INTERNATIONAL TOWER HILL MINES LTD [THM] Filings

10-Q 1 thm-20230630x10q.htm 10-Q

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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 June 30, 2023

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

For the transition period from to

Commission file number: 001-33638

INTERNATIONAL TOWER HILL MINES LTD.

(Exact Name of Registrant as Specified in its Charter)

British Columbia, Canada		98-0668474
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2710 - 200 Granville Street
Vancouver, British Columbia, Canada

(Address of Principal Executive Offices)

V6C 1S4

(Zip code)


Registrant’s telephone number, including area code: (604) 683-6332

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

Title of each class:		Trading Symbol:		Name of each exchange on which registered:
Common Shares, no par value		THM		NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the 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 (§232.405 of this chapter) 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 July 28, 2023, the registrant had 195,885,531 common shares outstanding.

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		Page
Part I	FINANCIAL INFORMATION
Item 1	Financial Statements	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4	Controls and Procedures	22

Part II	OTHER INFORMATION
Item 1	Legal Proceedings	23
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3	Defaults Upon Senior Securities	23
Item 4	Mine Safety Disclosures	23
Item 5	Other Information	23
Item 6	Exhibits	24

SIGNATURES		25

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FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements or information within the meaning of the United States Private Securities Litigation Reform Act of 1995 concerning anticipated results and developments in the operations of International Tower Hill Mines Ltd. (“we”, “us”, “our,” “ITH” or the “Company”) in future periods, planned exploration activities, the adequacy of the Company’s financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” (or the negative and grammatical variations of any of these terms) occur or be achieved. These forward-looking statements may include, but are not limited to, statements concerning:

●

the Company’s future cash requirements, the Company’s ability to meet its financial obligations as they come due, and the Company’s ability to raise the necessary funds to continue operations on acceptable terms, if at all;

●

the Company’s ability to carry forward and incorporate into future engineering studies of the Livengood Gold Project updated mine design, production schedule and recovery concepts identified during the optimization process;

●

the Company’s potential to carry out an engineering phase that will evaluate and optimize the Livengood Gold Project’s configuration and capital and operating expenses, including determining the optimum scale for the Livengood Gold Project;

●

the Company’s strategies and objectives, both generally and specifically in respect of the Livengood Gold Project;

●

the Company’s belief that there are no known environmental issues that are anticipated to materially impact the Company’s ability to conduct mining operations at the Livengood Gold Project;

●

the potential for the expansion of the estimated mineral resources at the Livengood Gold Project;

●

the potential for a production decision concerning, and any production at, the Livengood Gold Project;

●

the sequence of decisions regarding the timing and costs of development programs with respect to, and the issuance of the necessary permits and authorizations required for, the Livengood Gold Project;

●

the Company’s estimates of the quality and quantity of the mineral resources at the Livengood Gold Project;

●

the timing and cost of any future exploration programs at the Livengood Gold Project, and the timing of the receipt of results therefrom;

●

the expected levels of overhead expenses at the Livengood Gold Project; and

●

future general business and economic conditions, including changes in the price of gold and the overall sentiment of the markets for public equity.

Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:

●

the demand for, and level and volatility of the price of gold;

●

conditions in the financial markets generally, the overall sentiment of the markets for public equity, interest rates, currency rates, and the rate of inflation;

●

general business and economic conditions;

●

government regulation and proposed legislation (and changes thereto or interpretations thereof);

●

defects in title to claims or the ability to obtain surface rights, either of which could affect the Company’s property rights and claims;

●

the Company’s ability to secure the necessary services and supplies on favorable terms in connection with its programs at the Livengood Gold Project and other activities;

●

the Company’s ability to attract and retain key staff, particularly in connection with the permitting and development of any mine at the Livengood Gold Project;

●

the accuracy of the Company’s resource estimates (including with respect to size and grade) and the geological, operational and price assumptions on which these are based;

●

the timing of the Company’s ability to commence and complete planned work programs at the Livengood Gold Project;

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●

the timing of the receipt of and the terms of the consents, permits and authorizations necessary to carry out exploration and development programs at the Livengood Gold Project and the Company’s ability to comply with such terms on a safe and cost-effective basis;

●

the ongoing relations of the Company with the lessors of its property interests and applicable regulatory agencies;

●

the metallurgy and recovery characteristics of samples from certain of the Company’s mineral properties and whether such characteristics are reflective of the deposit as a whole; and

●

the continued development of and potential construction of any mine at the Livengood Gold Project property not requiring consents, approvals, authorizations or permits that are materially different from those identified by the Company.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including without limitation those discussed in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2022, which are incorporated herein by reference, as well as other factors described elsewhere in the Company’s other reports filed with the U.S. Securities and Exchange Commission (the “SEC”).

