Much of the information included in this quarterly report includes or is based
upon estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations is intended to help the reader understand the results of
operations and financial condition of our company. Management's Discussion and
Analysis of Financial Condition and Results of Operations is provided as a
supplement to, and should be read in conjunction with, our consolidated
financial statements and the accompanying notes to the consolidated financial
Liberty Star Uranium & Metals Corp. was formerly Liberty Star Gold Corp. and
formerly Titanium Intelligence, Inc. ("Titanium"). Titanium was incorporated on
August 20, 2001 under the laws of the State of Nevada. On February 5, 2004, we
commenced operations in the acquisition and exploration of mineral properties
business. Big Chunk Corp. ("Big Chunk") was our wholly owned subsidiary and was
incorporated on December 14, 2003 in the State of Alaska. Big Chunk is engaged
in the acquisition and exploration of mineral properties business in the State
of Alaska. Big Chunk was dissolved on June 3, 2019. Redwall Drilling Inc.
("Redwall") was our wholly owned subsidiary and was incorporated on August 31,
2007 in the State of Arizona. Redwall performed drilling services on our mineral
properties. Redwall ceased drilling activities in July 2008 and was dissolved on
March 30, 2010. In April 2007, we changed our name to Liberty Star Uranium &
Metals Corp ("Liberty Star") to reflect our current general exploration for base
and precious metals. We are in the exploration phase of operations and have not
generated any revenues from operations.
In October 2014, we formed our wholly owned subsidiary, Hay Mountain Holdings
LLC ("HMH")(formerly known as Hay Mountain Super Project LLC), to serve as the
primary holding company for development of the potential ore bodies encompassed
in the Hay Mountain area of interest in Arizona. On April 11, 2019 we formed a
new subsidiary named Earp Ridge Mines LLC, wholly owned by Hay Mountain Holdings
LLC, intended for engagement with future venture partners.
On August 13, 2020, the Company formed Red Rock Mines, LLC, an Arizona
corporation, as a wholly-owned subsidiary of Hay Mountain Holdings, LLC.
Our Current Business
We are engaged in the acquisition and exploration of mineral properties in the
state of Arizona and the Southwest USA. Claims in the state of Arizona are held
in the name of Liberty Star. We use the term "Super Project" to indicate a
project in which numerous mineral targets have been identified, any one or more
of which could potentially contain commercially viable quantities of minerals.
Our significant projects are described below.
Tombstone Super Project ("Tombstone"): Tombstone is located in Cochise County,
Arizona and covers the Tombstone caldera and its environs. Within the Tombstone
caldera is the Hay Mountain target where we are concentrating our work at this
time. We plan to ascertain whether the Tombstone, Hay Mountain claims possess
commercially viable deposits of copper, molybdenum, gold, silver, lead, zinc,
manganese and other metals including Rare Earth Elements (REE's). We have not
identified any ore reserves to date.
On June 16, 2020, the company acquired 2 Mineral Exploration Permits (MEP)
covering 240 acres at Robbers Roost. Which is located 5.89 miles west of the Hay
Mountain Project. While the Robbers Roost MEP area is new to the Company, it has
been explored previously by several exploration companies, in the 1970's and
1990's, and recently has received significant interest by others operating in
the area. Drilling by ASARCO indicates "the presence of a granodioritic porphyry
intrusive at depth below the alteration zone. The intrusive is characterized by
porphyry copper style alteration and mineralization." (JB Nelson, "Robbers'
Roost Summary Report," 1995, p. 2
From July 14th to August 5th 2020, field mapping was conducted in the Hay
Mountain Project area, located 7 km southeast of Tombstone, in Cochise County,
Arizona. The purpose of mapping was to identify alteration and veining
associated with an inferred porphyry copper system at depth, determine the
extent of hydrothermal alteration, and comment on the possible the timing of
mineralization. Mapping was conducted at 1:10,000 scale and a total of 183
carbonate vein samples were taken for pXRF analysis and UV fluorescence
On November 11, 2020, the company announced the identification of potentially
exploitable gold mineralization on its recently acquired Arizona State Land
Department Mineral Exploration Permits. Preliminary surface exploration on the
Red Rock MEPs advances the Company's knowledge of the porphyry system signature
associated with magnetic highs at, and adjacent to the north of, Target 1, and
represent the expansion of biogeochemical, surface rock sampling, and x-ray
fluorescence (XRF) work continuing at Target 1 and on the anticipated gold halo
likely associated with the indicated porphyry center. The Company discovered
multiple outcrops of intensely silicified rock in the initial observational
field work. These outcrops generally occur in linear features several feet in
thickness with multiple features oriented en echelon with interstitial host
country rock of varying horizontal dimension. These outcrops contain densely
distributed jasperoids, which, when sampled yield what the Company believes are
potentially economically exploitable concentrations of gold. There was a total
of 23 representative (1 to 2 kg) rock sample assays. These assays demonstrate
gold concentrations ranging from below detection limits of 0.05 ppm in country
rock surrounding certain outcrops to a high of 13.55 ppm in direct outcrop
samples. Of the 23 assayed samples, nine (9) show gold concentrations of 0.95
ppm or more.
