10-Q 1 form10q.htm FORM 10-Q Rise Gold Corp.: Form 10-Q - Filed by newsfilecorp.com
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 30, 2024

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

Commission File Number: 000-53848

RISE GOLD CORP.

(Exact name of registrant as specified in its charter)

  Nevada 30-0692325
(State or other jurisdiction of incorporation) (IRS Employer Identification Number)

650-669 Howe Street
Vancouver, British Columbia, Canada V6C 0B4
(Address of principal executive offices) (Zip Code)

(604) 260-4577

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class   Trading Symbol(s)   Name of exchange on which registered
None   None   None

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

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

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

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

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

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

As of June 14, 2024, the registrant had 55,785,106 shares of common stock issued and outstanding.


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

The condensed consolidated interim financial statements of Rise Gold Corp. ("we", "us", "our", the "Company", or the "registrant"), a Nevada corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, the condensed consolidated interim financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company in the Company's Form 10-K for the fiscal year ended July 31, 2023.


RISE GOLD CORP.

(AN EXPLORATION STAGE COMPANY)

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PERIOD ENDED APRIL 30, 2024

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS: Page
   
Consolidated Interim Balance Sheets 1
Consolidated Interim Statements of Loss and Comprehensive Loss 2
Consolidated Interim Statements of Cash Flows 3
Consolidated Interim Statements of Stockholders' Equity 4
Notes to Unaudited Consolidated Interim Financial Statements 5
 

RISE GOLD CORP.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

(Expressed in United States Dollars)

(Unaudited)

             
AS AT   April 30, 2024     July 31, 2023  
ASSETS            
Current            
Cash and cash equivalents (Note 3) $ 630,290   $ 758,272  
Receivables   17,827     82,529  
Prepaid expenses (Note 4)   78,091     140,042  
Assets held for sale (Note 6)   511,530     -  
Total current assets   1,237,738     980,843  
             
Non-current            
Mineral property interests (Note 5)   4,149,053     4,149,053  
Equipment (Note 6)   -     528,465  
Deferred financing asset (Note 11)   112,092     -  
Total assets $ 5,498,883   $ 5,658,361  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current            
Accounts payable and accrued liabilities $ 822,152   $ 457,412  
Loan payable (Note 9)   1,495,459     -  
Payable to related parties (Note 8)   110,079     51,159  
Total current liabilities   2,427,690     508,571  
             
Non-current            
Loan payable (Note 9)   -     1,437,914  
Credit facility (Note 11)   108,578     -  
Derivative liability (Note 10)   2,558     140,015  
Total liabilities   2,538,826     2,086,500  
             
Stockholders' equity            
Capital stock, $0.001 par value, 400,000,000 shares authorized;            
55,785,106 shares issued and outstanding (Note 12)   55,785     40,363  
Additional paid-in capital (Note 12)   32,546,064     30,304,568  
Cumulative translation adjustment   (104,084 )   (104,084 )
Deficit   (29,537,708 )   (26,668,986 )
Total stockholders' equity   2,960,057     3,571,861  
             
Total liabilities and stockholders' equity $ 5,498,883   $ 5,658,361  
             
Nature and continuance of operations (Note 1)            
Contingency (Note 7)            
Subsequent event (Note 11 and 15)            

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

1


RISE GOLD CORP.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in United States Dollars)

(Unaudited)

    Three months     Three months     Nine months     Nine months  
    ended April     ended April     ended April     ended April  
    30, 2024     30, 2023     30, 2024     30, 2023  
                         
EXPENSES                        
Accretion expense (Note 9 and 11) $ 19,897   $ 41,104   $ 69,419   $ 99,030  
Consulting   69,472     186,094     235,655     464,350  
Directors' fees   30,000     20,000     88,022     60,000  
Filing and regulatory   8,959     13,470     30,545     46,802  
Foreign exchange (gain) loss   20,081     (26,781 )   27,980     38,699  
General and administrative   76,937     147,829     339,088     266,626  
Geological, mineral, and prospect costs (Note 5)   337,158     438,319     732,924     675,926  
Interest expense (Note 9 and 11)   62,569     56,850     192,230     267,028  
Professional fees   276,858     181,335     872,136     405,464  
Promotion and shareholder communication   8,079     68,947     51,558     154,266  
Salaries   (43 )   33,750     89,526     101,250  
Share-based compensation (Note 12)   -     466,527     230,985     466,527  
Loss $ (909,967 ) $ (1,627,444 ) $ (2,960,068 ) $ (3,045,968 )
Gain (loss) on fair value adjustment on derivative liability (Note 10)   8,742     274,107     137,457     (454,418 )
Write-off on receivable   40     -     (64,524 )   -  
Other income   8,374     (5 )   18,413     1,029  
Net loss and comprehensive loss for the period $ (892,811 ) $ (1,353,342 ) $ (2,868,722 ) $ (3,499,357 )
Basic and diluted loss per common share $ (0.02 ) $ (0.04 ) $ (0.07 ) $ (0.09 )
Weighted average number of common shares outstanding (basic and diluted)   47,128,914     39,742,958     43,108,301     34,483,714  