The Company’s forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations and opinions of management as of the date of this report. The Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements.

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PART 1

ITEM 1. FINANCIAL STATEMENTS

INTERNATIONAL TOWER HILL MINES LTD.

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

As at June 30, 2023 and December 31, 2022

(Expressed in US Dollars - Unaudited)


		June 30,		December 31,
	Note	2023		2022
ASSETS

Current
Cash and cash equivalents	1	$	2,990,012	$	4,847,429
Prepaid expenses and other			297,923		152,572
Total current assets			3,287,935		5,000,001

Property and equipment			7,465		7,465
Capitalized acquisition costs	4		55,375,124		55,375,124

Total assets		$	58,670,524	$	60,382,590

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities
Accounts payable		$	24,295	$	53,539
Accrued liabilities	5		142,521		234,846

Total liabilities			166,816		288,385

Shareholders’ equity
Share capital, no par value; unlimited number of authorized shares; 195,313,184 and 195,885,531 shares issued and outstanding at December 31, 2022 and June 30, 2023, respectively	6		288,866,139		288,484,901
Contributed surplus	6		36,215,746		36,275,917
Accumulated other comprehensive income			1,560,066		1,500,196
Deficit			(268,138,243)		(266,166,809)

Total shareholders’ equity			58,503,708		60,094,205

Total liabilities and shareholders’ equity		$	58,670,524	$	60,382,590

General Information and Nature of Operations (Note 1)

Commitments (Note 8)

Subsequent event (Note 10)

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

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INTERNATIONAL TOWER HILL MINES LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three and Six Months Ended June 30, 2023 and 2022

(Expressed in US Dollars - Unaudited)


		Three Months Ended				Six Months Ended
	Note	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Operating expenses
Consulting fees	6	$	318,614	$	374,100	$	376,249	$	432,765
Insurance			52,993		58,486		102,567		100,936
Investor relations	6		30,740		34,320		34,811		49,573
Mineral property exploration	4		641,748		561,945		787,643		765,038
Office			5,979		6,092		8,887		10,436
Other			2,801		3,193		7,023		7,802
Professional fees			86,576		43,260		127,881		109,493
Regulatory			24,812		24,989		86,176		98,685
Rent			33,796		33,802		67,592		67,605
Travel			11,963		6,413		13,874		8,157
Wages and benefits	6		248,767		255,384		364,416		384,933
Total operating expenses			(1,458,789)		(1,401,984)		(1,977,119)		(2,035,423)

Other income (expenses)
Gain/(Loss) on foreign exchange			(53,843)		190,165		(60,616)		95,410
Interest income			34,255		1,540		55,821		3,109
Other income			10,480		10,000		10,480		22,652
Total other income (expenses)			(9,108)		201,705		5,685		121,171

Net loss for the period			(1,467,897)		(1,200,279)		(1,971,434)		(1,914,252)

Other comprehensive income (loss)
Exchange difference on translating foreign operations			59,255		(196,458)		59,870		(63,970)
Total other comprehensive income (loss) for the period			59,255		(196,458)		59,870		(63,970)
Comprehensive loss for the period		$	(1,408,642)	$	(1,396,737)	$	(1,911,564)	$	(1,978,222)

Basic and diluted loss per share		$	(0.01)	$	(0.01)	$	(0.01)	$	(0.01)

Weighted average number of shares outstanding – basic and diluted			195,369,790		195,313,184		195,341,643		195,129,206

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

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INTERNATIONAL TOWER HILL MINES LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Three and Six Months Ended June 30, 2023 and 2022

(Expressed in US Dollars - Unaudited)