On November 25, 2020, the company received approval from the Arizona State Land
Department for 5 additional MEP's covering 2,369.15 acres for a total of
16,662.10 acres or 26.03 sq miles at our Hay Mountain Project.
On March 15, 2021, the company announced the release of more rock chip assay
results from the Red Rock Canyon area located within the Hay Mountain Project.
28 samples were submitted to the ALS/USA Inc. Tucson location with results
returned to the Company February 6th. This set of samples are within and outside
of the original study area and expand on the October 2020 geochemical sampling
undertaken on MEP land within the Company's Red Rock Canyon holdings.
On May 21, 2021, the company announced the public release of its latest
technical report. The Technical Report on the Red Rock Canyon Gold Property
Cochise County, Arizona ("RRC Technical Report" "The Report"). The Report was
prepared by Broadlands Mineral Advisory Services Ltd., owned and operated by
Liberty Star's independent director Bernard J. Guarnera, P.ENG., QP, CMA. Mr.
Guarnera authored The Report. His findings include that the Red Rock Canyon
tract contains "gold at grades that are now considered economic" (p.1). Further,
the compilation of previous drilling results, by others as noted in The Report,
(p.30) indicates that 12 of 17 intercepts reported gold at grades above what is
considered current cut off grades, 0.022 oz per ton (0.68 gpt). These historical
intercepts range from five (5) to forty-five (45) feet in vertical extent and
reveal multiple mineralized zones. Grades in the larger intercepts are reported
up to 0.182 ounces per ton (5.66 gpt). Additionally, Liberty Star collected
fifteen (15) more rock samples on a recent field visit near and at the locations
of past drilling. We expect the new field assays to confirm similar grades in
the corresponding outcrops. These assay results are forthcoming and will be
posted to the Liberty Star website.
On May 26, 2021, the company announced the public release of geochemical assay
results prepared by ALS/USA Inc. The Company noted in its news release issued
May 21st that the results were forthcoming on the heels of its latest technical
report focused on the gold prospect at Red Rock Canyon. Previously released
geochemical assay results from October 2020 and Feb 2021 can be viewed on the
Liberty Star Minerals website. This set of results strongly aligns with previous
assay results indicating that the Red Rock portion of the Hay Mountain Project
is a potential gold property.
Title to mineral claims involves certain inherent risks due to difficulties in
determining the validity of certain claims, as well as potential for problems
arising from the frequently ambiguous conveyancing history characteristic of
many mineral properties. We have investigated title to all the Company's mineral
properties and, to the best of its knowledge, title to all properties retained
are in good standing.
The mineral resource business generally consists of three stages: exploration,
development and production. Mineral resource companies that are in the
exploration stage have not yet found mineral resources in commercially
exploitable quantities and are engaged in exploring land in an effort to
discover them. Mineral resource companies that have located a mineral resource
in commercially exploitable quantities and are preparing to extract that
resource are in the development stage, while those engaged in the extraction of
a known mineral resource are in the production stage. We have not found any
mineral resources in commercially exploitable quantities.
There is no assurance that a commercially viable mineral deposit exists on any
of our properties, and further exploration is required before we can evaluate
whether any exist and, if so, whether it would be economically feasible to
develop or exploit those resources. Even if we complete our current exploration
program and we are successful in identifying a mineral deposit, we would be
required to spend substantial funds on further drilling and engineering studies
before we could know whether that mineral deposit will constitute a commercially
viable mineral deposit, known as an "ore reserve."