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

2


RISE GOLD CORP.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Expressed in United States Dollars)

(Unaudited)

FOR THE NINE MONTHS ENDED APRIL 30,   2024     2023  
             
CASH FLOWS FROM OPERATING ACTIVITIES            
Loss for the period $ (2,868,722 ) $ (3,499,357 )
Items not involving cash            
Depreciation   16,935     17,115  
Interest expense   192,230     267,028  
Share-based compensation   230,985     466,527  
Accretion expense   69,419     99,030  
Loss (gain) on fair value adjustment on derivative liability   (137,457 )   454,418  
Non-cash working capital item changes:            
Receivables   64,701     9,219  
Prepaid expenses   61,950     352,258  
Accounts payable and accrued liabilities   484,459     (94,713 )
Related party payables   58,920     (7,824 )
Net cash used in operating activities   (1,826,580 )   (1,936,299 )
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Private placement, net of issuance cost   1,898,598     2,985,423  
Loan repayment   (200,000 )   (250,000 )
Proceeds from option exercise   -     27,408  
Net cash provided by financing activities   1,698,598     2,762,831  
             
Change in cash and cash equivalents for the period   (127,982 )   826,532  
Cash and cash equivalents, beginning of period   758,272     471,918  
Cash and cash equivalents, end of period $ 630,290   $ 1,298,450  

Supplemental disclosure with respect to cash flows (Note 13)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

3


RISE GOLD CORP.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in United States Dollars)

(Unaudited)

                                           
    Capital Stock     Additional Paid-
in Capital
    Shared
subscribed in
advance
    Cumulative
Translation
Adjustment
             
                       
  Number     Amount     Deficit     Total  
                                           
Balance as at July 31, 2022   32,787,798   $ 32,788   $ 26,678,566   $ -   $ (104,084 ) $ (23,008,604 ) $ 3,598,666  
Loss for the period   -     -     -     -     -     (684,538 )   (684,538 )
Balance as at October 31, 2022   32,787,798   $ 32,788   $ 26,678,566   $ -   $ (104,084 ) $ (23,693,142 ) $ 2,914,128  
Shares issued for cash, net of issuance cost   4,449,066     4,449     1,767,521     50,000     -           1,821,970  
Loss for the period   -     -     -     -     -     (1,461,478 )   (1,461,478 )
Balance as at January 31, 2023   37,236,864   $ 37,237   $ 28,446,087   $ 50,000   $ (104,084 ) $ (25,154,620 ) $ 3,274,620  
Shares issued for cash, net of issuance cost   3,050,936     3,051     1,210,402     (50,000 )   -     -     1,163,453  
Options exercise   75,000     75     27,334     -     -     -     27,409  
Warrants issued for loan modification   -     -     132,869     -     -     -     132,869  
Share-based compensation   -     -     466,527     -     -     -     466,527  
Loss for the period   -     -     -           -     (1,353,342 )   (1,353,342 )
Balance as at April 30, 2023   40,362,800   $ 40,363   $ 30,283,219   $ -   $ (104,084 ) $ (26,507,962 ) $ 3,711,536  
                                           
