Company Quick10K Filing
Thunder Mountain Gold
Price0.07 EPS0
Shares60 P/E5
MCap4 P/FCF-14
Net Debt-0 EBIT1
TEV4 TEV/EBIT5
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-10
10-Q 2020-03-31 Filed 2020-05-15
10-K 2019-12-31 Filed 2020-03-20
10-Q 2019-09-30 Filed 2019-11-12
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-15
10-K 2018-12-31 Filed 2019-04-01
10-Q 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-13
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-30
10-Q 2017-09-30 Filed 2017-11-13
10-Q 2017-06-30 Filed 2017-08-11
10-Q 2017-03-31 Filed 2017-05-15
10-K 2016-12-31 Filed 2017-03-30
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-05-16
10-K 2015-12-31 Filed 2016-04-06
10-Q 2015-09-30 Filed 2015-11-18
10-Q 2015-06-30 Filed 2015-08-19
10-Q 2015-03-31 Filed 2015-05-14
10-K 2014-12-31 Filed 2015-03-31
10-Q 2014-09-30 Filed 2014-11-12
10-Q 2014-06-30 Filed 2014-08-13
10-Q 2014-03-31 Filed 2014-05-15
10-K 2013-12-31 Filed 2014-04-08
10-Q 2013-09-30 Filed 2013-11-19
10-Q 2013-06-30 Filed 2013-08-19
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-04-10
10-Q 2012-09-30 Filed 2012-11-13
10-Q 2012-06-30 Filed 2012-08-20
10-Q 2012-03-31 Filed 2012-05-21
10-K 2011-12-31 Filed 2012-04-16
10-Q 2011-09-30 Filed 2011-11-21
10-Q 2011-06-30 Filed 2011-08-19
10-Q 2011-03-31 Filed 2011-05-16
10-K 2010-12-31 Filed 2011-03-25
10-Q 2010-09-30 Filed 2010-11-19
10-Q 2010-06-30 Filed 2010-08-16
10-Q 2010-03-31 Filed 2010-05-21
10-K 2009-12-31 Filed 2010-03-31
8-K 2019-08-20
8-K 2019-06-10
8-K 2019-03-01
8-K 2018-04-27
8-K 2018-02-27

THMG 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31 ex31a.htm
EX-31 ex31b.htm
EX-32 ex32a.htm
EX-32 ex32b.htm

Thunder Mountain Gold Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
2.41.71.00.2-0.5-1.22012201420172020
Assets, Equity
1.61.20.80.40.0-0.42012201420172020
Rev, G Profit, Net Income
0.30.20.10.0-0.1-0.22012201420172020
Ops, Inv, Fin

10-Q 1 thmg10qaug06.htm THUNDER MOUNTAIN GOLD FORM 10-Q Thunder Mountain Gold, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2020

OR

 

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

 

For the transition period from __________ to  __________

 

Commission File Number:  001-08429

 

Picture 1 

 

THUNDER MOUNTAIN GOLD, INC.

(Exact name of Registrant as specified in its charter)

 

Nevada

 

91-1031015

(State or other jurisdiction of incorporation  or  organization)

 

(IRS identification No.)

 

 

 

11770 W President Dr. STE F

 

 

Boise,  Idaho

 

83713-8986

(Address of Principal Executive Offices)

 

(Zip Code)

 

(208) 658-1037

(Registrant’s Telephone Number, including Area Code)

 

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

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.001 par value

THMG

THM

OTCQB

TSX-V

 

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

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.   x   Yes  ¨  No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x  Yes¨  No

 

Indicate by check mark whether the Registrant is  ¨  a large accelerated filer, ¨  an accelerated file, x  a non-accelerated filer, x  a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act) or ¨ an emerging growth company

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

¨  Yes  x   No

 

Number of shares of issuer’s common stock outstanding at July 10, 2020:  60,145,579


2



TABLE OF CONTENTS 

 

 

PART I – FINANCIAL INFORMATION4 

Item 1 Financial Statements4 

Item 2.  Management's Discussion and Analysis or Plan of Operation16 

Item 3.  Quantitative and Qualitative Disclosures about Market Risk30 

Item 4.  Controls and Procedures30 

PART II – OTHER INFORMATION31 

Item 1.  Legal Proceedings.31 

Item 1A. Risk Factors.31 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.31 

Item 3.  Defaults Upon Senior Securities.31 

Item 4.  Mine Safety Disclosures31 

Item 5.  Other Information31 

Item 6.  Exhibits32 

SIGNATURES33 

 


3



PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

 

Thunder Mountain Gold, Inc.

Consolidated Balance Sheets (Unaudited)

June 30, 2020 and December 31, 2019

 

 

June 30,

2020

 

December 31, 2019

ASSETS

 

 

 

 

 

 

 

 

 

  Current assets:

 

 

 

 

    Cash and cash equivalents

 

$     103,016

 

$     252,415

    Prepaid expenses and other assets

 

34,196

 

18,824

     Total current assets

 

137,212

 

271,239

 

 

 

 

 

Property and Equipment:

 

 

 

 

 Land

 

280,333

 

280,333

 Equipment, net of accumulated depreciation of $167,172 and $156,694,

   respectively

 

15,433

 

25,911

  Total property and equipment

 

295,766

 

306,244

 

 

 

 

 

  Right to use asset

 

9,134

 

16,625

  Investment in BeMetals, at fair value (Note 4)

 

2,349,971

 

1,735,830

     Total assets

 

$      2,792,083

 

$     2,329,938

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

  Accounts payable and other accrued liabilities

 

$       95,139

 

$       96,973

  Accrued related party liability (Note 8)

 

206,685

 

216,685

Accrued interest payable to related parties (Note 7)

 

80,937

 

73,343

  Operating lease liability – current

 

9,134

 

15,265

  Advance from BeMetals (Note 3)

 

7,356

 

78,539

  Deferred officer compensation (Note 8)

 

1,041,500

 

1,041,500

  Related parties notes payable (Note 7)

 

106,576

 

106,576

      Total current liabilities

 

1,547,327

 

1,628,881

 

 

 

 

 

Operating lease liability – long-term

 

-

 

1,360

SBA PPP Loan (Note 6)

 

48,000

 

-

Accrued reclamation costs

 

65,000

 

65,000

     Total liabilities

 

1,660,327

 

1,695,241

 

 

 

 

 

Commitments and Contingencies (Notes 2 and 3)

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

  Preferred stock; $0.0001 par value, 5,000,000 shares authorized;

     no shares issued or outstanding

 

-

 

-

  Common stock; $0.001 par value; 200,000,000 shares

     authorized, 60,145,579 shares issued and outstanding

 

60,146

 

60,146

  Additional paid-in capital

 

6,336,316

 

6,176,576

  Less:  11,700 shares of treasury stock, at cost

 

(24,200)

 

(24,200)

  Accumulated deficit

 

(5,414,208)

 

(5,751,527)

     Total Thunder Mountain Gold, Inc stockholders' equity

 

958,054

 

460,995

Noncontrolling interest in Owyhee Gold Trust (Note 3)

 

173,702

 

173,702

     Total stockholders' equity

 

1,131,756

 

634,697

     Total liabilities and stockholders' equity

 

$     2,792,083

 

$     2,329,938

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


4



Thunder Mountain Gold, Inc.

Consolidated Statements of Operations (Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

 

 

 

 

 

 

 Gain on mineral interest

$

-

$

1,504,398

$

-

$

1,504,398

 Management service income

 

75,000

 

50,000

 

150,000

 

50,000

 Total revenues

 

75,000

 

1,554,398

 

150,000

 

1,554,398

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 Exploration

 

4,776

 

7,561

 

8,093

 

16,178

 Legal and accounting

 

5,972

 

25,710

 

34,431

 

114,721

 Management and administrative

 

104,933

 

97,440

 

367,083

 

278,667

 Depreciation

 

5,239

 

7,134

 

10,478

 

15,214

 Total operating expenses

 

120,920

 

137,845

 

420,085

 

424,780

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 Interest expense, related parties

 

(3,797)

 

(6,588)

 

(7,594)

 

(11,721)

 Unrealized gain on investment

 

1,400,412

 

(50,726)

 

614,141

 

(50,726)

 Miscellaneous income (expense)

 

239

 

(243)

 

857

 

(244)

 Total other income (expense)

 

1,396,854

 

(57,557)

 

607,404

 

(62,691)

Net income

 

1,350,935

 

1,358,996

 

337,319

 

1,066,927

Net Income (loss) – noncontrolling interest in Owyhee Gold Trust

 

-

 

-

 

-

 

-

Net income – Thunder Mountain Gold, Inc.

$

1,350,935

$

1,358,996

 

337,319

 

1,066,927

 

 

 

 

 

 

 

 

 

Net income per common share-basic and diluted

$

0.02

$

0.02

$

0.01

$

0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding-basic and diluted

 

60,145,579

 

58,195,030

 

60,145,579

 

57,921,822

 

 

 

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


5



Thunder Mountain Gold, Inc.