To date, we have not generated any revenues. Our ability to pursue our business
plan and generate revenues is subject to our ability to obtain additional
financing, and we cannot give any assurance that we will be able to do so.
The extent to which the coronavirus disease ("COVID-19") impacts our businesses
will depend on future developments, which are highly uncertain and cannot be
predicted, including new information which may emerge concerning the severity of
COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
If the disruptions posed by COVID-19 or other matters of global concern continue
for an extensive period of time, our operations may be materially adversely
affected. Currently, the Company has not experienced a significant impact on its
businesses related to COVID-19. However, COVID-19 did, and continues to, impact
us significantly with delays in acquiring a JV to begin our primary drilling
Results of Operations
Material Changes in Financial Condition for the Three-Month Period Ended April
We had cash and cash equivalents in the amount of $126,882 as of April 30, 2021
compared to $6,718 as of January 31, 2021. We had negative working capital of
$2,187,400 as of April 30, 2021 compared to $1,991,571 as of January 31, 2021.
We used $79,433 of net cash in operating activities during the three months
ended April 30,2021 which was utilized for working capital. We also utilized our
cash funds to continue exploration activities at our Hay Mountain mineral lands
by working on geochemical interpretation of the soil, rock chip and vegetation
sampling and ZTEM (aeromagnetics and aero electromagnetics). We purchased no new
equipment during the three months ended April 30,2021. We have been raising
capital primarily by issuing convertible promissory notes, related party notes
and the sale of common stock. We intend to continue to raise capital from such
sources. In addition to seeking sources of funding through the sale of equity,
we may seek to enter into joint venture agreements, or other types of agreements
with other companies to finance our projects for the long term. In addition, we
may choose to sell a portion of our assets to finance our projects. Should our
properties prove to be commercially viable, we may be in a position to seek debt
financing to help build infrastructure, and eventually we may obtain revenues
from commercial mining of our properties.
Material Changes in Results of Operations for the Three-Month Periods Ended
April 30, 2021 and 2020
We had a net loss of $81,624 and for the three months ended April 30, 2021,
compared to net loss of $183,741 for the three months ended April 30,2020,
During the three months ended April 30,2021, we had a decrease of $1,199 in
geological and geophysical expense compared to the three months ended April
30,2020, due primarily to an decrease in land rental fees for mineral claims.
During the three months ended April 30,2021, we had a decrease of $1,191 in
salaries and benefit expense compared to the three months ended April 30,2020,
due primarily to a reduction in hours worked. During the three months ended
April 30,2021, we had a decrease of $30,589 in legal expense compared to the
three months ended April 30,2020, due primarily to a decrease in the use of
outside legal services for operations and litigation matters. We had a decrease
in general and administrative expenses of $6,569 during the three months ended
April 30, 2021, as compared to the three months ended April 30,2020 which was
due to a slight reduction in occupancy expense. We had a decrease in interest
expense of $67,319 during the three months ended April 30,2020, as compared to
the three months ended April 30,2020, due primarily to a decrease in convertible
Liquidity and Capital Resources
We had cash and cash equivalents in the amount of $126,882 as of April 30, 2021.
We had negative working capital of $2,187,400 as of April 30, 2021. We used cash
in operating activities of $79,433 for the three months ended April 30, 2021. We
will need additional funds in order to proceed with our planned exploration
Convertible promissory notes
We have issued the following convertible promissory notes in private placements
of our securities to institutional investors pursuant to exemptions from
registration set out in Rule 506 of Regulation D under the Securities Act of
On October 28, 2020, we received net proceeds of $82,000 from the issuance of a
convertible note dated October 20, 2020 (the "October 2020 Note"). The note
bears interest at 8%, includes OID of $8,500, and legal and due diligence fees
of $3,000, matures on September 1, 2021, and is convertible after 180 days into
shares of the Company's common stock at a price of 75% of the average of the
lowest 5 weighted average market price of the Company's common stock during the
10 trading days prior to conversion. During the three months ended April 30,
2021, the noteholder converted a total of $27,000 of the note for 33,881 shares
of the Company's common stock, leaving a balance of $72,546 as of April 30,
On April 26, 2021, we received net proceeds of $60,000 from the issuance of a
convertible note dated April 23, 2021 (the "April 2021 Note"). The note bears
interest at 8%, includes legal and due diligence fees of $3,000, and matures on
April 23, 2022, and is convertible after 180 days into shares of the Company's
common stock at a price of 75% of the average of the lowest 5 weighted average
market price of the Company's common stock during the 10 trading days prior to
Proceeds from issuance of common stock
On March 5, 2021, the Company issued 6,000 shares of its common stock to an
accredited investor for the exercise of warrants for proceeds of $2,100, or
$0.35 per common share.