Balance as at July 31, 2023   40,362,800   $ 40,363   $ 30,304,568   $ -   $ (104,084 ) $ (26,668,986 ) $ 3,571,861  
Loss for the period   -     -     -     -     -     (1,378,425 )   (1,378,425 )
Shares subscribed in advance   -     -     -     440,868     -     -     440,868  
Share-based compensation   -     -     90,361     -     -     -     90,361  
Balance as at October 31, 2023   40,362,800   $ 40,363   $ 30,394,929   $ 440,868   $ (104,084 ) $ (28,047,411 ) $ 2,724,665  
Loss for the period   -     -     -     -     -     (597,486 )   (597,486 )
Shares issued for cash, net of issuance cost   5,377,541     5,378     945,476     (440,868 )   -     -     509,986  
Share-based compensation   -     -     140,624     -     -     -     140,624  
Balance as at January 31, 2024   45,740,341   $ 45,741   $ 31,481,029   $ -   $ (104,084 ) $ (28,644,897 ) $ 2,777,789  
Loss for the period   -     -     -     -     -     (892,811 )   (892,811 )
Shares issued for cash, net of issuance cost   10,044,765     10,044     937,698     -     -     -     947,742  
Warrants issued for credit facility   -     -     127,337     -     -     -     127,337  
Balance as at April 30, 2024   55,785,106   $ 55,785   $ 32,546,064   $ -   $ (104,084 ) $ (29,537,708 ) $ 2,960,057  

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

4


RISE GOLD CORP.
(An Exploration Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024
(Expressed in United States Dollars)
(Unaudited)
 

1. NATURE AND CONTINUANCE OF OPERATIONS

Rise Gold Corp. (the "Company") was originally incorporated as Atlantic Resources Inc. in the State of Nevada on February 9, 2007 and is in the exploration stage. On April 11, 2012, the Company merged its wholly-owned subsidiary, Patriot Minefinders Inc., a Nevada corporation, in and to the Company to effect a name change to Patriot Minefinders Inc. On January 14, 2015, the Company completed a name change to Rise Resources Inc. in the same manner. On March 29, 2017, the Company changed its name to Rise Gold Corp. These mergers were carried out solely for the purpose of effecting these changes of names.

On September 18, 2020, the Company increased its authorized capital from 40,000,000 shares to 400,000,000 shares.

On January 29, 2016, the Company completed an initial public offering in Canada and began trading on the Canadian Securities Exchange ("CSE") on February 1, 2016.

The Company is in the early stages of exploration and as is common with any exploration company, it raises financing for its acquisition activities. The accompanying consolidated financial statements have been prepared on the going concern basis, which presumes that the Company will continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. The Company has incurred a loss of $2,868,722 for the nine-month period ended April 30, 2024 and has accumulated a deficit of $29,537,708. The ability of the Company to continue as a going concern is dependent on the Company's ability to maintain continued support from its shareholders and creditors and to raise additional capital and implement its business plan. There is no assurance that the Company will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. These events and conditions cast substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At April 30, 2024, the Company had a working capital deficit of $1,189,952 (July 31, 2023 - working capital of $472,272).

 

2. BASIS OF PREPARATION

Generally Accepted Accounting Principles

These unaudited condensed consolidated interim financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America ("US GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC") for financial information with the instructions to Form 10-Q and Regulation S-K. Results are not necessarily indicative of results which may be achieved in the future. The unaudited condensed consolidated interim financial statements should be read in conjunction with the Company's Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with Management's Discussion and Analysis, for the year ended July 31, 2023. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations. These financial statements follow the same accounting policies in the annual financial statements. The operating results for the nine months ended April 30, 2024 are not necessarily indicative of the results that may be expected for the year ended July 31, 2024.

5


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

2. BASIS OF PREPARATION (continued)

Basis of Consolidation

These condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiary, Rise Grass Valley Inc. All significant intercompany accounts and transactions have been eliminated on consolidation.

Subsidiaries

Subsidiaries are all entities over which the Company has exposure to variable returns from its involvement and has the ability to use power over the investee to affect its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases.

The accounts of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Intercompany transactions, balances and unrealized gains or losses on transactions are eliminated upon consolidation.

Use of Estimates

The preparation of these financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of estimates include the carrying value and recoverability of mineral properties and the recognition of deferred tax assets based on the change in unrecognized deductible temporary tax differences. Actual results could differ from those estimates and would impact future results of operations and cash flows.

 

3. CASH AND CASH EQUIVALENTS

As at April 30, 2024, the balance of cash and cash equivalents is $630,290 (July 31, 2023: $758,272) of which $Nil (July 31, 2023: $682,807) is cash equivalents related to Guaranteed Investment Certificates (GICs) held during the period.

 

4. PREPAID EXPENSES

    April 30, 2024     July 31, 2023  
Current            
Insurance $ 11,599   $ 79,758  
Deposits   48,447     50,539  
Investor relations   18,045     9,745  
Total $ 78,091   $ 140,042  

 

6


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

5. MINERAL PROPERTY INTERESTS

The Company's mineral properties balance consists of:

    Idaho-Maryland, California  
       
       
July 31, 2023 and April 30, 2024 $ 4,149,053  

Title to mineral properties

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain mineral titles. Additionally, the potential for problems arising from the frequently ambiguous conveying history characteristic of many mineral properties also exist in addition to requisite permits to authorize a mine. As at April 30, 2024, the Company holds title to the Idaho-Maryland Gold Mine Property.