Consolidated Statements of Cash Flows (Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2020

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

  Net Income (loss)

$

337,319

$

1,066,927

 

Adjustments to reconcile net income (loss) to net cash used by operating activities:

 

 

 

 

 

  Depreciation

 

10,478

 

15,214

 

  Stock based compensation

 

159,740

 

117,088

 

  Gain on mineral interest

 

-

 

(1,504,398)

 

  Unrealized loss/(gain) on investment

 

(614,141)

 

50,726

 

Change in:

 

 

 

 

 

  Prepaid expenses and other assets

 

(15,372)

 

(2,567)

 

  Accounts payable and other accrued liabilities

 

(11,833)

 

(18,605)

 

  Accrued interest payable to related parties

 

7,594

 

10,985

 

  Deferred officer compensation

 

-

 

22,000

 

  Advance from BeMetals

 

(71,184)

 

-

 

     Net cash used by operating activities

 

(197,399)

 

(242,630)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

  Proceeds from mineral interest

 

-

 

100,000

 

     Net cash provided by investing activities

 

-

 

100,000

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

  Proceeds from sale of common stock and warrants

 

-

 

250,000

 

  Proceeds from SBA PPP Loan

 

48,000

 

-

 

  Borrowings on related parties notes payable

 

-

 

50,000

 

  Payment on related parties notes payable

 

-

 

(10,000)

 

     Net cash provided by financing activities

 

48,000

 

290,000

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(149,399)

 

147,370

 

Cash and cash equivalents, beginning of period

 

252,415

 

3,710

 

Cash and cash equivalents, end of period

 

$        103,016

 

$        151,080

 

 

 

 

 

 

 

Noncash financing and investing activities:

 

 

 

 

 

Investment in equity security received for mineral interest (Note 3)

 

-

 

1,883,875

 

 

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


6



Thunder Mountain Gold, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the three month periods ended June 30, 2020 and June 30, 2019

 

Common Stock

Additional Paid-In Capital

Treasury Stock

Accumulated Deficit

Non-Controlling Interest in OGT

Total

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

Balances at April 1, 2019

57,645,579

 

$    57,646

$ 5,929,076

$(24,200)

$  (7,125,679)

$  173,702

(989,455)

 

 

 

 

 

 

 

 

 

Shares and warrants issued for cash

2,500,000

 

2,500

247,500

-

-

-

250,000

Net income

-

 

-

-

-

1,358,996

-

1,358,996

Balances at June 30, 2019

60,145,579

 

$    60,146

$ 6,176,576

$(24,200)

$  (5,766,683)

$  173,702

$    (619,541)

 

 

 

 

 

 

 

 

 

Balances at April 1, 2020

60,145,579

 

$    60,146

$ 6,336,317

$(24,200)

$  (6,765,143)

$  173,702

(219,179)

 

 

 

 

 

 

 

 

 

Net income

-

 

-

-

-

1,350,935

-

1,350,935

 

 

 

 

 

 

 

 

 

Balances at June 30, 2020

60,145,579

 

$    60,146

$ 6,336,316

$(24,200)

$  (5,414,208)

$  173,702

$    1,131,756

 

 

 

 

 

 

 

 

 

Thunder Mountain Gold, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the six month periods ended June 30, 2020 and June 30, 2019

 

Common Stock

Additional Paid-In Capital

Treasury Stock

Accumulated Deficit

Non-Controlling Interest in OGT

Total

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

Balances at January 1, 2019

57,645,579

 

$    57,646

$ 5,811,988

$(24,200)

$  (6,833,610)

$  173,702

$    (814,474)

 

 

 

 

 

 

 

 

 

Shares issued for cash

2,500,000

 

2,500

247,500

-

-

-

250,000

Stock based compensation

-

 

-

117,088

-

-

-

117,088

Net income

-

 

-

-

-

1,066,927

-

1,066,927

 

 

 

 

 

 

 

 

 

Balances at June 30, 2019

60,145,579

 

$    60,146

$ 6,176,576

$(24,200)

$  (5,766,683)

$  173,702

$    (619,541)

 

 

 

 

 

 

 

 

 

Balances at January 1, 2020

60,145,579

 

$    60,146

$ 6,176,576

$(24,200)

$  (5,751,527)

$  173,702

$    634,697

 

 

 

 

 

 

 

 

 

Stock based compensation

-

 

-

159,740

-

-

-

159,740

Net income

-

 

-

-

-

337,319

-

337,319

 

 

 

 

 

 

 

 

 

Balances at June 30, 2020

60,145,579

 

$    60,146

$ 6,336,316

$(24,200)

$  (5,414,208)

$  173,702

$    1,131,756

 

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


7



1. Summary of Significant Accounting Policies and Business Operations 

 

Business Operations

 

Thunder Mountain Gold, Inc. (“Thunder Mountain”, “THMG”, or “the Company”) was originally incorporated under the laws of the State of Idaho on November 9, 1935, under the name of Montgomery Mines, Inc.  In April 1978, the Montgomery Mines Corporation was obtained by a group of the Thunder Mountain property holders and changed its name to Thunder Mountain Gold, Inc., with the primary goal to further develop their holdings in the Thunder Mountain Mining District, located in Valley County, Idaho. Thunder Mountain Gold, Inc. takes its name from the Thunder Mountain Mining District, where its principal lode mining claims were located. For several years, the Company’s activities were restricted to maintaining its property position and exploration activities.

 

The Company sold its holdings in the Thunder Mountain Mining District in 2005 and began the process of acquiring and developing another project. In 2007, the Company acquired the South Mountain Mines property in Owyhee County, located in southwest Idaho, and initiated exploration activities on that property, which continue today. The Company also acquired additional claims on prospective ground in the Reese River Valley, 20 miles south of Battle Mountain, in Lander County Nevada.

 

On February 27, 2019, the Company entered into an Option Agreement, (the “BeMetals Option Agreement”) with BeMetals Corp. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of South Mountain Mines, Inc. (“SMMI”) from Thunder Mountain Resources, Inc. (“TMRI”), both wholly owned subsidiaries of the Company. The term of the agreement is for two years, with an option to extend to three years, with BeMetals conducting a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company’s common stock.  For the six months ended June 30, 2020, the Company recognized $150,000 in management services income. In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments.  See Note 3 for further information.

 

Basis of Presentation and Going Concern

 

These unaudited interim consolidated financial statements have been prepared by the management of the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim consolidated financial statements have been included.

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company's financial position and results of operations. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020.

 

For further information refer to the financial statements and footnotes thereto in the Company’s audited financial statements for the year ended December 31, 2019 as filed with the Securities and Exchange Commission.

 

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has historically incurred losses, however, under the BeMetals Option Agreement (Note 3), the Company now has a recurring source of revenue, and its ability to continue as a going concern is no longer dependent on equity capital raises and borrowings.  However, if necessary, the


8



Company continues to have the ability to raise additional capital in order to fund its future exploration and working capital requirements. The Company’s plans for the long-term continuation as a going concern include operating on the cash flows and consideration payments provided under the BeMetals Option Agreement.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company; its wholly owned subsidiaries, Thunder Mountain Resources, Inc. (“TMRI”) and South Mountain Mines, Inc. (“SMMI”); and a company in which the Company owns 75% and has majority control, Owyhee Gold Trust, LLC (“OGT”).    The Company’s consolidated financial statements reflect the other investor’s 25% non-controlling, capped interest in OGT.   Intercompany accounts are eliminated in consolidation.

 

Accounting Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions include the carrying value of properties and mineral interests, environmental remediation liabilities, deferred tax assets, and stock-based compensation. Management’s estimates and assumptions are based on historical experience and other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates.

 

Revenue Recognition

 

Management service revenue is recognized when the Company has satisfied its performance obligation required under its management contract.    Such obligation is satisfied over time as work is performed and the Company has a contractual right to payment.   

 

Income Taxes

 

The Company recognizes deferred income tax liabilities or assets at the end of each period using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized.

 

Cash and Cash Equivalents

 

For the purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be a cash equivalent.

 

Fair Value Measurements

 

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used.  The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall.   The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.   Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs.  The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At June 30, 2020, the Company has one financial asset, an investment in marketable equity security, that is adjusted to fair value on a recurring basis for which the fair value is determined based on Level 1 inputs as the equity security is traded on a stock exchange.  The Company has no financial liabilities that are adjusted to fair value on a recurring basis.

 

Financial Instruments

 

The Company’s financial instruments include cash and cash equivalents, investment in equity security and related party notes payable the carrying value of which approximates fair value based on the nature of those instruments.


9



Investments

 

The Company determines the appropriate classification of investments at the time of acquisition and re-evaluates such determinations at each reporting date. Equity securities determined to be marketable are carried at fair value determined using Level 1 fair value measurement inputs with the change in fair value recognized as unrealized gain (loss) in the consolidated statement of operations each reporting period. Gains and losses on the sale of securities are recognized on a specific identification basis.

