UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from _______________________to___________________________
Commission File Number:
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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.
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issuer’s common stock, as of May 15, 2023:
DESERT HAWK GOLD CORP.
Form 10-Q
March 31, 2023
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
DESERT HAWK GOLD CORP.
CONDENSED INTERIM BALANCE SHEETS (UNAUDITED)
| March 31, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Inventories (NOTE 4) | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| INVENTORIES (NOTE 4) | ||||||||
| PROPERTY AND EQUIPMENT, net (NOTE 5) | ||||||||
| MINERAL PROPERTIES AND INTERESTS, net (NOTE 6) | ||||||||
| RECLAMATION BONDS (NOTE 3) | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Royalties and upside participation payable (NOTE 7) | ||||||||
| Accrued interest, prepaid forward gold contract (NOTE 7) | ||||||||
| Accrued liabilities – officers and other wages (NOTES 11 and 12) | ||||||||
| Notes payable, current portion (NOTE 8) | ||||||||
| Settlement of consulting contract payable (NOTE 10) | ||||||||
| Prepaid forward gold contract liability (NOTE 7) | ||||||||
| Due in lieu of gold deliveries (NOTE 7) | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Asset retirement obligation (NOTE 9) | ||||||||
| TOTAL LONG-TERM LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTES 3, 6 AND 12) | ||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred Stock, $ | ||||||||
| Common Stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
1
DESERT HAWK GOLD CORP.
CONDENSED INTERIM STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended March 31, 2023 and 2022
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| REVENUE | ||||||||
| Concentrate sales | $ | $ | ||||||
| Contract processing income | ||||||||
| Total revenue | ||||||||
| OPERATING EXPENSES | ||||||||
| General production and project costs | ||||||||
| Contract processing costs | ||||||||
| Depreciation and amortization | ||||||||
| Other operating costs | ||||||||
| Legal and professional | ||||||||
| Officers and directors’ fees | ||||||||
| General and administrative | ||||||||
| Gain on disposal of equipment | ( | ) | ||||||
| Forward gold contract expense (NOTE 7) | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest and other income | ||||||||
| Interest expense – equipment financing | ( | ) | ( | ) | ||||
| Interest expense - other | ( | ) | ( | ) | ||||
| TOTAL OTHER INCOME (EXPENSE) | ( | ) | ( | ) | ||||
| NET LOSS BEFORE INCOME TAX | ( | ) | ( | ) | ||||
| Provision (benefit) for income tax | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| $ | ( | ) | $ | ( | ) | |||
The accompanying notes are an integral part of these financial statements.
2
DESERT HAWK GOLD CORP.
CONDENSED INTERIM STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
For the three months ended March 31, 2023 and 2022
| Common Stock | Additional | Total Stockholders’ | ||||||||||||||||||
| Shares Issued | Par Value $.001 per share | Paid in Capital | Accumulated Deficit | Equity (Deficit) | ||||||||||||||||
| BALANCE, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| BALANCE, March 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| BALANCE, December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| BALANCE, March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these financial statements.
3
DESERT HAWK GOLD CORP.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31, 2023 and 2022
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided (used) by operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Accretion of asset retirement obligation | ||||||||
| Write down of inventory to net realizable value | ||||||||
| Gain on disposal of equipment | ( | ) | ||||||
| Forward gold contract expense (NOTE 7) | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Royalties and upside participation payable (NOTE 7) | ||||||||
| Accrued interest, prepaid forward gold contract (NOTE 7) | ||||||||
| Accrued liabilities – officer and other wages | ||||||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Additions to property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of equipment | ||||||||
| Increase in reclamation bonds | ( | ) | ( | ) | ||||
| Net cash used by investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payment of notes payable | ( | ) | ( | ) | ||||
| Net cash used by financing activities | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
4
DESERT HAWK GOLD CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2023
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Desert Hawk Gold Corp. (the “Company”), a Nevada Corporation, was incorporated on November 5, 1957. The Company commenced its current mining activities on May 1, 2009.
During the year ended December 31, 2009, the Company entered into Joint Venture Agreements with the Clifton Mining Company (“Clifton”), the Woodman Mining Company and the Moeller Family Trust for the lease of certain of their property interests in the Gold Hill Mining District of Utah. In 2011, the Company entered into an agreement with DMRJ Group, (a Platinum Partners related entity), which allowed for long term funding of the Kiewit project and helped to provide cash flow for operations during the period from 2009 until 2014 while the permitting process was ongoing. The final permit needed to begin development of the Kiewit property was received in January 2014 and development began in February 2014. Construction at the site was substantially complete on September 30, 2014. Revenue from the heap leach operation began in October 2014 with the first sales of gold concentrate.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods reported. The condensed balance sheet at December 31, 2022 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Operating results for the three-month period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.
These unaudited condensed interim financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (“U.S. GAAP”). These unaudited condensed interim financial statements should be read in conjunction with the annual audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on March 31, 2023.
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to U.S. GAAP and have been consistently applied in the preparation of the financial statements.
Reclassifications
Certain reclassifications have been made to conform prior periods’ amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ equity (deficit), and cash flows as previously reported.
Earnings (Loss) Per Share
Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company.
For the three months ended March 31, 2023 and
2022, common stock equivalents of and
5
Going Concern
As shown in the accompanying financial statements,
the Company had an accumulated deficit of $
Although production restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. The ability of the Company to continue as a going concern is dependent on the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they are due.
New Accounting Pronouncements
Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”) that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
NOTE 3 – RECLAMATION BONDS
At March 31, 2023 and December 31, 2022, reclamation
bonds totaled $
NOTE 4 – INVENTORIES
Inventories at March 31, 2023 and December 31, 2022 consists of the following:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Ore on leach pad | $ | $ | ||||||
| Carbon column in process | ||||||||
| Finished goods | ||||||||
| Less long-term portion | ( | ) | ||||||
| Total | $ | $ | ||||||
Inventories at March 31, 2023 and December 31,
2022 were valued at net realizable value because production costs were greater than the amount the Company expected to receive on the
sale of the estimated gold ounces contained in inventories. The adjustment to inventory, which is included in general production and project
costs on the statements of operations, was $ and $
6
NOTE 5 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at March 31, 2023 and December 31, 2022:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Electronic and computer equipment | ||||||||
| Vehicles | ||||||||
| Buildings | ||||||||
| Land and improvements | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Kiewit property facilities | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
For the Kiewit property facilities, amortization
based on total units of production was $ and $
Depreciation expense on property and equipment
for the three months ended March 31, 2023 and 2022 was $
NOTE 6 – MINERAL PROPERTIES AND INTERESTS
Mineral properties and interests as of March 31, 2023 and December 31, 2022 are as follows:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Kiewit and all other sites | $ | $ | ||||||
| JJS property | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Asset retirement obligation assets | ||||||||
| Kiewit Site | ||||||||
| Kiewit Exploration | ||||||||
| JJS property | ||||||||
| Total | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Amortization of the mineral properties and interests
based on total units of production was $ and $
The Company is required to pay a 4% net smelter royalty (“NSR”) to Qenta, Inc. (“Qenta”) on revenues of gold and silver from the Kiewit gold property and the JJS properties. See Note 7.