As of April 30, 2024, based on management's review of the carrying value of mineral rights, management determined that there is no evidence that the cost of these acquired mineral rights will not be fully recovered and accordingly, the Company determined that no adjustment to the carrying value of mineral rights was required. As of the date of these consolidated financial statements, the Company has not established any proven or probable reserves on its mineral properties and has incurred only acquisition and exploration costs.

Idaho-Maryland Gold Mine Property, California

On August 30, 2016, the Company entered into an option agreement with three parties to purchase a 100% interest in and to the Idaho-Maryland Gold Mine property located near Grass Valley, California, United States; pursuant to the option agreement, in order to exercise the option, the Company was required to pay $2,000,000 by November 30, 2016. Upon execution of the option agreement, the Company paid the vendors a non-refundable cash deposit in the amount of $25,000, which was credited against the purchase price of $2,000,000 upon exercise of the option. On November 30, 2016, the Company negotiated an extension of the closing date of the option agreement to December 26, 2016, in return for a cash payment of $25,000, which was also credited against the purchase price of $2,000,000 upon exercise of the option. On December 28, 2016, the Company negotiated a further no-cost extension of the closing date of the option agreement to April 30, 2017. On January 25, 2017, the Company exercised the option by paying the net amount owing of $1,950,000 and acquired a 100% interest in the Idaho-Maryland Gold Mine property.

In connection with the option agreement, the Company agreed to pay a cash commission of $140,000 equal to 7 per cent of the purchase price of $2,000,000; the commission was settled on January 25, 2017 through the issuance of 92,000 units valued at C$2.00 per unit. Each unit consists of one share of common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of C$4.00 for a period of two years from the date of issuance. On January 24, 2019, these warrants expired unexercised. The Company also incurred additional transaction costs of $109,053, which have been included in the carrying value of the Idaho-Maryland Gold Mine.

7


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

5. MINERAL PROPERTY INTERESTS (continued)

Idaho-Maryland Gold Mine Property, California (continued)

On January 6, 2017, the Company entered into an option agreement with Sierra Pacific Industries Inc. ("Sierra") to purchase a 100% interest in and to certain surface rights near Grass Valley, California, United States, contiguous to the Idaho-Maryland Gold Mine property acquired by the Company on January 25, 2017. Pursuant to the option agreement, in order to exercise the option, the Company was required to pay $1,900,000 by March 31, 2017. Upon execution of the option agreement, the Company paid the vendors a non-refundable cash deposit in the amount of $100,000, which was credited against the purchase price of $1,900,000 upon exercise of the option. On April 3, 2017, the Company negotiated an extension of the closing date of the option agreement to June 30, 2017, in return for a cash payment of $200,000, at which time a payment of $1,600,000 was due in order to exercise the option. On June 7, 2017, the Company negotiated an extension of the closing date of the option agreement to September 30, 2017, in return for a cash payment of $300,000, at which time a payment of $1,300,000 was due in order to exercise the option.

On May 14, 2018, the Company completed the purchase of the surface rights by making the final payment of $1,300,000.

As at April 30, 2024, the Company has incurred cumulative exploration expenditures of $9,463,906 on the Idaho-Maryland Gold Mine property as follows:




 
 

Nine months ended

April 30, 2024

   

Year ended

July 31, 2023

 
             
Idaho-Maryland Gold Mine expenditures:            
Opening balance $ 8,730,982   $ 7,958,346  
             
Consulting   651,265     629,183  
Depreciation   16,935     22,971  
Engineering   4,634     20,370  
Exploration   (1,232 )   (28,183 )
Logistics   5,283     21,815  
Rent   46,405     97,332  
Supplies   8,822     9,148  
Sampling   812     -  
Total expenditures for the period   732,924     772,636  
             
Closing balance $ 9,463,906   $ 8,730,982  

 

8


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

6. EQUIPMENT

Cost   Drilling equipment  
At July 31, 2022 $ 644,847  
At July 31, 2023 $ 644,847  
At April 30, 2024 $ 644,847  
       
Accumulated depreciation      
At July 31, 2022 $ 93,411  
Depreciation   22,971  
At July 31, 2023 $ 116,382  
Depreciation   16,935  
At April 30, 2024 $ 133,317  
       
Total carrying value, July 31, 2023 $ 528,465  
       
Total carrying value, April 30, 2024 $ 511,530  
Assets held for sale   (511,530 )
Total carrying value, April 30, 2024 $ -  

Assets Held for Sale

During the quarter ended April 30, 2024, the Company approved a plan to sell its drilling equipment. The Company intends to sell the equipment within the next twelve months. No impairment loss was recognized on reclassification to asset held for sale as the Company expects the fair value (estimated based on recent market prices of similar assets) less cost to sell is higher than the carrying amount. As a result, the net carrying amount of $511,530 has been reclassified. 

