STAR GOLD CORP. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report and the exhibits attached hereto contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements concern the Company's anticipated results and developments in the Company's operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statement that expresses or involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates", or "intends", or states that certain actions, events or results "may" or "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:
? Risks related to the Company's properties being in the exploration stage;
? Risks related to the mineral operations being subject to government regulation;
? Risks related to environmental concerns;
? Risks related to the Company's ability to obtain additional capital to develop
the Company's resources, if any;
? Risks related to mineral exploration and development activities;
? Risks related to mineral estimates;
? Risks related to the Company's insurance coverage for operating risks;
? Risks related to the fluctuation of prices for precious and base metals, such
as gold, silver and copper;
? Risks related to the competitive industry of mineral exploration;
? Risks related to the title and rights in the Company's mineral properties;
? Risks related to the possible dilution of the Company's common stock from
additional financing activities;
? Risks related to potential conflicts of interest with the Company's management;
? Risks related to the Company's shares of common stock;
This list is not exhaustive of the factors that may affect the Company's forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled "Risk Factors and Uncertainties", "Description of Business" and "Management's Discussion and Analysis" of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.Star Gold Corp. disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law. The Company advises readers to carefully review the reports and documents filed from time to time with theSecurities and Exchange Commission (the "SEC"), particularly the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Certain statements contained in this Quarterly Report on Form 10-Q constitute "forward-looking statements." These statements, identified by words such as "plan," "anticipate," "believe," "estimate," "should," "expect," and similar expressions include the Company's expectations and objectives regarding its future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Management's Discussion and Analysis or Plan of Operation" and elsewhere in this Quarterly Report. As used in this Quarterly Report, the terms "we," "us," "our," "Star Gold ," and the "Company", meanStar Gold Corp. , unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed inU.S. dollars, unless otherwise indicated. Page 13 of 23
Management's Discussion and Analysis is intended to be read in conjunction with
the Company's financial statements and the integral notes ("Notes") thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ending
April 30, 2022 . The following statements may be forward-looking in nature and
actual results may differ materially.
Corporate Background
The Company was originally incorporated onDecember 8, 2006 , under the laws of theState of Nevada asElan Development, Inc. OnApril 25, 2008 , the name of the Company was changed toStar Gold Corp. Star Gold Corp. is a pre-development stage company engaged in the acquisition and exploration of precious metal deposit properties and advancing them toward production. The Company is engaged in the business of exploring, evaluating and acquiring mineral prospects with the potential for economic deposits of precious and base metals.Star Gold Corp. originally leased with an option to acquire certain unpatented mining claims located in theState of Nevada which in part make up what we refer to as the "Longstreet Property" (or the "Longstreet Project "). The Longstreet Property in its entirety comprises 142 mineral claims: 75 original optioned claims, of which 70 are unpatented staked claims and five claims leased from local ranchers, pursuant to the "Clifford Lease"; as well as 50 claims subsequently staked byStar Gold . The Longstreet Property covers a total area of approximately 2,500 acres (1,012 ha).The Longstreet Project is at an intermediate stage of exploration. The Company has no patents, licenses, franchises or concessions which are considered by the Company to be of importance. The business is not of a seasonal nature. Because minerals are traded in the open market, the Company has little to no control over the competitive conditions in the industry.