On March 26, 2021, the Company issued 17,006 shares of its common stock and
8,503 warrants to our CEO for gross proceeds of $20,000, for $1.176 per unit.
The warrants have a three-year term and are exercisable at any time at an
exercise price of $1.646.
In March 2021, the Company issued 49,412 shares of its common stock and 24,706
warrants to our CEO for gross proceeds of $55,000 for $1.113 per unit. The
warrants have a three-year term and are exercisable at any time at an exercise
price of $1.558.
On April 2, 2021, the Company issued 9,818 shares of its common stock and 4,909
warrants to an accredited investor for gross proceeds of $10,000, or $1.019 per
unit. The warrants have a three-year term and are exercisable at any time at an
exercise price of $1.426.
On April 23, 2021, the Company issued 15,049 of its common stock to a noteholder
for the conversion of $12,000 of principal under the October 2020 Note, or
$0.797 per share.
On April 27, 2021, the Company issued 18,832 of its common stock to a noteholder
for the conversion of $15,000 of principal under the October 2020 Note, or
$0.797 per share.
On April 30, 2021, the Company received proceeds of $20,000 from an investor for
the purchase of 19,268 shares of its common stock and 9,634 warrants, at a price
of $1.038 per unit. The warrants have a three-year term and are exercisable at
any time at an exercise price of $1.453.
Proceeds from long-term notes payable
On June 22, 2020, the Company received loan proceeds of $32,300 (net of $100
loan fee) under the SBA's Economic Injury Disaster Loan program ("EIDL"). The
EIDL loan, dated June 16, 2020, bears interest at 3.75%, has a 30-year term, is
secured by substantially all assets of the Company, and is due in monthly
installments of $158 beginning June 18, 2021 (extended to June 18, 2023).
On February 16, 2021, the Company received loan proceeds of $32,497 under the
Payroll Protection Program ("PPP"). The PPP loan bears interest at 1%, has a
5-year term, and is due in equal monthly installments beginning December 16,
Critical Accounting Policies
The unaudited consolidated financial statements of Liberty Star have been
prepared in conformity with accounting principles generally accepted in the
United States of America. Our significant accounting policies are described in
Note 2 to the consolidated financial statements included in Item 8 in our Form
10-K for the year ended January 31, 2021. The critical accounting policies
adopted by our company are as follows:
Since we have not generated any revenue, we have negative cash flows from
operations and negative working capital and we have included a reference to the
substantial doubt about our ability to continue as a going concern in connection
with our unaudited consolidated financial statements as of April 30, 2021. Our
total stockholders' deficit at April 30, 2021 was approximately $2 million.
These unaudited consolidated financial statements have been prepared on the
going concern basis, which assumes that adequate sources of financing will be
obtained as required and that our assets will be realized, and liabilities
settled in the ordinary course of business. Accordingly, these consolidated
financial statements do not include any adjustments related to the
recoverability of assets and classification of assets and liabilities that might
be necessary should we be unable to continue as a going concern.
We account for costs incurred to acquire, maintain and explore mineral
properties as charged to expense in the period incurred until the time that a
proven mineral resource is established at which point development of the mineral
property would be capitalized. Currently, we do not have any proven mineral
resources on any of our mineral properties.
Convertible promissory notes
We reviewed the convertible promissory notes and the related subscription
agreements to determine the appropriate reporting within the consolidated
financial statements. We report convertible promissory notes as liabilities at
their carrying value less unamortized discounts in accordance with the
applicable accounting guidance. We record conversion options and detachable
common stock purchase warrants and report them as derivative liabilities at fair
value at each reporting period when required in accordance with the applicable
accounting guidance. No gain or loss is reported when the notes are converted
into shares of our common stock in accordance with the note's terms.
Common stock purchase warrants
We report common stock purchase warrants as equity unless a condition exists
which requires reporting as a derivative liability at fair market value. For
common stock purchase warrants reported as a derivative liability, as well as
new and modified warrants reported as equity, we utilize a Monte Carlo options
model in order to determine fair value.
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