 

7.           CONTINGENCY

During the year ended July 31, 2014, the Company entered into a binding letter of intent ("LOI") with Wundr Software Inc. ("Wundr"). Under the terms of the LOI, the Company would acquire 100% of the issued and outstanding common shares of Wundr. The Company did not complete the transactions contemplated in the LOI, which the Company announced had expired on January 10, 2014.

On September 17, 2014, the Company learned that it was the subject, along with a number of additional defendants, of a notice of civil claim (the "Claim") filed in the Supreme Court of British Columbia by Wundr, under which Wundr is seeking general damages from the Company as well as damages for conspiracy to cause economic harm. None of the allegations contained in the Claim have been proven in court. Management has assessed that the probability of the Claim resulting in an unfavourable outcome and financial loss to the Company is unlikely.

 

9


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

8. RELATED PARTY TRANSACTIONS

Key management personnel consist of the Chief Executive Officer, Chief Financial Officer, and the directors of the Company. The remuneration of the key management personnel is as follows:

a) Salaries of $89,526 (2023 - $101,250) to the previous CEO of the Company. Consulting fees of $80,556 and $88,716 (2023 - $Nil and $Nil) to the CEO and an advisor of the Company

b) Director fees of $88,022 (2023 - $60,000) to directors of the Company.

c) During the period ended April 30, 2024, the Company paid $99,572 (2023 - $99,426) in professional and consulting fees to a company controlled by a director of the Company.

d) Share-based compensation of $166,619 (2023 - $421,883) for options granted during the period ended.

e) As at April 30, 2024 and July 31, 2023, $110,079 and $51,159 were owed to related parties, respectively.

f) As at April 30, 2024, certain directors of the Company purchased an aggregate of 7,969,067 units of the private placement for gross proceeds of $972,300 (2023 - purchased 2,394,299 units for $957,720).

g) A director of the Company is a manager of a private company which manages Eridanus Capital, LLC, a company that provided a secured loan to the Company's wholly owned subsidiary, Rise Grass Valley in 2019.

 

9. LOAN PAYABLE

On September 3, 2019, the Company completed a debt financing with Eridanus Capital LLC (the "Lender" or "Eridanus") for $1,000,000 (the "Loan"). The Loan had an original term of 4 years and an annual interest rate of 10% for the first two years increasing to 20% in year 3 and to 25% in year 4. Interest will accrue and be paid along with the principal upon the maturity date. The Lender received 1,150,000 bonus share purchase warrants as additional consideration for advancing the Loan. The fair value of these warrants was calculated to be $444,942 which was netted against the loan payable balance along with $15,000 paid to the lender for a total of $459,942 in issuance costs. Each warrant entitles the holder to acquire one share of common stock at an exercise price of $0.80 (C$1.00) for a period of three years from the date of issuance. The Loan may be repaid prior to the maturity date, in whole or in part, provided that all accrued interest is paid. In addition, if total interest payments are less than $200,000, the difference will be paid to the Lender as prepayment compensation. The Loan is secured against the assets of the Company and its subsidiary.

    Loan Payable  
Balance, July 31, 2022 $ 1,364,530  
Interest expense   328,097  
Accretion expense   149,505  
Issuance costs   (154,218 )
Repayment   (250,000 )
Balance, July 31, 2023 $ 1,437,914  
Interest expense   189,035  
Accretion expense   68,510  
Repayment   (200,000 )
Balance, April 30, 2024 $ 1,495,459  

 

10


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 
9. LOAN PAYABLE (continued)

In February 2023, the Company renegotiated its debt agreement with the Lender whereby the Company agreed to pay $250,000 applied against unpaid and accrued interest and issue 575,000 share purchase warrants to the Lender. The maturity date of the loan has been extended by one year to September 4, 2024 and the interest rate has been reduced to 15% compounding monthly for a period of 12 months after which it reverts to 25% per annum, compounding monthly. The renegotiation of the debt was accounted for as a non - substantial debt modification. Accordingly, no gain or loss was recorded and a new effective interest rate of 32.67% was established based on the carrying value of the debt and the revised cash flow. Each warrant entitles the holder to acquire one share at an exercise price of $0.60 for a period of two years from the date of issuance. The fair value of these warrants was calculated to be $154,218 which was netted against the loan payable balance.