Overview of Mineral Exploration and Current Operations
Star Gold Corp. is a pre-development stage mineral company with no producing mines. Mineral exploration is essentially a research activity that does not produce a product. The Company acquires properties which it believes have potential to host economic concentrations of minerals, particularly gold and silver. These acquisitions have and may take the form of unpatented mining claims on federal land, or leasing claims, or private property owned by others. An unpatented mining claim is an interest, that can be acquired, in the mineral rights on open lands of the federally owned public domain. Claims are staked in accordance with the Mining Law of 1872, recorded with the federal government pursuant to laws and regulations established by theBureau of Land Management . The Company intends to remain in the business of exploring for mining properties that have the potential to produce gold, silver, base metals and other commodities. The Company will perform basic geological work to identify specific drill targets on the properties, and then collect subsurface samples by drilling to confirm the presence of mineralization (the presence of economic minerals in a specific area or geological formation). The Company may enter joint venture agreements with other companies to fund further exploration and/or development work. It is the Company's plan to focus on assembling a high-quality group of mid-stage mineral (primarily gold and silver) exploration prospects, using the experience and contacts of the management group. By such prospects, the Company means properties that have been previously identified by third parties, (including prior owners and/or exploration companies), as mineral prospects with potential for economic mineralization. Often these properties have been sampled, mapped and sometimes drilled, usually with indefinite results. Accordingly, such acquired projects will have either prior exploration history or will have strong similarity to a recognized geologic ore deposit model. Geographic emphasis will be placed on the westernUnited States . The geologic potential and ore deposit models have been defined and specific drill targets identified on the Longstreet Property. The Company's property evaluation process involves using basic geologic fieldwork to perform an initial evaluation of a property. If the evaluation is positive, the Company seeks to acquire, either by staking unpatented mining claims on open public domain, or by leasing the property from the owner of private property or the owner of unpatented claims. Once acquired, the Company then typically makes a more detailed evaluation of the property. This detailed evaluation involves expenditures for exploration work which may include rock and soil sampling, geologic mapping, geophysics, trenching, drilling or other means to determine if economic mineralization is present on a property. Page 14 of 23
The Company owns 137 claims and leases 5 Claims from Clifford. The Company shall pay a 3%Net Smelter Royalty ("NSR") within thirty (30) days following the end of the calendar quarter under which the Company receives Net Smelter Returns. To date, the Company has not received Net Smelter Returns. Third parties to which NSR payments would be made are as follows: Property name Longstreet Third partiesGreat Basin Resources, Inc. and Clifford Number of claims 142 (1)(2)(3)(4) Acres (approx.) 2,500 Agreements/Royalties Royalties 3%Net Smelter Royalty ("NSR") Annual advance royalty payment$12,000
(1)
Inc., of the 142 total claims controlled by the Company (Note 4 of the
financial statements) of which 137 are owned by the Company and 5 of which
are owned by (also Note 4) and leased to and managed by the Company.
(2) On
Basin") agreed to amend the Longstreet Agreement (Note 4) to eliminate the
required property expenditure structure and to implement new consideration
for the transfer of the Property pursuant to that agreement (the "2019
Amendment"). The Amendment eliminated the remainder of the required
property expenditures set forth in the Longstreet Agreement, as amended.
(3) On
Longstreet property claims. The Company owns 137 claims (exclusive of 5
Clifford claims) and has no required spend other than annual claims filing
fees.
(4) The Company shall pay Clifford a 2% net smelter royalty on net smelter
returns which is inclusive of the overall 3% net smelter royalty for the
properties.
Compliance with Government Regulations
Continuing to acquire and explore mineral properties in theState of Nevada will require the Company to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in theState of Nevada and the United States Federal agencies.United States Mining in theState of Nevada is subject to federal, state and local law. Three types of laws are of particular importance to the Company'sU.S. mineral properties: those affecting land ownership and mining rights; those regulating mining operations; and those dealing with the environment.
Land Ownership and
On Federal Lands, mining rights are governed by the GeneralMining Law of 1872 (GeneralMining Law ) as amended, 30 U.S.C. §§ 21-161 (various sections), which allows the location of mining claims on certain Federal Lands upon the discovery of a valuable mineral deposit and proper compliance with claim location requirements. A valid mining claim provides the holder with the right to conduct mining operations for the removal of locatable minerals, subject to compliance with the GeneralMining Law andNevada state law governing the staking and registration of mining claims, as well as compliance with various federal, state and local operating and environmental laws, regulations and ordinances. As the owner or lessee of the unpatented mining claims, the Company has the right to conduct mining operations on the lands subject to the prior procurement of required operating permits and approvals, compliance with the terms and conditions of any applicable mining lease, and compliance with applicable federal, state, and local laws, regulations and ordinances. Page 15 of 23 Mining Operations
The exploration of mining properties and development and operation of mines is governed by both federal and state laws.
TheState of Nevada likewise requires various permits and approvals before mining operations can begin, although the state and federal regulatory agencies usually cooperate to minimize duplication of permitting efforts. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time.The Nevada Department of Environmental Protection , which is referred to as the NDEP, is the state agency that administers the reclamation permits, mine permits and related closure plans on theNevada property. Local jurisdictions (such asEureka County ) may also impose permitting requirements (such as conditional use permits or zoning approvals). Environmental Law
The development, operation, closure, and reclamation of mining projects inthe United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of the Company's operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to the Company's proposed operations may be encountered. The Company is currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Unless and until a mineral resource is proved, it is unlikelyStar Gold Corp. operations will move beyond the pre-development stage. If in the future the Company decides to proceed beyond exploration, there will be numerous notifications, permit applications, and other decisions to
be addressed at that time. CompetitionStar Gold Corp. competes with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties and for equipment and labor related to exploration and development of mineral properties. Many of the mineral resource exploration and development companies with whom the Company competes have greater financial and technical resources. Accordingly, competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impactStar Gold Corp.'s ability to finance further exploration and to achieve the financing necessary for the Company to develop its mineral properties.
