzar, is the CEO, President, and director of the Company.
The term of the Belshazzar Property Agreement commenced on June 4, 2021, and continues for ten years, subject to the Company’s right to extend the Belshazzar Property Agreement for two additional terms of ten years each, and subject to the Company’s option to purchase the Belshazzar Property.
Full consideration of the Belshazzar Property Agreement consists of the following: (i) an initial cash payment of $20,000 to be paid within 90 days from the execution of the Belshazzar Property Agreement on June 4, 2021 (the “effective date”), and (ii) annual payments of $20,000 to be paid on the anniversary of the Effective Date while the Belshazzar Property Agreement remains in effect.
The Company has the exclusive option and right to acquire 100% ownership of the Belshazzar Property (the “Belshazzar Purchase Option”). To exercise the Belshazzar Purchase Option, the Company will be required to pay $800,000 (the “Belshazzar Purchase Price”). The Belshazzar Purchase Price can be paid in either cash and/or equity of the Company, or a combination thereof, at the election of Belshazzar. The annual payments paid by the Company to Belshazzar, shall not be applied or credited against the Belshazzar Purchase Price. The Belshazzar Property is subject to a 1% Gross Returns Royalty payable to the property owner, from the commencement of commercial production subject to certain terms. As at June 30, 2024, the Company had recorded $60,000 in acquisition costs associated with the Belshazzar Property, and accrued the third $20,000 anniversary payment, which was paid Subsequent to June 30, 2024.
As of June 30, 2024, the total cost of the Belshazzar Property was $80,000, and had no plant nor equipment associated with it.
Swales Property (Exploration Phase)
On December 27, 2021, we entered into an exploration lease with option to purchase agreement (the “Swales Property Agreement”) with Mr. W. Wright Parks III., (“Mr. Parks”) on the Swales Property, consisting of 40 unpatented lode mining claims totaling 800 acres (the “Swales Property”).
The term of the Swales Property Agreement commenced on December 27, 2021, and continues for ten years, subject to the Company’s right to extend the Swales Property Agreement for two additional terms of ten years each, and subject to the Company’s option to purchase the Swales Property.
Full consideration of the Swales Property Agreement consists of the following: (i) an initial cash payment of $20,000 to be paid within 90 days from the execution of the Belshazzar Agreement on December 27, 2021 (the “effective date”), and (ii) annual payments of $20,000 to be paid on the anniversary of the Effective Date while the Swales Property Agreement remains in effect.
The Company has the exclusive option and right to acquire 100% ownership of the Swales Property (the “Swales Purchase Option”). To exercise the Swales Purchase Option, the Company will be required to pay $750,000 (the “Swales Purchase Price”). The Swales Purchase Price can be paid in either cash and/or equity of the Company, or a combination thereof, at the election of Mr. Parks. The annual payments paid by the Company to Mr. Parks, shall not be applied or credited against the Swales Purchase Price. The Company made the initial cash payment of $20,000 on January 15, 2022, and made the first $20,000 anniversary payment on March 14, 2023, which was initially accrued at December 31, 2022. At December 31, 2023, the Company accrued the second $20,000 anniversary payment, which was paid on February 16, 2024.
As of June 30, 2024, the total cost of the Swales Property was $60,000, and had no plant nor equipment associated with it.
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Olinghouse Project (Development and Exploration Phase)
On December 17, 2021, our wholly owned subsidiary, Nevada Canyon, LLC, entered into an Option to Purchase Agreement (the “Olinghouse Agreement”) with Target Minerals, Inc (“Target”), to acquire 100% interest of Target’s 1% production royalty on the Olinghouse Project.
The Company has the exclusive right and option (the “Olinghouse Purchase Option”), exercisable at any time during the Olinghouse Option period, at its sole discretion, to acquire 100% of a 1% production royalty from the net smelter returns on all minerals and products produced from certain properties comprising the Olinghouse Project.
The term of the Olinghouse Purchase Option shall be the later of one year, or 60 days after the date on which the Company delivers to Target a written notice to exercise the Olinghouse Purchase Option, subject to further extension if Target’s conditions to closing are not fully satisfied or otherwise waived by the Company. Full consideration of the Olinghouse Agreement consists of the following: (i) an initial cash option payment of $200,000 payable upon execution of the Agreement, which the Company paid on December 18, 2021, and (ii) purchase price (the “Olinghouse Purchase Price”) which shall be paid by the Company to Target in either cash or common shares of the Company, the determination of which shall be as follows:
| ● | if the Company’s 10-day volume weighted average price (“VWAP”) calculation is less than $1.25 per share, the Olinghouse Purchase Price shall be paid in cash; or | |
| ● | if the Company’s 10-day VWAP Calculation is more than $1.25 per share, the Olinghouse Purchase Price shall be paid in the form of 2,000,000 Shares of the Company’s common stock. |
On December 23, 2022, the Company and Target agreed to extend the Olinghouse Purchase Option for an additional one-year term, expiring on December 17, 2023, for a one-time cash payment of $40,000. In December of 2023, in accordance with Article 3 of the Olinghouse Agreement, the Company notified Target that the Company intends to exercise its option to acquire the 1% production royalty on the Olinghouse Project and, as of the date of this Quarterly Report on Form 10-Q, is awaiting delivery of the Royalty deed, at which point the Company will have to make the final option payment as discussed above.
As of June 30, 2024, the total cost of the Olinghouse Royalty was $240,000. The Company did not have any plant nor equipment associated with Olinghouse Royalty.