The following weighted average assumptions were used for the Black-Scholes pricing model valuation of warrants:

   
February 17, 2023
   
Risk-free interest rate 4.15%
Expected life of warrants 2 years
Expected annualized volatility 99.02%
Share price at grant date $0.53
Exercise price $0.60
Fair value $0.27
Dividend Nil
Forfeiture rate 0%

 

10. DERIVATIVE LIABILITY

The exercise price of the Company's share purchase warrants is fixed in Canadian dollars and the functional currency of the Company is the USD. These warrants are considered to be a derivative as a variable amount of cash in the Company's functional currency will be received on exercise of the warrants. Accordingly, the share purchase warrants issued as part of past financings, are classified and accounted for as a derivative liability.

The following table shows a continuity of the Company's derivative liability:

          Number of warrants  
          accounted for as  
    Warrant derivative     derivative liability  
Balance, July 31, 2022 $ 373,910     4,991,645  
Fair value adjustment   (233,895 )   -  
Balance, July 31, 2023 $ 140,015     4,991,645  
Fair value adjustment   (137,457 )   -  
Balance, April 30, 2024 $ 2,558     4,991,645  

For the nine-month period ended April 30, 2024, the Company recorded a total gain on fair value of derivative liability of $137,457 (April 30, 2023 - loss of $454,418).

11


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

10. DERIVATIVE LIABILITY (continued)

The following weighted average assumptions were used for the Black-Scholes pricing model valuation of warrants as at April 30, 2024 and July 31, 2023:

   
April 30, 2024
 
July 31, 2023
     
Risk-free interest rate 4.34% 4.67%
Expected life of warrants 0.18 to 0.30 years 0.93 to 1.05 years
Expected annualized volatility 121.62% to 132.25% 151.04% to 154.60%
Share price at measurement date $0.22 $0.19
Dividend Nil Nil
Forfeiture rate 0% 0%

 

11. CREDIT FACILITY

On February 6, 2024, the Company entered into a credit facility arrangement with an arm's length lender that also provides services to the Company. Pursuant to the arrangement, each month, the lender will defer and add to the loan principal an amount equal to half of the fees billed by the lender up to $1,000,000. Amounts loaned will bear interest at a rate of 12% per annum compounded annually and will be due four years from the date of the arrangement. The Company may repay any amounts owing under the credit facility at any time without penalty. In connection with the credit facility, the Company has issued 1,000,000 non-transferable share purchase warrants to the lender, with each warrant exercisable into one share of common stock of the Company at a price of $0.16 per share for a period of four years from the date of issuance. The fair value of these warrants was calculated to be $127,336 of which was $15,244 in accretion expense was offset against the credit facility balance. In addition, for each $100,000 loaned under the arrangement, the Company has agreed to issue to the lender 200,000 additional non-transferable warrants ("Additional Warrants"). Each Additional Warrant will be exercisable into one share of common stock of the Company at any time within a four-year period from the date of issuance at an exercise price equal to the market price of the shares of the Company on grant.

    Credit Facility  
Balance, July 31, 2023 $  
Principal amount   119,717  
Interest expense   3,195  
Issuance costs   (15,244 )
Accretion expense   910  
Balance, Apr 30, 2024 $ 108,578  
       
    Deferred Financing Asset  
Balance, July 31, 2023 $  
Issuance costs 1,000,000 warrants   127,336  
Allocation to credit facility   (15,244 )
Balance, Apr 30, 2024 $ 112,092  

 

12


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

11. CREDIT FACILITY (continued)

The following weighted average assumptions were used for the Black-Scholes pricing model valuation of warrants:

   
February 5, 2024
   
Risk-free interest rate 3.67%
Expected life of warrants 4 years
Expected annualized volatility 122.71%
Share price at grant date $0.16
Exercise price $0.16
Fair value $0.13
Dividend Nil
Forfeiture rate 0%

Subsequent to the period ended April 30, 2024, 200,000 additional warrants are to be issued.

