STAR GOLD CORP. 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 2021 . 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. Page 28 of 56 For the fiscal year endingApril 30, 2022 , 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.
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 year ended April 30,
2021 2020 $ Change % ChangeMineral exploration expense$ 25,146 $ 25,244 $ (98 ) (0.4 %) Pre-development expense 246,088 155,716 90,372 58.0 % Legal and professional fees 125,416 77,855 47,561 61.1 % Management and administrative 244,151 193,807 50,344 26.0 % Depreciation 1,318 1,666 (348 ) (20.9 %) Interest expense 946 903 43 4.8 % Interest expense, related party 1,367 419 948 226.3 % Interest (income) (232 ) (760 ) 528 (69.5 %) NET LOSS$ 644,200 $ 454,850 $ 189,350 41.6 % The Company earned no operating revenue in 2021 or 2020 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 year ended
Mineral exploration expense
For the year ended April 30,
2021 2020 $ Change % ChangeDrilling and field work $ - $ - $ - - Claims 25,146 25,244
(98 ) (0.4 %)
Total mineral exploration expense $ 25,146 $ 25,244 $ (98 ) (0.4 %)
Page 29 of 56
Mineral exploration expense for the year ended April 30, 2021 was $25,146 a
decrease of $98 from 2020 mineral exploration expense of $25,244 . Aside from
annual claims payments, there was no additional mineral exploration expense for
the year ended April 30, 2021 and 2020, 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.
Pre-development expense
For the year ended April 30,
2021 2020 $ Change % Change
Cultural resources and anthropological $ - $ 8,060 $ (8,060 ) (100.0 %)
Environmental and plan of operation 5,232 29,181 (23,949 ) (82.1 %)
Field expense 3,870 1,386 2,484 179.2 %
Flora and fauna contractor - 3,231 (3,231 ) (100.0 %)
Permits and fees 200 - 200 N/A
Project management 4,975 12,625 (7,650 ) (60.6 %)
Technical consultants 192,453 81,425 111,028 136.4 %
Water rights costs 39,358 19,808 19,550 98.7 %
Total pre-development expense $ 246,088 $ 155,716 $ 90,372 58.0 %
Pre-development expense for the year ended
Technical consultant expense increased to$192,453 in 2021 due to a consulting contract executed withGreat Basin Resources, Inc. as consideration for amending the Longstreet Property Agreement, as well as expenses related to preparation of a new technical resource report for theLongstreet Project and its related economics. For the year endedApril 30, 2021 , the Company accelerated the payment toGreat Basin Resources, Inc. in consideration of a recorded quit claim deed on the Longstreet property claims. Also, for the year endedApril 30, 2021 , the Company engaged a mining engineering firm for the purpose of authorizing an updated Preliminary Economic Assessment ("PEA") report on the project. The updated PEA is expected to incorporate effects of the recent upward trend in the price of gold and silver. As well, updating costing methods are expected to be incorporated in the PEA. The Company expects to publish the updated PEA during the fiscal year endedApril 30, 2022 . Consequently, total pre-development expense increased$90,372 for the year endedApril 30, 2021 compared to the
year endedApril 30, 2020 . OnNovember 4, 2019 , theUnited States Department of Agriculture-Forest Service approved theCompany's Longstreet Exploration Project which includes drilling of two (2) test holes for water and a monitoring well to determine sufficient water supply for a potential mine at the Longstreet site. The Company is currently assembling bids from engineering firms for development of a full Plan of Operations and Mine Schedule for development and eventual submission of an application to permit construction of a heap leach mining operation on the Longstreet Property. The Company is also soliciting bids for drilling of monitor and water-course wells on the Longstreet property site to determine suitability for future mining and leach pad operations. Page 30 of 56 Legal and professional fees For the year ended April 30, 2021 2020 $ Change % Change Audit and accounting$ 27,386 $ 28,288 $ (902 ) (3.2 %) Legal fees 60,936 14,613 46,323 317.0 % Public company expense 24,030 21,666 2,364 10.9 % Investor relations 13,064 13,288 (224 ) (1.7 %)
Total legal and professional fees
Audit and accounting fees for the year ended
Legal fees increased$46,323 , from$14,613 for the year endedApril 30, 2020 to$60,936 for the year endedApril 30, 2021 . The increase in legal fees for the year endedApril 30, 2021 was due to an increased need for legal services related to compliance, property transfer and corporate transaction matters. There are no pending legal issues or contingencies as ofApril 30, 2021 .
Investor relations expense decreased
General and administrative expense
For the year ended April 30,
2021 2020 $ Change % Change
Auto and travel $ 3,651 $ 11,776 $ (8,125 ) (69.0 %)
General administrative and insurance 43,768 40,327 3,441 8.5 %
Management fees and payroll 30,000 136,760 (106,760 ) (78.1 %)
Office and computer expense 5,080 4,236 844 19.9 %
Stock-based compensation 161,015 - 161,015 N/A
Telephone and utilities 637 708 (71 ) (10.0 %)
Total general and administrative
Total general and administrative expense increased$50,344 for the year endedApril 30, 2021 to$244,151 compared to$193,807 for the year endedApril 30, 2020 . Management fees decreased$106,760 for the year endedApril 30, 2021 as management fees were foregone in the interest of conserving cash. Stock-based compensation increased$161,015 for the year endedApril 30, 2021 as officers and directors were granted options to purchase shares of the Company's Common Stock.
COVID-19 limited business-related travel which resulted in a decrease in auto
and travel expense for the year ended
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL April 30, 2021 April 30, 2020 Current assets$ 299,275 $ 46,948 Current liabilities 32,336 113,460 Working capital (deficit)$ 266,939 $ (66,512 ) For the year ended CASH FLOWS April 30, 2021 April 30, 2020
Cash flow used by operating activities
(12,000 ) (129,800 )
Cash flow provided by financing activities 827,318 (50,000 )
Net change in cash during period $ 239,327 $ (413,699 )
As of April 30, 2021 , the Company had cash on hand of $265,944 . 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.
Page 31 of 56
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. CRITICAL ACCOUNTING POLICIES
The Company has identified certain accounting policies, described below, that are most important to the portrayal of its current financial condition and results of operations. The Company's significant accounting policies are disclosed in the notes to the audited financial statements included in this Annual Report.
Asset Impairments The Company periodically reviews its long-lived assets to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted net future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value. Mineral Interests Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mineral properties and expenses costs to maintain mineral rights as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method based on periodic estimates of ore reserves. Mineral interests are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.
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