As filed with the U.S. Securities and Exchange Commission on September 19, 2024.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s Name into English)
| 1040 | Not Applicable | |||
(State or other jurisdiction of incorporation or organization) |
(Primary
Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Christopher Gerteisen
(Names, address, including zip code, and telephone number, including area code, of agent for service)
| Copies to: | ||||
Jeffrey Fessler Sheppard, Mullin, Richter & Hampton LLP 30 Rockefeller Plaza New York, NY 10112-0015 (212) 653-8700 |
Patrick Gowans QR Lawyers Level 6, 400 Collins Street Melbourne, VIC 3000, Australia |
Rob Condon Dentons US LLP 1221 Avenue of the Americas New York, NY 10020 (212) 768-6700 | ||
Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging
growth company
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
| PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION | DATED SEPTEMBER 19, 2024 |
430,000 American Depositary Shares Representing 25,800,000 Ordinary Shares
Nova Minerals Limited
We are offering 430,000 American Depositary Shares, or ADSs, in the United States, representing 25,800,000 ordinary shares of Nova Minerals Limited (“Nova Minerals,” “Nova,” “we,” “us,” “our,” or the “Company”) in a firm commitment public offering. Each ADS represents 60 ordinary shares, no par value, deposited with The Bank of New York Mellon, as depositary.
The ADSs are listed on The Nasdaq Capital Market (the “Nasdaq”) under the symbol “NVA.” We have assumed a public offering price of US$6.53, which represents the last reported sale price of the ADSs as reported on Nasdaq on September 16, 2024. The final public offering price will be determined through negotiation between us and the underwriters in the offering and the assumed public offering price used throughout this prospectus may not be indicative of the actual offering price.
The ADSs and the ordinary shares underlying the ADSs are being offered under this prospectus. We refer to the foregoing collectively, as the securities. See “Description of Share Capital” and “Description of American Depositary Shares” for more information.
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 13 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
| Per ADS | Total | ||||||
| Public offering price | US$ | US$ | |||||
| Underwriting discounts and commissions(1) | US$ | US$ | |||||
| Proceeds to us, before expenses | US$ | US$ | |||||
| (1) | Underwriting discounts and commissions do not include a non-accountable expense allowance equal to 1.0% of the public offering price payable to the underwriters. We refer you to “Underwriting” beginning on page 117 for additional information regarding underwriters’ compensation. |
We have granted a 45-day option to the representative of the underwriters to purchase up to 43,000 additional ADSs representing 2,580,000 ordinary shares solely to cover over-allotments, if any.
The underwriters expect to deliver the ADSs to purchasers on or about , 2024.
ThinkEquity
The date of this prospectus is , 2024
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. Neither we, nor the underwriters have authorized anyone to provide you with different information. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus, or any free writing prospectus, as the case may be, or any sale of ordinary shares.
For investors outside the United States: Neither we, nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the ordinary shares and the distribution of this prospectus outside the United States.
This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information.
Notes on Prospectus Presentation
Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. Certain market data and other statistical information contained in this prospectus are based on information from independent industry organizations, publications, surveys and forecasts. Some market data and statistical information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of the independent sources listed above and our internal research. While we believe such information is reliable, we have not independently verified any third-party information and our internal data has not been verified by any independent source.
| i |
Our reporting currency and our functional currency is the Australian dollar. This prospectus contains translations of Australian dollars into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from Australian dollars into U.S. dollars in this prospectus were made at a rate of A$1.00 per US$0.6712 which was the noon buying rate of the Federal Reserve Bank of New York on September 13, 2024. We make no representation that the Australian dollar or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Australian dollar, as the case may be, at any particular rate or at all.
All references in the prospectus to “U.S. dollars,” “dollars,” “US$” and “$” are to the legal currency of the United States and all references to “A$” are to the legal currency of Australia.
TECHNICAL MINING INFORMATION AND TERMS
Cautionary Note Regarding Presentation of Mineral Reserve and Mineral Resource Estimates
The Securities and Exchange Commission (the “SEC”) adopted new mineral property disclosure requirements in subpart 1300 of Regulation S-K (the “S-K 1300”) effective January 2021 that are applicable to all mining companies filing registration statements with the SEC. These rules better align disclosure with international regulatory practices, including the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (“JORC”). However, while the definitions in S-K 1300 are more similar to those in JORC compared to the previous SEC disclosure rules, there are differences in the definitions and standards under S-K 1300 and JORC. Investors are therefore cautioned that public disclosure by us of mineral resources in Australia in accordance with JORC (as required by ASX Listing Rules) does not form a part of this Registration Statement on Form F-1.
We have inferred, indicated, and measured mineral resources but not mineral reserves. Investors should understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. An inferred mineral resource has a lower level of confidence than that applying to an indicated or measured mineral resource and may not be converted to a mineral reserve.
We are still in the exploration stage and our planned commercial operations have not yet commenced. There is currently no commercial production at the Estelle Gold Project site. We have completed a technical report summary in compliance with S-K 1300 on the Estelle Gold Project. While we have commenced the requisite studies necessary to prepare and complete a formal Feasibility Study (FS) on the aforementioned project, such formal Feasibility Study has not yet been started and is not expected to be completed until 2025. As such, our estimated proven or probable mineral reserves, expected mine life and gold pricing, as the case may be, cannot be determined at this time as the initial requisite studies, additional drilling, and pit design optimizations have not yet been completed.
You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. Under S-K 1300, estimates of inferred mineral resources may not form the basis of an economic analysis. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. A significant amount of exploration must be completed in order to determine whether an inferred mineral resource may be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded to mineral reserves.
Qualified Persons Statement
Some technical mining information contained herein with respect to the Estelle Gold Project is derived from the report titled “Initial Assessment Technical Report Summary Estelle Gold Project Alaska, USA” prepared for us with an effective date of January 31, 2024. We refer to this report herein as our S-K 1300 Report. Each of Roughstock Mining Services, LLC, Hans Hoffman, Head of Exploration of Nova Minerals Ltd., Yukuskokon Professional Services, Vannu Khounphakdee, P.Geo of Nova Minerals Ltd., METS Engineering, Matrix Resource Consultants Pty Ltd., Christopher Gerteisen, P.Geo, Chief Executive Officer of Nova Minerals Ltd., and Jade North, LLC have approved and verified the technical mining information related to the Estelle Gold Project contained in the S-K 1300 Report and reproduced in this prospectus.
| ii |
Glossary of Mining Terms
The following is a glossary of certain mining terms that may be used in this prospectus.
| Ag | Silver. | |
| Alluvial | A placer formed by the action of running water, as in a stream channel or alluvial fan; also said of the valuable mineral (e.g. gold or diamond) associated with an alluvial placer. | |
| As | Arsenic | |
| Assay | A metallurgical analysis used to determine the quantity (or grade) of various metals in a sample. | |
| Au | Gold | |
| BFS | Bankable Feasibility Study | |
| Bi | Bismuth | |
| Callie-style | Mineralization characterized by coarse and readily visible gold occurring in quartz veins hosted in carbonaceous siltstone. | |
| Claim | A mining right that grants a holder the exclusive right to search and develop any mineral substance within a given area. | |
| Concentrate | A clean product recovered in flotation, which has been upgraded sufficiently for downstream processing or sale. | |
| Core drilling | A specifically designed hollow drill, known as a core drill, is used to remove a cylinder of material from the drill hole, much like a hole saw. The material left inside the drill bit is referred to as the core. In mineral exploration, cores removed from the core drill may be several hundred to several thousand feet in length. | |
| Cu | Copper. | |
| Cut-off grade | When determining economically viable mineral reserves, the lowest grade of mineralized material that can be mined and processed at a profit. | |
| Deposit | An informal term for an accumulation of mineralization or other valuable earth material of any origin. | |
| Diamond drill | A rotary type of rock drill that cuts a core of rock that is recovered in long cylindrical sections, two centimeters or more in diameter. | |
| Dilational structure | structures composed of mechanisms whose only degree of freedom corresponds to dilation. | |
| Drift | A horizontal or nearly horizontal underground opening driven along a vein to gain access to the deposit. | |
| Dyke | A long and relatively thin body of igneous rock that, while in the molten state, intruded a fissure in older rocks. |
| iii |
| En-echelon | Structures within rock caused by noncoaxial shear. | |
| Exploration | Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore. | |
| Flotation | A milling process in which valuable mineral particles are induced to become attached to bubbles and float as others sink. | |
| FS | A Feasibility Study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying Factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study. | |
| Grade | Term used to indicate the concentration of an economically desirable mineral or element in its host rock as a function of its relative mass. With gold, this term may be expressed as grams per ton (g/t) or ounces per ton (opt). | |
| Greywacke | A variety of sandstone generally characterized by its hardness, dark color, and poorly sorted angular grains of quartz, feldspar, and small rock fragments set in a compact, clay-fine matrix. | |
| Ha | Hectare - An area totaling 10,000 square meters or 2.47 acres. | |
| Indicated Mineral Resource | An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit | |
| Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation | ||
| An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve. | ||
| Inferred Mineral Resource | An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply, but not verify, geological and grade or quality continuity. | |
| An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration. | ||
| Km | Kilometer(s). Equal to 0.62 miles. | |
| Lithologic | The character of a rock formation, a rock formation having a particular set of characteristics. | |
| M | Meter(s). Equal to 3.28 feet. | |
| Mafic | Igneous rocks composed mostly of dark, iron- and magnesium-rich minerals. | |
| Massive | Said of a mineral deposit, especially of sulfides, characterized by a great concentration of mineralization in one place, as opposed to a disseminated or vein-like deposit. | |
| Measured Mineral Resource | Part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. |
| iv |
| Metallurgy | The science and art of separating metals and metallic minerals from their ores by mechanical and chemical processes. | |
| Mineral | A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed under favorable conditions, a definite crystal form. | |
| Mineral Deposit | A mass of naturally occurring mineral material, e.g. metal ores or nonmetallic minerals, usually of economic value, without regard to mode of origin. | |
| Mineralization | A natural occurrence in rocks or soil of one or more yielding minerals or metals. | |
| Mineral Project | The term “mineral project” means any exploration, development or production activity, including a royalty or similar interest in these activities, in respect of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base, precious and rare metals, coal, and industrial minerals. | |
| Mineral Resource | A concentration or occurrence of diamonds, natural, solid, inorganic or fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. | |
| Mo | Molybdenum | |
| Moz | Million ounces. | |
| Mt | Metric ton. Metric measurement of weight equivalent to 1,000 kilograms or 2,204.6 pounds. | |
| Net Smelter Royalty | The aggregate proceeds received from time to time from any arm’s length smelter or other arm’s length purchaser from the sale of any ores, concentrates, metals or other material of commercial value, net of expenses. | |
Ore |
Mineralized material that can be extracted and processed at a profit. | |
| Ounce | A measure of weight in gold and other precious metals, correctly troy ounces, which weigh 31.2 grams as distinct from an imperial ounce which weigh 28.4 grams. | |
| PEA | Preliminary Economic Assessment. A study, other than a pre-feasibility or feasibility study, that includes an economic analysis of the potential viability of mineral resources. | |
| Pegmatite | An igneous rock, formed by slow crystallization at high temperature and pressure at depth, and exhibiting large interlocking crystals usually greater in size than 2.5 cm (1 in). | |
| PFS | Preliminary Feasibility Study. A Preliminary Feasibility Study is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A Pre-Feasibility Study is at a lower confidence level than a Feasibility Study. |
| v |
| Probable Mineral Reserve | The mineable part of an indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve. | |
| Proven Mineral Reserve | The term “proven mineral reserve” is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high degree of confidence in the Modifying Factors. | |
| Qualified Person | An individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development, production activities and project assessment, or any combination thereof, including experience relevant to the subject matter of the project or report and is a member in good standing of a self-regulating organization. | |
| Reclamation | Restoration of mined land to original contour, use, or condition where possible. | |
| Sb | Antimony | |
| Sedimentary | Said of rock formed at the Earth’s surface from solid particles, whether mineral or organic, which have been moved from their position of origin and re-deposited, or chemically precipitated. | |
| Strike | The direction, or bearing from true north, of a vein or rock formation measure on a horizontal surface. | |
| Te | Tellurium | |
| Tenement | A mineral claim. | |
| Ton | A metric ton of 1,000 kilograms (2,205 pounds). | |
| μm | Micrometer. | |
| W | Tungsten |
| vi |
PROSPECTUS SUMMARY
The following summary highlights certain information in this prospectus and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. This summary does not contain all of the information that may be important to you. You should read and carefully consider the following summary together with the entire prospectus, especially the “Risk Factors” section of this prospectus and our financial statements and the notes thereto appearing elsewhere in this prospectus before deciding to invest in our Company. For more information on our business, refer to the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” sections of this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the “Risk Factors” and other sections of this prospectus. See “Cautionary Note Regarding Forward-Looking Statements”.
As used herein, references to the “S-K 1300 Report” are to the technical report summary titled “Initial Assessment Technical Report Summary Estelle Gold Project, Alaska, USA” prepared by Roughstock Mining Services, LLC, Nova Minerals Limited, Matrix Resource Consultants Pty Ltd, METS Engineering, Yukuskokon Professional Services and Jade North, LLC “ with an effective date of January 31, 2024, which was prepared in accordance with S-K 1300. The S-K 1300 Report is filed as Exhibit 96.1 to the registration statement of which this prospectus forms a part.
In this prospectus, “we,” “us,” “our,” “the Company,” “Nova” and similar references refer to Nova Minerals Limited and its consolidated subsidiaries.