 

12. CAPITAL STOCK AND ADDITIONAL PAID-IN-CAPITAL

Private Placements

On April 29, 2024, the Company completed a non-brokered private placement over two tranches for gross proceeds totaling $954,253 through the issuance of 10,044,765 units in total at a price of $0.095 per unit with each unit consisting of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share of common stock at an exercise price of $0.158 for a period of three years from the date of issuance. Certain directors of the Company purchased an aggregate of 5,436,847 units of the private placement for gross proceeds of $516,500. The Company paid fees of $8,475 and issued 21,000 finder's warrants where each finder's warrant entitles the holder to acquire one share at a price of $0.158 for a period of two years. The Company paid legal fees of $15,137 in connection with this financing.

On December 7, 2023, the Company completed a non-brokered private placement over two tranches for gross proceeds totaling $967,957 through the issuance of 5,377,541 units in total at a price of $0.18 per unit with each unit consisting of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share of common stock at an exercise price of $0.26 for a period of two years from the date of issuance. Certain directors of the Company purchased an aggregate of 2,532,220 units of the private placement for gross proceeds of $455,800. The Company paid fees of $6,480 and issued 36,000 finder's warrants where each finder's warrant entitles the holder to acquire one share at a price of $0.26 until November 7, 2025. The Company paid legal fees of $10,624 in connection with this financing.

On February 17, 2023, the Company completed a non-brokered private placement over two tranches for gross proceeds totaling $3,000,000 through the issuance of 7,500,000 units in total at a price of $0.40 per unit, where each unit consisted of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share of common stock at an exercise price of $0.60 until January 31, 2025 and February 17, 2025. Certain directors of the Company purchased an aggregate of 2,394,299 units of the private placement for gross proceeds of $957,720. The Company paid fees of $4,014 and issued 10,440 finder's warrants relating to the first tranche, where each finder's warrant entitles the holder to acquire one share of common stock at a price of $0.60 until January 31, 2025 and February 17, 2025. The Company paid legal fees of $10,563 in connection with this financing.

13


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

12. CAPITAL STOCK AND ADDITIONAL PAID-IN-CAPITAL (continued)

Stock Options

On December 12, 2023, the Company granted a total of 707,752 stock options with a fair value of $140,624 to directors of the Company. The stock options are exercisable at a price of $0.25 per share until December 12, 2028.

On September 22, 2023, the Company granted a total of 397,780 stock options with a fair value of $90,361 to officers and directors of the Company. The stock options are exercisable at a price of $0.26 per share until September 22, 2028.

On February 21, 2023, the Company granted a total of 1,045,000 stock options with a fair value of $466,527 to employees, officers, directors and consultants of the Company, exercisable at a weighted average price of $0.53 (C$0.72) per share until February 21, 2028.

The following incentive stock options were outstanding and exercisable as at April 30, 2024:

 

Number

of Options

 

Weighted

Average

Exercise

Price (C$)

 

 

  Expiry Date

           
  280,000   0.70   August 21, 2024
  1,338,500   1.20   September 22, 2025
  805,000   0.82   February 7, 2027
  1,045,000   0.72   February 21, 2028
  397,780   0.35   September 22, 2028
  707,752   0.34   December 12, 2028
  4,574,032   0.79    
           

As at April 30, 2024, the aggregate intrinsic value of the Company's stock options is $Nil (July 31, 2023 - $Nil).

Stock option transactions are summarized as follows:

    Number of Options    

Weighted Average

Exercise Price ($C)

 
Balance outstanding and exercisable, July 31, 2022   3,038,500     1.02  
    Options granted   1,045,000     0.72  
    Options cancelled   (60,000 )   1.08  
    Options expired   (310,000 )   1.20  
    Options exercised   (75,000 )   0.50  
Balance outstanding and exercisable, July 31, 2023   3,638,500     0.93  
    Options granted   1,105,532     0.34  
    Options expired   (170,000 )   1.00  
Balance outstanding and exercisable, April 30, 2024   4,574,032   $ 0.79  

 

14


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

12. CAPITAL STOCK AND ADDITIONAL PAID-IN-CAPITAL (continued)

Stock Options (continued)

The following weighted average assumptions were used for the Black-Scholes pricing model valuation of stock options issued during the period ended April 30, 2024 and July 31, 2023:

 

April 30, 2024

July 31, 2023

Risk-free interest rate

3.53% and 4.21%

3.58%

Expected life of stock options

5 years

5 years

Expected annualized volatility

131.16% and 131.87%

122.01%

Share price at grant date

$0.23 and $0.26

$0.53

Dividend

Nil

Nil

Forfeiture rate

0%

0%

Share-Based Payments

The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan the exercise price of each option equals the market price of the Company's stock, less any applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of 5 years with vesting determined by the board of directors.

