Mineral Properties and Equipment

6 Months Ended

Jun. 30, 2023

Mineral Industries Disclosures [Abstract]

MINERAL PROPERTIES AND EQUIPMENT

NOTE 2 - MINERAL PROPERTIES AND EQUIPMENT

	Mineral properties		Property and equipment		Total
Cost
As of December 31, 2021	$	12,077,511	$	338,204	$	12,415,715
Additions		46,884,775		838,991		47,723,766
As of December 31, 2022		58,962,286		1,177,195		60,139,481
Additions		0		0		0
As of June 30, 2023	$	58,962,286	$	1,177,195	$	60,139,481
Accumulated depreciation
As of December 31, 2021	$	0	$	44,689	$	44,689
Depreciation expense		0		44,057		44,057
As of December 31, 2022		0		88,746		88,746
Depreciation expense		0		22,029		22,029
As of June 30, 2023	$	0	$	110,775	$	110,775
Net book value on June 30, 2023	$	58,962,286	$	1,066,420	$	60,028,706

On October 26, 2020, the Company completed its acquisition of Bullfrog Mines pursuant to the Membership Interest Purchase Agreement (the “MIPA”) among the Company, Homestake Mining Company of California (“Homestake”), and Lac Minerals (USA) LLC (“Lac Minerals” and together with Homestake, the “Barrick Parties”).

Pursuant to the MIPA, the Company purchased from the Barrick Parties all of the equity interests in Bullfrog Mines LLC for aggregate consideration of (i) 9,100,000 units of the Company, each unit consisting of one share of common stock of the Company and one four-year warrant purchase one share of common stock of the Company at an exercise price of C$1.80 (such number of units and exercise price are set out on a pre Reverse Stock Split basis), (ii) a 2% net smelter returns royalty (the “Barrick Royalty”) granted on all minerals produced from all of the patented and unpatented claims (subject to the adjustments set out below), pursuant to a royalty deed, dated October 26, 2020 by and among Bullfrog Mines and the Barrick Parties (the “Royalty Deed”), (iii) the Company granting indemnification to the Barrick Parties pursuant to an indemnity deed, dated October 26, 2020 by and among the Company, the Barrick Parties and Bullfrog Mines, and (iv) certain investor rights, including anti-dilution rights, pursuant to the investor rights agreement dated October 26, 2020, among the Company, Augusta Investments Inc., and Barrick Gold Corporation.

Pursuant to the Royalty Deed, the Barrick Royalty is reduced to the extent necessary so that royalties burdening any individual parcel or claim included in the Barrick Properties on October 26, 2020, inclusive of the Barrick Royalty, would not exceed 5.5% in the aggregate, provided that the Barrick Royalty in respect of any parcel or claim would not be less than 0.5%, even if the royalties burdening a parcel or claim included in the Barrick Properties would exceed 5.5%.

The following is the consideration paid in the Bullfrog Mines acquisition, which was allocated entirely to mineral properties:

Consideration:
Grant date fair value of 9,100,000 units issued	$	8,342,880
Transaction fees		97,571
Asset retirement obligation		1,130,631
Total	$	9,571,082

On June 13, 2022, the Company completed the acquisition of the outstanding membership interests (collectively, the “CR Interests”) of CR Reward LLC, a wholly-owned subsidiary of Waterton (“CR Reward”), pursuant to a membership interest purchase agreement with Waterton Nevada Splitter, LLC (“Waterton”). CR Reward holds the Reward Project located seven miles from the Company’s Bullfrog Project in Nevada. The CR Interests were acquired for the following consideration: (a) $12,500,000 in cash paid at the closing; plus (b) the issuance of 7,800,000 shares of Augusta Gold common stock at closing; plus (c) $22,126,000 in cash paid on September 14, 2022 (comprising collectively the “Second Payment” and the “Deferred Payment”).

Management has determined that the CR Reward acquisition does not constitute a business combination because the acquired assets do not contain processes sufficient to constitute a business in accordance with ASC 805. As a result, the consideration is measured based on the cost accumulation model and allocated to the acquired assets on the basis of relative fair value, with no resulting goodwill or bargain purchase gain being recognized. Share-based payments issued in conjunction with the acquisition are valued based on the fair value of the consideration issued, measured at the grant date in accordance with ASC 718.

The following is the consideration paid in the CR Reward acquisition:

Consideration:
Cash	$	12,500,000
Grant date fair value of 7,800,000 units issued		11,516,583
Transaction fees		61,488
Second Payment		4,626,000
Deferred Payment		17,500,000
Total consideration	$	46,204,071

Net assets acquired
Cash	$	1,299
Prepaids		9,658
Property and plant		838,992
Mineral properties		46,465,056
Accounts payable		(10,500	)
Asset retirement obligation		(1,100,434	)
Total net assets acquired	$	46,204,071

The Company has posted several cash bonds as financial security to satisfy reclamation requirements. The balance of posted cash reclamation bonds at June 30, 2023 is $1,115,813, for total coverage of $3,188,036.