7
NOTE 7 – PREPAID FORWARD GOLD CONTRACT LIABILITY
In 2019, the Company entered into and closed a
Pre-Paid Forward Gold Purchase Agreement (the “Purchase Agreement”) with PDK Utah Holdings, LP (“PDK”) for the
sale and purchase by PDK of gold produced from the Company’s mining property. Under the terms of the Purchase Agreement, as amended,
PDK agreed to purchase a total of
Under the terms of the Purchase Agreement, as amended, the Company is obligated to deliver gold in the following quantities:
Months | Gold Ounces per Month | Total Gold Ounces | ||||||
| December 2020 | ||||||||
| January 2021 to March 2021 | ||||||||
| April 2021 to March 2022 | ||||||||
| April 2022 to March 2023 | ||||||||
| April 2023 to December 2023 | ||||||||
| January 2024 | ||||||||
In addition, under the Purchase Agreement, Qenta
may reduce the required number of ounces to be sold in exchange for up to
As security for the obligations of the Company under the Purchase Agreement, the Company has granted a security interest in all of the assets of the Company. The Purchase Agreement contains representations and warranties, as well as affirmative and negative covenants customary to a transaction of this nature.
To date, no gold has been delivered under the
contract. As of March 31, 2023 and December 31, 2022, a cumulative of
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Total ounces to be delivered | ||||||||
| Contractual payment per ounce in lieu of delivery | $ | $ | ||||||
| Amount due in lieu of gold deliveries | $ | $ | ||||||
8
For the three months ended March 31, 2023 and 2022, the activity related to the forward gold contract is as follows:
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Prepaid forward gold contract liability balance at beginning of period | $ | $ | ||||||
| Forward gold contract balance associated with ounces to be delivered during period | ||||||||
| Reduction in prepaid forward gold contract liability balance | ( | ) | ( | ) | ||||
| Prepaid forward gold contract liability balance at end of period | $ | $ | ||||||
As of March 31, 2023, and through the issuance of these financial statements, the Company has received invoices for the deliveries and payments due. The failure to make gold deliveries and make additional payments as described below provides Qenta with certain remedies, including termination of the agreement, demand for early payment of the entire delivery obligations, and enforcement of foreclosure rights against the assets pledged as security under the agreement. Due to the delinquent status of the deliveries and Qenta’s rights under the default provisions of the Purchase Agreement, the Company has classified the entire liability balance owing as current on the balance sheets. The Company’s management has been in discussions with Qenta regarding the status of the Purchase Agreement. To date, Qenta has not exercised its rights of default as defined in the agreement nor has it indicated plans to do so.
In addition to the delivery of gold ounces,
The Purchase Agreement contains a participation
payment whereby Qenta receives a portion of the proceeds from gold sold by the Company to a third party. The payment due is based upon
a percentage of proceeds over a set gold price per ounce. The upside participation amounts are payable within
The Purchase Agreement provides for the Company to pay default interest (calculated at the rate of LIBOR plus 2%) on outstanding amounts due. To date, none has been paid.
The following is a summary of royalties, upside participation and interest payable:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Royalties payable | $ | $ | ||||||
| Royalties withholding payable | ||||||||
| Upside participation payable | ||||||||
| Subtotal | ||||||||
| Accrued interest, prepaid forward gold contract | ||||||||
| Total | $ | $ | ||||||
9
NOTE 8 – NOTES PAYABLE
The following is a summary of the notes payable:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Note payable to Epiroc, collateralized by a used Epiroc drill due in | ||||||||
| Current portion | - | ( | ) | |||||
| Long term portion | $ | $ | ||||||
During the three months ended March 31, 2023,
the Company paid the remaining note payable balance of $
NOTE 9 –ASSET RETIREMENT OBLIGATION
Changes in the asset retirement obligation for the three months ended March 31, 2023 and 2022 are as follows:
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Asset retirement obligation, beginning of period | $ | $ | ||||||
| Increase due to change in estimated costs | ||||||||
| Accretion expense | ||||||||
| Asset retirement obligation, end of period | $ | $ | ||||||
In the first quarter of 2023, the Company updated
its estimate for reclamation and closure costs of the mine at the end of its life based on an expanded permit and bonding requirement
finalized in December 31, 2022. The updated estimate was $
NOTE 10 – SETTLEMENT OF CONSULTING CONTRACT
On March 29, 2018, the Company entered into a
five-year Agency Agreement (the “Agency Agreement”) with H&H Metals Corp., a New York corporation (“H&H”).
Under the terms of the Agency Agreement, H&H agreed to provide certain advisory services in regard to natural resources activities
and to assist in securing purchasers for minerals produced from its mining properties. The Company negotiated a settlement in 2019 with
H&H resulting in the Company owing a balance of $
NOTE 11 – RELATED PARTY TRANSACTIONS
The Company has a month-to-month lease agreement
for its office space with RMH Overhead, LLC (“RMH”), a company owned by Rick Havenstrite, the Company’s President and
a director. The Company recognized rent expense of $
The Company rents a haul truck from RMH at a current
rate of $
10
Employment Agreements
The Company has an employment agreement with Mr.
Havenstrite as President of the Company, which is ongoing. The agreement, as amended, requires Mr. Havenstrite to meet certain time requirements
and limits the number of other board member obligations in which he can participate. The agreement allows for a base annual salary of
$
The amounts accrued at March 31, 2023 and December 31, 2022 is due to the officers of the Company as follows:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Rick Havenstrite, President | $ | $ | ||||||
| Marianne Havenstrite, Treasurer and Principal Financial Officer | ||||||||
| Total | $ | $ | ||||||
Directors’ fees
The Company compensates independent directors
for their contributions to the management of the Company, with one director receiving fees of $
NOTE 12– COMMITMENTS AND CONTINGENCIES
In addition to commitments disclosed in Notes 3, 7 and 12, the Company had the following commitments and contingencies.
Personal property tax and other accrued liabilities
Personal property tax for Tooele County, Utah,
is billed and becomes due on November 30 of each year. At March 31, 2023 and December 31, 2022, the amount due to Tooele County is $
Mining Leases
Annual claim fees are currently $
NOTE 13 – CAPITAL STOCK
Common Stock
The Company is authorized to issue
During the three months ended March 31, 2023 and 2022, the Company had no transactions relating to common stock.