Warrants

On June 14, 2022, the Company amended the term of 6,308,310 common share purchase warrants by extending their expiry dates by two years and adding an accelerated expiry provision. Between July 3, 2019 and September 21, 2020 the Company issued a total of 6,308,310 warrants to purchase shares of common stock of the Company in connection with various private placement financings and debt financings. 3,959,727 of these warrants were granted with an exercise price of CAD$1.00 per share ("CAD Priced Warrants") or optional currency settlement choice with amended expiry dates ranging from July 3, 2024 to September 9, 2024, and 2,348,583 of these warrants were granted with an exercise price of US$1.00 per share ("USD Priced Warrants") with amended expiry dates ranging from July 31, 2024 to September 21, 2024. All other terms and conditions of the warrants remain unchanged.

15


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

12. CAPITAL STOCK AND ADDITIONAL PAID-IN-CAPITAL (continued)

Warrants (continued)

The following warrants were outstanding at April 30, 2024:

 

Number

of Warrants

 

Exercise

Price

(C$)

 

 

Expiry Date

           
  518,406   1.00   July 3, 2024
  2,291,321   1.00   August 19, 2024
  1,150,000   1.00   September 9, 2024
  2,181,917   1.36   July 31, 2024
  166,666   1.36   September 21, 2024
  2,231,429   0.80   January 31, 2025
  1,529,008   0.80   February 17, 2025
  575,000   0.80   February 17, 2025
  1,659,214   0.36   November 7, 2025
  1,065,555   0.36   December 7, 2025
  1,000,000   0.22   February 5, 2028
  2,873,170   0.21   April 9, 2027
  9,000   0.21   April 9, 2026
  2,149,212   0.21   April 29, 2027
  12,000   0.21   April 29, 2026
  19,411,898   0.66    
           

Warrant transactions are summarized as follows:

    Number of Warrants     Weighted Average  
          Exercise Price (C$)  
Balance, July 31, 2022   12,337,006   $ 0.95  
   Warrants issued   4,335,437     0.80  
   Warrants expired   (11,196 )   1.00  
Balance, July 31, 2023   16,661,247     0.91  
   Warrants issued   8,768,151     0.26  
   Warrants expired   (6,017,500 )   0.76  
Balance, April 30, 2024   19,411,898     0.66  

 

16


RISE GOLD CORP.
(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIOD ENDED APRIL 30, 2024

(Expressed in United States Dollars)

(Unaudited)

 

13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

During the nine -month periods ended April 30, 2024 and 2023, the Company had the following non-cash financing and investing activities:

For the period ended April 30, 2024:

a) The Company accrued $192,230 of interest expense as part of the outstanding balance of loan payable and credit facility.

b) The Company accrued $910 of accretion expense on warrants issued for deferred financing asset.

For the period ended April 30, 2023:

a) Company accrued $267,028 of interest expense as part of the outstanding balance of loan payable.

 

14. SEGMENTED INFORMATION

A reporting segment is defined as a component of the Company that:

- Engages in business activities from which it may earn revenues and incur expenses;

- Operating results are reviewed regularly by the entity's chief operating decision maker; and

- Discrete financial information is available.

The Company has determined that it operates its business in one geographical segment located in California, United States, where all of its equipment and mineral property interests are located.

 

15. SUBSEQUENT EVENT

Subsequent to the period ended April 30, 2024, the Company granted a total of 1,004,479 stock options to directors and an officer of the Company. The stock options are exercisable at a price of $0.17 per share until May 1, 2029.

17


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS", "INTENDS", "WILL", "HOPES", "SEEKS", "ANTICIPATES", "EXPECTS" AND THE LIKE OFTEN IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD-LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO PRESENT AND FUTURE OPERATIONS, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE PLANS OR OPERATIONS WILL OR MAY PRODUCE POSITIVE RESULTS, REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE US TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OUR OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Description of Business

We are a mineral exploration company that was incorporated in the state of Nevada in 2007. Our primary asset is our interest in the Idaho-Maryland Gold Mine property (the "I-M Mine Property"), which is a major past producing high-grade property near Grass Valley, California, United States, which we own outright through our wholly owned Nevada subsidiary, Rise Grass Valley Inc. ("Rise Grass Vall