	Six-Month Period Ended June 30, 2023
						Accumulated
						other
	Number of			Contributed		comprehensive
	shares	Share capital		surplus		income		Deficit		Total
Balance, December 31, 2022	195,313,184	$	288,484,901	$	36,275,917	$	1,500,196	$	(266,166,809)	$	60,094,205
Stock-based compensation-options	—		—		63,514		—		—		63,514
Stock-based compensation-DSUs	—		—		257,553		—		—		257,553
Exchange difference on translating foreign operations	—		—		—		59,870		—		59,870
Share issuance	572,347		381,238		(381,238)		—		—		—
Net loss	—		—		—		—		(1,971,434)		(1,971,434)
Balance, June 30, 2023	195,885,531	$	288,866,139	$	36,215,746	$	1,560,066	$	(268,138,243)	$	58,503,708


	Three-Month Period Ended June 30, 2023
						Accumulated
						other
	Number of			Contributed		comprehensive
	shares	Share capital		surplus		income		Deficit		Total
Balance, March 31, 2023	195,313,184	$	288,484,901	$	36,296,185	$	1,500,811	$	(266,670,346)	$	59,611,551
Stock-based compensation-options	—		—		43,246		—		—		43,246
Stock-based compensation-DSUs	—		—		257,553		—		—		257,553
Exchange difference on translating foreign operations	—		—		—		59,255		—		59,255
Share issuance	572,347		381,238		(381,238)		—		—		—
Net loss	—		—		—		—		(1,467,897)		(1,467,897)
Balance, June 30, 2023	195,885,531	$	288,866,139	$	36,215,746	$	1,560,066	$	(268,138,243)	$	58,503,708


	Six-Month Period Ended June 30, 2022
						Accumulated
						other
	Number of			Contributed		comprehensive
	shares	Share capital		surplus		income		Deficit		Total
Balance, December 31, 2021	194,908,184	$	288,032,132	$	35,989,922	$	1,828,121	$	(263,125,116)	$	62,725,059
Stock-based compensation-options	—		—		93,342		—		—		93,342
Stock-based compensation-DSUs	—		—		313,023		—		—		313,023
Exchange difference on translating foreign operations	—		—		—		(63,970)		—		(63,970)
Exercise of options	405,000		290,290		—		—		—		290,290
Reallocation from contributed surplus	—		162,479		(162,479)		—		—		—
Net loss	—		—		—		—		(1,914,252)		(1,914,252)
Balance, June 30, 2022	195,313,184	$	288,484,901	$	36,233,808	$	1,764,151	$	(265,039,368)	$	61,443,492


	Three-Month Period Ended June 30, 2022
						Accumulated
						other
	Number of			Contributed		comprehensive
	shares	Share capital		surplus		income		Deficit		Total
Balance, March 31, 2022	195,313,184	$	288,484,901	$	35,856,667	$	1,960,609	$	(263,839,089)	$	62,463,088
Stock-based compensation-options	—		—		64,118		—		—		64,118
Stock-based compensation-DSUs	—		—		313,023		—		—		313,023
Exchange difference on translating foreign operations	—		—		—		(196,458)		—		(196,458)
Net loss	—		—		—		—		(1,200,279)		(1,200,279)
Balance, June 30, 2022	195,313,184	$	288,484,901	$	36,233,808	$	1,764,151	$	(265,039,368)	$	61,443,492

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

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INTERNATIONAL TOWER HILL MINES LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2023 and 2022

(Expressed in US Dollars - Unaudited)


	Six Months Ended
	June 30, 2023		June 30, 2022
Operating Activities
Loss for the period	$	(1,971,434)	$	(1,914,252)
Add items not affecting cash:
Stock-based compensation-options		63,514		93,342
Stock-based compensation-DSUs		257,553		313,023
Changes in non-cash items:
Accounts receivable		(28,526)		5,969
Prepaid expenses and other		(114,470)		(119,872)
Accounts payable and accrued liabilities		(123,515)		(420,875)
Cash and cash equivalents used in operating activities		(1,916,878)		(2,042,665)

Financing Activities
Issuance of shares		—		290,290
Cash and cash equivalents provided by financing activities		—		290,290

Effect of foreign exchange on cash		59,461		(63,708)
Change in cash and cash equivalents		(1,857,417)		(1,816,083)
Cash and cash equivalents, beginning of the period		4,847,429		7,780,671

Cash and cash equivalents, end of the period	$	2,990,012	$	5,964,588

Non-cash transactions:

●	Reallocation from contributed surplus from issuance of stock $381,238 (June 30, 2022 - $nil)

●	Reallocation from contributed surplus from exercise of stock options $nil (June 30, 2022 - $162,479)

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

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INTERNATIONAL TOWER HILL MINES LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Six Months Ended June 30, 2023 and 2022

(Expressed in US dollars – Unaudited)

1. GENERAL INFORMATION AND NATURE OF OPERATIONS

International Tower Hill Mines Ltd. (“ITH” or the “Company”) is incorporated under the laws of British Columbia, Canada. The Company’s head office address is 2710 - 200 Granville Street, Vancouver, British Columbia, Canada.

International Tower Hill Mines Ltd. consists of ITH and its wholly-owned subsidiaries Tower Hill Mines, Inc. (“TH Alaska”) (an Alaska corporation), Tower Hill Mines (US) LLC (“TH US”) (a Colorado limited liability company), and Livengood Placers, Inc. (“LPI”) (a Nevada corporation). The Company is in the business of acquiring, exploring and evaluating mineral properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. At June 30, 2023, the Company has a 100% interest in its Livengood Gold Project, an exploration-stage project in Alaska, U.S.A (the “Livengood Gold Project”).

These unaudited condensed consolidated interim financial statements have been prepared on a going-concern basis, which presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future.

As at June 30, 2023, the Company had cash and cash equivalents of $2,990,012 compared to $4,847,429 at December 31, 2022. The Company has no revenue generating operations from which it can internally generate funds.

The Company will require significant additional financing to continue its operations (including general and administrative expenses) in connection with advancing activities at the Livengood Gold Project and the development of any mine that may be built at the Livengood Gold Project. There is no assurance that the Company will make a decision to build a mine at the Livengood Gold Project and, if so, that it will be able to obtain the additional financing required on acceptable terms, if at all. In addition, any significant delays in the issuance of required permits for the ongoing work at the Livengood Gold Project, or unexpected results in connection with the ongoing work, could result in the Company being required to raise additional funds to advance permitting efforts. The Company’s review of its financing options includes considering a future strategic alliance to assist in further development, permitting and future construction costs, although there can be no assurance that any such strategic alliance will, in fact, be pursued or realized.

Despite the Company’s success to date in raising significant equity financing to fund its operations, there is significant uncertainty that the Company will be able to secure any additional financing in the current or future equity markets. The amount of funds to be raised and the terms of any proposed equity financing that may be undertaken will be negotiated by management as opportunities to raise funds arise. Specific plans related to the use of proceeds will be devised once financing has been completed and management knows what funds will be available for these purposes. As at August 5, 2023, management believes that the Company has sufficient financial resources to maintain its operations for the next twelve months.

2. BASIS OF PRESENTATION

These unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 as filed in our Annual Report on Form 10-K. In the opinion of the Company’s management, these financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position at June 30, 2023 and the results of its operations for the six months then ended. Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, 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 revenues and expenses during the period. These judgments, estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and

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INTERNATIONAL TOWER HILL MINES LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Six Months Ended June 30, 2023 and 2022

(Expressed in US dollars – Unaudited)

circumstances. While management believes the estimates to be reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.

On August 5, 2023, the Board of Directors of the Company (the “Board”) approved these condensed consolidated interim financial statements.

All currency amounts are stated in U.S. dollars unless noted otherwise. References to C$ refer to Canadian currency.

Basis of consolidation

These condensed consolidated interim financial statements include the accounts of ITH and its wholly-owned subsidiaries TH Alaska, TH US, and LPI. All intercompany transactions and balances have been eliminated.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these financial instruments.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the significance of the inputs used in making the measurement. The three levels of the fair value hierarchy are as follows:

●

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

●

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

●

Level 3 – Inputs that are not based on observable market data.

There were no financial instruments measured at fair value.