 

Mineral Interests

 

The Company capitalizes costs for acquiring mineral interests, and expenses costs to maintain mineral rights and leases as incurred.  Exploration costs are expensed in the period in which they occur.  Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method based on periodic estimates of ore reserves. Mineral interests are periodically assessed for impairment of value and any subsequent losses are charged to operations at the time of impairment.

If a mineral interest is abandoned or sold, its capitalized costs are charged to operations.   Consideration received by the Company pursuant to joint ventures or purchase option agreements is applied against the carrying value of the related mineral interest.  When and if payments received exceed the carrying value, the excess amount is recognized as a gain in the consolidated statement of operations in the period the consideration is received.

 

Investments in Joint Venture

 

The Company’s accounting policy for joint ventures is as follows:

 

1.The Company uses the cost method when it does not have joint control or significant influence in a joint venture. Under the cost method, these investments are carried at cost. If other than temporary impairment in value is determined, it would then be charged to current net income or loss. 

 

2.If the Company enters into a joint venture in which there is joint control between the parties or the Company has significant influence, the equity method is utilized whereby the Company’s share of the venture’s earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. If other than temporary impairment in value is determined, it would then be charged to current net income or loss. 

 

3.In a joint venture where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is typically consolidated with the presentation of non-controlling interest.  In determining whether significant influences exist, the Company considers its participation in policy-making decisions and its representation on the venture’s management committee. See Note 3 regarding the Company’s investment in Owyhee Gold Trust, LLC. 

 

Reclamation and Remediation

 

The Company’s operations have been, and are subject to, standards for mine reclamation that have been established by various governmental agencies. The Company would record the fair value of an asset retirement obligation as a liability in the period in which the Company incurred a legal obligation for the retirement of tangible long-lived assets. A corresponding asset would also be recorded and depreciated over the life of the asset.

 

After the initial measurement of the asset retirement obligation, the liability is adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation.

 

Determination of any amounts recognized upon adoption is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates.


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For non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred, and they are reasonably estimable. Such costs are based on management’s estimate of amounts expected to be incurred when the remediation work is performed.

 

Share-Based Compensation

 

Share-based payments to employees and directors, including grants of employee stock options, are measured at fair value and expensed in the consolidated statement of operations over the vesting period.  

 

Recent Accounting Pronouncements

 

Accounting Standards Updates Adopted

 

In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820):  Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.  The update removes, modifies and makes additions to the disclosure requirements on fair value measurements.  The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.  The Company evaluated the new standard in the first quarter of 2020 and determined that ASU 2018-13 did not have an impact on the Company’s consolidated financial statement disclosures.

 

Accounting Standards Updates to Become Effective in Future Periods

 

In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740):  Simplifying the Accounting for Income Taxes.  The update contains a number of provisions intended to simplify the accounting for income taxes.  The update is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.  Management is evaluating the impact of this update on the Company’s consolidated financial statements.

 

Net Income (Loss) Per Share

 

The Company is required to have dual presentation of basic earnings per share (“EPS”) and diluted EPS.  Basic EPS is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including options and warrants to purchase the Company’s common stock. The potential dilutive common stock equivalents for each period are as follows:

 

For the six months ended June 30, 2020, stock options of 5,705,000 are excluded from the calculation of diluted income per share as the options’ exercise prices was not lower than the average share price during the period.  

 

For the six months ended June 30, 2019, stock options of 5,035,000 are excluded in the calculation of diluted income per share as the options’ exercise prices was not lower than the average share price during the period

 

2.  Mineral Interest Commitments  

 

The Company has two lease arrangements with landowners that own land parcels adjacent to the Company’s South Mountain patented and unpatented mining claims.  The leases were originally for a seven-year period, with annual payments of $20 per acre.  The leases were renewed for an additional 10 years at $30 per acre paid annually; committed payments are listed in the table below. The leases have no work requirements.

 

 

Annual Payment

Acree Lease (June)

$3,390 

Lowry Lease (October)

11,280 

     Total

$14,670 


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The Company has 78 unpatented claims (1,600 acres) in the Trout Creek area and 21 unpatented claims in the South Mountain area. The claim fees are paid on these unpatented claims annually as follows:

 

Target Area

2020

Trout Creek -State of Nevada

$12,090 

Trout Creek -Lander County, Nevada

940 

South Mountain-State of Idaho

3,255 

   Total

$16,285 

 

3.South Mountain Project 

 

BeMetals Option Agreement:

 

On February 27, 2019, the Company entered into an Option Agreement, (the “BeMetals Option Agreement”) with BeMetals Corp., a British Columbia corporation (“BeMetals”), and BeMetals USA Corp., a Delaware corporation (“BMET USA”), a wholly owned subsidiary of BeMetals.   Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of SMMI from TMRI, both wholly owned subsidiaries of the Company. SMMI is the Company’s subsidiary that holds the Company’s investment in the South Mountain project mineral interest.   The term of the agreement is for two years with BeMetals completing a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm.

 

Pursuant to the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the outstanding shares of SMMI from TMRI if the following obligations are satisfied: 

·Tranche 1: cash payment of $100,000 to TMRI within 1 business day of delivery of voting support agreements from shareholders of THMG who hold or control shares carrying more than 50% of the voting rights attached to all outstanding THMG Shares.  Payment was received on March 5, 2019 and is nonrefundable.  

·Tranche 2:  Tranche 2 conditions were completed on June 10, 2019. issuance of 10 million common shares in the capital of BMET USA to TMRI (received on June 10, 2019 with a fair value on that date of $1,883,875; and 

 

·BMET USA purchase of 2.5 million shares of THMG common stock at a price of $0.10 per share, for an aggregate purchase price of $250,000, on a private placement basis (received June 2019).  

 

·Tranche 3: cash payment of $250,000 on or before the 6-month anniversary of the Tranche 2.  Payment was received on December 10, 2019 and is nonrefundable. 

·Tranche 4: cash payment of $250,000 on or before the 15-month anniversary of the Tranche 2, which is September 10, 2020.  

·Tranche 5: cash payment of $250,000 on or before the 21-month anniversary of the Tranche 2, which is March 10, 2021.  

·Tranche 6: cash payment of $250,000 plus an additional payment paid in cash, BMET USA common shares or a combination of both, due on or before the 27-month anniversary of Tranche 2, which is September 10, 2021.  The calculation of the additional payment is an amount equal to the lesser of 50% of the market capitalization of BeMetals at the time, and the greater of either $10 million; or 20% the net present value of the South Mountain Project as calculated in a PEA.   

 

On May 18, 2020, the Company extended the BMET Option Agreement by three months from the existing BeMetals Option Agreement date, due to the COVID-19 pandemic, and business conditions surrounding restricted international travel, and corresponding access to capital markets. The Company’s financial position was not significantly impacted due to the extension.


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Concurrent with the BeMetals Option Agreement, BMET USA and SMMI entered into a management contract whereby BeMetals will pay $25,000 monthly to SMMI for management services to enable BMET to perform exploration and development work with respect to the South Mountain Project. Management service income of $75,000 per quarter for a total of $150,000 was recognized for the three and six periods ended June 30, 2020, respectively. Management service income of $50,000 was recognized for the three- and six-month periods ended June 30, 2019.

 

BeMetals provides funding to SMMI for ongoing project expenses, including office lease payments.    Under the terms of the Option Agreement, SMMI’s management provides BeMetals a request for fund monthly to cover the upcoming month’s expenses.   At June 30, 2020 and December 31, 2019, advances received from BeMetals that have not yet been spent totaled $7,356 and $78,539, respectively.

 

SMMI Joint Venture – OGT, LLC

The Company’s wholly owned subsidiary SMMI is the sole manager of the South Mountain Project in its entirety through a separate Mining Lease with Option to Purchase (“Lease Option”) with the Company’s majority-owned subsidiary OGT.  The Lease Option includes a capped $5 million less net returns royalties paid through the date of exercise.  The Lease Option expires in November 2026.  If SMMI exercises the option, the option payment of $5 million less advance royalties will be distributed 100% by OGT to OGT’s minority member.  Under the Lease Option, SMMI pays an advance $5,000 net returns royalty to OGT annually on November 4 which is distributed to OGT’s minority member.

 

4.  Investment in Equity Security

 

In June 2019 in connection with the BeMetals Option Agreement (see Note 3), the Company received 10,000,000 shares of BeMetals Corp. common stock that had a fair value of $1,883,875 when received.   At June 30, 2020, and December 31, 2019, the fair value of the shares is $2,349,971 and $1,735,830, respectively.   For the six-and three months ended June 30, 2020, the Company recognized an unrealized gain for the change in fair value of the investment of $614,141, and $1,400,412, respectively. For the six-and three months ended June 30, 2019, the Company recognized an unrealized loss for the change in fair value of the investment of $50,726 for both periods.