Our Company
Overview
We are an exploration stage company, and our flagship project is the Estelle Gold Project located in Alaska. We have no operating revenues and do not anticipate generating revenues in the foreseeable future. However, we expect to complete our first gold pour in late 2028, although there is no assurance that we will meet that timeframe and consummation of any such commercial production is subject to the risks described herein under “Risk Factors.” The Estelle Gold Project, or the Project, which is 85% owned by us, contains multiple mining complexes across a 35km long mineralized corridor of over 20 identified advanced gold prospects, including two already defined multi-million ounce resources across four deposits containing a combined S-K 1300 compliant 5.17 million ounce (“Moz”) Au, of which Nova’s 85% attributable interest is 4.41 Moz Au. Recently the Company has also discovered antimony and other critical minerals coincident with the gold in surface sampling on numerous prospects across the project, with several of these prospects currently drill ready. The Project, which is comprised of 514km2 of unpatented mining claims located on State of Alaska public lands, is situated on the Estelle Gold Trend in Alaska’s prolific Tintina Gold Belt, a province which hosts a 220 Moz documented gold endowment and some of the world’s largest gold mines and discoveries including Barrick’s Donlin Creek Gold Project and Kinross Gold Corporation’s Fort Knox Gold Mine. The belt also hosts significant antimony deposits and was a historical North American antimony producer.
Figure 1: Nova’s flagship Estelle Gold Project is located within Alaska’s prolific Tintina Gold Belt.
The Estelle Gold Project
The following information is condensed and extracted from the S-K 1300 Report. Readers should refer to the full text of the S-K 1300 Report for further information regarding the Estelle Gold Project.
Project Description, Location and Access
The Estelle Gold Project, which is located approximately 150km northwest of Anchorage, Alaska, is a year-round operation, near a large labor force and all essential services with a base site which hosts a fully winterized 80-person camp, including an on-site sample processing facility, helipad for 2 helicopters, and the 4,000-foot Whiskey Bravo airstrip, which can facilitate large capacity DC3 type aircraft. Easy access is currently available to the project via a winter road and by air. We anticipate access to be improved further by the recently proposed West Susitna Access Road, which would be situated on State land within the Matanuska-Susitna Borough. The West Susitna Access Road has considerable support from both the community and the State government, and has progressed to the permitting stage, with construction proposed to start in 2025.
| 1 |
Figure 2: Location map of the Estelle Gold Project with infrastructure solutions shown
| 2 |
Geological Setting
The Estelle Gold Project is located in the Alaskan Mountain Range in the southwestern extremity of the Tintina Gold Province, comprising Cambrian to Devonian deep-water basinal shales and sandstones. Both the terrane and the Tintina Gold Province terminate on the Broad Pass/ Mulchatna Fault Zone, near the Estelle Gold Project’s southern property boundary.
Within the property, lie the Mesozoic marine sedimentary rocks of the Kahiltna terrane. Regionally, these marine rocks were intruded by several plutons. The Mount Estelle pluton has been dated at 65 to 66 Ma. This pluton is compositionally zoned and is made up of a granite core transitioning to quartz monzonite, quartz monzodiorite, augite monzodiorite, diorite, and lamprophyric mafic and ultramafic rocks. The intrusion contains xenoliths of metasedimentary country rocks into which it was intruded. Tourmaline and beryl have been observed in, and adjacent to the pluton. The rock surrounding the Mt. Estelle pluton has undergone contact metamorphism and is locally hornfelsed. There is red staining which likely indicates disseminations of pyrite along fracture faces. Adjacent to the pluton, local sericite and clay alteration is also found.
The Estelle pluton is cut by several dikes which range in composition from aplite, gabbro, dacite, and lamprophyre. These structures are found in the felsic and intermediate phases of the pluton. Gold, associated with pyrrhotite, chalcopyrite, pentlandite and molybdenite also occurs in ultramafic rocks on the south side of the pluton. Mineralization is less common in the sedimentary rocks.
Anomalous gold, platinum-group elements, copper, chrome, nickel and arsenic are reported from many of the composite plutons of the Yentna trend and gold and platinum-group-element placers have been worked at several sites downstream from the plutons.
The high grade RPM deposit within the Estelle Gold Project lies within a plutonic complex intruding a Jurassic to Early Cretaceous flysch sequence. The intrusive complex consists of ultramafic to felsic plutons of Late Cretaceous/Early Tertiary age (69.7 Ma) and are centrally located in a region of arc-magmatic related gold deposits. Though mineralization at Estelle is generally restricted to the intrusive rocks, mineralization at RPM occurs in both the intrusive and hornfels. At RPM, roof pendants of hornfels occur overlying multiple intrusive units. Fingers of fine-grained aplite, monzonite and biotite-rich diorite cut the hornfels. All of the lithologic units are in turn cut by stockwork and/or sheeted veins. Veins range in size and character from meter-wide quartz ± sulfide to millimeter-scale quartz-arsenopyrite veins and centimeter-scale quartz-tourmaline-sulfide veins. A granitic intrusive body, which underlies the hornfels and crops out in the southern part of the prospect area appears to be potentially related to mineralization.
Mineralization and Deposit Types
The deposits on the Estelle Gold Project are all large near-surface Intrusion Related Gold Systems (IRGS), and since 2018 we have been aggressively and systematically exploring the multiple prospects within the project area. To date, we have proven a total S-K 1300 compliant mineral resource estimate of 5.17 Moz Au, of which Nova’s 85% attributable interest is 4.41 Moz Au, which is hosted within 4 mineral resource deposits:
| ● | Korbel Main: A bulk tonnage deposit, located in the Korbel area in the North of the project, which has a confirmed strike length of over 2.5km and up to 500m depth, and remains open with significant potential to further extend the mineralization. | |
| ● | Cathedral: Another bulk tonnage deposit located nearby and similar to Korbel Main. An initial maiden Inferred resource has confirmed a strike length of at least 800m and 350m wide. The deposit remains wide open in all directions and the potential for high-grade zones exist with up to 114 g/t Au in surface rock chip samples. | |
| ● | RPM North: A high-grade deposit, located in the RPM area in the South of the project, which has a 450m strike length and 150m width, defined by close spaced resource drilling, and remains open. It also includes a high-grade M&I core of 100m long x 50m wide x 300m deep and significant potential remains to further extend the mineralization. | |
| ● | RPM South: A newly discovered zone where initial drilling has confirmed a genetically link to RPM North. Currently resources have a strike length of 400m and 250m width. Over 600m of perspective strike length connects RPM South with RPM North which is the highest priority drill target within the Estelle Gold Project with significant positive implications for further resource upside. |
In addition to the 4 defined mineral resource deposits, the project also contains numerous other identified prospects at various stages of exploration including, blocks C, D, Isabella, Sweet Jenny, You Beauty, Shoeshine, Shadow, Train, Muddy Creek, Discovery, Trumpet, Stoney, T5, Tomahawk, Trundle, Rainy Day, West Wing, Stibium, Styx, Portage Pass, NK, Revelation, and Wombat (See figure 4).
Mineral Resource Estimates
Over 90,000m of diamond and RC drilling has been undertaken for all deposits, in support of a S-K 1300 compliant mineral resource estimate (MRE) of 5.17 Moz Au across the Estelle Gold Project, of which 85% or 4.41 Moz Au is attributable to Nova Minerals. This MRE is based on the drilling information available on March 31, 2023 and contains measured, indicated, and inferred categories. Resources were estimated for each deposit by Multiple Indicator Kriging (MIK) with block support adjustment reflecting large scale open pit mining. Drilling undertaken after March 31, 2023, along with future targeted drilling programs, are planned to potentially upgrade both the size and confidence of the MRE.
The following table sets forth the MRE for Nova’s 85% attributable interest in the Estelle Gold Project as detailed in the S-K 1300 Report with an effective date of January 31, 2024.
| Measured | Indicated | Measured + Indicated | Inferred | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tons | Grade | Au | Tons | Grade | Au | Tons | Grade | Au | Tons | Grade | Au | Tons | Grade | Au | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposit | Cutoff | MT | Au g/t | Moz | MT | Au g/t | Moz | MT | Au g/t | Moz | MT | Au g/t | Moz | MT | Au g/t | Moz | ||||||||||||||||||||||||||||||||||||||||||||||||
| RPM North | 0.20 | 1.2 | 4.1 | 0.16 | 2.6 | 1.6 | 0.13 | 3.7 | 2.4 | 0.29 | 20 | 0.60 | 0.39 | 24 | 0.89 | 0.68 | ||||||||||||||||||||||||||||||||||||||||||||||||
| RPM South | 0.20 | 20 | 0.47 | 0.30 | 20 | 0.47 | 0.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total RPM | 1.2 | 4.1 | 0.16 | 2.6 | 1.6 | 0.13 | 3.7 | 2.4 | 0.29 | 40 | 0.54 | 0.69 | 44 | 0.70 | 0.98 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Korbel Main | 0.15 | 210 | 0.31 | 2.09 | 210 | 0.31 | 2.09 | 30 | 0.27 | 0.26 | 240 | 0.31 | 2.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cathedral | 0.15 | 120 | 0.28 | 1.08 | 120 | 0.28 | 1.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Korbel | 210 | 0.31 | 2.09 | 210 | 0.31 | 2.09 | 150 | 0.28 | 1.34 | 360 | 0.30 | 3.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Estelle Gold Project | 1.2 | 4.1 | 0.16 | 213 | 0.33 | 2.22 | 214 | 0.35 | 2.38 | 190 | 0.33 | 2.03 | 404 | 0.34 | 4.41 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 3 |
Notes to the above table:
| 1. | A mineral resource is defined as a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity, that there are reasonable prospects for economic extraction. |
| 2. | The mineral resource applies a reasonable prospect of economic extraction with the following assumptions: |
| ● | Resources are constrained within optimized pit shells that reflect a conventional large-scale truck and shovel open pit operation with the cost and revenue parameters as follows | |
| ● | Gold price of US$2,000/oz | |
| ● | 5% royalty on recovered ounces | |
| ● | Pit slope angles of 50o | |
| ● | Mining cost of US$1.65/t | |
| ● | Processing cost for RPM US$9.80/t and for Korbel US$5.23/t (inclusive of ore sorting for Korbel) | |
| ● | Combined processing recoveries of 88.20% for RPM and 75.94% for Korbel | |
| ● | General and Administrative Cost of US$1.30/t | |
| ● | Tonnage and grades are rounded to two significant figures and ounces are rounded to 1,000 ounces. Rounding errors are apparent. |
The US$2,000/oz pit shell constraining the Korbel Main mineral resources extends over around 2.3km of strike with an average width of around 600m, and a maximum vertical depth below surface of approximately 430m.
The US$2,000/oz pit shell constraining the Cathedral mineral resources extends over approximately 1.2km north-south by up to approximately 820m east-west, with a maximum vertical depth below surface of approximately 520m.
The RPM US$2,000/oz resource pit shell encompasses the RPM North and South mineral resources. In the RPM North area, it covers an area around 840m east -west by 700m north-south and reaches a maximum vertical depth below topography of approximately 340m. In the RPM South area, it covers an area around 450 m east-west by 480m north-south and reaches a maximum vertical depth below topography of approximately 250m.
Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resources will be converted into mineral reserves.
Estimation Methodology
Mineral resources were estimated for each deposit by Multiple Indicator Kriging (MIK) with block support adjustment reflecting large scale open pit mining, a method that has been demonstrated to provide reliable estimates of recoverable open pit resources in gold deposits of diverse geological styles.
The estimates for each deposit are based on 3.048 meter (10 foot) down-hole composited gold assay grades from RC and diamond drilling coded by between one and three mineralized domains which delineate zones within which the tenor and spatial trends of mineralization are similar.
For each mineralized domain 14, indicator thresholds were defined using a consistent set of percentiles. Bin grades used for MIK modelling were selected from bin mean grades with the exception of the upper bin grades which were selected on a case-by-case basis, with commonly either the bin median, or bin mean excluding outlier grades was selected. This approach reduces the impact of small numbers of extreme gold grades on estimated resources and is appropriate for MIK modelling of highly variable mineralization such as the Estelle deposits. Mineralization continuity was characterized by indicator variograms modelled at the 14 indicator thresholds.
The estimates include a bulk density of 2.65 t/bcm for each deposit, supported by caliper measurements of mineralized drill core samples.
The estimates are classified as Measured, Indicated or Inferred, primarily reflecting the drill hole spacing.
Cut-off Grades
A cut-off grade of 0.20g/t was chosen for reporting the RPM North and South mineral resources, and a cut-off grade of 0.15g/t was chosen for reporting the Korbel Main and Cathedral mineral resources.
The cut-off grade for the RPM South and RPM North deposits is calculated as the grade required to pay for processing, transportation to the mill, and general and administrative (“G&A”) costs. The mill cut-off grade for the Korbel Main and Cathedral deposits is calculated as the grade required to pay for ore sorting, subsequent processing and G&A costs. The reduced processing costs for Korbel Main and Cathedral reflect the average mass rejected by the sorters. An average sorter recovery was included in the cut-off grade calculation.
The cut-off grade calculations and the input parameters used are shown in the table below.
| Cut-off Grade Formula | |||
| Cut off (g/t)= | Combined Processing Cost + Difference between ore and waste mining cost | ||
| (Realized Gold Price ($/g) x Combined Metallurgical Recovery) | |||
| Korbel Main and Cathedral cut-off grade calculation | |||
| Parameters | Gold Price ($/g) | = US$2,000/31.103477 =US$64.301/gram | |
| Realized Gold Price ($/g) = | = Gold Price ($/g) x (1-Royalty(%)) | ||
| = US$64.301 x (1-0.05) | |||
| = US$61.086 /gram | |||
| Combined Processing Cost($/ore ton) | =Sorter Cost + Processing Cost + G&A Cost | ||
| =US$0.73 +US$4.50+US$1.30 | |||
| = US$6.53/t | |||
| Difference between ore and waste mining cost ($/t) | =US$0.00/t | ||
| Combined Metallurgical Recovery | =0.7594 | ||
| Calculated cut-off (g/t) | =(US$6.53+0.00) / (US$61.086 x 0.7594) | ||
| 0.141 g/t | |||
| Rounded cut-off (g/t) | = 0.15 g/t | ||
| RPM North and South cut-off grade calculation | |||
| Parameters | Gold Price ($/g) | = US$2,000/31.103477 =US$64.301/gram | |
| Realized Gold Price ($/g) = | = Gold Price ($/g) x (1-Royalty(%)) | ||
| = US$64.301 x (1-0.05) | |||
| = US$61.086 /gram | |||
| Combined Processing Cost($/ore ton) | = Processing Cost + G&A Cost | ||
| =US$9.80+US$1.30 | |||
| = US$11.10/t | |||
| Difference between ore and waste mining cost ($/t) | =$0.00/t | ||
| Combined Metallurgical Recovery | =0.8820 | ||
| Calculated cut-off (g/t) | =(US$11.10+0.00) / (US$61.086 x 0.8820) | ||
| =0.206 g/t | |||
| Rounded cut-off (g/t) | = 0.20 g/t | ||
| 4 |
Mineral Processing, Metallurgical Testing and Recovery Methods
A robust project flowsheet and initial assessment level processing plant design has been established, based on preliminary metallurgy and ore sorting tests in combination with economic considerations. The flow sheet indicates that the gold is easily liberated from the Estelle ore bodies using conventional technology for an average recovery of 88.3%, with further optimization planned.