4. MINERAL PROPERTY

The Company had the following activity related to its Livengood Gold Project:


Capitalized acquisition costs	Amount
Balance, December 31, 2022	$	55,375,124
Acquisition costs		—
Balance, June 30, 2023	$	55,375,124

The following table presents costs incurred for exploration and evaluation activities for the six months ended June 30, 2023 and 2022:


	June 30, 2023		June 30, 2022
Exploration costs:
Aircraft	$	13,200	$	9,000
Environmental		99,819		73,710
Equipment rental		34,676		23,493
Field costs		60,787		62,394
Geological/geophysical		—		64,626
Land maintenance and tenure		536,097		445,090
Legal		35,323		82,917
Transportation and travel		7,741		3,808
Total expenditures for the period	$	787,643	$	765,038

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INTERNATIONAL TOWER HILL MINES LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Six Months Ended June 30, 2023 and 2022

(Expressed in US dollars – Unaudited)

Livengood Gold Project Property

The Livengood property is located in the Tintina gold belt approximately 70 miles (113 kilometers) northwest of Fairbanks, Alaska. The property consists of land leased from the Alaska Mental Health Trust, a number of smaller private mineral leases, Alaska state mining claims purchased or located by the Company and patented ground held by the Company.

Details of the leases are as follows:

A lease of the Alaska Mental Health Trust mineral rights having a term beginning July 1, 2004 and extending 19 years until June 30, 2023, subject to further extensions beyond June 30, 2023 by either commercial production or payment of an advance minimum royalty equal to 125% of the amount paid in year 19 and diligent pursuit of development. The lease requires minimum work expenditures and advance minimum royalties (all of which minimum royalties are recoverable from production royalties) which escalate annually with inflation. A net smelter return (“NSR”) production royalty of between 2.5% and 5.0% (depending upon the price of gold) is payable to the lessor with respect to the lands subject to this lease. In addition, an NSR production royalty of l% is payable to the lessor with respect to the unpatented federal mining claims subject to the lease described in b) below and an NSR production royalty of between 0.5% and 1.0% (depending upon the price of gold) is payable to the lessor with respect to the lands acquired by the Company as a result of the purchase of LPI in December 2011. During the six months ended June 30, 2023 and from the inception of this lease, the Company has paid $455,629 and $4,813,947, respectively.

A lease of federal unpatented lode mining claims having an initial term of ten years commencing on April 21, 2003 and continuing for so long thereafter as advance minimum royalties are paid and mining related activities, including exploration, continue on the property or on adjacent properties controlled by the Company. The lease requires an advance minimum royalty of $50,000 on or before each anniversary date for the duration of the lease (all of which minimum royalties are recoverable from production royalties). An NSR production royalty of between 2% and 3% (depending on the price of gold) is payable to the lessors. The Company may purchase 1% of the royalty for $1,000,000. During the six months ended June 30, 2023 and from the inception of this lease, the Company has paid $50,000 and $980,000, respectively.

A lease of patented lode mining claims having an initial term of ten years commencing January 18, 2007, and continuing for so long thereafter as advance minimum royalties are paid. The lease requires an advance minimum royalty of $20,000 on or before each anniversary date through January 18, 2017 and $25,000 on or before each subsequent anniversary (all of which minimum royalties are recoverable from production royalties). An NSR production royalty of 3% is payable to the lessors. The Company may purchase all interests of the lessors in the leased property (including the production royalty) for $1,000,000 (less all minimum and production royalties paid to the date of purchase), of which $500,000 is payable in cash over four years following the closing of the purchase and the balance is payable by way of the 3% NSR production royalty. The Company has acquired a 40% interest in the mining claims subject to the lease, providing the Company with a 40% interest in the lease. The Company paid $15,000 of royalties during the six months ended June 30, 2023, for a total of $295,000 from the inception of this lease.

A lease of unpatented federal lode mining and federal unpatented placer claims having an initial term of ten years commencing on March 28, 2007, and continuing for so long thereafter as advance minimum royalties are paid and mining related activities, including exploration, continue on the property or on adjacent properties controlled by the Company. The lease requires an advance minimum royalty of $15,000 on or before each anniversary date for the duration of the lease (all of which minimum royalties are recoverable from production royalties). The Company is required to pay the lessor the additional sum of $250,000 upon making a positive production decision, of which $125,000 is payable within 120 days of the decision and $125,000 is payable within a year of the decision (all of which are recoverable from production royalties). An NSR production royalty of 2% is payable to the lessor. The Company may purchase all of the interest of the lessor in the leased property (including the production royalty) for $1,000,000. The Company paid $15,000 of royalties during the six months ended June 30, 2023, for a total of $218,000 from the inception of this lease.