Preferred Stock
The Company’s Articles of Incorporation authorized
11
NOTE 14 – STOCK OPTIONS
The Company has reserved
Outstanding and vested options at March 31,
2023 and December 31, 2022 were and
NOTE 15 – REVENUE
Product sales for three months ended March 31, 2023 and 2022, are shown below:
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Concentrate sales | $ | $ | ||||||
| Gold | ||||||||
| Silver | ||||||||
| Total concentrate sales | ||||||||
| Deductions to concentrate sales | ||||||||
| Royalties | ( | ) | ( | ) | ||||
| Upside participation payments | ( | ) | ( | ) | ||||
| Outside processing | ( | ) | ( | ) | ||||
| Subtotal – deductions to concentrate sales | ( | ) | ( | ) | ||||
| Net concentrate sales | ||||||||
| Net processing income | ||||||||
| TOTAL REVENUE | $ | $ | ||||||
For the three months ended March 31, 2023 and 2022, all revenues from concentrate sale was from concentrated sold to Asahi Refining.
Contract processing income is proceeds received for ore processed for another company. The contract agreement with the outside company for which we were processing material was terminated in October 2022.
12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 and with the unaudited financial statements and related notes thereto presented in this Quarterly Report on Form 10-Q. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods.
Forward-looking statements
The statements contained in this report that are not historical facts, including, but not limited to, statements found in the section entitled “Risk Factors,” are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, competitive position, potential growth opportunities, potential operating performance improvements, ability to retain and recruit personnel, and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “should,” “anticipates,” “expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.
Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed in this 10-Q. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to, the following:
| ● | environmental hazards; |
| ● | metallurgical and other processing problems; |
| ● | unusual or unexpected geological formations; |
| ● | need for additional funding to continue operations; |
| ● | global economic and political conditions; |
| ● | staffing considerations in remote locations; |
| ● | disruptions in credit and financial markets; |
| ● | global productive capacity |
| ● | changes in existing mining laws or regulations; |
| ● | changes in product costing; |
| ● | competitive technology positions and operating interruptions (including, but not limited to, labor disputes, leaks, fires, flooding, landslides, power outages, explosions, unscheduled downtime, transportation interruptions, war and terrorist activities); and |
| ● | disruptions due to global pandemics, supply chain delays, or civil unrest. |
Mining operations are subject to a variety of existing laws and regulations relating to exploration, permitting procedures, safety precautions, property reclamation, employee health and safety, air and water quality standards, pollution and other environmental protection controls, all of which are subject to change and are becoming more stringent, and costly to comply with. Should one or more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those expected. We disclaim any intention or obligation to update publicly or revise such statements whether as a result of new information, future events or otherwise.
These risk factors could cause our results to differ materially from those expressed in forward-looking statements.
Overview
We are a mineral exploration company located in the Gold Hill Mining District in Tooele County, Utah. We are currently focused on exploration and development of our Kiewit claims and operation of a heap leach processing facility.
13
We were originally incorporated in the State of Idaho on November 5, 1957. For several years we bought and sold mining leases and claims, but in 1995 we ceased all principal business operations. In 2008, we changed our corporate domicile from the State of Idaho to the State of Nevada. In May 2009, we raised funds to recommence mining activities. In July 2009, we entered into agreements to commence exploration activities on mining claims in the Gold Hill Mining District located in Tooele County, Utah. We hold leasehold interests within the Gold Hill Mining District consisting of 66 unpatented mining claims and 30 patented claims. From these claims we have centered our exploration activities on the Kiewit site.
During 2018 we settled our outstanding debt with DMRJ Group I, LLC and repurchased and retired all outstanding preferred shares issued to them under the 2010 Investment Agreement with them.
During 2019 we secured funding of $13,600,000 (net) from PDK Utah Holdings LP under the terms of the Pre-Paid Forward Gold Purchase Agreement dated March 7, 2019. We also renegotiated our lease with Clifton Mining and released all but the current unpatented and patented mining claims. We also reacquired the existing royalties from Clifton and its affiliates and issued a royalty to PDK equal to 4% of the net smelter returns from our mine. An additional 20 claims, known as the JJS Property, were also acquired.
During the first quarter of 2023 we crushed no tons of mineralized material and hauled 149,3349 tons of waste from the open-pit Kiewit Pit. Using the funds from the PDK transaction, in January 2020 we commenced a drilling program on the Kiewit and JJS mining claims to determine the definition of the mineralized body and resource classification of the resources in connection with the proposed completion of a technical report on the claims. Our drilling plan included drilling 30 holes for a total footage of 7,500 feet. Although drilling has commenced on the JJS property, permitting has not been completed and production has not yet begun. We intend to continue extraction of mineralized material and to upgrade and expand the current facilities, as resource expansion dictates.
Since securing funding in March 2019, we have recommenced mining operations. Revenues of approximately $19,661,000 from sales of gold and other metals have been received through March 31, 2023, bringing total revenue from metals sales from the inception of the processing in 2014 to $25,875,000.
Results of Operations for the three months ended March 31, 2023 and 2022
| Three months ended March 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| REVENUE | $ | 738,283 | $ | 1,267,122 | $ | (528,839 | ) | (41.7 | %) | |||||||
| EXPENSES | ||||||||||||||||
| General production and project costs | 1,380,782 | 1,227,726 | 153,056 | 12.5 | % | |||||||||||
| Processing costs | - | 40,705 | (40,705 | ) | (100.0 | %) | ||||||||||
| Depreciation and amortization | 163,184 | 314,688 | (151,504 | ) | (48.1 | %) | ||||||||||
| Other operating costs | 66,484 | 114,915 | (48,431 | ) | (42.1 | %) | ||||||||||
| Exploration expense | - | - | ||||||||||||||
| Legal and professional | 66,610 | 67,771 | (1,161 | ) | (1.7 | %) | ||||||||||
| Officers and directors fees | 92,023 | 87,889 | 4,134 | 4.7 | % | |||||||||||
| General and administrative | 70,283 | 111,780 | (41,497 | ) | (37.1 | %) | ||||||||||
| (Gain) loss on disposal of equipment | (5,669 | ) | - | (5,669 | ) | N/A | ||||||||||
| Forward gold contract expense | 883,334 | 576,444 | 306,890 | 53.2 | % | |||||||||||
| 2,717,031 | 2,541,918 | 175,113 | 6.9 | % | ||||||||||||
| OPERATING LOSS | (1,978,748 | ) | (1,274,796 | ) | (703,952 | ) | 55.2 | % | ||||||||
| OTHER INCOME (EXPENSE) | (284,681 | ) | (62,431 | ) | (222,250 | ) | 356.0 | % | ||||||||
| NET LOSS | $ | (2,263,429 | ) | $ | (1,337,227 | ) | $ | (926,202 | ) | 69.3 | % | |||||
During the three months ended March 31, 2023 and 2022, we had net losses of $2,263,429 and $1,337,227, respectively. This represents an increase in net loss of $926,202 for the three months ended March 31, 2023, over the three months ended March 31, 2022. Increased losses are primarily due to the increase in forward gold contract expense and lack of production in the first quarter of 2023.
