GOLDCORP INC. Certain statements in this Management's Discussion and Analysis ("MD&A"), other
than purely historical information, including estimates, projections, statements
relating to our business plans, objectives and expected operating results, and
the assumptions upon which those statements are based, are "forward-looking
statements". Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "would," "expect," "intend,"
"could," "estimate," "should," "anticipate," or "believe," and similar
expressions. Forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements. We undertake
no obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events, or otherwise, except as
may be required under applicable law. Readers should carefully review the risk
factors and related notes included under Item 1A of our Annual Report on Form
10-K for the year ended
The following MD&A is intended to help readers understand the results of our operation and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Interim Unaudited Financial Statements and the accompanying Notes to Interim Unaudited Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Unless otherwise indicated or unless the context otherwise requires, all
references in this document to "we," "us," "our," the "Company," and similar
expressions refer to
Company History and Recent Events
General Corporate Overview
Augusta Gold is an exploration stage gold company focused on building a
long-term business that delivers stakeholder value through developing the
The Company is led by a management team and board of directors with a proven track record of success in financing and developing mining assets and delivering shareholder value.
On
Pursuant to the MIPA, the Company agreed to purchase from the Barrick Parties,
and the Barrick Parties agreed to sell to the Company, all of the equity
interests (the "Equity Interests") in
The Acquisition Transaction closed on
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Following closing of the Acquisition Transaction, the Company's board and
management was reconstituted to include
On
On
Results of Operations
Three Months Ended
Three Months Ended
9/30/21 9/30/20
Operating expenses
General and administrative $1,152,843 $641,344
Exploration, evaluation and project expense 1,267,366 137,071
Accretion expense 6,162 0
Depreciation expense 16,910 0
Total operating expenses 2,443,281 778,415
Net operating loss (2,443,281) (778,415)
Interest expense 0 (21,376)
Revaluation of warrant liability 3,936,989 (157,439)
Foreign currency translation adjustment (470,565) 0
Net income (loss) $1,023,143 ($957,230 )
Nine Months Ended
Nine Months Ended
9/30/21 9/30/20
Operating expenses
General and administrative $3,807,392 $1,023,005
Lease expense 16,000 16,000
Exploration, evaluation and project expense 7,745,089 504,034
Accretion expense 18,605 0
Depreciation expense 33,043 0
Total operating expenses 11,620,129 1,543,039
Net operating loss (11,620,129) (1,543,039)
Interest expense 0 (59,675)
Revaluation of warrant liability 13,826,926 (484,922)
Foreign currency translation adjustment 185,942 0
Net income (loss) $2,392,739 ($2,087,636 )
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For the three months ending
Three months ending 9/30/2021 9/30/2021 9/30/2020 Variance Accounting fees$62,000 $18,000 $44,000 Legal fees 89,000 43,000 46,000 Marketing expense 1,000 76,000 (75,000) Payroll 445,000 41,000 404,000 Corporate expenses & rent 42,000 0 42,000 Share based compensation 442,000 450,000 (8,000) Insurance 31,000 1,000 30,000 Stock exchange fees 13,000 3,000 10,000 Other general expenses 28,000 9,000 19,000 Total$1,153,000 $641,000 $512,000
For the nine months ending
Nine months ending
$219,000 $71,000 $148,000 Legal fees 354,000 51,000 303,000 Marketing expense 74,000 255,000 (181,000) Payroll 1,284,000 95,000 1,189,000 Corporate expenses & rent 262,000 0 262,000 Share based compensation 1,163,000 487,000 676,000 Insurance 92,000 1,000 91,000 Stock exchange fees 233,000 20,000 213,000 Other general expenses 126,000 43,000 83,000 Total$3,807,000 $1,023,000 $2,784,000
·Accounting fees increase resulted from higher costs for review procedures along with additional consulting fees needed for required regulatory filings and tax compliance. Management believes these increased costs will continue in future fiscal periods.
·Legal fees were needed for additional stock exchange listing compliance
requirements. While these fees represent a one-time cost, management does
believe that legal costs will be higher than prior periods moving forward due to
the Company's increased compliance costs and the implementation of regulatory
changes in relation to property disclosure requirements in our filings with the
·Marketing expense was lower as 2020 had additional amounts that were used for Company and shareholder awareness projects.