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INTERNATIONAL TOWER HILL MINES LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Six Months Ended June 30, 2023 and 2022

(Expressed in US dollars – Unaudited)

Title to mineral properties

The acquisition of title to mineral properties is a detailed and time-consuming process. The Company has taken steps to verify title to all mineral properties in which it has an interest. Although the Company has taken every reasonable precaution to ensure that legal title to its properties is properly recorded in the name of the Company, there can be no assurance that such title will ultimately be secured.

5. ACCRUED LIABILITIES

The following table presents the Company's accrued liabilities balances at June 30, 2023 and December 31, 2022.


	June 30, 2023		December 31, 2022
Accrued liabilities	$	120,097	$	104,198
Accrued salaries and benefits		22,424		130,648
Total accrued liabilities	$	142,521	$	234,846

Accrued liabilities at June 30, 2023 include accruals for general corporate costs and project costs of $83,507 and $36,590, respectively. Accrued liabilities at December 31, 2022 include accruals for general corporate costs and project costs of $46,974 and $57,224, respectively.

6. SHARE CAPITAL

Authorized

The Company’s authorized share capital consists of an unlimited number of common shares without par value. At December 31, 2022 and June 30, 2023, there were 195,313,184 and 195,885,531 shares issued and outstanding, respectively.

Share issuances

At the Company's 2023 Annual General Meeting of Shareholders held on May 23, 2023, Mr. Stephen Lang did not stand for re-election as director. On June 22, 2023, in accordance with the approved Deferred Share Unit Plan, the Company issued 572,347 common shares to Mr. Lang and transferred related contributed surplus of $381,238 to share capital.

During the six months ended June 30, 2022, the Company issued an aggregate of 405,000 common shares pursuant to the exercise of stock options for total proceeds of $290,290 and transferred related contributed surplus of $162,479 to share capital.

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INTERNATIONAL TOWER HILL MINES LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Six Months Ended June 30, 2023 and 2022

(Expressed in US dollars – Unaudited)

Stock options

The Company adopted an incentive stock option plan in 2006, as amended September 19, 2012, and reapproved by the Company’s shareholders on May 28, 2015, May 30, 2018, and May 25, 2021 (the “Stock Option Plan”). The essential elements of the Stock Option Plan provide that the aggregate number of common shares of the Company that may be issued pursuant to options granted under the Stock Option Plan and any other share-based compensation arrangements may not exceed 10% of the number of issued shares of the Company at the time of the granting of options. Options granted under the Stock Option Plan will have a maximum term of ten years. The exercise price of options granted under the Stock Option Plan shall be fixed in compliance with the applicable provisions of the Toronto Stock Exchange (“TSX”) Company Manual in force at the time of grant and, in any event, shall not be less than the closing price of the Company’s common shares on the TSX on the trading day immediately preceding the day on which the option is granted, or such other price as may be agreed to by the Company and accepted by the TSX. Options granted under the Stock Option Plan vest immediately, unless otherwise determined by the Board at the date of grant.

A summary of the options granted under the Stock Option Plan as of June 30, 2023 and December 31, 2022 is presented below:


	Six Months Ended					Year Ended
	June 30, 2023					December 31, 2022
		Weighted					Weighted
		Average		Aggregate			Average		Aggregate
	Number of	Exercise Price		Intrinsic Value		Number of	Exercise Price		Intrinsic Value
	Options	(C$)		(C$)		Options	(C$)		(C$)

Balance, beginning of the period	2,287,049	$	0.95			2,947,049	$	0.97
Granted	240,000		0.63			240,000		0.92
Exercised	—		—			(405,000)		0.90
Expired	(740,000)		0.91			(495,000)		1.08
Balance, end of the period	1,787,049	$	0.92	$	Nil	2,287,049	$	0.95	$	10,400

The weighted average remaining life of options outstanding at June 30, 2023 was 3.0 years.