The process plant was designed using conventional processing unit operations with the addition of XRT ore sorting systems. Only ore originating from Korbel Main and Cathedral will be sorted, with ore originating from the RPM deposits bypassing the sorters. The ore sorting test work performed to date was preliminary in nature in support of the flow sheet to determine the trade off on the gold recoveries. With the preliminary nature of the study, it is still yet to be determined if ore sorting will be included in the final flowsheet and future economic analysis. The product of the process will be doré bars.
Run-of-mine and run–of-stockpile ore will be hauled to the sorting facility where it will be crushed in a primary gyratory crusher before going through a sizing screen. The fines fraction head will be fed directly to the high-pressure grinding rolls (“HPGR”), the mid-sized material will be fed to the XRT ore sorting system, and the oversize material will be crushed in a secondary cone crusher. The ore sorting system will separate the economical ore out from the waste, transporting it to an HPGR. The product of the HPGR will be sent to a closed circuit consisting of a ball mill and hydrocyclone cluster. The P80 overflow of 75µm will flow through the flotation circuit. The tailings from this process will be sent to the tailing’s thickener. The concentrate will move on to the cyclone cluster and IsaMill for fine grinding to P80 of 22µm before finally moving on to the pre-leach thickener where the underflow will report to the leach and CIP circuits.
The gold leached in the CIP circuit will be recovered by activated carbon and elution. From this elution circuit, the gold will be recovered by electrowinning cells in the gold room. The gold sludge will be dried, mixed with fluxes, and then smelted in a furnace to produce doré bars. Carbon will be re-activated in a regeneration kiln before being re-used in the CIP circuit. The CIP tailings will be treated for cyanide in the cyanide destruction circuit before being pumped to the tailings thickener. The waste byproduct of the tailings thickener will be pumped to the tailings storage facility.
Figure 3: The Estelle Gold Project simplified flow sheet
Mining Methods
The open pit optimization assumptions are based on a conventional truck and shovel mining method. The pit shells used for the resource estimation are based on a 50o overall slope angle.
Economic Analysis
No detailed economic analysis is provided in the S-K 1300 Report and the investor is cautioned that only mineral resources are being presented.
Other Assets
In addition to the Estelle Gold Project, we own minority interests in the companies described below that partially provide a hedge against fluctuations in the gold price and expose us to the upside of other high growth sectors none of which are deemed material by us in our operations.
Our investments include:
| ● | Snow Lake Resources Limited (Nasdaq: LITM) | |
|
We hold a 23.75% ownership stake (as of the date of this prospectus) in Snow Lake Resources Ltd (“Snow Lake”), a Canadian clean energy exploration company listed on Nasdaq (LITM) with a global portfolio of clean energy mineral projects comprised of two uranium projects and two hard rock lithium projects. The Black Lake Uranium Project is an exploration stage project located in the Athabasca Basin, Saskatchewan and the Engo Valley Uranium Project is an exploration stage project located in the Skeleton Coast of Namibia. The Snow Lake Lithium Project is an exploration stage project located in the Snow Lake region of Northern Manitoba and the Shatford Lake Lithium Project is an exploration stage project located adjacent to the Tanco lithium mine in Southern Manitoba. Snow Lake’s current focus is advancing the exploration of its two uranium projects to supply the minerals and resources needed for the clean energy transition, while exploration activities on its two lithium projects will remain limited until such time as the lithium market recovers from its current depressed levels. | ||
| In April 2022, we sold 3,000,000 shares in Snow Lake that generated gross proceeds of US$18 million, thus reducing our interest in Snow Lake from 9,600,000 shares to 6,600,000 shares. We continue to hold 6,600,000 Snow Lake shares, representing 23.75% of Snow Lake’s issued and outstanding shares as of the date of this prospectus. |
| 5 |
| ● | Asra Minerals Limited (ASX:ASR) | |
| We hold a free carried investment of approximately 5.73% (as of the date of this prospectus) in Asra Minerals Limited (“Asra”) a gold, lithium and rare earths exploration company based in Western Australia and listed on the ASX (ASR). | ||
| Located in the mining hub of Western Australia’s Eastern Goldfields, Asra Mineral’s Mt Stirling Project consists of 10 major gold prospects, two recent rare earths discoveries, and widespread highly anomalous cobalt and scandium mineralisation. | ||
| Asra’s project is close to existing major mining operations and neighbors Red 5’s King of the Hills gold mine which boasts Australia’s ninth largest gold ore reserve and a 16-year mine life. The region has recently produced approximately 14 Moz of gold from mines such as Tower Hills, Sons of Gwalia, Thunderbox, Harbor Lights and Gwalia. | ||
| Asra also currently holds a large equity holding in Quebec Lithium explorer, Loyal Lithium (ASX: LLI) and a large equity joint ventures with Zuleika Gold (ASX: ZAG) and Monger Gold (now LLI) in the Kalgoorlie-Menzie goldfields region. | ||
| ● | Rotor X Aircraft Manufacturing | |
| We also hold a free carried investment of 9.9% in Rotor X Aircraft Manufacturing (“Rotor X”), a pre-IPO revenue generating US-based company that seeks to lead the development of electric VTOL (Vertical Take-Off and Landing) aircraft and innovative low operating cost heavy lift drone technology. Rotor X Aircraft Manufacturing is a helicopter kit manufacturing company that provides the world’s most affordable and reliable 2 seat personal helicopter. Recently Rotor X also announced that it has entered the electric vertical take-off and landing (eVTOL) market with the aim of developing innovative, low operating cost heavy-lift electric helicopters and drones, to support mining and other industries, as well as the growing urban air taxi market. | ||
| The potential benefits for our mining operations through the innovative application of clean aircraft technology, have been the primary motive behind our investment in Rotor X. |
Our Opportunity
We believe that the Estelle Gold Project gives us a potentially lucrative gold mining opportunity similar to the Carlin Gold Trend (the “Carlin”) due to its large size and low grade bulk mines. The Carlin Trend is located in Nevada, and is host to one of America’s largest gold endowments currently estimated at 130 Moz of gold and since it commenced operations in 1963 has produced over 84 Moz gold.
When a subsidiary of Newmont Gold Corporation opened the Carlin mine, it was the world’s first open pit primary gold mine, mining vast bulk tonnages of low grade ore which were crushed, ground and treated by cyanidation with high recovery rates.
The technological know-how in mineral exploration and mine development gained from the Carlin Trend was also quickly applied to other low grade bulk mines around the world.
Similar to the Carlin Trend, the Estelle Gold Project has a vast mineralized land position. In our experience, very few mining companies own a district scale gold asset with an already defined large gold resource, in a Fraser Institute ranked top 4 investment jurisdiction, on State lands, with the possibility for long term opportunity of potentially multiple mines across one single project site, like we have at Estelle. All deposits are open with thick ore zones from surface and a low strip ratio, amendable to large scale bulk mining using conventional truck and shovel methods, with further drill programs planned, which could potentially continue to increase both the size and confidence of the resource base over the coming years.
In 2023 we drilled approximately 7,000m, the majority of which was focused on the RPM area with the aim to further prove up and expand the resource at RPM, including the North, South and Valley zones and test the potential of inter-connection between these zones. To date, this drilling has not been included in any mineral resource estimates and may provide potential future resource upside.
Approximately 600m of exploration drilling was also conducted in the Train prospect area, where RPM-style gold mineralization as well as multi-element silver, copper, antimony and other critical minerals have been identified in surface exploration work. The Train prospect is situated approximately 6km north of RPM covering an area 4.5km long and 2.5km wide representing another very large intrusive related mineralized system. The Train prospect area is considered a high priority target for potential discovery and definition of an additional resource deposit.
Extensive surface exploration mapping and sampling programs were also conducted as part of the 2023 field season, along with the re-examination of multi-element data from historical samples. These were primarily focused on the RPM and Train areas, as well as at the highly prospective 3km long polymetallic Au-Ag-Cu system at the Stoney prospect.
| 6 |
In addition to the 4 already defined resource deposits, Nova also has 20 other known prospects at various stages of advancement across the 35km long mineralised corridor, including the recent significant discoveries at the Train/Trumpet, Discovery/Muddy Creek, Wombat, Stibium, Styx, and Stoney prospects.
At Train, geological observations and high-grade rock chip samples indicate another possibly large IRGS exposed at surface with a 1km strike length and 500m width. Structural controls and more high-grade rock chips also show a possible genetic link to the nearby Trumpet prospect with a strike length of 1.5km between the two prospects.
At the new Discovery and Muddy Creek prospects surface exploration sampling in 2023 has identified one of the most continuous high-grade zones of mineralization on the property, with a 1.5km long surface gold anomaly with multiple high-grade rock and soil samples.
New gold-antimony targets were identified in the Stibium and Styx prospects with the discovery of high grade stibnite, a primary ore source for the rare mineral antimony, associated with the gold systems, which represents a significant development for us as antimony is listed as a critical and strategic mineral to US economic and national security interests with no current US domestic supply.
At the Shoeshine prospect a property wide record 1,290 g/t Au rock sample was discovered as well as significant concentrations of the critical mineral antimony and copper and silver.
In the Stoney area, surface sampling and mapping has identified a high-grade polymetallic gold, copper and silver stacked vein system along a 4km strike length, up to 10m wide and over 300m of vertical extent and the results of further surface exploration mapping and sampling programs conducted in the area in 2023 have identified indications of gold, silver, copper and antimony as well.
At the recently discovered Wombat prospect soil and rock samples have identified the thickest gold-bearing veins to date on the property with over a 1km strike length in what appears to be a porphyry gold-copper area.
As systematic reconnaissance exploration programs continue, we expect further discoveries of surface outcropping deposits could potentially create a long term opportunity of future mine life through a pipeline of exploitable resources, assuming that we are able to prove additional reserves on our property and that we are also able to develop and market such reserves in a profitable manner.
As the Company now progresses to the feasibility study stage, numerous studies required to commence and complete a formal Feasibility Study are currently underway to test potential improvements and optimization of the flowsheet including:
| ● | Optimized plant size with the aim being to process high-grade ore early in the mining schedule, with a smaller milling circuit, and more selective ore sorting commencing in 2 to 3 years to process the medium grade material, with lower grade material sent to heap leach; | |
| ● | Evaluation of heap leaching potential, a well-proven low-cost gold recovery method for lower grade material and material rejected from ore sorters, to lift annual gold production; | |
| ● | Investigating various heap leaching options, including agglomeration and alternative leach reagents; | |
| ● | Assessing extraction options of the highly elevated concentrations of silver, copper, antimony and other critical minerals identified across the project which could potentially provide valuable by-product credits; | |
| ● | Reviewing various selective ore sorting options on material from both RPM and Korbel with Steinert ore sorting to test a combination of different sensors including, XRT density, color, laser and induction, to potentially improve the ore sorting results further; and | |
| ● | Investigating alternative technology options, such as SAG (Semi Autogenous Grinding) mills, coarse flotation using Hydrofloat technology and gravity recovery using a Reflux Classifier to further improve and optimize the process flowsheet. |
Figure 4: Unlocking the Estelle Gold Project – District scale with over 20 identified gold prospects – Map Coordinate System: UTM = NAD83 zone 5
Our Competitive Strengths
We believe that we are an industry leader based on the speed and manner in which we have been growing our global resource inventory, working within relatively small budgets. In just over 5 years, our fundamental achievements include:
| ● | The discovery of a district scale gold and other minerals project in a safe jurisdiction on Alaska State lands (no native or federal land across the Estelle Gold property), at a very low cost of discovery per ounce; | |
| ● | Drilled over 90,000m, including very thick high-grade intercepts at RPM, to define a large gold resource from green fields, with deposits spread across 4 large near surface intrusion related gold systems (IRGS) which are continuing to grow with ongoing exploration and drilling programs to potentially improve both the size and confidence of the resource; | |
| ● | Established infrastructure for year-round operation; | |
| ● | Established a proven and robust flow sheet which liberates the gold using conventional technology; and | |
| ● | Built strong relationships with the Alaskan community, suppliers and the State government. |
Coupled with a potentially lucrative asset, we have also established a leadership team of experienced mining executives and operators with a history of growing and de-risking projects, including a local well-connected CEO who has significant experience in bringing mines into production having worked on major projects including Sepon, Carosue Dam, Batu Hijau and the Carlin Trend.