14
Liquidity and Cash Flow
| March 31, | December 31, | |||||||
| WORKING CAPITAL | 2023 | 2022 | ||||||
| Current assets | $ | 3,323,177 | $ | 4,175,616 | ||||
| Current liabilities | 24,823,458 | 23,299,677 | ||||||
| Working capital (deficit) | $ | (21,500,281 | ) | $ | (19,124,061 | ) | ||
| Three months ended March 31, | ||||||||
| CASH FLOWS | 2023 | 2022 | ||||||
| Cash flow provided by operating activities | $ | 60,824 | $ | 492,801 | ||||
| Cash flow used by investing activities | (112,917 | ) | (154,039 | ) | ||||
| Cash flow used by financing activities | (58,061 | ) | (168,895 | ) | ||||
| Net increase (decrease) in cash | $ | (110,154 | ) | $ | 169,867 | |||
Net cash provided by operating activities of $60,824 during the three months ended March 31, 2023, compared with cash provided by operating activities of $492,801 during the three months ended March 31, 2022, represented a $431,977 decrease in cash provided by operating activities and is primarily attributable to the lack of production during the period.
Net cash used by investing activities was $112,917 during the three months ended March 31, 2023, compared with $154,039 cash used during the three months ended March 31, 2022. This decrease in cash used by investing activities of $41,122 was primarily related to a decrease in the amount expended for reclamation bonds.
Net cash used by financing activities was $58,061 during the three months ended March 31, 2023, compared with $168,895 cash used during the three months ended March 31, 2022. This decrease in cash used by financing activities of $110,834 during the three months ended March 31, 2023, was primarily due to reduction of notes payable payments.
As a result of the above, cash decreased by $110,154 during the three months ended March 31, 2023 over the cash balance at December 31, 2022, leaving us with a cash balance of $470,868 as of March 31, 2023.
Going Concern
As shown in the accompanying financial statements, the Company had an accumulated deficit of $23,000,594 and negative working capital of $21,500,281 at March 31, 2023, which raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Although production restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. The ability of the Company to continue as a going concern is dependent on the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they are due.
If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.
15
Critical Accounting Policies
There have been no significant changes to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Form 10-K.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity, capital expenditures or capital resources.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we have elected not to provide the disclosure required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Control and Procedures
Our Chief Executive Officer, who serves as our principal executive officer; and our Treasurer, who serves as our principal financial officer, evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). The Chief Executive Officer and Treasurer have concluded that as of the Evaluation Date, due to the existence of material weaknesses, our disclosure controls and procedures were not effective to provide assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
16
PART II – OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
During the first quarter of 2019, the Company entered into and closed a Prepaid Forward Gold Purchase Agreement (the “Purchase Agreement”) with PDK Utah Holdings L.P. (“PDK”) for the sale and purchase by PDK of gold produced from the Company’s mining property. On October 31, 2019, the Company and PDK amended the Purchase Agreement and entered into the Amended Prepaid Forward Agreement (the “Amended Agreement”) to reduce the total number of ounces of gold subject to the Purchase Agreement and to revise other provisions therein. The first gold delivery under the Amended Agreement was due on December 24, 2020, and recurring deliveries are due on the fourth business day prior to the last calendar day of each scheduled delivery month. On December 1, 2020, we notified PDK that we would not be able to make our December delivery and elected to use one of the delivery postponement options under the Amended Agreement. This provision permits us to delay delivery by up to 30 days by delivering the amount of gold due on the previous month’s due date, plus interest calculated at the default interest rate. At the end of this 30-day extension period we were unable to deliver the December payment. We have also failed to make the monthly gold deliveries beginning January through November of 2021 and anticipate that we will be unable to make deliveries until at least the beginning of the next fiscal year. The failure to make gold deliveries under the Amended Agreement provides PDK with certain remedies, including termination of the agreement, demand for early payment of the entire delivery obligations, and enforcement of foreclosure rights against the assets pledged as security under the agreement. In February 2023, PDK sold their ownership position in the Purchase Agreement to Qenta, Inc. (“Qenta”). The Company’s management has been in discussions with Qenta regarding the status of the Purchase Agreement. As of the filing date of this report, we are obligated to deliver to Qenta 31,027 ounces of gold, plus default interest calculated at the rate of LIBOR plus 2%, under the Amended Agreement. We are involved in ongoing discussions with representatives of Qenta in an attempt to resolve these late payments and to renegotiate the gold delivery schedule.
Item 4. Mine Safety Disclosures
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95 to this quarterly report.
Item 6. Exhibits
| Exhibit No. | Description | |
| 31.1 | Rule 15d-14(a) Certification by Principal Executive Officer | |
| 31.2 | Rule 15d-14(a) Certification by Principal Financial Officer | |
| 32.1 | Section 1350 Certification of Principal Executive Officer | |
| 32.2 | Section 1350 Certification of Principal Financial Officer | |
| 95 | Mine Safety Disclosure | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
In accordance with Rule 402 of Regulation S-T, the XBRL information included in Exhibit 101 to this Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Desert Hawk Gold Corp. | ||
| Date: May 15, 2023 | By: | /s/ Rick Havenstrite |
| Rick Havenstrite, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: May 15, 2023 | By: | /s/ Marianne Havenstrite |
| Marianne Havenstrite, Treasurer | ||
| (Principal Accounting and Financial Officer) | ||
18
Exhibit 31.1
Certification
I, Rick Havenstrite, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Desert Hawk Gold Corp. for the quarter ended March 31, 2023; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 15, 2023
| /s/ Rick Havenstrite | |
| Rick Havenstrite, President | |
| (Principal Executive Officer) |
Exhibit 31.2
Certification
I, Marianne Havenstrite, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Desert Hawk Gold Corp. for the quarter ended March 31, 2023; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 15, 2023
| /s/ Marianne Havenstrite | |
| Marianne Havenstrite, Treasurer | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Desert Hawk Gold Corp. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), the undersigned principal executive officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 15, 2023
| /s/ Rick Havenstrite | |
| Rick Havenstrite, President | |
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Desert Hawk Gold Corp. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), the undersigned principal executive officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 15, 2023
| /s/ Marianne Havenstrite | |
| Marianne Havenstrite, Treasurer | |
| (Principal Financial and Accounting Officer) |
Exhibit 95
Mine Safety Disclosure Data
For the quarter ended March 31, 2023, there were no violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine health hazard under section 104 of the Federal Mine Safety and Health Act of 1977 (the “Act”), and three citations under section 104(a) of the Act which were not deemed significant and substantial. The total dollar value of proposed assessments from the Mine Safety and Health Administration under such Act was $850.00, which was paid on April 17, 2023.
We certify that no orders were issued under section 104(b) of such Act, no citations or orders were issued for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under section 104(d) of such Act, and there were no flagrant violations under section 110(b)(2) of the Act.
We certify that we had no mining-related fatalities during the quarter ended March 31, 2023.
We have not received an imminent danger order under Section 107(a) of the Federal Mine Safety and Health Act of 1977.
We have not received any notices of a pattern of violations, or of the potential to have such a pattern, of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of mine health and safety hazards.