·The increase in payroll and corporate expenses was from the Company entering
into an agreement to share office space, equipment, personnel, consultants and
various administrative services for the Company's new head office located in
·The Company granted 5,825,000 options to officers, directors and employees of
the Company in the first quarter 2021, pursuant to the terms of the Company's
Stock Option Plan. The Company recognized share-based compensation expense
related to the stock options of
·Stock exchange fee variance is a result of the initial listing fee paid to the
TSX in
For the three- and nine-month period ending
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Three months Nine months
ending 9/30 ending 9/30
Drilling $425,000 $3,992,000
Consultants/Contractors 279,000 1,529,000
Supplies and equipment 105,000 765,000
Assay 154,000 543,000
Water haulage 82,000 390,000
Overhead 27,000 234,000
Permits and fees 183,000 253,000
Other 12,000 39,000
Total 2021 $1,267,000 $7,745,000
Total 2020 $137,000 $504,000
Variance $1,130,000 $7,241,000 In the third quarter of 2021, exploration drilling targeted metallurgical samples at Bullfrog. A total of three holes totaling 1,654 meters were drilled at Bullfrog to collect metallurgical samples and test for remnant high-grade mineralization adjacent to the backfilled stope. The data collected from the metallurgical drilling is being assessed to determine if further test work is required.
The Company continues to evaluate all the drilling data in addition to interpreting the results from the geophysical survey.
The revaluation of the warrant liability is based on the following warrants issued:
Issue Date Expiration Date Warrants Issued Exercise Price
Liquidity and Capital Resources
The Company has no revenue generating operations from which it can internally generate funds. To date, the Company's ongoing operations have been financed by the sale of its equity securities by way of public offerings, private placements and the exercise of incentive stock options and share purchase warrants. The Company believes that it will be able to secure additional private placements and public financings in the future, although it cannot predict the size or pricing of any such financings. This situation is unlikely to change until such time as the Company can develop a bankable feasibility study on one of its projects.
On
On
On
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stock at an exercise price of
Liquidity
As of
As of
The Company expects that it will operate at a loss for the foreseeable future and believes the current cash and cash equivalents and working capital will be sufficient for it to maintain its currently held properties, fund its planned exploration, and fund its currently anticipated general and administrative costs for at least the next 12 months from the date of this report. However, the Company does expect that it will be required to raise additional funds through public or private equity financings in the future in order to continue in business in the future past the immediate 12 month period. Should such financing not be available in that time-frame, the Company will be required to reduce its activities and will not be able to carry out all of its presently planned exploration and, if warranted, development activities on its currently anticipated scheduling.
Capital Management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development and exploration of its mineral properties and to maintain a flexible capital structure, which optimizes the costs of capital to an acceptable risk.
As of
The Company manages the capital structure and adjusts it in response to changes in economic conditions, its expected funding requirements, and risk characteristics of the underlying assets. The Company's funding requirements are based on cash forecasts. In order to maintain or adjust the capital structure, the Company may issue new debt, new shares and/or consider strategic alliances. Management reviews its capital management approach on a regular basis. The Company is not subject to any externally imposed capital requirements.
Contractual obligations and commitments
The Company's contractual obligations and commitments as of
<1 year 1 - 3 years 4 - 5 years >5 years Total Leases$78,687 $250,421 $64,132 $675,000 $1,068,240 Capital Expenditure 25,000 60,000 - - 85,000$103,687 $310,421 $64,132 $675,000 $1,153,240
Off Balance Sheet Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
Critical Accounting Policies and Use of Estimates
Stock based compensation is measured at grant date, based on the fair value of
the award, and is recognized as an expense over the employee's requisite service
period. We estimate the fair value of each stock option as of the date of grant
using the Black-Scholes pricing model. The Company determines the expected life
based on historical experience with similar awards, giving consideration to the
contractual terms, vesting schedules and post-vesting forfeitures. The Company
uses the risk-free interest rate on the implied yield currently available on
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issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.
Mineral property exploration costs are expensed as incurred until such time as
economic reserves are quantified. To date, the Company has not established any
proven or probable reserves on its mineral properties. Costs of lease,
exploration, carrying and retaining unproven mineral lease properties are
expensed as incurred. The Company has chosen to expense all mineral exploration
costs as incurred given that it is still in the exploration stage. Once the
Company has identified proven and probable reserves in its investigation of its
properties and upon development of a plan for operating a mine, it would enter
the development stage and capitalize future costs until production is
established. When a property reaches the production stage, the related
capitalized costs will be amortized over the estimated life of the
probable-proven reserves. When the Company has capitalized mineral properties,
these properties will be periodically assessed for impairment of value and any
diminution in value. To date, the Company has not established the commercial
feasibility of any exploration prospects; therefore, all exploration costs are
being expensed. Costs of property acquisitions are being capitalized, and a
required payment of
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