 

5.  Property and Equipment

 

The Company’s property and equipment are as follows:

 

 

 

 

 

 

June 30, 2020

 

December 31, 2019

Vehicles

$

22,441  

 

$22,441  

Buildings

 

65,071  

 

65,071  

Construction Equipment

 

36,447  

 

36,447  

Mining Equipment

 

58,646  

 

58,646  

 

 

182,605  

 

182,605  

Accumulated Depreciation

 

(167,172) 

 

(156,694) 

 

 

15,433  

 

25,911  

Land

 

280,333  

 

280,333  

Total Property and Equipment

$

295,766  

 

$306,244  

 

6. SBA PPP Loan

 

 

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (the “CARES Act”) Act was signed into United States law.   

 


13



In April 2020, the Company received a loan of $48,000 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I, Section 1102 and 1106 of the CARES Act.  The loan, which was in the form of a promissory note, as amended, dated April 21, 2020 issued by the Company (the “Note”); the Note matures on April 13, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on August 13, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. Qualifying expenses include payroll costs, costs used to continue group health care benefits, mortgage payments, rent, and utilities. The Company intends to use the entire loan amount for qualifying expenses, but there is no guarantee that the loan will be forgiven.

 

7. Related Parties Notes Payable

 

At June 30, 2020, and December 31, 2019 the Company had notes payable balances of $66,768 and $39,808 with Eric Jones, the Company’s President and Chief Executive Officer and Jim Collord, the Company’s Vice President and Chief Operating Officer, respectively.  These notes, as amended, bear interest at 1.0% to 2.0% per month and are due December 31, 2020.   

 

8.Related Party Transactions 

 

In addition to the related parties notes payable discussed in Note 7, the Company had the following related party transactions:  

 

Three of the Company’s officers began deferring compensation for services on April 1, 2015. On July 31, 2018, the Company stopped expensing and deferring compensation for the three Company officers in the interest of marketing the SMMI project. As part of the BeMetals agreement (Note 3), the Company resumed compensation for these officers on May 15, 2019. The officers deferred compensation balances at June 30, 2020 and December 31, 2019 represent the balances deferred prior to the BeMetals agreement and are as follows:  Eric Jones, President and Chief Executive Officer - $420,000; Jim Collord, Vice President and Chief Operating Officer - $420,000; and Larry Thackery, Chief Financial Officer - $201,500.

 

The Company engaged Baird Hanson LLP (“Baird”), a company owned by one of the Company’s directors, to provide legal services in 2018.  In advance of the BeMetals transaction Mr. Baird withdrew Baird Hanson LLP as counsel to avoid any appearance of a conflict with the then-proposed BeMetals Corp. transaction. At June 30, 2020 and December 31, 2019, the balance due to Baird was $206,685 and $216,685 respectively.  

 

Since 2017, Eric Jones has advanced funds to the Company for operating expenses. The balance of Mr. Jones’ advances at June 30, 2020 and December 31, 2019 was $17,146; the balance is included in accounts payable and other accrued liabilities on the consolidated balance sheet. At June 30, 2020 and December 31, 2019, the Company has a payable to Jim Collord of $20,476, attributed to reimbursement of expenses for the SMMI project.   The balance is included in accounts payable and other accrued liabilities on the consolidated balance sheet.

 

9. Stockholders’ Equity 

 

The Company’s common stock has a par value of $0.001 with 200,000,000 shares authorized. The Company also has 5,000,000 authorized shares of preferred stock with a par value of $0.0001.

 

10.Stock Options 

 

The Company has a Stock Incentive Plan (the “SIP”) that provides for the grant of stock options, incentive stock options, stock appreciation rights, restricted stock awards, and incentive awards to eligible individuals including directors, executive officers and advisors that have furnished bona fide services to the Company not related to the sale of securities in a capital-raising transaction.

 

On March 27, 2020, the Company granted 1,630,000 stock options to officers and directors of the Company. The fair value of the options was determined to be $159,740 using the Black Scholes model.  The options are


14



exercisable on or before March 29, 2025 and have an exercise price of $0.099.  The options were fully vested upon grant and the entire fair value was recognized as compensation expense during the quarter ended March 31, 2020.    

 

In March 2019 the Company granted 1,325,000 stock options to officers and directors of the Company. The options are exercisable on or before March 25, 2024 and have an exercise price of $0.09.  The fair value of the options was determined to be $117,088 using the Black Scholes model.  The options were fully vested upon grant and the entire fair value was recognized as compensation expense during the quarter ended March 31, 2019.    

 

The fair value of each option award was estimated on the date of the grant using the assumptions noted in the following table:

 

 

March 27, 2020

March 25, 2019

Stock price

$0.099

$0.09

Exercise price

$0.099

$0.09

Expected volatility

218.6%

209.5%

Expected dividends

-

-

Expected terms (in years)

5.0

5.0

Risk-free rate

0.39%

2.21%

 

The following is a summary of the Company’s options issued and outstanding under the SIP:

 

 

Shares

 

Weighted Average Exercise Price

Outstanding and exercisable at December 31, 2018

3,710,000  

 

0.09

Granted

1,325,000 

 

0.09

Outstanding and exercisable at December 31, 2019

5,035,000  

 

$0.09

Granted

1,630,000  

 

$0.099

Expired

(960,000) 

 

(0.06)

Outstanding and exercisable at June 30, 2020

5,705,000  

 

$0.10

 

The average remaining contractual term of the options outstanding and exercisable at June 30, 2020 was 2.91 years.  As of June 30, 2020, options outstanding and exercisable had no aggregate intrinsic value.


15



Item 2.  Management's Discussion and Analysis or Plan of Operation

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operation (“MD&A”) is intended to help the reader understand our financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying integral notes (“Notes”) thereto.  The following statements may be forward-looking in nature and actual results may differ materially.

 

COVID-19

 

In March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention. Its rapid spread around the world and throughout the United States prompted many countries, including the United States, to institute restrictions on travel, public gatherings and certain business operations. These restrictions disrupted economic activity in the Company’s business related to raising capital.  As of June 30, 2020, the disruption did not materially impact the Company’s financial statements. However, if the severity of the economic disruptions increase as the duration of the COVID-19 pandemic continues, the negative financial impact due to the BeMetals Option Agreement could be significantly greater in future periods.

 

The effects of the continued outbreak of COVID-19 and related government responses could have disruptions to the Company`s Option Agreement with BeMetals Corp. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of South Mountain Mines, Inc. (“SMMI”) from the Company. The term of the agreement is for two years starting June 10, 2019, with an option to extend an additional year, with BeMetals conducting a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company’s common stock.  In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments.  The COVID-19 outbreak could have a variety of adverse impacts to the Company, including their ability to continue operations of their exploration under the BeMetals Operation Agreement. Thunder Mountain Gold evaluated these impairment considerations and determined that no such impairments occurred as of June 30, 2020.

COVID-19 Additional Precautions

 

Thunder Mountain Gold Inc. has also taken steps to mitigate the potential risks to employees and suppliers posed by the spread of COVID-19. The Company has taken extra precautions for employees who work under the terms of the BeMetals Operation Agreement and have implemented work from home policies where appropriate.

 

As of June 30, 2020, there has been no material adverse impact to the BeMetals Operation Agreement. Management will continue to review and modify plans as conditions change. Despite efforts to manage these impacts to the Company, the ultimate impact of COVID-19 also depends on factors beyond management’s knowledge or control, including the duration and severity of this outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects. Therefore, management cannot estimate the potential future impact to financial position, results of operations and cash flows, but the impacts could be material.

 

Plan of Operation:

 

FORWARD LOOKING STATEMENTS: The following discussion may contain forward-looking statements that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include the following: inability to locate property with mineralization, lack of financing for exploration efforts, competition to acquire mining properties; risks inherent in the mining industry, and risk factors that are listed in the Company's reports and registration statements filed with the Securities and Exchange Commission.  

 

On February 27, 2019, the Company entered into an Option Agreement, (the “BeMetals Option Agreement”) with BeMetals Corp. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of South Mountain Mines, Inc. (“SMMI”) from Thunder Mountain Resources, Inc. (“TMRI”), both wholly owned subsidiaries of the Company. The term of the agreement is for two years with BeMetals


16



completing a PEA completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company’s common stock.  Through June 30, 2020, cash proceeds of $350,000 and $250,000 in exchange for shares of the Company’s common stock have been received.   In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments.  

 

The Company’s plan of operation for the next twelve months will be to provide support to BeMetals Corp. during their option period and help ensure that the South Mountain PEA is completed on schedule and within budget.

 

While South Mountain is the Company`s main focus, work to advance the Trout Creek Project will occur as time and available capital allows.

 

South Mountain Project, Owyhee County, Idaho

 

Under the BeMetals Corporation (TSX-V:  BMET) Option Agreement, BeMetals and Thunder Mountain Gold formed a project team early in 2019 that is focused on advancing the South Mountain Project. This Boise Idaho-based team includes key management of Thunder Mountain Gold Inc., who have coordinated re-establishment of the Project site prior to the start of drilling.  In addition, BeMetals appointed a project manager and project geologist for this team, along with technical and underground support.