We have no pending legal actions before the Federal Mine Safety and Health Review Commission as of March 31, 2023 and have not instituted any legal actions during the quarter ended March 31, 2023.
Condensed Interim Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred Stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred Stock, shares issued | ||
| Preferred Stock, shares outstanding | ||
| Common Stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common Stock, shares authorized | 100,000,000 | 100,000,000 |
| Common Stock, shares issued | 26,831,603 | 26,831,603 |
| Common Stock, shares outstanding | 26,831,603 | 26,831,603 |
Condensed Interim Statements of Operations (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Income Statement [Abstract] | ||
| Basic and diluted loss per share (in Dollars per share) | $ (0.08) | $ (0.05) |
| Basic and diluted weighted average number of shares outstanding (in Shares) | 26,831,603 | 26,831,603 |
Condensed Interim Statement of Changes in Stockholders’ Equity (Deficit) (Unaudited) - USD ($) |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total |
|---|---|---|---|---|
| BALANCE at Dec. 31, 2021 | $ 26,833 | $ 9,666,275 | $ (14,247,760) | $ (4,554,652) |
| BALANCE (in Shares) at Dec. 31, 2021 | 26,831,603 | |||
| Net loss | (1,337,227) | (1,337,227) | ||
| BALANCE at Mar. 31, 2022 | $ 26,833 | 9,666,275 | (15,584,987) | (5,891,879) |
| BALANCE (in Shares) at Mar. 31, 2022 | 26,831,603 | |||
| BALANCE at Dec. 31, 2022 | $ 26,833 | 9,666,275 | (20,737,165) | (11,044,057) |
| BALANCE (in Shares) at Dec. 31, 2022 | 26,831,603 | |||
| Net loss | (2,263,429) | (2,263,429) | ||
| BALANCE at Mar. 31, 2023 | $ 26,833 | $ 9,666,275 | $ (23,000,594) | $ (13,307,486) |
| BALANCE (in Shares) at Mar. 31, 2023 | 26,831,603 |
Organization and Description of Business |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Organization and Description of Business [Abstract] | |
| ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Desert Hawk Gold Corp. (the “Company”), a Nevada Corporation, was incorporated on November 5, 1957. The Company commenced its current mining activities on May 1, 2009.
During the year ended December 31, 2009, the Company entered into Joint Venture Agreements with the Clifton Mining Company (“Clifton”), the Woodman Mining Company and the Moeller Family Trust for the lease of certain of their property interests in the Gold Hill Mining District of Utah. In 2011, the Company entered into an agreement with DMRJ Group, (a Platinum Partners related entity), which allowed for long term funding of the Kiewit project and helped to provide cash flow for operations during the period from 2009 until 2014 while the permitting process was ongoing. The final permit needed to begin development of the Kiewit property was received in January 2014 and development began in February 2014. Construction at the site was substantially complete on September 30, 2014. Revenue from the heap leach operation began in October 2014 with the first sales of gold concentrate. |
Summary of Significant Accounting Policies |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Summary of Significant Accounting Policies [Abstract] | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods reported. The condensed balance sheet at December 31, 2022 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Operating results for the three-month period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.
These unaudited condensed interim financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (“U.S. GAAP”). These unaudited condensed interim financial statements should be read in conjunction with the annual audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on March 31, 2023.
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to U.S. GAAP and have been consistently applied in the preparation of the financial statements.
Reclassifications
Certain reclassifications have been made to conform prior periods’ amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ equity (deficit), and cash flows as previously reported.
Earnings (Loss) Per Share
Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company.
For the three months ended March 31, 2023 and 2022, common stock equivalents of and 2,400,000, respectively, associated with the Company’s outstanding stock options were excluded from the calculation of diluted earnings per share because they were anti-dilutive due to the net loss for the periods then ended.
Going Concern
As shown in the accompanying financial statements, the Company had an accumulated deficit of $23,000,594 through March 31, 2023 and net loss of $2,263,429 for the three-month period ended March 31, 2023, along with negative working capital of $21,500,281 which raises substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company has not delivered gold ounces as scheduled on its prepaid forward gold contract and could be subject to default provisions within the related agreement (see Note 7). The condensed interim financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Although production restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. The ability of the Company to continue as a going concern is dependent on the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they are due.
New Accounting Pronouncements
Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”) that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Reclamation Bonds |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Reclamation Bonds [Abstract] | |
| RECLAMATION BONDS | NOTE 3 – RECLAMATION BONDS
At March 31, 2023 and December 31, 2022, reclamation bonds totaled $1,592,936 and $1,591,547, respectively, associated with estimated reclamation costs for its mineral properties. The totals in both years include a surety bond of $674,000 with a bonding company for reclamation of its mineral property. This escrowed amount is held at Bank of New York, Mellon for the Company’s benefit. It may not be released to the Company without the prior consent of the surety bondholder. The escrowed amount does not earn interest. The remaining balances of $918,936 and $917,547, respectively, are held as certificate of deposits by the Utah Department of Natural Resources. |
Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORIES | NOTE 4 – INVENTORIES
Inventories at March 31, 2023 and December 31, 2022 consists of the following:
Inventories at March 31, 2023 and December 31, 2022 were valued at net realizable value because production costs were greater than the amount the Company expected to receive on the sale of the estimated gold ounces contained in inventories. The adjustment to inventory, which is included in general production and project costs on the statements of operations, was $ and $680,319 during the three-month period ended March 31, 2023 and 2022, respectively. |
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Property and Equipment |
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| Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | NOTE 5 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at March 31, 2023 and December 31, 2022:
For the Kiewit property facilities, amortization based on total units of production was $ and $70,864 for the three-months ended March 31, 2023 and 2022, respectively. There was no production for the three months ended March 31, 2023.
Depreciation expense on property and equipment for the three months ended March 31, 2023 and 2022 was $163,184 and $193,210 respectively. |
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Mineral Properties and Interests |
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| Mineral Properties and Interests [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MINERAL PROPERTIES AND INTERESTS | NOTE 6 – MINERAL PROPERTIES AND INTERESTS
Mineral properties and interests as of March 31, 2023 and December 31, 2022 are as follows:
Amortization of the mineral properties and interests based on total units of production was $ and $50,615 for the three months ended March 31, 2023 and 2022, respectively. There was no production for the three months ended March 31, 2023.