| 7 |
We also pride ourselves on our innovation and efficiency, which we believe is evidenced by our low discovery cost per ounce. We continue to develop our strategies and initiatives to improve our business plans and operations, in particular with respect to the Estelle Gold Project. Some of the innovations we have undertaken to date include:
| ● | Particle density X-Ray ore sorting. Ore sorting test work conducted on drill core samples from Estelle ore demonstrates great potential for less processing and increased mine production to successfully separate the gold-bearing veins. | |
| ● | On-site independent preparation facility. We have established an onsite preparation facility which has the capacity to process up to 7,500 samples per month, providing significant cost savings as the samples are prepared through drying, crushing and splitting on site, significantly reducing the sample weight that is shipped from site to the laboratory for analysis. This also allows us to bypass the commercial prep-lab which in turn improves the assay result turnaround time. |
Our Growth Strategy
Our growth strategy is to get the Estelle Gold Project into production as fast as possible to become a tier one global gold producer in order to maximize shareholder value. The Feasibility Study currently underway is considering a strategy with a scalable operation (Figure 5), subject to market conditions and strategic partners, by developing:
| ● | A High-Grade RPM Starter Mine (Option 1) |
Establishing an initial lower capex smaller scale operation at the high-grade RPM deposit for potential near term cashflow at high margins to self-fund expansion plans;
| ● | A Stand Alone Antimony-Gold Starter Mine (Option 2) |
With China announcing export restrictions on antimony, the Company is now also investigating the possibility to fast track the Stibium gold-antimony prospect development option with potential US Dept. of Defense (DoD) support and is subject to DoD funding; and/or
| ● | The Expanded Project – Korbel + RPM + Regional (Option 3) |
Scalability – Large project for both gold and critical minerals with a pipeline spanning decades of potential production from over 20 known prospects. Higher capex larger mining operation with increased gold production, cash flow, and mine life, which is of interest to potential future large gold company strategic partners
Figure 5: Estelle staged development options – Deferred capital/funding early production
Estelle’s Projected Timeline to Production
| ● | 2024 drill program - RPM resource definition drilling for FS and targeted drilling at other prospects across the project area for gold, antimony and other critical minerals (Q3) |
| ● | FS trade off study work and geotechnical drilling (Ongoing throughout 2024) | |
| ● | Global MRE update (2024 and 2025) | |
| ● | FS, including updated MRE with resources from the 2023 and 2024 drill programs (2025) | |
| ● | BFS and permitting (2026) | |
| ● | Option 1, High-Grade RPM starter mine production, subject to permits and approval (2026) | |
| ● | Option 2, Stand-alone antimony-gold starter mine production, subject to Dept of Defense funding (2026) | |
| ● | Option 3, The expanded project - Decision to mine and financing (2027) | |
| ● | Option 3, The expanded project - Commence mine construction (2027/2028) | |
| ● | Option 3, The expanded project Production and 1st gold pour (Late 2028) | |
| ● | Ongoing exploration to assess district wide opportunities to increase the resource pipeline | |
| * All timelines are projected only and subject to assay lab turnarounds, market and operating conditions, all necessary approvals, regulatory requirements, weather events and no unforeseen delays. |
Figure 6: Estelle’s projected timeline to production with development optionality
Our Risks and Challenges
Our prospects should be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by similar companies. Our ability to realize our business objectives and execute our strategies is subject to risks and uncertainties, including, among others, the following:
| 8 |
Risks Related to Our Business and Industry
Risks and uncertainties related to our business include, but are not limited to, the following:
| ● | We currently report our financial results under IFRS, which differs in certain significant respect from U.S. generally accepted accounting principles, or U.S. GAAP. | |
| ● | Our mineral reserves may be significantly lower than expected. | |
| ● | Our Estelle Gold Project only has estimated inferred, indicated and measured resources identified, there are no known reserves on our property. There is no assurance that we can establish the existence of any mineral reserve on our property in commercially exploitable quantities. Until we can do so, we cannot earn any revenues from this property and if we do not do so we will lose all of the funds that we expend on exploration. If we do not discover any mineral reserve in a commercially exploitable quantity, the exploration component of our business could fail. | |
| ● | We have no history of producing metals from our current mineral property and there can be no assurance that we will successfully establish mining operations or profitably produce precious metals. | |
| ● | Any material changes in mineral resource/reserve estimates and grades of mineralization will affect the economic viability of placing a property into production and a property’s return on capital. | |
| ● | The profitability of our operations, and the cash flows generated by our operations, are affected by changes in the market price for gold, which in the past has fluctuated widely. | |
| ● | Our success depends on the exploration development and operation of the Estelle Gold Project, an exploration stage project. | |
| ● | We do not operate any mines and the development of our mineral project into a mine is highly speculative in nature, may be unsuccessful and may never result in the development of an operating mine. | |
| ● | Mineral resource estimates are based on interpretation and assumptions and could be inaccurate or yield less mineral production under actual conditions than is currently estimated. Any material changes in these estimates could affect the economic viability of the Estelle Gold Project, our financial condition and ability to be profitable. | |
| ● | We have negative cash flows from operating activities. | |
| ● | We have no history of earnings, and there are no known commercial quantities of mineral reserves on the Estelle Gold Project. | |
| ● | We will require grants from the U.S. Department of Defense to pursue our strategy to develop a stand-alone antimony- gold starter mine. Failure to obtain such grants could have a material adverse effect on our financial condition and results of operations. | |
| ● | The development of the Estelle Gold Project or any other projects we may acquire in the future into an operating mine will be subject to all of the risks associated with establishing and operating new mining operations. | |
| ● | Our growth strategy and future exploration and development efforts may be unsuccessful. | |
| ● | We may issue additional ordinary shares or ADSs from time to time for various reasons, resulting in the potential for significant dilution to existing securityholders. | |
| ● | We are subject to various laws and regulations, and the costs associated with compliance with such laws and regulations may cause substantial delays and require significant cash and financial expenditure, which may have a material adverse effect on our business. | |
| ● | The mining industry is intensely competitive in all of its phases, and we compete with many companies possessing greater financial and technical resources. | |
| ● | We are currently operating in a period of economic uncertainty and capital markets disruptions, which have been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. | |
| ● | Failure to comply with certain financial covenants under our Nebari convertible loan facility could have a material adverse effect on our business and results of operations. | |
| ● | If we fail to maintain effective internal controls over financial reporting, the price of the ADSs or ordinary shares may be adversely affected. |
| ● | There will be significant hazards associated with our mining activities, some of which may not be fully covered by insurance. To the extent we must pay the costs associated with such risks, our business may be negatively affected. | |
| ● | Capital and operating cost estimates made in respect of our current and future development projects and mines may not prove to be accurate. |
Risks Related to This Offering and Ownership of the ADSs
Risks and uncertainties related to this offering and ownership of the ADSs include, but are not limited to, the following:
| ● | If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of the ADSs and their trading volume could decline. | |
| ● | U.S. investors may have difficulty enforcing civil liabilities against our company, our directors or members of senior management and the experts named in this prospectus. | |
| ● | Our Constitution and Australian laws and regulations applicable to us may adversely affect our ability to take actions that could be beneficial to our shareholders. | |
| ● | You may be subject to limitations on the transfer of your ADSs and the withdrawal of the underlying ordinary shares. |
In addition, we face other risks and uncertainties that may materially affect our business prospects, financial condition, and results of operations. You should consider the risks discussed in “Risk Factors” and elsewhere in this prospectus before investing in our securities.
Recent Developments
Nebari Variation Agreements
On March 6, 2024 we entered into a Variation Agreement (the “March 2024 Variation Agreement”) to amend the terms of the convertible loan facility with Nebari Gold Fund 1, LP (“Nebari”). The terms of the March 2024 Variation Agreement provide that we have the option (but not the obligation) to extend the repayment date of the facility by 12 months to November 29, 2025. In consideration of the grant of the right to extend the facility, we paid Nebari the sum of US$55,000 and the conversion price of the facility was reduced to A$0.53. On June 6, 2024, we exercised our right under the March 2024 Variation Agreement to extend the repayment date of the facility to November 29, 2025. On May 22, 2024, we entered into a Variation Agreement with Nebari under which the covenant under the convertible loan facility for minimum month-end consolidated cash balance of at least US$2,000,000 was reduced to US$1,500,000 for the month ended June 30, 2024.
On September 19, 2024, we entered into a Variation Agreement (the “September 2024 Variation Agreement”) with Nebari to amend certain terms of the Nebari loan facility. The terms of the September 2024 Variation Agreement are that, subject to shareholder approval at the Annual General Meeting of the Company to be held in November 2024, we will have the option (but not the obligation) to extend the repayment date of the facility by 12 months to November 29, 2026 by giving Nebari notice of its option to extend by November 29, 2024 and the conversion price of the facility will be reduced to A$0.25. In addition, the September 2024 Variation Agreement provides that the financial covenant under the convertible loan facility requiring us to maintain a minimum month-end consolidated cash balance of at least US$2,000,000 was reduced to A$1,000,000 upon signing of such agreement without shareholder approval. If the September 2024 Variation Agreement is not approved by our shareholders, the Nebari facility will remain repayable on its current terms (including the A$0.53 conversion price) and would be due for repayment on November 29, 2025, other than the minimum liquidity financial covenant variation mentioned above which is effective upon execution of such agreement.
April 2024 Financing
On April 12, 2024, we completed a placement of 2,083,336 new fully paid ordinary shares at an issue price of A$0.24 per share to raise A$500,000 (before costs). In addition, as part of this placement, 2,083,333 new fully paid ordinary shares to raise an additional A$500,000 under the placement, representing participation by our Executive Directors & CEO, was issued on June 6, 2024 following shareholder approval at a General Meeting of the Company held on May 31, 2024.
July 2024 Public Offering
On July 25, 2024, we consummated our underwritten public offering of 475,000 units, with each unit consisting of one ADS and one warrant to purchase one ADS, at a price to the public of US$6.92 per unit, for gross proceeds of approximately US$3.3 million and net proceeds of approximately US$2.03 million, before deducting underwriting discounts and offering expenses. The offering also included the purchase by the underwriters of 47,500 warrants to purchase 47,500 ADSs in connection with the partial exercise by the underwriters of their over-allotment option.
2024 Exploration Drilling and Surface Sampling Programs Commenced
On July 31, 2024, we commenced resource definition drilling at the RPM North deposit and surface sampling exploration field programs across the wider Estelle project area, including the gold-antimony prospects at Stibium, Styx, and Train.
Additional Mining Claims
In August 2024, we announced that we staked an additional three State of Alaska mining claims, totaling approximately 1km2, adjacent to the Stibium prospect. The claims were staked to capture more prospective ground.
Our Corporate History and Structure
We have the following material, direct and indirect owned subsidiaries: AKCM (AUST) Pty Ltd, Alaska Range Resources LLC, AK Operations LLC and AK Custom Mining LLC.
The following chart depicts the corporate structure of us together with the jurisdiction of incorporation of our subsidiaries and related holding companies.
| 9 |
Corporate Information
Our principal executive office is Suite 5, 242 Hawthorn Road, Caulfield, Victoria 3161 Australia. The telephone number at our executive office is +61 3 9537 1238.
Our registered office is located at Suite 5 on 242 Hawthorn Road in Caulfield, Australia.
Our agent for service of process in the United States is our wholly-owned U.S. subsidiary Alaska Range Resources LLC, 1150 S Colony Way, Suite 3-440, Palmer, AK 99645.
Our website can be found at www.novaminerals.com.au. The information contained on our website is not a part of this prospectus and should not be relied upon in determining whether to make an investment in our company.
| 10 |
The Offering
| Securities offered | 430,000 ADSs representing 25,800,000 ordinary shares. | |
| ADSs | Each ADS represents 60 of our ordinary shares. The ADSs may be evidenced by American Depositary Receipts. The depositary will be the holder of the ordinary shares underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and owners and beneficial owners of ADSs from time to time. | |
| To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, which is filed as an exhibit to the registration statement of which this prospectus forms a part. | ||
Ordinary shares outstanding immediately prior to this offering |
243,556,881 ordinary shares | |
| Ordinary shares outstanding immediately after the offering | 269,356,881 ordinary shares or 271,936,881 ordinary shares if the underwriters exercise the over-allotment option (with respect to the ADSs) in full. | |
| Over-allotment option | We have granted to the underwriters a 45-day option to purchase from us up to an additional 10% of the amount of the ADSs sold in the offering ( i.e. 43,000 additional ADSs representing 2,580,000 ordinary shares) at the public offering price, less the underwriting discounts and commissions. | |
| Use of proceeds | We estimate that the net proceeds from the sale of the ADSs that we are selling in this offering will be approximately US$2.26 million, (or approximately US$2.52 million if the underwriter’s option to purchase additional ADSs is exercised in full), based upon an assumed offering price of US$6.53 per ADS, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. | |
| We plan to use the net proceeds of this offering for resource and exploration field programs, including additional drilling and exploration, feasibility studies, and general working capital as further detailed in the Use of Proceeds section. See “Use of Proceeds” for more information on the use of proceeds. | ||
| Depositary | The Bank of New York Mellon. | |
| Risk factors | Investing in our securities involves a high degree of risk and purchasers of our securities may lose part or all of their investment. See “Risk Factors” for a discussion of factors you should carefully consider before deciding to invest in our securities. | |
| Trading market and symbol | The ADSs are listed on the Nasdaq Capital Market under the symbol “NVA.” Our ordinary shares are listed on the Australian Stock Exchange (“ASX”) under the symbol “NVA.” |
The number of ordinary shares outstanding immediately following this offering is based on 243,556,881 ordinary shares outstanding as of September 19, 2024 and excludes:
| ● | 23,578,766 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of A$1.12 per share; | |
| ● | 11,750,000 further options that are available for issuance under our employee share option plan; | |
| ● | 15,238,643 ordinary shares issuable upon conversion of US$5,420,934 (A$8,076,481) in principal (including original issue discount and capitalized interest) under the Nebari convertible loan facility (based on a A$0.53 fixed conversion price following approval by our shareholders of the March 2024 Variation Agreement at a General Meeting of the Company held on May 31, 2024), or 32,305,924 ordinary shares if our shareholders approve the reduced conversion price of A$0.25 under the September 2024 Variation Agreement at the Annual General Meeting of the Company to be held in November 2024; | |
| ● | up to 1,200,000 ordinary shares that may be issued upon the achievement of certain milestones pursuant to Class A and Class B performance rights granted to certain directors; | |
| ● | up to 1,200,000 ordinary shares that may be issued upon the achievement of certain milestones pursuant to Class C performance rights granted to certain directors; and | |
| ● | up to 32,775,000 ordinary shares issuable upon exercise of warrants to purchase 546,250 ADSs (representing 32,775,000 ordinary shares) with weighted-average exercise price of US$7.40 per ADS issued in our July 2024 public offering. | |
Except as otherwise indicated herein, all information in this prospectus assumes: | ||
| ● | no exercise of the options and/or performance rights described above; | |
| ● | no exercise by the underwriters of their over-allotment option; and | |
| ● | no exercise of any Representative’s Warrants issued in connection with this offering following shareholder approval. |
| 11 |
Summary Consolidated Financial Information
The following summary historical financial information should be read in conjunction with our consolidated financial statements and related notes included elsewhere in the prospectus and the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.