 

BeMetals (BMET) commenced drilling at South Mountain in July of 2019 and drilled twenty-one holes totaling 7,517 feet (2,290 meters) from five underground drilling stations within the Sonneman level. The drilling program was designed to test potential down plunge extensions, and overall continuity to the mineralized zones and confirm the grade distribution of the current polymetallic mineral resource. All of the drill core recovered from the drilling was logged on site and assayed by ALS Chemex. Selected intervals and results are summarized below in Tables 1 and 2.   

 

Picture 2 

Long Section of Sonneman Level, (Looking northeast), showing Phase One 21 borehole locations

 

South Mountain Project - Background

 

The South Mountain Project is considered an advanced stage, high-grade zinc-silver-gold exploration or pre-development project. The land package at South Mountain consists of a total of 17 patented mining claims encompassing approximately 326 acres, 21 unpatented mining lode claims covering approximately 290 acres, and approximately 489 acres of leased private land. In addition, the project owns 360 acres of private land (mill site) not


17



contiguous with the mining claims. All holdings are located in the South Mountain Mining District, Owyhee County, Idaho.

 

The property is located approximately 70 air miles southwest of Boise, Idaho and approximately 24 miles southeast of Jordan Valley, Oregon. It is accessible by highway 95 driving south from the Boise area to Jordan Valley Oregon, then by traveling southeast approximately 22 miles back into Idaho, via Owyhee County road that is dirt and improved to within 4 miles of historic mine site. The last 4 miles up the South Mountain Mine road are unimproved dirt road. The property is accessible year-round to within 4 miles of the property, where the property is accessible from May thru October without plowing snow. There is power distribution within 4 miles of the site as well. The climate is considered high desert. The Company has water rights on the property, and there is a potable spring on the property that once supplied water to the main camp.

 

South Mountain Mine History

 

The limited historic production peaked during World War II when, based on smelter receipts, the production of direct shipped ore totaled as follows:  

 

Metal

Grade

Total Metal

Zinc

14.5%

15,593,100 lbs (7,072,900 Kg)

Silver

10.6 opt   (363.4 g/t)

566,440 ozs  (17,618,200 grams)

Gold

0.058 opt   (1.99 g/t)

3,120 ozs  (96,980 grams)

Copper

1.4%

1,485,200 lbs  (6,320 Kg)

Lead

2.4%

2,562,300 lbs  (1,162,250 Kg)

Anaconda Smelter – Toole Utah - Crude Ore Shipment Head Grades

1941-1953 Total Tons:  53,653 (48,670 tonnes)

 

In addition to the direct-ship ore, a flotation mill was constructed and operated during the late-1940s and early-1950s.

From the 1954 South Mountain Mill report, recoveries were reported as follows: 

 

1954 South Mountain Historic Mill Report:

 

Metal

Head Grades

Recovery

Zinc

6.7%

80%

Silver

17.5 opt (600 g/t)

85%

Gold

0.02 opt  (0.7 g/t)

75%

Copper

3.2%

90%

Lead

1%

90%

These are historic grades and recoveries not confirmed by the Company, but reportedly

mined from a small 39,600-ton (35,900 tonnes) copper rich block in the Texas zone.

 

South Mountain Mines Inc. (an Idaho Corporation) owned the patented claims from 1975 to the time the Company purchased the entity in 2007. They conducted extensive exploration work including extending the Sonneman Level by approximately 1,500 feet to intercept the down-dip extension of the Texas sulfide mineralization mined on the Laxey Level approximately 400 feet up-dip from the Sonneman.  High grade sulfide mineralization was intercepted and confirmed on the Sonneman Extension.  In 1985 South Mountain Mines Inc. completed a feasibility study based on historic and newly developed ore zones exposed in their underground workings and drilling.  Although they determined positive economics, and that the resource was still open at depth with a large upside potential, the project was idled and placed into care and maintenance.

 

In 2008, the Company contracted Kleinfelder, Inc., a nationwide engineering and consulting firm, to complete a technical report “Resources Data Evaluation, South Mountain Property, South Mountain Mining District, Owyhee County, Idaho”. The technical report was commissioned by Thunder Mountain Resources, Inc. to evaluate all the existing data available on the South Mountain property.  Kleinfelder utilized a panel modeling method using this data to determine potential mineralized material remaining and to make a comparison with the resource determined by South Mountain Mines in the mid-1980s. Kleinfelder’s calculations provided a potential resource that is consistent with South Mountain Mines’ (Bowes 1985) historic reserve model.


18



In 2009, the Company contracted a third-party consulting firm that incorporated  all the new drill and sampling data into an NI 43-101 Technical Report.  This report was completed as part of the Company’s dual listing on the TSX Venture Exchange in 2010.  The Company is also traded in the U.S. on the OTCQB under ticker THMG.

 

In January of 2018, the Company engaged Hard Rock Consulting LLC (HRC) from Denver, Colorado to update the South Mountain Project 43-101. HRC concluded that significant potential exists to increase the known mineral resource with additional drilling, as well as to upgrade existing mineral resource classifications with additional infill drilling.  HRC also determined that the conceptual geologic model is sound, and, in conjunction with drilling results, indicates that mineralization is essentially open in all directions, and is continuous between underground levels and extends to the surface.  

 

Hard Rock Consulting also noted that:

 

·THMG technical staff has thorough understanding of the geology of the South Mountain Project, and that the appropriate deposit model is being applied for exploration.  

 

·Because the Project is largely located on and surrounded by private land, it greatly simplifies Project approvals compared to mining projects involving public lands.    

 

·Initial metallurgical testing demonstrates that the South Mountain massive sulfide mineralization is amenable to differential flotation and concentration. 

 

·The current mineral resource at the South Mountain Project is more than sufficient to warrant continued planning and development to further advance the Project. 

 

Gold Breccia

 

HRC also reviewed the data on the anomalous gold-bearing multi-lithic breccia that was identified by THMG conducting reconnaissance work at South Mountain.  In 2010, five holes were drilled in the anomaly for a total footage of 3,530 feet, and 705 total samples taken every five feet of drill hole. Of the 705 samples taken, 686 samples contained anomalous gold, or 97% of the samples. The highest-grade intercept ran 0.038 ounce per ton.   HRC reviewed the reports done on the breccia completed by both Kinross and Newmont; of note was Newmont’s comparison of the geology to the Battle Mountain Complex in Nevada.  

 

The Technical Report was authored by Ms. J.J. Brown, P.G., SME-RM, Mr. Jeffrey Choquette, P.E., and Mr. Randy Martin, SME-RM, all of Hard Rock Consulting, each of whom is an independent qualified person for the purposes of NI 43-101 The NI 43-101 Technical Report has an effective date of April 7, 2018 and has been filed in Canada on SEDAR in accordance with NI 43-101.  The Report can be reviewed on the Company`s website at www.thundermountaingold.com.

 

Note to United States investors concerning estimates of measured, indicated and inferred resources. Disclosure of the NI-43-101 has been prepared in accordance with the requirements of Canadian securities laws, including Canadian National Instrument 43-101 (“NI 43-101”), which differ from the current requirements of the U.S. Securities and Exchange Commission (“SEC”) set out in Industry Guide 7.  The Highlights of South Mountain NI-43-101 section refers to “mineral resources,” “measured mineral resources,” “indicated mineral resources,” and “inferred mineral resources.”  While these categories of mineralization are recognized and required by Canadian securities laws, they are not recognized by Industry Guide 7 and are not normally permitted to be disclosed in SEC filings.  United States investors are cautioned not to assume that all or any of measured, indicated or inferred mineral resources will ever be converted into mineral reserves.  Under Industry Guide 7, mineralization may not be classified as a “reserve” unless the mineralization can be economically or legally extracted at the time the “reserve” determination is made.  "Inferred mineral resources" have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian reporting standards; however, Industry Guide 7 normally only permits issuers to report mineralization that does not constitute "reserves" by Industry Guide 7 standards as in-place tonnage and grade without reference to unit measures.  Accordingly,


19



information contained in this 10-Q containing descriptions of South Mountain’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of Industry Guide 7. 

 

Phase I Drilling at South Mountain under BeMetals Option Agreement

 

The principal objectives of the Phase 1 work plan at South Mountain was to test for potential extensions of the mineralized zones and confirm the grade distribution of the current polymetallic mineral resource estimate. The Company has now successfully completed the phase 1 program comprised of 20 underground drill holes for a total of approximately 2,290 meters. Geological logging and sampling of all drill holes have now been completed with all analytical results received. These results have been compiled into the Project’s geological database and will be used to design the phase 2 drilling program for 2020. Following a planned phase 2 drilling program, all new results will be integrated into an updated mineral resource estimation for the Project, expected to be completed towards the end of this year. Further expansion and definition of the DMEA, Texas, and MB4 zones, as well as other targets within reach of underground drill testing from the Sonneman level, provide excellent exploration upside for the 2020 program.