The Company provides no assurance it will be able to compete in any of its business areas effectively with current or future competitors or that the competitive pressures faced by the Company will not have a material adverse effect on the business, financial condition and operating results.
Office and Other Facilities
Employees The Company has no employees as of the date of this Quarterly Report on Form 10-Q. Star Gold Corp . conducts business largely through independent contractor agreements with consultants.
Research and Development Expenditures
The Company has not incurred any research expenditures since incorporation.
Reports to Security Holders
The Registrant does not issue annual or quarterly reports to security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with theSEC . Electronically filed reports may be accessed at www.sec.gov Page 16 of 23 SELECTED FINANCIAL DATA. Three months ended July 31, 2022 July 31, 2021 Revenues $ - $ - Total operating expenses 137,135 165,176 Loss from operations (137,135 ) (165,176 ) Other income (expense) (2,911 ) (208 ) NET LOSS $
(140,046 )
Weighted average shares of common stock (basic and diluted) 97,290,810
97,290,810
Income (loss) per share (basic and diluted) Nil Nil BALANCE SHEET INFORMATION July 31, 2022 April 30, 2022 Working capital (deficit)$ 27,569 $ 149,615 Total assets 800,367 845,714 Accumulated deficit 12,335,034 12,194,988 Stockholders' equity 465,136 605,182 PLAN OF OPERATION The Company maintains a corporate office inCoeur d'Alene, Idaho . This is the primary administrative office for the Company and is utilized by Board ChairmanLindsay Gorrill and Chief Financial OfficerKelly Stopher . During the fiscal year endedApril 30, 2021 , the Company commissioned a detailed third-party Preliminary Economic Assessment ("PEA") to redefine theLongstreet Project and to make sure that the assumptions, and resulting economics, relied on to move the leach pad closer to the Main nob justified the change in design. The PEA has been completed and the Company is currently assessing the best strategy to proceed. The drilling permit granted from theBureau of Land Management ("BLM") inSeptember 2019 remains valid untilDecember 2022 . This allows the Company to commence drilling mainly for the Hydrology Study but also enabling drilling of other holes on the Main knob for geochemical analysis. A bond has been obtained and there are no impediments to drilling other than capital constraints. The Company may apply for an extension of the permit. For the fiscal year endingApril 30, 2023 , the Company plans to commence the following activities as it prepares to draft its Environmental Impact Statement ("EIS") on theLongstreet Project :
Hydrology Drilling - 2 to 4 holes expected to be sufficient:
Geochemical analysis - design of program for submission to
Plan of
Assuming the results of the above-referenced activities are favorable, the Company intends to proceed to the preparation of an EIS and plan of operation for the Longstreet project (the "Longstreet Plan"). The eventual objective of the EIS and Longstreet Plan is the issuance, by each respective governing agency, of the necessary mine permits to authorize the construction of, and ongoing operations at, an open pit/heap leach mine at the Longstreet Property.
Approval of the Longstreet Plan is subject to governmental agency review and may require additional remediation activities.
Page 17 of 23
Management believes it can source additional capital in the investment markets
in the coming months and years. The Company may also consider other sources of
funding, including potential mergers, sale of property, joint ventures and/or
farm-out a portion of its exploration properties.
Future liquidity and capital requirements depend on many factors including
timing, cost and progress of the Company's exploration efforts. The Company
will consider additional public offerings, private placement, mergers or debt
instruments.
Additional financing will be required in the future to complete all necessary
steps to apply for a final permit. Although the Company believes it will be able
to source additional financing there are no guarantees any needed financing will
be available at the time needed or on acceptable terms, if at all. If the
Company is unable to raise additional financing when necessary, it may have to
delay exploration efforts or property acquisitions or be forced to cease
operations. Collaborative arrangements may require the Company to relinquish
rights to certain of its mining claims.
RESULTS OF OPERATIONS
For the three months ended
July 31, 2022 July 31, 2021 $$ Change Pct. Change
Mineral exploration expense$ 25,146 $ 25,146 $ - 0.0 % Pre-development expense 53,177 13,315 39,862 299.4 % Legal and professional fees 38,046 40,161 (2,115 ) (5.3 %) Management and administrative 20,766 86,554 (65,788 ) (76.0 %) Interest expense 406 262 144 55.0 %
Interest expense, related party 2,505
- 2,505 N/A Interest income - (54 ) 54 (100.0 %) Total$ 140,046 $ 165,384 $ (25,338 ) (15.3 %) The Company earned no operating revenue in 2022 or 2021 and does not anticipate earning any operating revenues in the near future.Star Gold Corp. is a pre-development stage company and presently is seeking other natural resources related business opportunities.