The selected consolidated statement of profit or loss and other comprehensive income/(loss) data for the six months ended December 31, 2023, and 2022 and consolidated statement of financial position data as of December 31, 2023 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.
The selected consolidated statement of profit or loss and other comprehensive income/(loss) data for the years ended June 30, 2023, and 2022 and consolidated statement of financial position data as of June 30, 2023, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our audited consolidated financial statements have been prepared in accordance with IFRS, as issued by the IASB, as of and for the years ended June 30, 2023, and 2022. Financial statements prepared in compliance with IFRS are not comparable in all respects with financial statements that are prepared in accordance with U.S. GAAP. Our historical results for any period are not necessarily indicative of our future performance.
For the six months ended December 31, 2023, the conversion from A$ into US$ was made at the exchange rate as of December 31, 2023, on which US$1.00 equaled A$1.46199. For the six months ended December 31, 2022, the conversion from A$ into US$ was made at the exchange rate as of December 31, 2022, on which US$1.00 equaled A$1.47601. The use of US$ is solely for the convenience of the reader.
For the fiscal year ended June 30, 2023, the conversion from A$ into US$ was made at the exchange rate as of June 30, 2023, on which US$1.00 equaled A$1.50830. For the fiscal year ended June 30, 2022, the conversion from A$ into US$ was made at the exchange rate as of June 30, 2022, on which US$1.00 equaled A$1.45159. The use of US$ is solely for the convenience of the reader.
Consolidated Statement of Profit or Loss and Other Comprehensive Income Data
| For the six months ended December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| A$ | A$ | US$ | US$ | |||||||||||||
| Revenue | 173,536 | - | 118,698 | - | ||||||||||||
| Other income, losses | (7,480,900 | ) | (3,049,127 | ) | (5,116,930 | ) | (2,065,790 | ) | ||||||||
| Expenses | (1,887,176 | ) | (2,854,324 | ) | (1,290,827 | ) | (1,933,811 | ) | ||||||||
| Loss After Income Tax Expense | (9,194,540 | ) | (5,903,451 | ) | (6,289,058 | ) | (3,999,601 | ) | ||||||||
| Total Comprehensive Loss | (10,737,437 | ) | (5,093,600 | ) | (7,344,398 | ) | (3,450,925 | ) | ||||||||
| Basic loss per share (1) | (0.04 | ) | (0.03 | ) | (0.03 | ) | (0.02 | ) | ||||||||
| Diluted loss per share (1) | (0.04 | ) | (0.03 | ) | (0.03 | ) | (0.02 | ) | ||||||||
| Dividends per share | - | - | - | - | ||||||||||||
| (1) | Adjusted to reflect the 10 for 1 consolidation of our ordinary shares on November 29, 2021. |
| For the year ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| A$ | A$ | US$ | US$ | |||||||||||||
| Revenue | 12,027 | 20,000 | 7,974 | 13,778 | ||||||||||||
| Other income, gains and (losses) | (6,055,067 | ) | 39,613,276 | (4,014,498 | ) | 27,289,576 | ||||||||||
| Expenses | (5,528,200 | ) | (5,230,455 | ) | (3,655,186 | ) | (3,603,259 | ) | ||||||||
| (Loss)/Profit After Income Tax Expense for the Year | (11,571,240 | ) | 34,402,821 | (7,671,710 | ) | 23,700,095 | ||||||||||
| Total Comprehensive (Loss)/Income for the Year | (9,629,678 | ) | 38,097,293 | (6,384,458 | ) | 26,245,216 | ||||||||||
| Basic (loss)/earnings per share (1) | (0.06 | ) | 0.20 | (0.04 | ) | 0.14 | ||||||||||
| Diluted (loss)/earnings per share (1) | (0.06 | ) | 0.18 | (0.04 | ) | 0.12 | ||||||||||
| Dividends per share | - | - | - | - | ||||||||||||
| (1) | Adjusted to reflect the 10 for 1 consolidation of our ordinary shares on November 29, 2021. |
Consolidated Statement of Financial Position Data
| As of December 31, 2023 | ||||||||||||||||||||||||
| Actual | Pro Forma (1) | Pro Forma As Adjusted (1) (2)(3) | ||||||||||||||||||||||
| A$ | US$ | A$ | US$ | A$ | US$ | |||||||||||||||||||
| Cash | 6,228,229 | 4,260,103 | 10,188,492 | 6,968,920 | 13,494,763 | 9,230,407 | ||||||||||||||||||
| Total Assets | 110,698,323 | 75,717,565 | 114,658,586 | 78,426,382 | 117,964,857 | 80,687,869 | ||||||||||||||||||
| Total Liabilities | 7,949,140 | 5,437,205 | 7,949,140 | 5,437,205 | 7,949,140 | 5,437,205 | ||||||||||||||||||
| Net Assets | 102,749,183 | 70,280,360 | 106,709,446 | 72,989,176 | 110,015,717 | 75,250,663 | ||||||||||||||||||
| Accumulated profits (losses) | (59,128,334 | ) | (40,443,734 | ) | (60,973,807 | ) | (41,706,036 | ) | (61,772,658 | ) | (42,252,449 | ) | ||||||||||||
| Issued Capital | 142,986,671 | 97,802,770 | 148,792,407 | 101,773,888 | 152,897,529 | 104,581,788 | ||||||||||||||||||
| Reserves | 11,390,230 | 7,790,908 | 11,390,230 | 7,790,908 | 11,390,230 | 7,790,908 | ||||||||||||||||||
| Non-controlling Interest | 7,500,616 | 5,130,415 | 7,500,616 | 5,130,415 | 7,500,616 | 5,130,415 | ||||||||||||||||||
| (1) | The pro forma data gives effect to the issuance of an aggregate of (i) 2,083,336 ordinary shares in a placement on April 12, 2024 for which the Company received aggregate gross proceeds of A$500,000 with associated costs of A$10,071; (ii) 2,083,333 shares issued on June 6, 2024 to certain of our Executive Directors & CEO as part of our April 2024 placement (following approval by our shareholders at the general meeting of shareholders on May 31, 2024 for which the Company received aggregate proceeds of A$500,000); (iii) 251 ordinary shares issued on the exercise of unquoted options in February 2024 and April 2024 for which the Company received aggregate proceeds of A$175 and (iv) 475,000 ADSs representing 28,500,000 ordinary shares on July 25, 2024 for which the Company received aggregate gross proceeds of US$3,287,000 (A$4,805,561) with associated underwriting commissions and offering costs of US$1,255,414 (A$1,835,402). |
| (2) | The pro forma as adjusted data give effect to our receipt of US$2,807,900 (A$4,105,122) in gross proceeds, with US$546,413 (A$798,850) of associated underwriting commissions and estimated offering expenses payable by us, from the issuance and sale of 430,000 ADSs at the assumed offering price of US$6.53 per ADS. |
| (3) | Each US$1.00 increase (decrease) in the assumed public offering price of US6.53 per ADS would increase (decrease) each of cash, total assets, and net assets by approximately A$0.58 million (or approximately US$0.40 million), increase (decrease) accumulated losses by approximately A$0.05 million (or approximately US$0.03 million), and increase (decrease) issued capital by approximately A$0.63 million (or approximately US$0.43 million), assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, a decrease of 50,000 ADSs offered by us would decrease each of cash, total assets, and net assets by approximately A$0.44 million (or approximately US$0.30 million), decrease accumulated losses by approximately A$0.04 million (or approximately US$0.03 million), and decrease issued capital by approximately A$0.48 million (or approximately US$0.33 million), assuming the assumed public offering price of US$6.53 per ADS remains the same, and after deducting underwriting discounts and commissions. |
| 12 |
RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this prospectus, before purchasing our securities. We have listed below (not necessarily in order of importance or probability of occurrence) what we believe to be the most significant risk factors applicable to us, but they do not constitute all of the risks that may be applicable to us. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section titled “Special Note Regarding Forward-Looking Statements.”
Risks Related to Our Business and Industry
Our mineral reserves may be significantly lower than expected.
We are in the exploration stage and our planned principal operations have not commenced. There is currently no commercial production at our Estelle Gold Project. However, we expect to complete our first gold pour in late 2028, although there is no assurance that we will meet that timeframe and consummation of any such commercial production is subject to the risks described in this section. We have completed a technical report summary in compliance with the SEC’s S-K 1300 disclosure rules. We have produced an Initial Assessment on a very small area which includes the 4 current resource deposits on the Estelle Gold Project to both JORC and S-K 1300 standards. Although we have commenced the requisite studies necessary to prepare and complete a Feasibility Study (FS) on the Estelle Gold Project, such formal Feasibility Study has not yet been started and is not expected to be completed until 2025. As such, our estimated proven or probable mineral reserves, expected mine life and mineral pricing cannot be determined as the exploration programs, additional drilling, economic assessments and requisite initial studies and pit (or mine) design optimizations have not yet been completed, and the actual mineral reserves may be significantly lower than expected. You should not rely on the technical reports, preliminary economic assessments or feasibility studies, if and when completed and published, as indications that we will have successful commercial operations in the future. Even if we prove reserves on our property, we cannot guarantee that we will be able to develop and market them, or that such production will be profitable.
The estimation of mineral reserves is not an exact science and depends upon a number of subjective factors. Any measured, indicated and inferred resource figures presented in this prospectus are estimates from the written reports of technical personnel and mining consultants who were contracted to assess the mining prospects. Resource estimates are a function of geological and engineering analyses that require us to forecast production costs, recoveries, and metals prices. The accuracy of such estimates depends on the quality of available data and of engineering and geological interpretation, judgment, and experience. Estimated inferred mineral resources may not be upgraded to indicated or measured or to probable or proved reserves, and any reserves may not be realized in actual production and our operating results may be negatively affected by inaccurate estimates.
Our Estelle Gold Project only has estimated measured, indicated and inferred resources identified, there are no known reserves, on our property. There is no assurance that we can establish the existence of any mineral reserve on our property in commercially exploitable quantities. Until we can do so, we cannot earn any revenues from this property and if we do not do so we will lose all of the funds that we expend on exploration. If we do not discover any mineral reserve in a commercially exploitable quantity, the exploration component of our business could fail.
We have not established that our mineral property contains any mineral reserve according to recognized reserve guidelines, nor can there be any assurance that we will be able to do so. A mineral reserve is defined by the SEC in S-K 1300 as that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination. There is a probability that our mineral property does not contain any “reserves” and any funds that we spend on exploration could be lost. Even if we do eventually discover mineral reserves on our property, there can be no assurance that it can be developed into producing mines and extract those minerals. Both mineral exploration and development involve a high degree of risk and few mineral properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the mineral deposit to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral deposit unprofitable.
| 13 |
We have no history of producing metals from our current mineral property and there can be no assurance that we will successfully establish mining operations or profitably produce precious metals.
We have no history of producing metals from our current mineral property. We do not produce gold and do not currently generate operating earnings. While we seek to move our projects into production, such efforts will be subject to all of the risks associated with establishing new mining operations and business enterprises, including:
| ● | the timing and cost, which are considerable, of the construction of mining and processing facilities; | |
| ● | the ability to find sufficient gold reserves to support a profitable mining operation; | |
| ● | the availability and costs of skilled labor and mining equipment; | |
| ● | compliance with environmental and other governmental approval and permit requirements; | |
| ● | the availability of funds to finance construction and development activities; | |
| ● | potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants that may delay or prevent development activities; and | |
| ● | potential increases in construction and operating costs due to changes in the cost of labor, fuel, power, materials and supplies. |
The costs, timing and complexities of mine construction and development may be increased by the remote location of our property. It is common in new mining operations to experience unexpected problems and delays during construction, development and mine start-up. In addition, our management will need to be expanded. This could result in delays in the commencement of mineral production and increased costs of production. Accordingly, we cannot assure you that our activities will result in profitable mining operations or that we will successfully establish mining operations.
Any material changes in mineral resource/reserve estimates and grades of mineralization will affect the economic viability of placing a property into production and a property’s return on capital.
As we have not completed feasibility studies on any of our properties and have not commenced actual production, mineralization resource estimates may require adjustments or downward revisions. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by our feasibility studies and drill results. Minerals recovered in small scale tests may not be duplicated in large scale tests under on-site conditions or in production scale.
The resource estimates that are contained in this prospectus or that we may calculate in the future will have been determined based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material adverse effect on our share price and the value of our property.
The profitability of our operations, and the cash flows generated by our operations, are affected by changes in the market price for gold which in the past has fluctuated widely.
Substantially all of our revenues and cash flows will come from the sale of gold if we enter into the production stage. Historically, the market price for gold has fluctuated widely and has been affected by numerous factors over which we have no control, including:
| ● | the demand for gold for industrial uses and for use in jewelry; | |
| ● | international or regional political and economic trends; | |
| ● | the strength of the US dollar, the currency in which gold prices generally are quoted, and of other currencies; | |
| ● | financial market expectations regarding the rate of inflation; | |
| ● | interest rates; | |
| ● | speculative activities; | |
| ● | actual or expected purchases and sales of gold bullion holdings by central banks or other large gold bullion holders or dealers; | |
| ● | hedging activities by gold producers; and | |
| ● | the production and cost levels for gold in major gold-producing nations. |
| 14 |
In addition, the current demand for, and supply of, gold affects the price of gold, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. Historically, gold has tended to retain its value in relative terms against basic goods in times of inflation and monetary crisis. As a result, central banks, financial institutions, and individuals hold large amounts of gold as a store of value, and production in any given year constitutes a very small portion of the total potential supply of gold. Since the potential supply of gold is large relative to mine production in any given year, normal variations in current production will not necessarily have a significant effect on the supply of gold or its price.
If gold prices should fall below and remain below our cost of production for any sustained period, we may experience losses and may be forced to curtail or suspend some or all of our gold mining operations. In addition, we would also have to assess the economic impact of low gold prices on our ability to recover any losses we may incur during that period and on our ability to maintain adequate reserves.