 

Table 1. BeMetal`s Analytical and Assay Results for the Phase 1 Drilling Program

Drill Hole ID, Zone

& Interval

From

(m)

To

(m)

Core Interval (m)

Zn %

Ag

g/t

Au

g/t

Pb %

Cu %

DMEA Zone

 

 

 

 

 

 

 

 

SM19-002

 

 

 

 

 

 

 

 

          Interval 1

46.88

57.39

10.51

17.81

226

2.41

1.59

0.16

          Interval 2

67.85

71.63

3.78

5.45

145

8.39

0.58

0.15

          Interval 3

85.83

96.39

10.56

11.42

123

4.43

0.36

0.52

 

 

 

 

 

 

 

 

 

SM19-003

 

 

 

 

 

 

 

 

           Interval 1

51.18

75.35

24.17

11.12

267

3.44

3.75

0.29

          Including

51.18

60.78

9.60

11.74

437

5.99

8.68

0.38

          Including

62.09

75.35

13.26

11.77

169

1.88

0.54

0.25

          Interval 2

77.60

81.24

3.64

9.74

331

1.94

1.11

0.34

SM19-005

75.13

86.37

11.23

7.97

128

1.20

0.91

0.24

 

 

 

 

 

 

 

 

 

SM19-006

28.01

43.71

15.70

21.27

147

8.04

0.77

0.30

 

 

 

 

 

 

 

 

 

SM19-007

26.97

39.17

12.20

18.16

122.6

4.41

1.55

0.16

 

 

 

 

 

 

 

 

 

SM19-014

 

 

 

 

 

 

 

 

        Interval 1

105.31

120.40

15.09

9.59

127.1

1.50

0.69

0.28

        Interval 2

138.07

143.88

5.81

4.88

76.9

2.55

0.21

0.12

        Interval 3

155.17

158.95

3.78

14.49

145.5

0.37

0.25

0.48

         Interval 4

184.40

189.56

5.15

0.28

79.9

2.08

0.15

0.06

        Interval 5

250.65

258.94

8.29

8.11

178.7

0.48

0.57

1.73

        Interval 6

266.33

268.16

1.83

1.32

158.9

2.56

0.56

0.11

Texas Zone

 

 

 

 

 

 

 

 

SM19-010

 

 

 

 

 

 

 

 

       Interval 1

24.41

31.62

7.21

4.37

155.2

0.13

0.03

2.07

       Interval 2

53.11

63.15

10.04

0.40

135.1

0.07

0.01

1.75

* Note: 1.00 meter (m) is equal to 3.28 feet (ft).  One gram per tonne (g/t) is

equal to 0.032 ounces per ton (oz/t, or o.p.t.)

 

Table 2 below shows the latest results received from holes SM19-016, SM19-017 and SM19-018:


20



Table 2. Drill Holes SM19-016, SM19-017 and SM19-018: Analytical and Assay Results

Drill Hole ID: Zone

& Interval

From

(m)

To

(m)

Core Interval (m)

Zn %

Ag

g/t

Au

g/t

Pb %

Cu %

DMEA Zone

 

 

 

 

 

 

 

 

SM19-016

 

 

 

 

 

 

 

 

          Interval 1

112.33

132.05

19.72†

0.07

8.39

1.52

0.01

0.002

          Interval 2

136.55

146.64

10.09

3.15

151.3

1.68

0.66

0.22

          Interval 3

158.27

163.59

5.32†

0.59

46.8

1.81

0.11

0.04

          Interval 4

184.18

188.64

4.47†

5.04

482.0

4.27

5.80

0.43

          Interval 5

227.32

230.83

3.51

8.85

136.2

0.17

1.25

1.67

MB4 Target Zone

 

 

 

 

 

 

 

 

SM19-017

 

 

 

 

 

 

 

 

         Interval 1

1.37

5.23

3.86*

12.90

314.1

0.26

0.88

1.08

         Interval 2

16.32

24.08

7.76*

10.23

91.4

0.07

0.36

0.55

SM19-018

 

 

 

 

 

 

 

 

         Interval 1

0.00

18.62

18.62*

5.15

73.2

0.11

0.02

0.41

         Including

8.53

18.62

10.09*

8.06

97.0

0.15

0.02

0.68

 

Note: Reported widths in tables 1 & 2 are drilled core lengths as true widths are unknown at this time. It is estimated based upon current data that true widths might range between 60-80% of the drilled intersection. For drill holes SM19-017* and SM19-018* true widths are unknown as these are the first drill intersections of the MD4 target. Intervals cut offs are based upon visual contacts of massive sulfide units with no more than 1.75 meters of internal skarn. For SM19-010 a nominal 0.5% copper cut off has been applied to determine the boundaries of the intersections for this skarn hosted mineralization with no more than 1.4m of internal dilution. For SM19-016† (intervals 1, 3 and 4) a nominal 0.46 g/t gold cut off has been applied to determine the boundaries of the intersections with no internal dilution. For SM19-017 & 018 a nominal 2.4% zinc cut off has been applied to determine the boundaries of the intersections for this skarn hosted mineralization with no more than 2m of internal dilution. (Note: See details below in QA/QC section). 1.00 meter (m) is equal to 3.28 feet (ft).  One gram per tonne (g/t) is equal to 0.032 ounces per ton (oz/t, or o.p.t.)

 

The above drill holes returned significant intersections of both massive sulfide and skarn styles of mineralization. Important sulfide minerals are pyrrhotite, sphalerite, galena, arsenopyrite and chalcopyrite. During the planned phase 2 campaign at South Mountain, the Company will carry out mineralogy and metallurgical test work studies to confirm historical other previous high-grade results.

 

Drill holes SM19-015, SM19-019, SM19-020 deviated from the target and did not return the anticipated drill intercepts.  However, this information is valuable in determining to the design and target areas of mineralization in the 2020 phase 2 program. Drill hole SM19-021 was terminated at 10 meters with a significant drill rig break down near the planned conclusion of the phase 1 program.


21



Picture 6 

 

Figure 1: 3D Perspective View inclined at 20 degrees looking north-north-east, showing locations of rib-sampling, priority target zones, and the phase 1 drill holes and highlighted the recent SM19-016, SM19-017 and SM19-018

 

Underground core drilling is being conducted to extend and upgrade the South Mountain resource - testing the continuity and down-dip extensions of the high-grade polymetallic massive sulfide zones.  The Company plans additional core drilling in the DMEA and Laxey zones to complete the confirmation and extensional drilling. In addition, there are plans to retrieve bulk samples for metallurgical test work. More than 15,000 feet (4,500 meters) have been drilled at South Mountain and included in the model. The South Mountain historic ore zones remain open down-dip on the zones encountered. The successful drilling and development work prove that the South Mountain resource continues to grow with potential to increase the resource substantially.


22



Picture 5 

 

Figure 2: Plan View of the Sonneman & Laxey Levels, South Mountain Deposit, showing locations of rib-sampling, priority target zones, and drill holes SM19-016, SM19-017 and SM19-018


23



Picture 1 

 

Figure 3: Plan View of Sonneman & Laxey Levels, showing locations of previously reported rib sampling

 

Underground Pre-Development Work Completed in 2012 thru 2014

 

The reconstruction of the Sonneman and Laxey drifts continued successfully until January 2014 when the Project went into care and maintenance.  The Sonneman Level advanced 2,711 feet from the portal and is constructed to 12 feet by 12 feet for future development and mining. Approximately 350 feet of drift remains to be rehabilitated to reach the historic Texas massive sulfide zone located at the end of the old workings.  This advance through this zone will allow for the drill stations and underground drilling to further define the high-grade resource encountered by William Bowes group in the 1980s.

 

The historic 2,200-foot long Laxey Level drift has been rehabilitated to 10 feet by 10 feet for approximately 720 feet.  At that location the old drift had become unstable at an intrusive dike and preparations were being made to advance through the caved area.  This old tunnel was rehabilitated and accessed along its full length in 2008, at which point it intercepted the Texas massive sulfide zone, one of many that had limited mining during and after the World War II period. High-grade massive sulfide is exposed in this area, and the core drilling during 2013 proved its continuity between the Laxey Level and the surface, an up-dip distance of nearly 400 feet.