Palmetto Project (Exploration Phase)
On January 27, 2022, the Company’s wholly owned subsidiary, Nevada Canyon, LLC, entered into a Royalty Purchase Agreement (the “Royalty Agreement”) with Smooth Rock Ventures, LLC, a wholly-owned subsidiary of Smooth Rock Ventures Corp. (“Smooth Rock”), to acquire a 2% net smelter returns royalty (“NSR”) on the Palmetto Project (the “Palmetto Project”), located in Esmeralda County, Nevada. Alan Day, the Company’s CEO, President, and director is also a director of Smooth Rock.
To acquire the 2% NSR on the Palmetto Project, Nevada Canyon agreed to pay Smooth Rock a one-time cash payment of $350,000, which was paid on February 7, 2022.
As of June 30, 2024, the total cost of the Palmetto Royalty was $350,000. The Company did not have any plant nor equipment associated with Olinghouse Royalty.
Lapon Canyon Project (Exploration Phase)
On May 24, 2024, Nevada Canyon, LLC entered into a Royalty Purchase Agreement with Walker River Resources, LLC (“Walker River”), a wholly owned subsidiary of Walker River Resources Corp., to acquire a 2% NSR on the Lapon Canyon Project, (the “Lapon Canyon Project”) for a one-time cash payment of $300,000.
The Lapon Canyon Project consists of 96 unpatented lode mining claims identified as the Sleeper and Lapon Rose claim groups situated in Mineral County, Nevada, within the northern portion of the Walker Lane gold trend. In order to finalize the Royalty Purchase Agreement, we were required to acquire an additional 1% NSR from two individuals who held NSR on the 36 Sleeper claims that are included in the Lapon Canyon Project. We paid a total of $25,000 for a 1% NSR on 36 Sleeper claims.
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Pikes Peak Project (Exploration Phase)
On June 12, 2024, we acquired a 2% NSR on the Pikes Peak Project (the “Pikes Peak Project”) from Walker River, who owns a 100% undivided interest in the Pikes Peak Project. The Pikes Peak Project consists of 36 unpatented lode mining claims situated in Mineral County, Nevada, within the northern portion of the Walker Lane gold trend. To acquire the NSR on Pikes Peak Project we made a one-time cash payment of $150,000.
Off-Balance Sheet Arrangements
None.
Use of Estimates
Areas where significant estimation judgments are made and where actual results could differ materially from these estimates are the carrying value of certain assets and liabilities which are not readily apparent from other sources and the classification of net operating loss and tax credit carry forwards.
We evaluate impairment of our long-lived assets by applying the provisions of ASC No. 360. In applying those provisions, we have not recognized any impairment charge on our long-lived assets during the six-month period ended June 30, 2024.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures, as of the end of the fiscal quarter covered by this quarterly report on Form 10-Q, were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
(b) Changes in Internal Controls over Financial Reporting
During the quarter ended June 30, 2024, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to 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.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
We incorporate by reference the Risk Factors included as Item 1A of our Annual Report on Form 10-K we filed with the Securities and Exchange Commission on March 11, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits
| (a) | The following exhibits are filed with this quarterly report on Form 10-Q or are incorporated herein by reference: |
| (1) | Incorporated by reference herein from the Form 8-K filed by the Company on December 22, 2015. | |
| (2) | Incorporated by reference herein from the Form 8-K filed by the Company on June 8, 2017. | |
| (3) | Incorporated by reference herein from the Form 8-K filed by the Company on July 7, 2017. | |
| (4) | Incorporated by reference herein from the Form 8-K filed by the Company on August 7, 2017. | |
| (5) | Incorporated by reference herein from the Form 8-K filed by the Company on July 12, 2018. | |
| (6) | Incorporated by reference herein from the Form 8-K filed by the Company on May 19, 2021. | |
| (7) | Incorporated by reference herein from the Form 8-K filed by the Company on June 7, 2021. | |
| (8) | Incorporated by reference herein from the Form 8-K filed by the Company on September 13, 2021. | |
| (9) | Incorporated by reference herein from the Form 8-K filed by the Company on December 21, 2021. | |
| (10) | Incorporated by reference herein from the Form 8-K filed by the Company on December 28, 2021. | |
| (11) | Incorporated by reference herein from the Form 8-K filed by the Company on December 30, 2021. | |
| (12) | Incorporated by reference herein from the Form 8-K filed by the Company on February 1, 2022. | |
| (13) | Incorporated by reference herein from the Form 8-K/A filed by the Company on March 25, 2022. | |
| (14) | Incorporated by reference herein from the Form 8-K filed by the Company on February 27, 2023. | |
| (15) | Incorporated by reference herein from the Form 10-Q filed by the Company on August 11, 2023. | |
| (16) | Incorporated by reference herein from the Form 10-Q filed by the Company on November 13, 2023. | |
| (17) | Incorporated by reference herein from the Form 10-Q filed by the Company on May 12, 2023. | |
| (18) | Incorporated by reference herein from the Form 8-K filed by the Company on May 29, 2024. | |
| (19) | Incorporated by reference herein from the Form 8-K filed by the Company on June 18, 2024. | |
| * | Filed herewith. |
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SignatureS
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NEVADA CANYON GOLD CORP. | |
| August 12, 2024 | /s/ Alan Day |
| Alan Day | |
| Chief Executive Officer (Principal Executive Officer), | |
| President and Member of the Board of Directors |
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