Our success depends on the exploration development and operation of the Estelle Gold Project, an exploration stage project.
At present, our only mineral property is the interest that we hold in the Estelle Gold Project, which is in the exploration stage. Unless we acquire or develop additional mineral properties, we will be solely dependent upon this property and our future success will be largely driven by our ability to explore and develop the Estelle Gold Project successfully, including the results of such exploration and development efforts. If no additional mineral properties are acquired by us, any adverse development affecting our operations and further exploration or development of the Estelle Gold Project may have a material adverse effect on our financial condition and results of operations.
We do not operate any mines and the development of our mineral project into a mine is highly speculative in nature, may be unsuccessful and may never result in the development of an operating mine.
The Estelle Gold Project is at the exploration stage and is without identified mineral reserves. We do not have any interest in any mining operations or mines in development.
Mineral exploration and mine development are highly speculative in nature, involve many uncertainties and risks and are frequently unsuccessful. Mineral exploration is performed to demonstrate the dimensions, position and mineral characteristics of mineral deposits, estimate mineral resources, assess amenability of the deposit to mining and processing scenarios and estimate potential deposit size. Once mineralization is discovered, it may take a number of years from the initial exploration phases before mineral development and production is possible, during which time the potential feasibility of the project may change adversely.
Mineralization may not be economic to mine. A significant number of years, several studies, and substantial expenditures are typically required to establish economic mineralization in the form of proven mineral reserves and Probable Mineral Reserves, to determine processes to extract the metals and, if required, to construct mining, processing, and tailing facilities and obtain the rights to the land and the resources (including capital) required to develop the mining operation.
In addition, if we discover mineralization that becomes a mineral reserve, it will take several years to a decade or more from the initial phases of exploration until production is possible. During this time, the economic feasibility of production may change. As a result of these uncertainties, we may not be able to successfully develop a commercially viable producing mine.
In addition, whether developing a producing mine is economically feasible will depend upon numerous additional factors, most of which are beyond our control, including the availability and cost of required development capital and labor, movement in the price of commodities, securing and maintaining title to mineral and other property rights as well as obtaining all necessary consents, permits and approvals for the development of the mine. The economic feasibility of development projects is based upon many factors, including the accuracy of mineral resource and mineral reserve estimates; metallurgical recoveries; capital and operating costs; government regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting and environmental protection; and metal prices, which are highly volatile. Development projects are also subject to the successful completion of feasibility studies, issuance of necessary governmental permits and availability of adequate financing. Any of these factors may result in us being unable to successfully develop a commercially viable operating mine.
Resource exploration and development is a high risk, speculative business.
While the discovery of an ore body may result in substantial rewards, few mineral properties which are explored are ultimately developed into producing mines. Most exploration projects do not result in the discovery of commercially mineable deposits. Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity or quality to return a profit from production. The marketability of minerals acquired or discovered by us may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to allowable production, importing and exporting of minerals, and environmental protection, the combination of which factors may result in our not receiving an adequate return of investment capital.
| 15 |
There is no assurance that our mineral exploration and development activities will result in any discoveries of commercial bodies of ore. The long-term profitability of our operations will in part be directly related to the costs and success of our exploration programs, which may be affected by a number of factors. Substantial expenditures are required to establish reserves through drilling and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.
Additionally, significant capital investment is required to discover commercial ore and to commercialize production from successful exploration effort and maintain mineral concessions and other rights through payment of applicable taxes, advance royalties and other fees. The commercial viability of a mineral deposit is dependent on a number of factors, including, among others: (i) deposit attributes such as size, grade and proximity to infrastructure; (ii) current and future metal prices; and (iii) governmental regulations, including those relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and necessary supplies and environmental protection. The complete impact of these factors, either alone or in combination, cannot be entirely predicted and their impact may result in our not achieving an adequate return on invested capital.
There is no certainty that the expenditures made by us towards the search for and evaluation of mineral deposits will result in discoveries of commercial quantities of ore.
Mineral resource estimates are based on interpretation and assumptions and could be inaccurate or yield less mineral production under actual conditions than is currently estimated. Any material changes in these estimates could affect the economic viability of the Estelle Gold Project, our financial condition and ability to be profitable.
The estimates for mineral resources contained herein are estimates only and no assurance can be given that the anticipated tonnages and grades will be achieved. There are numerous uncertainties inherent in estimating mineral resources, including many factors beyond our control. Such estimation is a subjective process, and the accuracy of any mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. In addition, there can be no assurance that gold recoveries in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production, if any. If our actual mineral resources are less than current estimates or if we fail to develop our mineral resource base through the realization of identified mineralized potential, our results of operations or financial condition may be materially and adversely affected. Evaluation of mineral resources occurs from time to time, and they may change depending on further geological interpretation, drilling results and metal prices. The category of inferred mineral resource is often the least reliable mineral resource category and is subject to the most variability. We regularly evaluate our mineral resources and consider the merits of increasing the reliability of its overall mineral resources.
We may not be able to obtain all required permits and licenses to place any of our properties into future production.
We may not be able to obtain all required permits and licenses to place any of our properties into production. Our future operations may require permits from various governmental authorities and will be governed by laws and regulations governing prospecting, development, mining, production, export, taxes, labor standards, occupational health, waste disposal, land use, environmental protections, mine safety and other matters. There can be no guarantee that we will be able to obtain all necessary licenses, permits and approvals that may be required to undertake exploration activity or commence construction or operation of mine facilities at the Estelle Gold Project. Additionally, there can be no assurance that all permits and licenses we may require for future exploration or possible future development will be obtainable at all or on reasonable terms.
Mining and exploration activities are also subject to various laws and regulations relating to the protection of the environment. Although we believe that our exploration activities are currently carried out in accordance with all of the applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner that could limit or curtail the production or development of the Estelle Gold Project. Amendments to current laws and regulations governing our operations and activities or a more stringent implementation thereof could have a material adverse effect on our business, financial condition and results of operations.
| 16 |
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, the installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of mining activities and may be subject to civil or criminal fines or penalties for violations of applicable laws or regulations.
Amendments to current laws, regulations and permits governing operations and activities of mining companies, or a more stringent implementation thereof, could have a material adverse impact on us and cause increases in exploration expenses, capital expenditures or production costs, reduction in levels of production at producing properties, or abandonment or delays in development of new mining properties.
We may to fail to adhere to annual claims renewal and rents submissions
We need to adhere to annual claims renewal and rents as per AS 27.10.160. Affidavit of Labor or Improvements. Within 90 days after September 1 of each year the owner of a mining claim, or some other person having knowledge of the facts, shall make and record with the recorder for the district in which the claim is located an affidavit showing the performance of labor or the making of improvements.
We have negative cash flows from operating activities.
We had negative cash flow from operating activities in the period from our incorporation until the date of this prospectus. We expect that we will use a portion of the proceeds of this offering to fund anticipated negative cash flow from operating activities in future periods. Given that we have no operating revenues, and do not anticipate generating operating revenues for the foreseeable future, we expect that expenditures to fund operating activities will be provided by financings. There is no assurance that future financings can be completed on acceptable terms or at all, and our failure to raise capital when needed could limit our ability to continue our operations in the future.
We have no history of earnings or mineral production, and there are currently no known commercial quantities of mineral reserves on the Estelle Gold Project.
We have no history of earnings or mineral production and may never engage in mineral production. There are currently no known commercial quantities of mineral reserves on the Estelle Gold Project. Development of the Estelle Gold Project and any other projects we may acquire in the future will only follow upon obtaining satisfactory results of further exploration work and geological and other studies. Exploration and the development of natural resources involve a high degree of risk and few properties which are explored are ultimately developed into producing properties. There is no assurance that our exploration and development activities will result in any discoveries of commercial bodies of ore. The long-term profitability of our operations will be in part directly related to the cost and success of our exploration programs, which may be affected by a number of factors. Even if commercial quantities of minerals are discovered, the Estelle Gold Project may not be brought into a state of commercial production. The commercial viability of a mineral deposit once discovered is also dependent on various factors, including particulars of the deposit itself, proximity to infrastructure, metal prices, and availability of power and water to permit development.
Further, we are subject to many risks common to mineral exploration companies, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and the lack of revenues. There is no assurance we will be successful in achieving a return on stockholder’s investment and the likelihood of success must be considered in light of its early-stage operations.
We will require additional financing to fund exploration and, if warranted, development and production. Failure to obtain additional financing could have a material adverse effect on our financial condition and results of operations and could cast uncertainty on our ability to continue our operations in the future.
We have no history of earnings, and, due to the nature of our business, there can be no assurance that we will be profitable. We have paid no dividends on our ordinary shares, ADSs or any of our other securities since incorporation and do not anticipate doing so in the foreseeable future.
Even if the results of exploration are encouraging, we may not have sufficient funds to conduct the further exploration that may be necessary to determine whether or not a commercially minable deposit exists on any portion of the Estelle Gold Project. While we may generate additional working capital through further equity offerings, there is no assurance that any such funds will be available on acceptable terms, or at all. If available, future equity financing may result in substantial dilution to stockholders. At present it is impossible to determine what amounts of additional funds, if any, may be required.
We will require grants from the U.S. Department of Defense to pursue our strategy to develop a stand-alone antimony- gold starter mine. Failure to obtain such grants could have a material adverse effect on our financial condition and results of operations.
One of our potential growth strategies is the development of a stand-alone antimony-gold starter mine. We believe that with China announcing export restrictions on antimony, there is an opportunity to receive support from the U.S. Department of Defense to fast track the Stibium gold-antimony prospect. Development of this project could provide a pathway for early cashflow which could provide necessary funding for our “Expanded Project” growth strategy. However, currently we do not have a defined resource for antimony on our project and this strategy will be dependent upon our receipt of grants from the U.S. Department of Defense. Failure to define an antimony resource and/or to obtain such grants will require us to forego this growth strategy which could have a material adverse effect on our financial condition and results of operations.
The development of the Estelle Gold Project or any other projects we may acquire in the future into an operating mine will be subject to all of the risks associated with establishing and operating new mining operations.
If the development of the Estelle Gold Project or any other projects we may acquire in the future is found to be economically feasible and we seek to develop an operating mine, the development of such a mine will require obtaining permits and financing the construction and operation of the mine itself, processing plants and related infrastructure. As a result, we will be subject to certain risks associated with establishing new mining operations, including:
| ● | uncertainties in timing and costs, which can be highly variable and considerable in amount, of the construction of mining and processing facilities and related infrastructure; | |
| ● | we may find that skilled labor, mining equipment and principal supplies needed for operations, including explosives, fuels, chemical reagents, water, power, equipment parts and lubricants are unavailable or available at costs that are higher than we anticipated; | |
| ● | we will need to obtain necessary environmental and other governmental approvals and permits and the receipt of those approvals and permits may be delayed or extended beyond what we anticipated, or that the approvals and permits may contain conditions and terms that materially impact our ability to operate a mine; | |
| ● | we may not be able to obtain the financing necessary to finance construction and development activities or such financing may be on terms and conditions costlier than anticipated, which may make mine development activities uneconomic; | |
| ● | we may suffer industrial accidents as part of building or operating a mine that may subject us to significant liabilities; | |
| ● | we may suffer mine failures, shaft failures or equipment failures which delay, hinder or halt mine development activities or mining operations; | |
| ● | our mining projects may suffer from adverse natural phenomena such as inclement weather conditions, floods, droughts, rockslides and seismic activity; | |
| ● | we may discover unusual or unexpected geological and metallurgical conditions that could cause us to have to revise or modify mine plans and operations in a materially adverse manner; and | |
| ● | the development or operation of our mines may become subject to opposition from nongovernmental organizations, environmental groups or local groups, which may delay, prevent, hinder or stop development activities or operations. |
In addition, we may find that the costs, timing and complexities of developing the Estelle Gold Project or any other future projects to be greater than we anticipated. Cost estimates may increase significantly as more detailed engineering work is completed on a project. It is common in mining operations to experience unexpected costs, problems and delays during construction, development and mine start-up. Accordingly, our activities may not result in profitable mining operations at our mineral properties.
Our growth strategy and future exploration and development efforts may be unsuccessful.
In order to grow our business and pursue our long-term growth strategy, we may seek to acquire additional mineral interests or merge with or invest in new companies or opportunities. A failure to make acquisitions or investments may limit our growth. In pursuing acquisition and investment opportunities, we face competition from other companies having similar growth and investment strategies, many of which may have substantially greater resources than us. Competition for these acquisitions or investment targets could result in increased acquisition or investment prices, higher risks and a diminished pool of businesses, services or products available for acquisition or investment. Additionally, if we lose or abandon our interest in any of our mineral projects, there is no assurance that we will be able to acquire another mineral property of merit or that such an acquisition would be approved by applicable regulators.
| 17 |
We may issue additional ADSs representing ordinary shares or ordinary shares, from time to time for various reasons, resulting in the potential for significant dilution to existing stockholders.
We may issue additional ADSs representing ordinary shares or ordinary shares, from time to time, for various reasons, including, but not limited to, for the purposes of raising capital (including to fund exploration and development work) or acquiring additional interests. We may also issue additional ADSs or ordinary shares pursuant to equity incentive plans from time to time. These further issuances of the ADSs or ordinary shares may have a depressive effect on the price of the ADSs and ordinary shares and will dilute the voting power of our existing stockholders and the potential value of each ADS or ordinary share.
We may face pressure to demonstrate that, in addition to seeking to generate returns for our shareholders, other stakeholders benefit from our activities.
Natural resources companies face increasing public scrutiny of their activities. We may face pressure to demonstrate that, in addition to seeking to generate returns for our shareholders, other stakeholders benefit from our activities, including local governments and the communities surrounding or nearby its properties. The potential consequences of these pressures include reputational damages, lawsuits, increasing social investment obligations and pressure to increase taxes, future royalties or other contributions to local governments and surrounding communities. These pressures may also impair our ability to successfully obtain permits and approvals required for our operations.