The Company is required to pay a 4% net smelter royalty (“NSR”) to Qenta, Inc. (“Qenta”) on revenues of gold and silver from the Kiewit gold property and the JJS properties. See Note 7. |
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Prepaid Forward Gold Contract Liability |
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| Prepaid Forward Gold Contract Liability [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREPAID FORWARD GOLD CONTRACT LIABILITY | NOTE 7 – PREPAID FORWARD GOLD CONTRACT LIABILITY
In 2019, the Company entered into and closed a Pre-Paid Forward Gold Purchase Agreement (the “Purchase Agreement”) with PDK Utah Holdings, LP (“PDK”) for the sale and purchase by PDK of gold produced from the Company’s mining property. Under the terms of the Purchase Agreement, as amended, PDK agreed to purchase a total of 47,045 ounces of gold from the Company. The Company agreed to deliver ounces of gold produced from the Kiewit property to PDK and the Company would then receive proceeds from PDK at the then current spot price less a discount specified in the Purchase Agreement. The Company has the option of paying cash for the number of ounces scheduled to be delivered each month at a rate of $500 per ounce. The Company received a net amount of $13,600,000 in 2019 for the future delivery of these gold ounces. In February 2023, PDK sold their ownership position in the Purchase Agreement to Qenta, Inc. (“Qenta”)
Under the terms of the Purchase Agreement, as amended, the Company is obligated to deliver gold in the following quantities:
In addition, under the Purchase Agreement, Qenta may reduce the required number of ounces to be sold in exchange for up to 8,000 common shares of the Company. To date, this option has not been elected.
As security for the obligations of the Company under the Purchase Agreement, the Company has granted a security interest in all of the assets of the Company. The Purchase Agreement contains representations and warranties, as well as affirmative and negative covenants customary to a transaction of this nature.
To date, no gold has been delivered under the contract. As of March 31, 2023 and December 31, 2022, a cumulative of 31,027 and 26,839 ounces, respectively, were scheduled to be delivered under the terms of the Purchase Agreement. The ounces due but unpaid at March 31, 2023 and December 31, 2022 have been reflected in “Due in lieu of gold deliveries” on the balance sheet based on the Company’s option to pay cash in lieu of delivery at $500 per ounce. The forward gold contract balance as of March 31, 2023 and December 31, 2022 is as follows:
For the three months ended March 31, 2023 and 2022, the activity related to the forward gold contract is as follows:
As of March 31, 2023, and through the issuance of these financial statements, the Company has received invoices for the deliveries and payments due. The failure to make gold deliveries and make additional payments as described below provides Qenta with certain remedies, including termination of the agreement, demand for early payment of the entire delivery obligations, and enforcement of foreclosure rights against the assets pledged as security under the agreement. Due to the delinquent status of the deliveries and Qenta’s rights under the default provisions of the Purchase Agreement, the Company has classified the entire liability balance owing as current on the balance sheets. The Company’s management has been in discussions with Qenta regarding the status of the Purchase Agreement. To date, Qenta has not exercised its rights of default as defined in the agreement nor has it indicated plans to do so.
In addition to the delivery of gold ounces, the Purchase Agreement contains a royalty provision whereby royalties of 4% are due on gold and silver recovered from mining operations at the Kiewit site and sold by the Company to a third party. Under the Purchase Agreement, the Company also accrues a 5% withholding tax to the state of Utah on the royalty payments. Royalties are payable within 30 days following the end of each fiscal quarter. To date, none of the royalty has been paid.
The Purchase Agreement contains a participation payment whereby Qenta receives a portion of the proceeds from gold sold by the Company to a third party. The payment due is based upon a percentage of proceeds over a set gold price per ounce. The upside participation amounts are payable within four days following each sale. To date, none has been paid.
The Purchase Agreement provides for the Company to pay default interest (calculated at the rate of LIBOR plus 2%) on outstanding amounts due. To date, none has been paid.
The following is a summary of royalties, upside participation and interest payable:
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Notes Payable |
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| Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES PAYABLE | NOTE 8 – NOTES PAYABLE
The following is a summary of the notes payable:
During the three months ended March 31, 2023, the Company paid the remaining note payable balance of $58,061. |
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Asset Retirement Obligation |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ASSET RETIREMENT OBLIGATION | NOTE 9 –ASSET RETIREMENT OBLIGATION
Changes in the asset retirement obligation for the three months ended March 31, 2023 and 2022 are as follows:
In the first quarter of 2023, the Company updated its estimate for reclamation and closure costs of the mine at the end of its life based on an expanded permit and bonding requirement finalized in December 31, 2022. The updated estimate was $2,557,553 on an undiscounted cash flow basis, an increase of $1,020,553 from the previous plan. The estimated reclamation costs were discounted using credit adjusted, risk-free interest rate of 11% from the time we incurred the obligation to the time we expect to pay the retirement obligation. During the quarter ended March 31, 2023, asset retirement obligation and the associated retirement asset of $22,178 was recognized for the disturbance that occurred in that period. |
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Settlement of Consulting Contract |
3 Months Ended |
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Mar. 31, 2023 | |
| Settlement of Consulting Contract [Abstract] | |
| SETTLEMENT OF CONSULTING CONTRACT | NOTE 10 – SETTLEMENT OF CONSULTING CONTRACT
On March 29, 2018, the Company entered into a five-year Agency Agreement (the “Agency Agreement”) with H&H Metals Corp., a New York corporation (“H&H”). Under the terms of the Agency Agreement, H&H agreed to provide certain advisory services in regard to natural resources activities and to assist in securing purchasers for minerals produced from its mining properties. The Company negotiated a settlement in 2019 with H&H resulting in the Company owing a balance of $200,000 due in July 2020 to H&H. This payment has not yet been paid and is classified as a current liability at both March 31, 2023 and December 31, 2022. |
Related Party Transactions |
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| RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS
The Company has a month-to-month lease agreement for its office space with RMH Overhead, LLC (“RMH”), a company owned by Rick Havenstrite, the Company’s President and a director. The Company recognized rent expense of $4,500 and $4,500 for three months ended March 31, 2023 and 2022.
The Company rents a haul truck from RMH at a current rate of $7,500 per month on a month-to-month basis. Rent expense of $22,500 and $30,000 was recognized during the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023 and December 31, 2022, $7,500 and $, respectively, is due to RMH for rent of this equipment, and this amount is included in accounts payable and accrued expenses on the balance sheet.
Employment Agreements
The Company has an employment agreement with Mr. Havenstrite as President of the Company, which is ongoing. The agreement, as amended, requires Mr. Havenstrite to meet certain time requirements and limits the number of other board member obligations in which he can participate. The agreement allows for a base annual salary of $144,000 plus an auto allowance and certain performance compensation upon fulfillment of established goals. The agreement allows the board of directors to terminate Mr. Havenstrite’s employment at any time, providing for a severance payment upon termination without cause.
The amounts accrued at March 31, 2023 and December 31, 2022 is due to the officers of the Company as follows:
Directors’ fees
The Company compensates independent directors for their contributions to the management of the Company, with one director receiving fees of $6,000 per month and another director receiving $5,000 per quarter. At March 31, 2023 and December 31, 2022, accrued compensation due to directors was $86,000 and $81,000 respectively. |
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE 12– COMMITMENTS AND CONTINGENCIES
In addition to commitments disclosed in Notes 3, 7 and 12, the Company had the following commitments and contingencies.
Personal property tax and other accrued liabilities
Personal property tax for Tooele County, Utah, is billed and becomes due on November 30 of each year. At March 31, 2023 and December 31, 2022, the amount due to Tooele County is $34,667 and $33,027, respectively and this amount is included in accounts payable.