 

During the development of the Sonneman Level during 2012-2013 several massive sulfide mineralized zones were mined through.  Detailed rib sampling along some of these zones yielded the following results:


24



Highlights from 2013-2014 Rib-Sampling Program

 

DMEA Zones 1/2/3; 130 ft. (39.62m) @ 16.76% Zinc (“Zn”), 4.11 ounces per ton (“o.p.t.”) (140.91 grams per tonne (“g/t”)) Silver (“Ag”), 0.089 o.p.t. (3.08 g/t Gold) (“Au”), 0.78% Copper (“Cu”) and 0.38% Lead (“Pb”)

Muck Bay #4 Zone; 23 ft. (7.01m) @ 14.69% Zn, 7.18 o.p.t. (246.17 g/t) Ag, 0.34% Cu and 0.65% Pb

Laxey Zone; 40 ft. (12.19m) @ 16.44% Zn, 13.97 o.p.t. (478.97 g/t) Ag, 0.020 o.p.t. (0.68 g/t) Au, 0.70% Cu and 0.86% Pb

 

(Results previously reported in the Company`s annual / quarterly reports; news releases; and the May 2019 independent technical report titled, “National Instrument 43-101 Technical Report Updated Mineral Resource Estimate for the South Mountain Project Owyhee County, Idaho, USA.” 1.00 meter (m) is equal to 3.28 feet (ft).  One gram per tonne (g/t) is equal to 0.032 ounces per ton (oz/t, or o.p.t.))

 

QUALITY ASSURANCE AND QUALITY CONTROL PROCEDURES

 

The South Mountain Project employs a rigorous QC/QA program that includes blanks, duplicates and appropriate certified standard reference material. All samples are introduced into the sample stream prior to sample handling/crushing to monitor analytical accuracy and precision. The insertion rate for the combined QA/QC samples is 10 percent or more depending upon batch sizes. ALS Global completed the analytical work with the core samples processed at their preparation facility in Reno, Nevada, U.S.A. All analytical and assay procedures are conducted in the ALS facility in North Vancouver, BC. The samples are processed by the following methods as appropriate to determine the grades; Au-AA23-Au 30g fire assay with AA finish, ME-ICP61-33 element four acid digest with ICP-AES finish, ME-OG62-ore grade elements, four acid with ICP-AES finish, Pb-OG62-ore grade Pb, four acid with ICP-AES finish, Zn-OG62-ore grade Zn, four acid digest with ICP-AES finish, Ag-GRA21-Ag 30g fire assay with gravimetric finish.

 

Qualified Person – Larry Kornze is the Qualified Person as defined by National Instrument 43-101 responsible for the technical data reported in this report.

 

This property is without known reserves and the proposed program is exploratory in nature according to Instruction 3 to paragraph (b)(5) of Industry Guide 7. There are currently no permits required for conducting exploration in accordance with the Company`s current board approved exploration plan.


25



Picture 8 

 

Trout Creek Project, Lander County, Nevada

 

The Trout Creek project is a highly prospective gold exploration target located along the western flank of the Shoshone Mountain Range in the Reese River Valley in Lander County, Nevada. The claim package consists of 78 unpatented mining claims (approximately 1560 acres) that are situated along a recognizable structural zone in the Eureka-Battle Mountain mineralized gold trend.  Because the project is surrounded by Newmont Mining`s land package, Thunder Mountain struck a joint venture agreement with Newmont Mining on some of their adjoining mineral rights sections and aliquot parcels from 2011 thru 2016. On October 27, 2016 the Company terminated the exploration agreement with Newmont Mining Corporation to concentrate their efforts on the South Mountain Project.  The Company retained the 78-claim package by paying annual fees to BLM of $3,255 and Lander County $940 fees.

 

The Project is located approximately 155 air miles northeast of Reno, Nevada, or approximately 20 miles south of Battle Mountain, Nevada, in Sections 10, 11, 14, 16, 21, 22, 27; T.29N.; R.44E. Mount Diablo Baseline & Meridian, Lander County, Nevada. Latitude:   40    23’ 36” North, Longitude: 117   00’ 58” West. The property is generally accessible year-round by traveling south from Battle Mountain Nevada on state highway 305, which is paved.

 

The Trout Creek target is anchored by a regional gravity anomaly on a well-defined northwest-southeast trending break in the alluvial fill thickness and underlying bedrock.  Previous geophysical work in the 1980s revealed an airborne magnetic anomaly associated with the same structure, and this was further verified and outlined in 2008 by Company personnel, with consultation from Jim Wright – Wright Geophysics using a ground magnetometer. The target is covered by alluvial fan deposits of generally unknown thickness, shed from the adjacent Shoshone Range, a fault block mountain range composed of Paleozoic sediments of both upper and lower plate rocks of the Roberts Mountains thrust.

 

An extensive data package on the area was made available to Thunder Mountain Gold by Newmont during the joint exploration agreement period (2011-2016) that significantly enhanced the target area. This, along with fieldwork consisting of mapping and sampling the altered and mineralized structures that can be followed through the Shoshone Range.  Of importance is that these structures align with the Cortez-Pipeline deposits and the Phoenix deposit (part of the Eureka-Battle Mountain-Getchell Trend).  


26



In addition to the geologic fieldwork, Wright Geophysics conducted a ground gravity survey and CSMAT over the pediment target area and this provided insight into the gravel-bedrock contact as well as defining the favorable structural setting within the buried bedrock.  An untested drill target was identified under the gravel pediment along these structures, and the geophysics showed that the bedrock was within 500 feet of the surface, which is reasonable depth for exploration drilling and potential mining if a significant mineralization is encountered.

 

The ongoing exploration field work, including claim maintenance and assessment, is financed by the Company through sale of unregistered common stock using private placements with accredited investors.  Future work will be funded in the same manner or through a strategic partnership with another mining company.  

 

There are currently no environmental permits required for the planned exploration work on the property. In the future, a notice of intent may be required with the Bureau of Land Management.  This property is without known reserves and the proposed program is exploratory in nature according to Instruction 3 to paragraph (b)(5) of Industry Guide 7.

 

Competition

 

We are an exploration stage company. We compete with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration and development companies with whom we compete have greater financial and technical resources than us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.

 

Employees

 

Three of the Company’s officers began deferring compensation for services on April 1, 2015. On July 31, 2018, the Company stopped expensing and deferring compensation for the three Company officers in the interest of marketing the SMMI project. As part of the BeMetals agreement (Note 3), the Company resumed compensation for these officers on May 15, 2019. The officers deferred compensation balances at June 30, 2020 represent the balances deferred prior to the BeMetals agreement and are as follows:  Eric Jones, President and Chief Executive Officer - $420,000; Jim Collord, Vice President and Chief Operating Officer - $420,000; and Larry Thackery, Chief Financial Officer - $201,500.

 

Results of Operations:

 

For the six-months ended June 30, 2020, the Company recorded net income of $337,319, or $0.01 per share compared to a net income of $1,066,927, or $0.02 per share for the same period of 2019.  The decrease of $729,608 is due to the unrealized gain on investment related to the Company receiving 10,000,000 shares of BeMetals Corp. common stock. The 2019 BeMetals common stock value is offset by subsequent quarterly changes in stock price of the BeMetals common stock. (See South Mountain Project above). On June 2019 the Company received 10,000,000 shares of BeMetals Corp. common stock that had a fair value of $1,883,875 when received. At June 30, 2020, the fair value of the shares is $2,349,971.

 

Three-month period comparisons

Total operating expenses for the three months ended June 30, 2020 of $120,920 decreased from the same respective time period in 2019 by $16,925 or 12%. Exploration expenses for the three months ended June 30, 2020 decreased by $2,785 when compared to same period in 2019. Legal and accounting costs decreased in the six-month period ended June 30, 2020 compared to 2019 by $19,738 for a total of $5,972.  This decrease can be associated with legal expenses surrounding the BeMetals Option Agreement signed on February 27, 2019. Management and administrative expense increased by $332.


27



Six-month period comparisons

The Company recognized $150,000 in management services income during the six-month period ended on June 30, 2020. Total operating expenses for the period ending June 30, 2020 of $420,085 decreased from the same respective time period in 2019 by $4,695 or 1%. Exploration expenses for the six months ended June 30, 2020 decreased by $8,084 when compared to same period in 2019. Legal and accounting costs decreased in six-month period ended June 30, 2020 compared to 2019 by $80,290 for a total of $34,431.  This decrease can be associated with legal expenses surrounding the BeMetals Option Agreement signed on February 27, 2019. Management and administrative expense increased by $88,415 or 31% principally due to stock options compensation of $159,740 issued to our officers and directors on March 30, 2020.

 

The consolidated financial statements for the six-months ended June 30, 2020 have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the consolidated financial statements as of June 30, 2020, we have sufficient cash reserves to cover normal operating expenditures for the following 12 months.

 

Liquidity and Capital Resources:

 

For the six months ended June 30, 2020, the Company reports net cash used by operating activities of $197,399 compared to cash used by operating activities in 2019’s comparable period of $242,630.  During the six-month period ended June 30, 2020, no cash flows from investing activities occurred compared with $100,000 in the same period of 2019 as a result of proceeds from mineral interest.  During the six months ended June 30, 2019 $50,000 of cash was provided by borrowings on a related party note payable less payments on borrowings of $10,000.  As a result, the Company reported a net cash decrease of $149,399 for the period ended June 30, 2020 to a net cash increase of $147,370 in 2019’s comparable period.