Our mineral exploration activities are subject to extensive laws and regulations governing prospecting, exploration, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, waste disposal, water use, land claims of local people, protection of historic and archaeological sites, mine development, protection of endangered and protected species and other matters.
Government and community/stakeholder approvals may be required in connection with our operations. To the extent such approvals are required and not obtained, we may be curtailed or prohibited from continuing our exploration or mining operations or from proceeding with planned exploration or development of mineral properties.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.
Our mineral exploration activities may be adversely affected in varying degrees by changing government regulations relating to the mining industry or shifts in political conditions that increase royalties payable or the costs related to our activities or maintaining the Estelle Gold Project. Operations may also be affected in varying degrees by government regulations with respect to restrictions on production, price controls, government-imposed royalties, claim fees, export controls, income taxes, and expropriation of property, environmental legislation and mine safety. The effect of these factors cannot be accurately predicted.
Legislation has been proposed that would significantly affect the mining industry and our business.
In recent years, members of the United States Congress have repeatedly introduced bills which would supplant or alter the provisions of the Federal Resource Conservation and Recovery Act (the “U.S. General Mining Law”). If adopted, such legislation, among other things, could eliminate or greatly limit the right to a mineral patent, impose federal royalties on mineral production from unpatented mining claims located on U.S. federal lands, result in the denial of permits to mine after the expenditure of significant funds for exploration and development, reduce estimates of mineral reserves and reduce the amount of future exploration and development activity on U.S. federal lands, all of which could have a material and adverse effect on our ability to operate and its cash flow, results of operations and financial condition.
| 18 |
Our activities are subject to environmental laws and regulations that may increase our costs of doing business and restrict our operations.
Our activities are subject to environmental regulations in the jurisdiction in which we operate. Environmental legislation generally provides for restrictions and prohibitions on spills, releases or emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner involving stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. Compliance with environmental laws and regulations and future changes in these laws and regulations may require significant capital outlays, cause material changes or delays in our current and planned operations and future activities and reduce the profitability of operations. It is possible that future changes in these laws or regulations could have a significant adverse impact on the Estelle Gold Project or some portion of our business, causing us to re-evaluate those activities at that time.
Examples of current U.S. federal laws which may affect our current operations and may impact future business and operations include, but are not limited to, the following:
The Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”), and comparable state statutes, impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The U.S. General Mining Law, and comparable state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such sites have been completed.
The Clean Air Act (“CAA”) restricts the emission of air pollutants from many sources, including mining and processing activities. Our mining operations may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring or control requirements under the CAA and state air quality laws. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on our production levels or result in additional capital expenditures in order to comply with the regulations.
The National Environmental Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions. If a proposed action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental Impact Statement (“EIS”). The U.S. Environmental Protection Agency (“EPA”), other federal agencies, and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS. We are required to undertake the NEPA process for the Estelle Gold Project permitting. The NEPA process can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project or the ability to construct or operate the Estelle Gold Project or other properties and may make them entirely uneconomic.
The Clean Water Act (“CWA”), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The CWA regulates storm water mining facilities and requires a storm water discharge permit for certain activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.
The Safe Drinking Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The program requires that a permit be obtained before drilling a disposal or injection well. Violation of these regulations or contamination of groundwater by mining related activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SDWA and state laws. In addition, third party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.
| 19 |
We may be unsuccessful in obtaining necessary permits to explore, develop or mine the Estelle Gold Project in a timely manner or at all.
Exploration, development and mining activities will require certain permits and other governmental approvals. We may be unsuccessful in obtaining such permits and approvals on a timely basis, or on favorable terms or at all.
The State of Alaska requires that an Application for Permit to Mine in Alaska (“APMA”) be submitted to obtain permits for all exploration, mining, or transportation of equipment and maintaining a camp. These permits are reviewed by related state and federal agencies that can comment on and require specific changes to proposed work plans to minimize impacts on the environment. The project currently holds the following authorizations and permits under the Alaska Permit for Mining Activities (APMA) system which are valid through 2027, except as set forth below:
| ● | Miscellaneous Land Use Permit #3042, which authorizes hard rock exploration activities on the project site. This permit is issued by the Alaska Department of Natural Resources , Division of Mining, Land & Water, Mining Section. | |
| ● | Temporary Water Use Authorization, which authorizes water removal from surface waterbodies for exploration activities. This authorization is issued by Alaska Department of Natural Resources , Division of Mining, Land & Water, Water Section. | |
| ● | Fish Habitat Permit (and/or fish Passage Permit, which authorizes activities in fish-bearing waters, primarily for water withdrawal structures. This authorization is issued by the Habitat Section of the Alaska Department of Fish and Game. | |
| ● | Camp Permit, which authorizes the exploration camp. This permit is issued by the Alaska Department of Natural Resources , Division of Mining, Land & Water, Mining Section as part of the Miscellaneous Land Use Permit #3042 described above. | |
| ● | Estelle Man Camp Permit, which provides approval to construct modifications to the existing drinking water system. This permit is issued by the Department of Environmental Conservation, Division of Environmental Health, Drinking Water Program (expires November 8, 2025) |
Any
failure to obtain permits and other governmental approvals could delay or prevent us from completing contemplated activities as planned
which could negatively impact our financial condition and results of operations.
Mining and project development is inherently risky and subject to conditions or events some of which are beyond our control, and which could have a material adverse effect on our business.
Our activities related to the exploration and development of the Estelle Gold Project and any other projects we may acquire in the future are subject to hazards and risks inherent in the mining industry. These risks, include, but are not limited to, rock falls, rock bursts, collapses, seismic activity, flooding, environmental pollution, mechanical equipment failure, facility performance issues, and periodic disruption due to inclement or hazardous weather conditions. Such risks could result in personal injury or fatality, damage to equipment or infrastructure, environmental damage, delays, suspensions or permanent cessation of activities, monetary losses and possible legal liability.
Our mining, processing, development and exploration activities depend on adequate infrastructure. Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants that affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage and government or other interference in the maintenance or provision of such infrastructure could adversely affect our operations, financial condition and results of operations.
The validity of our title to the Estelle Gold Project and future mineral properties may be disputed by others claiming title to all or part of such properties.
The acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral concessions may be disputed. Although we believe we have taken reasonable measures to ensure proper title to our interests in our properties, there is no guarantee that title to any such properties will not be challenged or impaired. Third parties may have valid claims underlying portions of our interests, including prior unregistered liens, agreements, transfers or claims and title may be affected by, among other things, undetected defects. In addition, we may be unable to operate on such properties as permitted or to enforce its rights with respect to such properties.
| 20 |
We may in the future enter into transactions with related parties and such transactions present possible conflicts of interest.
We may in the future enter into transactions with related parties and such transactions present possible conflicts of interest. Related parties may have interests in such transactions that do not align with the interests of our security holders. There can be no assurance that we may have been able to achieve more favorable terms, including as to value and other key terms, if such transaction had not been with a related party.
We may in the future enter into transactions with entities in which our board of directors and other related parties hold ownership interests. Material transactions with related parties after this offering, if any, will be reviewed and approved by our audit committee, which is comprised solely of independent directors. Nevertheless, there can be no assurance that any such transactions will result in terms that are more favorable to us than if such transactions are not entered into with related parties. Furthermore, we may achieve more favorable terms if such transactions had not been entered into with related parties and, in such case, these transactions, individually or in the aggregate, may have an adverse effect on our business, financial position and results of operations.
We face various risks related to health epidemics, pandemics or other health crises, which may have material adverse effects on our business, financial position, results of operations and/or cash flows.
An outbreak of epidemics, pandemics or other health crises, such as COVID-19 and the subsequent response by government and private actors to such health crises could result in a materially adverse effect on our business, operations and financial condition. As at the date of the date hereof, the COVID-19 pandemic and efforts to control its spread is no longer a global threat. Emergency measures imposed by governments on businesses and individuals, including quarantines, travel restrictions, social-distancing, closures of non-essential businesses and shelter-in-place orders, among other measures, have impacted and may further impact our workforce and operations.
The health epidemics such as the recently passed COVID-19 pandemic may lead to risks to employee health and safety and may result in a slowdown or temporary suspension of any exploration activities at the Estelle Gold Project. Our conduct of exploration and development programs may be impacted or delayed due to limitation on employee mobility, travel restrictions and shelter-in-place orders, which may restrict or prevent our ability to access its mineral properties. Any such limitations, restrictions and orders may have a material adverse effect upon ongoing exploration programs at our mineral properties and, ultimately, on our business and financial condition.
While these effects are expected to be temporary, the duration of the disruptions to business internationally and the related financial impact cannot be estimated with any degree of certainty at this time. The COVID-19 pandemic continues to rapidly evolve and the extent to which it may impact our business, financial condition and results of operations, as well as our plans relating to exploration expenditures and other discretionary items, will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
The outbreak of COVID-19 has caused, and may cause further, disruptions to our business and operational plans. Such disruptions may result from: (i) restrictions that governments and communities impose to address the COVID-19 outbreak; (ii) restrictions that we and our contractors and subcontractors impose to ensure the safety of employees and others; (iii) shortages of employees and/or unavailability of contractors and subcontractors; and/or (iv) interruption of supplies from third parties upon which the Company relies. Further, it is presently not possible to predict the extent or durations of these disruptions. These disruptions may have a material adverse effect on our business, financial condition and results of operations, which could be rapid and unexpected.
Increasing attention to ESG matters and conservation measures may adversely impact our business.
Increasing attention to, and societal expectations on companies to address, climate change and other environmental and social impacts and investor and societal expectations regarding voluntary ESG disclosures may result in increased costs and reduced access to capital. While we may announce various voluntary ESG targets in the future, such targets are aspirational. Also, we may not be able to meet such targets in the manner or on such a timeline as initially contemplated, including, but not limited to, as a result of unforeseen costs or technical difficulties associated with achieving such results.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Unfavorable ESG ratings could lead to increased negative investor sentiment toward us and could impact our access to and costs of capital. Additionally, to the extent ESG matters negatively impact our reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely impact our business. Increased focus by stakeholders, regulators and others on ESG related matters may result in increased permitting requirements and delays in the future. Additionally, we may become subject to misinformation campaigns related to ESG and other matters which may require substantial management time and expense to address and could negatively impact community sentiment regarding the applicable project or delay expected development timelines.
| 21 |
We rely on third-party contractors.
As we continue with the exploration and advancement of the Estelle Gold Project and any other projects we may acquire in the future, timely and cost-effective completion of work will depend largely on the performance of our contractors. If any of these contractors or consultants do not perform to accepted or expected standards, we may be required to hire different contractors to complete tasks, which may impact schedules and add costs to the Estelle Gold Project and any other projects we may acquire in the future, and in some cases, lead to significant risks and losses. A major contractor default or the failure to properly manage contractor performance could have an adverse effect on our results.
We rely on information technology systems and any inadequacy, failure, interruption or security breaches of those systems may harm our reputation and ability to effectively operate our business.
Our operations depend on information technology (“IT”) systems. These IT systems could be subject to network disruptions caused by a variety of sources, including computer viruses, security breaches and cyber-attacks, as well as disruptions resulting from incidents such as cable cuts, damage to physical plants, natural disasters, terrorism, fire, power loss, vandalism and theft. Our operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in IT system failures, delays and/or increase in capital expenses. The failure of IT systems or a component of information systems could, depending on the nature of any such failure, adversely impact our reputation and results of operations.
Although to date we have not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no assurance that we will not incur such losses in the future. Our risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority. As cyber threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.
Global financial markets can have a profound impact on the global economy in general and on the mining industry in particular.
Many industries, including the precious metals mining industry, are impacted by volatile market conditions. Global financial conditions remain subject to sudden and rapid destabilization in response to economic shocks. A slowdown in the financial markets or other economic conditions, including but not limited to consumer spending, employment rates, business conditions, inflation, fluctuations in fuel and energy costs, consumer debt levels, lack of available credit, the state of financial markets, interest rates and tax rates may adversely affect our growth and financial condition. Any sudden or rapid destabilization of global economic conditions could impact our ability to obtain equity or debt financing in the future on favorable terms or at all. In such an event, our operations and financial condition could be adversely affected.
The volatility in gold and other commodity prices may adversely affect any future operations and, if warranted, our ability to develop our properties.
We are exposed to commodity price risk. The price of gold or other commodities fluctuates widely and may be affected by numerous factors beyond our control, including, but not limited to, the sale or purchase of commodities by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, global and regional supply and demand, and political and economic climates and conditions of major mineral-producing countries around the world.
Declines in the market price of gold, base metals and other minerals may adversely affect our ability to raise capital or attract joint venture partners in order to fund our ongoing operations and meet obligations under option and other agreements underlying our mineral interests. Commodity price declines could also reduce the amount we would receive on the disposition of the Estelle Gold Project to a third party. In addition, the decision to put a mine into production and to commit the funds necessary for that purpose must be made long before the first revenue from production would be received. A decrease in the price of gold may prevent a property from being economically mined or result in the write-off of assets whose value is impaired as a result of lower gold prices.
| 22 |
The mining industry is intensely competitive in all of its phases, and we compete with many companies possessing greater financial and technical resources.
The mining industry is intensely competitive in all of its phases, and we compete with many companies possessing greater financial and technical resources. Competition in the precious metals mining industry is primarily for: (i) mineral rich properties that can be developed and produced economically; (ii) technical expertise to find, develop, and operate such properties; (iii) labor to operate the properties; and capital for the purpose of funding such properties. Many competitors not only explore for and mine precious metals but conduct refining and marketing operations on a global basis. Such competition may result in being unable to acquire desired properties, to recruit or retain qualified employees or to acquire the capital necessary to fund its operations and develop mining properties. Existing or future competition in the mining industry could materially adversely affect our prospects for mineral exploration and success in the future.
We may be adversely affected by the effects of inflation.