Mining Leases
Annual claim fees are currently $165 per claim plus administrative and school trust land fees. For the three months ended March 31, 2023 and 2022, claims’ fees paid were $ and $, respectively. Claims fees are due in August for the year beginning in September of that year. |
Capital Stock |
3 Months Ended |
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Mar. 31, 2023 | |
| Capital Stock [Abstract] | |
| CAPITAL STOCK | NOTE 13 – CAPITAL STOCK
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock. All shares have equal voting rights and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.
During the three months ended March 31, 2023 and 2022, the Company had no transactions relating to common stock.
Preferred Stock
The Company’s Articles of Incorporation authorized 10,000,000 shares of $0.001 par value Preferred Stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine. |
Stock Options |
3 Months Ended |
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Mar. 31, 2023 | |
| Stock Options [Abstract] | |
| STOCK OPTIONS | NOTE 14 – STOCK OPTIONS
The Company has reserved 2,400,000 shares under its 2018 Stock Incentive Plan (the “Plan”). The Plan was adopted by the board of directors on March 28, 2018, retroactive to February 23, 2018, as a vehicle for the recruitment and retention of qualified employees, officers, directors, consultants, and other service providers. The Plan is administered by the Board of Directors. The Company may issue, to eligible persons, restricted common stock, incentive and non-statutory options, stock appreciation rights and restricted stock units. The terms and conditions of awards under the Plan will be determined by the Board of Directors.
Outstanding and vested options at March 31, 2023 and December 31, 2022 were and 2,400,000. These options had an exercise price of $0.40, a remaining life of 0.15 years, and no intrinsic value. No options were granted or exercised during the three months ended March 31, 2023 and 2022. During the three months ended March 31, 2023, 2,400,000 options expired. |
Revenue |
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| REVENUE | NOTE 15 – REVENUE
Product sales for three months ended March 31, 2023 and 2022, are shown below:
For the three months ended March 31, 2023 and 2022, all revenues from concentrate sale was from concentrated sold to Asahi Refining.
Contract processing income is proceeds received for ore processed for another company. The contract agreement with the outside company for which we were processing material was terminated in October 2022. |
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Accounting Policies, by Policy (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
| Accounting Policies [Abstract] | |
| Reclassifications | Reclassifications
Certain reclassifications have been made to conform prior periods’ amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ equity (deficit), and cash flows as previously reported.
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| Earnings (Loss) Per Share | Earnings (Loss) Per Share
Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company.
For the three months ended March 31, 2023 and 2022, common stock equivalents of and 2,400,000, respectively, associated with the Company’s outstanding stock options were excluded from the calculation of diluted earnings per share because they were anti-dilutive due to the net loss for the periods then ended.
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| Going Concern | Going Concern
As shown in the accompanying financial statements, the Company had an accumulated deficit of $23,000,594 through March 31, 2023 and net loss of $2,263,429 for the three-month period ended March 31, 2023, along with negative working capital of $21,500,281 which raises substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company has not delivered gold ounces as scheduled on its prepaid forward gold contract and could be subject to default provisions within the related agreement (see Note 7). The condensed interim financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Although production restarted in 2019, it has not yet reached optimum levels. The timing and amount of capital requirements will depend on a number of factors, including demand for products, metals market pricing, and the availability of opportunities for expansion through affiliations and other business relationships. Management continues to seek new capital from equity securities issuances or other business arrangements to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan. The ability of the Company to continue as a going concern is dependent on the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they are due.
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| New Accounting Pronouncements | New Accounting Pronouncements
Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”) that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Inventories (Tables) |
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| Schedule of Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventories |
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Property and Equipment (Tables) |
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| Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment |
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Mineral Properties and Interests (Tables) |
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| Mineral Properties and Interests [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of mineral properties and interests |
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Prepaid Forward Gold Contract Liability (Tables) |
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| Prepaid Forward Gold Contract Liability [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of company is obligated to deliver gold |
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| Schedule of related contract expense |
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| Schedule of royalties, upside participation and interest payable |
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Notes Payable (Tables) |
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| Schedule of Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of notes payable |
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Asset Retirement Obligation (Tables) |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of asset retirement obligations |
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Related Party Transactions (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of amounts accrued |
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Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of product sales |
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Summary of Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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| Accounting Policies [Abstract] | ||
| Outstanding stock options were excluded (in Shares) | 2,400,000 | |
| Accumulated deficit | $ 23,000,594 | |
| Net loss | 2,263,429 | |
| Working capital | $ 21,500,281 | |
Reclamation Bonds (Details) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Reclamation Bonds [Abstract] | ||
| Reclamation cost | $ 1,592,936 | $ 1,591,547 |
| Surety bond in escrow account | 674,000 | 674,000 |
| Deposits | $ 918,936 | $ 917,547 |
Inventories (Details) - USD ($) |
Mar. 31, 2023 |
Mar. 31, 2022 |
|---|---|---|
| Schedule of Inventory Disclosure [Abstract] | ||
| General production and project costs | $ 680,319 |
Inventories (Details) - Schedule of inventories - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Inventories [Abstract] | ||
| Ore on leach pad | $ 2,628,409 | $ 3,266,091 |
| Carbon column in process | 231,685 | 163,619 |
| Finished goods | 139,438 | 114,361 |
| Inventory gross | 2,999,532 | 3,544,071 |
| Less long-term portion | (194,798) | |
| Total | $ 2,804,734 | $ 3,544,071 |
Property and Equipment (Details) - USD ($) |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
| Property and Equipment [Abstract] | ||
| Amortization expense | $ 70,864 | |
| Depreciation expense | $ 163,184 | $ 193,210 |