 

In April 2020, the Company received a loan of $48,000 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I, Section 1102 and 1106 of the CARES Act.  The loan, which was in the form of a promissory note, as amended, dated April 21, 2020 issued by the Company (the “Note”); the Note matures on April 13, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on August 13, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses

 

The Company has historically incurred losses, however, under the BeMetals Option Agreement, the Company now has a recurring source of revenue, and its ability to continue as a going concern is no longer just dependent on equity capital raises and borrowings.  The Company believes it has the ability to raise capital in order to fund its future exploration and working capital requirements if necessary.

 

Potential additional sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of our stock, or alternative methods such as mergers or sale of our assets. No assurances can be given, however, that we will be able to obtain any of these potential sources of cash.

 

Our plans for the long-term continuation as a going concern include financing our future operations through sales of our common stock and/or debt and the eventual profitable exploitation of our mining properties. Our plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for equity in the property.

 

In addition to the BeMetals Corp. Option Agreement, we believe that the Company will be able to meet its financial obligations by the following:

 

·July 10, 2020, we had $95,660 cash in our bank accounts. 

·Management is committed to manage expenses of all types to not exceed the on-hand cash resources of the Company at any point in time, now or in the future.  

·The Company will also consider other sources of funding, including potential mergers and/or additional farm-out of its other exploration property. 


28



For the six-month June 30, 2020, net cash used in operating activities was $197,399, consisting of net income of $337,319 offset by the non-cash items (Unrealized gain on Investment in BeMetals $614,141) and changes in current assets and current liabilities. There was no cash provided by investing or financing activities for the period ended June 30, 2020.

 

Our future liquidity and capital requirements will depend on many factors, including timing, cost and progress of our exploration efforts, our evaluation of, and decisions with respect to, our strategic alternatives, and costs associated with the regulatory approvals. If it turns out that we do not have enough cash to complete our exploration programs, we will attempt to raise additional funds from a public offering, a private placement, mergers, farm-outs or loans.

 

We know that additional financing will be required in the future to fund our planned operations. We do not know whether additional financing will be available when needed or on acceptable terms, if at all. If we are unable to raise additional financing when necessary, we may have to delay our exploration efforts or any property acquisitions or be forced to cease operations. Collaborative arrangements may require us to relinquish our rights to certain of our mining claims.

 

Private Placement

 

On February 27, 2019, the Company entered into an Option Agreement, (the “BeMetals Option Agreement”) with BeMetals Corp., a British Columbia corporation (“BeMetals”), and BeMetals USA Corp., a Delaware corporation (“BMET USA”), a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, in the second quarter 2019, BeMetals purchased 2.5 million shares of the Company’s common stock at a price of $0.10 per share, for an aggregate purchase price of $250,000, in a private placement. Use of proceeds are for general corporate working capital. This private placement was approved by the TSX-V.

 

The offering is believed to be exempt from registration pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(6) the Securities Act of 1933, as amended.  The securities offered, sold, and issued in connection with the private placement have not been or are not registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements.

 

Contractual Obligations

During 2008 and 2009, three lease arrangements were made with landowners that own land parcels adjacent to the Company’s South Mountain patented and unpatented mining claims.  The leases were for a seven-year period, with options to renew, with annual payments (based on $20 per acre) listed in the following table.  The leases have no work requirements.

 

Contractual obligations

Payments due by period

Total*

Less than 1 year

2-3 years

4-5 years

More than 5 years

Acree Lease (yearly, June)(1)

$16,950

$3,390

$6,780

$3,390

$         -

Lowry Lease (yearly, October)(1)(2)

$56,400

$11,280

$22,560

$11,280

$         -

OGT LLC(3)

$35,000

$5,000

$10,000

$10,000

$ 5,000

     Total

$108,350

$19,670

$39,340

$24,670

$ 5,000

 

(1)Amounts shown are for the lease periods years 12 through 16, a total of 4 years that remains after 2019. Lease was extended an additional 10 years at $30/acre after 2014. 

(2)The Lowry lease has an early buy-out provision for 50% of the remaining amounts owed in the event the Company desires to drop the lease prior to the end of the first seven-year period. 

(3)  OGT LLC, managed by the Company’s wholly owned subsidiary SMMI, receives a $5,000 per year payment for up to 10 years, or until a $5 million capped NPI Royalty is paid.


29



Critical Accounting Policies

 

We have identified our critical accounting policies, the application of which may materially affect the financial statements, either because of the significance of the financials statement item to which they relate, or because they require management’s judgment in making estimates and assumptions in measuring, at a specific point in time, events which will be settled in the future.  The critical accounting policies, judgments and estimates which management believes have the most significant effect on the financial statements are set forth below:

 

a)Estimates. Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain.  As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex.  Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates.  Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation and/or financial condition.  

 

b)Stock-based Compensation. The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation” using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. 

 

c)Income Taxes. We have current income tax assets recorded in our financial statements that are based on our estimates relating to federal and state income tax benefits. Our judgments regarding federal and state income tax rates, items that may or may not be deductible for income tax purposes and income tax regulations themselves are critical to the Company’s financial statement income tax items. 

 

d)Investments. In a joint venture where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest.  In determining whether significant influences exist, the Company considers its participation in policy-making decisions and its representation on the venture’s management committee. 

 

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

 

Not required for smaller reporting companies.

 

Item 4.  Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

At the end of the period covered by this report, an evaluation was carried out under the supervision of, and with the participation of, the Company’s Management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) of the Securities and Exchange Act of 1934, as amended).  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were adequately designed and effective in ensuring that information required to be disclosed by the Company in its reports that it files or submits to the SEC under the Exchange Act, is recorded, processed, summarized and reported within the time period specified in applicable rules and forms.

 

Changes in Internal Controls Over Financial Reporting

 

During the quarter covered by this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


30



PART II – OTHER INFORMATION

 

Item 1.  Legal Proceedings.

None.

Item 1A. Risk Factors.

 

The effects of the continued outbreak of COVID-19 and related government responses could have disruptions to the Company`s Option Agreement with BeMetals Corp. Under the terms of the BeMetals Option Agreement, BMET USA will be entitled to purchase 100% of the issued and outstanding shares of South Mountain Mines, Inc. (“SMMI”) from the Company. The term of the agreement is for two years starting June 10, 2019, with an option to extend an additional year, with BeMetals conducting a preliminary economic assessment ("PEA") completed by a mutually agreed third-party engineering firm. Over its term, this agreement requires cash payments to the Company of $1,350,000; $1,100,000 in cash and $250,000 in exchange for shares of the Company’s common stock.  In the event that BeMetals decides not to proceed with the South Mountain Project, BeMetals will not be obligated to make any additional payments.  The COVID-19 outbreak could have a variety of adverse impacts to the Company, including their ability to continue operations of their exploration under the BeMetals Operation Agreement. Thunder Mountain Gold evaluated these impairment considerations and determined that no such impairments occurred as of June 30, 2020.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

 

On February 27, 2019, the Company entered into an Option Agreement, (the “BeMetals Option Agreement”) with BeMetals Corp., a British Columbia corporation (“BeMetals”), and BeMetals USA Corp., a Delaware corporation (“BMET USA”), a wholly owned subsidiary of BeMetals. Under the terms of the BeMetals Option Agreement, among other conditions, BeMetals purchased 2.5 million shares of the Company’s common stock at a price of $0.10 per share, for an aggregate purchase price of $250,000, in a private placement.  This private placement has been approved by the TSX-V.

 

Item 3.  Defaults Upon Senior Securities.

 

None.

 

Item 4.  Mine Safety Disclosures

 

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities.

 

During the six-month period ended June 30, 2019, the Company did not have any operating mines and therefore had no such specified health and safety violations, orders or citations, related assessments or legal actions, mining-related fatalities, or similar events in relation to the Company’s United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act.

 

Item 5.  Other Information

 

None.


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Item 6.  Exhibits

 

(a) Documents which are filed as a part of this report: 

 

Exhibits:

 

31.1*Certification Required by Rule 13a-14(a) or Rule 15d-14(a). Jones 

31.2*Certification Required by Rule 13a-14(a) or Rule 15d-14(a). Thackery 

32.1*Certification required by Rule 13a-14(a) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. Jones 

32.2*Certification required by Rule 13a-14(a) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. Thackery 

101.INS*XBRL Instance Document 

101.SCH*XBRL Taxonomy Extension Schema Document 

101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document 

101.DEF*XBRL Taxonomy Extension Definition Linkbase Document 

101.LAB*XBRL Taxonomy Extension Label Linkbase Document 

101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document 

 

* - Filed herewith


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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(b) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.

 

THUNDER MOUNTAIN GOLD, INC.

 

/s/ Eric T. Jones

By                                                          

Eric T. Jones

President and Chief Executive Officer

Date: August 10, 2020

 

Pursuant to the requirements of the Securities Act of 1934 this report signed below by the following person on behalf of the Registrant and in the capacities on the date indicated.

 

/s/ Larry Thackery 

By                                                          

Larry Thackery

Chief Financial Officer

Date: August 10, 2020


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