The Company will continue to focus its capital and resources toward permitting activities at its Longstreet Property.
Total net loss for the three months ended
Mineral exploration expense
For the three months ended
July 31, 2022 July 31, 2021 $ Change Pct. Change
Claims 25,146 25,146 - 0.0%
Total mineral exploration expense
Mineral exploration expense for the three months endedJuly 31, 2022 was$25,146 a change of $Nil from 2021 mineral exploration expense of$25,146 . Aside from annual claims payments, there was no additional mineral exploration expense for the three months endedJuly 31, 2022 and 2021, respectively. The Company's emphasis has shifted from exploratory drilling to activities related to pre-development expense including environmental and anthropological studies associated with building a Plan of Operations and obtaining a permit to construct a mine at the Longstreet site. Page 18 of 23 Pre-development expense For the three months ended July 31, 2022 July 31, 2021 $ Change Pct. Change Field expense 3,124 1,995 1,129 56.6 % Permits and fees $ 200 $ 200 $ - 0.0 % Technical consultants 43,552 - 43,552 N/A Water rights costs 6,301 11,120 (4,819 ) (43.3 %) Total pre-development expense$ 53,177 $ 13,315 $ 39,862 299.4 %
Pre-development expense for the three months ended
Technical consultant expense increased$43,552 to$43,552 for the three months endedJuly 31, 2022 compared to $Nil for the three months endedJuly 31, 2021 . Legal and professional fees For the three months ended July 31, 2022 July 31, 2021 $ Change Pct. Change Audit and accounting$ 19,574 $ 18,592 $ 982 5.3 % Legal fees 1,934 6,800 (4,866 ) (71.6 %) Public company expense 16,460 14,712 1,748 11.9 % Investor relations 78 57 21 36.8 %
Total legal and professional fees
(5.3 %)
Audit and accounting fees for the three months ended
Legal fees decreased by$4,866 , from$6,800 for the three months endedJuly 31, 2021 to$1,934 for the three months endedJuly 31, 2022 . There are no pending legal issues or contingencies as ofJuly 31, 2022 .
Investor relations expense increased by
General and administrative expense
For the three months ended
July 31, 2022 July 31, 2021 $ Change Pct. Change
Auto and travel $ 94 $ 1,235 (1,141 ) (92.4 %)
General administrative and insurance 12,572 12,333 239 1.9 %
Management fees and payroll 7,500 72,000 (64,500 ) (89.6 %)
Office and computer expense 506 750 (244 ) (32.5 %)
Telephone and utilities 94 236 (142 ) (60.2 %)
Total $ 20,766 $ 86,554 $ (65,788 ) (76.0 %)
Total general and administrative expense decreased by $65,788 , for the three
months ended July 31, 2022 to $20,766 compared to $86,554 for the three months
ended July 31, 2021 . Management fees decreased by $64,500 for the three months
ended July 31, 2022 as management fees were not accrued for the period then
ended.
Page 19 of 23
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL July 31, 2022 April 30, 2022 Current assets$ 132,800 $ 190,147 Current liabilities 105,231 40,532 Working capital$ 27,569 $ 149,615 Three months ended CASH FLOWS July 31, 2022 July 31, 2021
Cash flow used by operating activities
(12,000 ) (12,000 )
Cash flow provided by financing activities 30,000 -
Net decrease in cash during period$ (49,853 ) $ (86,690 )
As ofJuly 31, 2022 , the Company had cash on hand of$962 . Since inception, the sole source of financing has been sales of the Company's debt and equity securities.Star Gold Corp. has not attained profitable operations and its ability to pursue any future plan of operation is dependent upon our ability to obtain financing.
The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, or ultimately to attain profitability. Potential sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of the Company's capital stock or alternative methods such as mergers or sale of the Company's assets. No assurances can be given, however, that the Company will be able to obtain any of these potential sources of cash. The Company currently requires additional cash funding from outside sources to sustain existing operations and to meet current obligations and ongoing capital requirements. The Company plans for the long-term continuation as a going concern include financing future operations through sales of our equity and/or debt securities and the anticipated profitable exploitation of the Company's mining properties. These plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for equity in the property.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders.
© Edgar Online, source