Although inflation in the United States has been relatively low in recent years, it rose significantly beginning in the second half of 2021. This is primarily believed to be the result of the economic impact from global armed conflict and the COVID-19 pandemic, including the effects of global supply chain disruptions, strong economic recovery and associated widespread demands for goods and government stimulus packages, among other factors. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates, and other similar effects. Our ability to conduct exploration of the Estelle Gold Project is dependent on the acquisition of goods and services at a reasonable cost, such as drilling equipment and skilled labor, assay laboratory testing in a timeframe that allows us to execute on follow-up exploration phases expeditiously, and aircraft (fixed wing and helicopter) charter service availability to mobilize labor, position equipment and supply exploration campaigns. If we are unable to take effective measures in a timely manner to mitigate the impact of the inflation, the scope of our exploration of the Estelle Gold Project may decrease and our business, financial condition, and results of operations could be adversely affected.
We are currently operating in a period of economic uncertainty and capital markets disruptions, which have been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine.
United States and other global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. In addition, Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds.
Any of the above-mentioned factors could affect our business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this prospectus. If we fail to maintain effective internal controls over financial reporting, the price of securities may be adversely affected.
If we fail to maintain effective internal controls over financial reporting, the price of securities may be adversely affected.
We may fail to maintain the adequacy of our internal controls over financial reporting as such standards are modified, supplemented or amended from time to time, and we cannot ensure that we will conclude on an ongoing basis that it has effective internal controls over financial reporting. Our failure to satisfy the requirements of applicable legislation on an ongoing, timely basis could result in the loss of investor confidence in the reliability of its financial statements, which in turn could harm our business and negatively impact the trading price and market value of its shares or other securities. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause it to fail to meet its reporting obligations.
We may fail to maintain the adequacy of its disclosure controls. Disclosure controls and procedures are designed to ensure that the information required to be disclosed by us in reports filed with securities regulatory agencies is recorded, processed, summarized and reported on a timely basis and is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.
No evaluation can provide complete assurance that our financial and disclosure controls will detect or uncover all failures of persons within the company to disclose material information otherwise required to be reported. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. The effectiveness of our controls and procedures could also be limited by simple errors or faulty judgements.
| 23 |
Failure to comply with certain financial and other covenants under our Nebari convertible loan facility could have a material adverse effect on our business and results of operations.
The repayment date under the Nebari convertible loan facility is November 29, 2025 following approval of a March 2024 Variation Agreement with Nebari at the shareholder meeting on May 31, 2024 and our formal election to extend the repayment date to November 29, 2025 on June 6, 2024. In addition, if we receive shareholder approval at the Annual General Meeting to be held in November 2024 for our September 2024 Variation Agreement with Nebari, the maturity date may, at the election of the Company, be extended to November 29, 2026 by giving Nebari notice of its option to extend by November 29, 2024. However, the loan agreement for such facility has certain financial and other covenants that we must comply with, including a minimum liquidity covenant which requires us to maintain a minimum month-end consolidated cash balance of at least A$1,000,000. In addition, we are required to maintain sufficient capacity to allow full conversion of the Nebari loan facility although Nebari has waived compliance with this provision until December 19, 2024, Failure to comply with these covenants would constitute an event of default under the loan agreement and Nebari could accelerate all amounts due under loan agreement and demand immediate repayment. Any such acceleration would require us to divert resources from our mining operations and could have a material adverse effect on our business and results of operations.
Our results of operations could be affected by currency fluctuations.
We maintain accounts in currencies including the United States dollars and Australian dollars. While this offering is being conducted in United States dollars, we conduct our business using both the aforementioned currencies depending on the location of the operations in question and the payment obligations involved. Accordingly, the results of our operations are subject to currency exchange risks. To date, we have not engaged in any formal hedging program to mitigate these risks. The fluctuations in currency exchange rates may significantly impact our financial position and results of operations in the future.
We are dependent on key personnel and the absence of any of these individuals could adversely affect our business. We may experience difficulty attracting and retaining qualified personnel.
Our success is or will be dependent on a relatively small number of key management personnel, employees and consultants. Such skills and knowledge include the areas of permitting, geology, drilling, metallurgy, logistical planning, engineering and implementation of exploration programs, as well as finance and accounting. The loss of the services of one or more of such key management personnel could have a material adverse effect on our business. Our ability to manage our exploration and future development activities, and hence our success, will depend in large part on the efforts of these individuals. We face intense competition for qualified personnel, and there can be no assurance that we will be able to attract and retain such personnel.
Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business.
From time to time, we may be party to various claims and litigation proceedings. All industries, including the mining industry, are subject to legal claims, with and without merit. Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding to which we may become subject could have a material effect on our financial position, results of operations or our mining, project development operations and may divert our management’s attention.
Certain of our directors and officers also serve as directors and officers of other companies involved in natural resource exploration and development, which may cause them to have conflicts of interest.
Certain of our directors and officers also serve as directors and/or officers of other companies involved in natural resource exploration and development and, consequently, there exists the possibility for such directors and officers to be in a position of conflict.
We expect that any decision made by any of such directors and officers involving our business will be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of the company and our stockholders, but there can be no assurance in this regard.
There will be significant hazards associated with our mining activities, some of which may not be fully covered by insurance. To the extent we must pay the costs associated with such risks, our business may be negatively affected.
In the course of exploration, development and production of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions including rock bursts, cave-ins, fires, flooding and earthquakes may occur. Such occurrences could result in damage to mineral properties or facilities thereon, personal injury or death, environmental damage to our properties or the properties of others, delays in mining, monetary losses and possible legal liability.
Although we maintain insurance to protect against certain risks in such amounts as we consider being reasonable, our insurance will not cover all of the potential risks associated with our operations. We may also be unable to maintain insurance to cover certain risks at economically feasible premiums. In addition, insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of our securities.
Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to companies in the mining industry on acceptable terms. As a result, we may become subject to liability for pollution or other hazards that may not be insured against. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon our financial performance and results of operations.
| 24 |
Capital and operating cost estimates made in respect of our current and future development projects and mines may not prove to be accurate.
Capital and operating cost estimates made in respect of our current and future development projects and mines may not prove to be accurate. Capital and operating costs are estimated based on the interpretation of geological data, feasibility studies, anticipated climatic conditions and other factors. Any of the following events, among the other events and uncertainties described herein, could affect the ultimate accuracy of such estimates: (i) unanticipated changes in grade and tonnage of ore to be mined and processed; (ii) incorrect data on which engineering assumptions are made; (iii) delay in construction schedules and unanticipated transportation costs; (iv) the accuracy of major equipment and construction cost estimates; (v) labor negotiations; (vi) changes in government regulation (including regulations regarding prices, cost of consumables, royalties, duties, taxes, permitting and restrictions on production quotas on exportation of minerals); and (vii) title claims.
Joint ventures and other partnerships may expose us to risks.
We may enter into joint ventures or partnership arrangements with other parties in relation to the exploration, development and production of the property in which we have an interest. Joint ventures can often require unanimous approval of the parties to the joint venture or their representatives for certain fundamental decisions such as an increase or reduction of registered capital, merger, division, dissolution, amendments of constating documents, and the pledge of joint venture assets, which means that each joint venture party may have a veto right with respect to such decisions which could lead to a deadlock in the operations of the joint venture. Further, we may be unable to exert control over strategic decisions made in respect of such properties. Any failure of such other companies to meet their obligations to us or to third parties, or any disputes with respect to the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures or the property and therefore could have a material adverse effect on our results of operations, financial performance, cash flows and the price of the ADSs.
Failure to comply with federal, state and/or local laws and regulations could adversely affect our business.
Our mining operations are subject to various laws and regulations governing exploration, development, production, taxes, labor standards and occupational health, mine safety, protection of endangered and protected species, toxic substances and explosives use, reclamation, exports, price controls, waste disposal and use, water use, forestry, land claims of local people, and other matters. This includes periodic review and inspection of our property that may be conducted by applicable regulatory authorities.
Although the exploration activities on our property have been and, we expect, will continue to be carried out in accordance with all applicable laws and regulations, there is no guarantee that new laws and regulations will not be enacted or that existing laws and regulations will not be applied in a way which could limit or curtail exploration or in the future, production. New laws and regulations or amendments to current laws and regulations governing the operations and activities of mining or more stringent implementation of existing laws and regulations could have a material adverse effect on us and cause increases in capital expenditures costs, or reduction in levels of exploration, development and/or production.
Failure to comply with applicable laws and regulations, even if inadvertent, may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. We may also be required to reimburse any parties affected by loss or damage caused by our mining activities and may have civil or criminal fines and/or penalties imposed against us for infringement of applicable laws or regulations.
| 25 |
We may pursue opportunities to acquire complementary businesses, which could dilute our shareholders’ ownership interests, incur expenditure and have uncertain returns.
We may seek to expand through future acquisitions of either companies or properties, however, there can be no assurance that we will locate attractive acquisition candidates, or that we will be able to acquire such candidates on economically acceptable terms, if at all, or that we will not be restricted from completing acquisitions pursuant to contractual arrangements. Future acquisitions may require us to expend significant amounts of cash, resulting in our inability to use these funds for other business or may involve significant issuances of equity. Future acquisitions may also require substantial management time commitments, and the negotiation of potential acquisitions and the integration of acquired operations could disrupt our business by diverting management and employees’ attention away from day-to-day operations. The difficulties of integration may be increased by the necessity of coordinating geographically diverse organizations, integrating personnel with disparate backgrounds and combining different corporate cultures.
Any future acquisition involves potential risks, including, among other things: (i) mistaken assumptions and incorrect expectations about mineral properties, mineral resources and costs; (ii) an inability to successfully integrate any operation our company acquires; (iii) an inability to recruit, hire, train or retain qualified personnel to manage and operate the operations acquired; (iv) the assumption of unknown liabilities; (v) limitations on rights to indemnity from the seller; (vi) mistaken assumptions about the overall cost of equity or debt; (vii) unforeseen difficulties operating acquired projects, which may be in geographic areas new to us; and (viii) the loss of key employees and/or key relationships at the acquired project.
At times, future acquisition candidates may have liabilities or adverse operating issues that we may fail to discover through due diligence prior to the acquisition. If we consummate any future acquisitions with unanticipated liabilities or that fails to meet expectations, our business, results of operations, cash flows or financial condition may be materially adversely affected. The potential impairment or complete write-off of goodwill and other intangible assets related to any such acquisition may reduce our overall earnings and could negatively affect our balance sheet.
We currently report our financial results under IFRS, which differs in certain significant respect from U.S. generally accepted accounting principles.
We report our financial statements under IFRS. There have been and there may in the future be certain significant differences between IFRS and U.S. GAAP, including differences related to revenue recognition, intangible assets, share-based compensation expense, income tax and earnings per share. As a result, our financial information and reported earnings for historical or future periods could be significantly different if they were prepared in accordance with U.S. GAAP. In addition, we do not intend to provide a reconciliation between IFRS and U.S. GAAP unless it is required under applicable law. As a result, you may not be able to meaningfully compare our financial statements under IFRS with those companies that prepare financial statements under U.S. GAAP.
The obligations associated with being a U.S. public company require significant resources and management attention, and we incur increased costs as a result of becoming a U.S. public company.
As a public company in both Australia and the U.S., we face increased legal, accounting, administrative and other costs and expenses that we have not incurred previously, and we will incur additional costs related to operating as a U.S. public company. As a U.S. public company, we will be required to, among other things:
| ● | prepare and file annual and other reports in compliance with the federal securities laws; | |
| ● | expand the roles and duties of our board of directors and committees thereof and management; | |
| ● | institute more comprehensive financial reporting and disclosure compliance procedures; | |
| ● | involve and retain, to a greater degree, outside counsel and accountants to assist us with the activities listed above; | |
| ● | build and maintain an investor relations function; and | |
| ● | comply with the initial listing and maintenance requirements of the Nasdaq Capital Market. |
We also expect that being able to offer securities to the U.S. public will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These increased costs may require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.
| 26 |
There can be no guarantee that our interests in our property are free from any title defects.
We have taken all reasonable steps to ensure that we have proper title to our property. However, there can be no guarantee that our interests in our property are free from any title defects, as title to mineral rights involves certain intrinsic risks due to the potential problems arising from the unclear conveyance history characteristic of many mining projects. There is also the risk that material contracts between us and relevant government authorities will be substantially modified to the detriment of us or be revoked. There can be no assurance that our rights and title interests will not be challenged or impugned by third parties.
Our mining operations are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals and other critical supplies.
Our exploration programs are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals and other critical supplies. If we are unable to obtain the requisite critical supplies in time and at commercially acceptable prices or if there are significant disruptions in the supply of electricity, water or other inputs to our mining sites, our business performance and results of operations may experience material adverse effects.
Land reclamation requirements may be burdensome.
Land reclamation requirements are generally imposed on companies with mining operations or mineral exploration companies in order to minimize long term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents or reasonably re-establish pre-disturbance landforms and vegetation. In order to carry out reclamation obligations imposed on us in connection with exploration, potential development and production activities, we must allocate financial resources that might otherwise be spent on exploration and development programs. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.
We are an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make the ADSs and/or warrants less attractive to investors.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, not being required to comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, not being required to comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could remain an emerging growth company until the earlier of: (i) the last day of the fiscal year in which we have total annual gross revenues of US$1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement; (iii) the date on which we have issued more than US$1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer. We cannot predict if investors will find the ADSs less attractive if we choose to rely on these exemptions. If some investors find the ADSs less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for the ADSs and our share price may be more volatile. Further, as a result of these scaled regulatory requirements, our disclosure may be more limited than that of other public companies and you may not have the same protections afforded to shareholders of such companies.
Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. We have opted for taking advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.
Foreign private issuers are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are not emerging growth companies and will continue to be permitted to follow our home country practice on such matters.
Risks Related to this Offering and Ownership of the ADSs
The market price of the ADSs may fluctuate, and you could lose all or part of your investment.
The market price for the ADSs is likely to be volatile, in part because our securities have only been traded on a U.S. national securities exchange for a short period of time. In addition, the market price of the ADSs may fluctuate significantly in response to several factors, most of which we cannot control, including:
| ● | actual or anticipated variations in our operating results; | |
| ● | increases in market interest rates that lead investors of the ADSs to demand a higher investment return; | |
| ● | changes in earnings estimates; | |
| ● | changes in market valuations of similar companies; | |