Stock options outstanding as at June 30, 2023 and December 31, 2022 are as follows:


	June 30, 2023				December 31, 2022
	Exercise		Number of		Exercise		Number of
Expiry Date	Price (C$)		Options	Exercisable	Price (C$)		Options	Exercisable
March 16, 2023		—	—	—	$	1.00	580,000	580,000
March 16, 2023		—	—	—	$	0.50	130,000	130,000
June 9, 2023		—	—	—	$	1.00	30,000	30,000
March 21, 2024	$	0.61	374,817	374,817	$	0.61	374,817	374,817
February 1, 2025	$	1.35	250,000	250,000	$	1.35	250,000	250,000
August 8, 2025	$	0.85	187,232	187,232	$	0.85	187,232	187,232
May 27, 2026	$	0.92	255,000	255,000	$	0.92	255,000	255,000
May 25, 2027	$	1.31	240,000	240,000	$	1.31	240,000	160,000
May 24, 2028	$	0.92	240,000	160,000	$	0.92	240,000	80,000
May 23, 2029	$	0.63	240,000	80,000		—	—	—
			1,787,049	1,547,049			2,287,049	2,047,049

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INTERNATIONAL TOWER HILL MINES LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Six Months Ended June 30, 2023 and 2022

(Expressed in US dollars – Unaudited)

A summary of the non-vested options as of June 30, 2023 and changes during the six months ended June 30, 2023 is as follows:


		Weighted average
	Number of	grant-date fair value
Non-vested options:	options	(C$)
Outstanding at December 31, 2022	240,000	$	0.73
Granted	240,000		0.42
Vested	(240,000)		0.67
Outstanding at June 30, 2023	240,000	$	0.48

At June 30, 2023, there was unrecognized compensation expense of C$83,927 related to non-vested options outstanding. The cost is expected to be recognized over a weighted-average remaining period of approximately 1.3 years.

Deferred Share Unit Incentive Plan

On April 4, 2017, the Company adopted a Deferred Share Unit Plan (the “DSU Plan”). The DSU Plan was approved by the Company’s shareholders on May 24, 2017 and reapproved by the Company’s shareholders on May 27, 2020 and May 25, 2021. The maximum aggregate number of common shares that may be issued under the DSU Plan and the Stock Option Plan is 10% of the number of issued and outstanding common shares (on a non-diluted basis).

During the six months ended June 30, 2023, in accordance with the DSU Plan, the Company granted each of the members of the Company’s Board of Directors (other than those directors nominated for election by Paulson & Co. Inc.) 131,746 deferred share units (“DSUs”) for a total of 526,984 DSUs with a grant date fair value (defined as the weighted average of the prices at which the common shares traded on the exchange with the most volume for the five days immediately preceding the grant) of C$0.63 per DSU, representing C$83,000 per director or C$332,000 in the aggregate.

Subject to adjustment in accordance with their terms, each DSU entitles the holders to receive one common share of the Company without the payment of any consideration. The DSUs vested immediately upon being granted, but the common shares underlying the DSUs are not deliverable to the grantee until the grantee is no longer serving on the Company’s Board of Directors.

DSUs outstanding as at June 30, 2023 and December 31, 2022 are as follows:


	Six Months Ended			Year Ended
	June 30, 2023			December 31, 2022
		Weighted Average			Weighted
	Number of	Exercise Price		Number of	Average Exercise
	Units	(C$)		Units	Price (C$)
Balance, beginning of the period	2,602,361	$	0.89	2,151,276	$	0.88
Issued	526,984		0.63	451,085	$	0.92
Delivered	(572,347)		0.87	—		—
Balance, end of the period	2,556,998	$	0.84	2,602,361	$	0.89

Share-based payments

During the six months ended June 30, 2023, there were 240,000 stock options granted under the Stock Option Plan and 526,984 DSUs granted under the DSU Plan. Share-based payment compensation for the six months ended June 30, 2023 totaled $321,067 ($63,514 related to stock options and $257,553 related to DSUs). Of the total expense for the period ended June 30, 2023, $261,523 was included in consulting fees ($3,970 related to stock options and $257,553 related to DSUs), $3,970 was included in investor relations, and $55,574 was included in wages and benefits in the statement of operations and comprehensive loss.

Table of Contents

INTERNATIONAL TOWER HILL MINES LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Six Months Ended June 30, 2023 and 2022

(Expressed in US dollars – Unaudited)

During the six months ended June 30, 2022, there were 240,000 stock options granted under the Stock Option Plan and 451,085 DSUs granted under the DSU Plan. Share-based payment compensation for the six months ended June 30, 2022 totaled $406,365 ($