Mineral Properties and Interests (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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| Mineral Properties and Interests [Abstract] | ||
| Amortization of the mineral properties | $ 50,615 | |
Mineral Properties and Interests (Details) - Schedule of mineral properties and interests - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Mineral Properties and Interests [Abstract] | ||
| Kiewit and all other sites | $ 3,700,000 | $ 3,700,000 |
| JJS property | 250,000 | 250,000 |
| Total | 3,950,000 | 3,950,000 |
| Less accumulated amortization | (852,000) | (852,000) |
| Total | 3,098,000 | 3,098,000 |
| Asset retirement obligation assets | ||
| Kiewit Site | 747,300 | 725,122 |
| Kiewit Exploration | 28,377 | 28,377 |
| JJS property | 31,016 | 31,016 |
| Total | 806,693 | 784,515 |
| Less accumulated amortization | (266,022) | (266,022) |
| Mineral properties after accumulated depletion | 540,671 | 518,493 |
| Total | $ 3,638,671 | $ 3,616,493 |
Prepaid Forward Gold Contract Liability (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended |
|---|---|---|---|
Dec. 31, 2019 |
Mar. 31, 2023 |
Dec. 31, 2022 |
|
| Prepaid Forward Gold Contract Liability (Details) [Line Items] | |||
| Purchase of shares | 47,045 | ||
| Per month ounce rate | $ 500 | $ 500 | |
| Common shares | 8,000 | ||
| Cumulative | 31,027 | 26,839 | |
| Amounts payable | 4 days | ||
| PDK [Member] | |||
| Prepaid Forward Gold Contract Liability (Details) [Line Items] | |||
| Per month ounce rate | $ 500 | ||
| Debt received net amount | $ 13,600,000 | ||
| Purchase agreement, description | the Purchase Agreement contains a royalty provision whereby royalties of 4% are due on gold and silver recovered from mining operations at the Kiewit site and sold by the Company to a third party. Under the Purchase Agreement, the Company also accrues a 5% withholding tax to the state of Utah on the royalty payments. Royalties are payable within 30 days following the end of each fiscal quarter. |
Prepaid Forward Gold Contract Liability (Details) - Schedule of related contract expense - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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| Schedule of Related Contract Expense [Abstract] | ||
| Total ounces to be delivered | $ 31,027 | $ 26,839 |
| Contractual payment per ounce in lieu of delivery | 500 | 500 |
| Amount due in lieu of gold deliveries | 15,513,500 | 13,419,500 |
| Prepaid forward gold contract liability balance at beginning of period | 5,841,383 | 10,263,438 |
| Forward gold contract balance associated with ounces to be delivered during period | 883,334 | 576,444 |
| Reduction in prepaid forward gold contract liability balance | (2,094,000) | (1,366,500) |
| Prepaid forward gold contract liability balance at end of period | $ 4,630,717 | $ 9,473,382 |
Prepaid Forward Gold Contract Liability (Details) - Schedule of royalties, upside participation and interest payable - USD ($) |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
| Schedule of Royalties Upside Participation And Interest Payable [Abstract] | ||
| Royalties payable | $ 625,370 | $ 585,536 |
| Royalties withholding payable | 32,917 | 30,820 |
| Upside participation payable | 2,391,643 | 2,226,735 |
| Subtotal | 3,049,930 | 2,843,091 |
| Accrued interest, prepaid forward gold contract | 925,358 | 640,742 |
| Total | $ 3,975,288 | $ 3,483,833 |
Notes Payable (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
USD ($)
| |
| Schedule of Notes Payable [Abstract] | |
| Note payable | $ 58,061 |
Notes Payable (Details) - Schedule of notes payable - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of notes payable [Abstract] | ||
| Note payable to Epiroc, collateralized by a used Epiroc drill due in 36 monthly payments of $14,679 including interest at 5.2%. | $ 58,061 | |
| Total Principal amount | 58,061 | |
| Current portion | (58,061) | |
| Long term portion |
Notes Payable (Details) - Schedule of notes payable (Parentheticals) |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
USD ($)
| |
| Schedule of notes payable [Abstract] | |
| Number of installments | Installments | 36 |
| Installments amount (in Dollars) | $ 14,679 |
| Interest rate percentage | 5.20% |
Asset Retirement Obligation (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
USD ($)
| |
| Asset Retirement Obligation Disclosure [Abstract] | |
| Estimate value | $ 2,557,553 |
| Increase estimate value | $ 1,020,553 |
| Risk-free interest rate | 11.00% |
| Associated retirement asset | $ 22,178 |
Asset Retirement Obligation (Details) - Schedule of asset retirement obligations - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Schedule of Asset Retirement Obligations [Abstract] | ||
| Asset retirement obligation, beginning of period | $ 1,496,434 | $ 1,362,294 |
| Increase due to change in estimated costs | 22,178 | |
| Accretion expense | 37,409 | 33,536 |
| Asset retirement obligation, end of period | $ 1,556,021 | $ 1,395,830 |
Settlement of Consulting Contract (Details) |
Mar. 29, 2018
USD ($)
|
|---|---|
| Schedule of Settlement of Consulting Contract [Abstract] | |
| Owing balance | $ 200,000 |
Related Party Transactions (Details) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
| Related Party Transactions (Details) [Line Items] | |||
| Rent expense | $ 4,500 | $ 4,500 | |
| Rate | 7,500 | ||
| Compensation expense | 22,500 | $ 30,000 | |
| Payments of employees | 144,000 | ||
| LLC [Member] | |||
| Related Party Transactions (Details) [Line Items] | |||
| Accrued expenses | 7,500 | ||
| Accounts payable | |||
| One Director [Member] | |||
| Related Party Transactions (Details) [Line Items] | |||
| Fees received | 6,000 | ||
| Another Director [Member] | |||
| Related Party Transactions (Details) [Line Items] | |||
| Fees received | 5,000 | ||
| Director [Member] | |||
| Related Party Transactions (Details) [Line Items] | |||
| Accrued compensation | $ 86,000 | $ 81,000 | |
Related Party Transactions (Details) - Schedule of amounts accrued - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
| Schedule of Amounts Accrued [Abstract] | ||
| Rick Havenstrite, President | $ 37,697 | $ 37,697 |
| Marianne Havenstrite, Treasurer and Principal Financial Officer | 18,462 | 18,462 |
| Total | $ 56,159 | $ 56,159 |
Commitments and Contingencies (Details) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
| Commitments and Contingencies (Details) [Line Items] | |||
| Amount due | $ 34,667 | $ 33,027 | |
| Claim fees | |||
| Mining Lease [Member] | |||
| Commitments and Contingencies (Details) [Line Items] | |||
| Annual claims fees | $ 165 | ||
Capital Stock (Details) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
| Capital Stock [Abstract] | ||
| Common stock shares, authorized | 100,000,000 | 100,000,000 |
| Common stock, voting rights | All shares have equal voting rights and have one vote per share | |
| Percentage of common stock | 50.00% | |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Stock Options (Details) - $ / shares |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2018 |
|
| Stock Options (Details) [Line Items] | |||
| Outstanding and vested options | 2,400,000 | ||
| Exercise price (in Dollars per share) | $ 0.4 | ||
| Remaining life of options | 1 month 24 days | ||
| Stock options expired | 2,400,000 | ||
| Stock Incentive Plan [Member] | |||
| Stock Options (Details) [Line Items] | |||
| Reserved shares | 2,400,000 |
Revenue (Details) - Schedule of product sales - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Concentrate sales | ||
| Total concentrate sales | $ 995,864 | $ 1,058,057 |
| Deductions to concentrate sales | ||
| Royalties | (41,931) | (44,550) |
| Upside participation payments | (164,907) | (166,612) |
| Outside processing | (50,743) | (53,961) |
| Subtotal – deductions to concentrate sales | (257,581) | (265,123) |
| Net concentrate sales | 738,283 | 792,934 |
| Net processing income | 474,188 | |
| TOTAL REVENUE | 738,283 | 1,267,122 |
| Gold [Member] | ||
| Concentrate sales | ||
| Total concentrate sales | 979,197 | 1,043,929 |
| Silver [Member] | ||
| Concentrate sales | ||
| Total concentrate sales | $ 16,667 | $ 14,128 |