Forward-Looking Statements
In addition to historical financial information, the following discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. See "Cautionary Statement on Forward-Looking Statements." Our
results and the timing of selected events may differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including the risk factors described in this report and in "Item 1A. Risk
Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30,
2019.
Overview
We are an exploration company that owns certain mining and mineral rights at our
Alhambra-Blackhawk project and have right-of-use mineral rights comprising the
Billali and Jim Crow-Imperial mine project in southwest New Mexico.
During the nine-months ended March 31, 2020, the Company focused primarily on
repair and improvement projects work at the Jim Crow mine site and continued and
expanded our exploratory program at the mine sites.
Basis of Presentation and Going Concern
The financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities and
commitments in the normal course of business. Should the Company be unable to
continue as a going concern, it may be unable to realize the carrying value of
its assets and to meet its liabilities as they become due.
The Company has recorded a net loss of $1,876,518 for the nine months ended
March 31, 2020, and has a total accumulated deficit of $95,355,188 and a working
capital deficit at March 31, 2020 of $4,811,112. The Company used in operating
activities, approximately $1.26 million. The Company currently has no source of
generating revenue.
To continue as a going concern, the Company is dependent on continued capital
financing for project development, repayment of various debt facilities and
payment of current operating expenses until the Company has put into production
an acceptable source to generate mineralized ore to generate a revenue stream.
Currently we have no commitment from any party to provide additional working
capital and there is no assurance that any funding will be available as
required, or if available, that its terms will be favorable or acceptable to the
Company.
At March 31, 2020, the Company was in default on delinquent payments of
approximately $3.2 million on accounts payable, $399 on a note payable and $696
thousand on accrued liabilities.
The unaudited consolidated financial statements do not include any adjustments
relating to the recoverability and classification of asset amounts or the
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
--------------------------------------------------------------------------------
21
--------------------------------------------------------------------------------
Operating Results for the Three Months Ended March 31, 2020 and 2019
Revenue
During the three months ended March 31, 2020 and 2019, the Company had no
revenue in the periods of measurement.
Operating Costs and Expenses
Our operating expenses incurred in three months ended March 31, 2020, decreased
$1,356,968 from $1,867,931 in the three months ended March 31, 2019 to $510,963
for the current period of measurement. The decreases in operating expenses in
the current period of measurement are attributable increased exploration and
mine related costs of $206,053 and is offset by a decrease in general and
administrative of $1,563,021.
The increase in exploration and mine related costs were incurred on the Jim Crow
mine and consisted mainly of increases of $133,397 in wages and payroll burden
costs, depreciation of $14,526 and other mine related costs of $58,130. The
decrease in general and administrative of $1,563,021 was mainly attributable to
decreases in: consulting fees related to working capital raises of $143,913,
audit fees and accounting of $30,000 and costs associated with warrants of
$1,433,655. These decreases were mainly offset by increases in salaries and
related payroll burden of $9,835 and legal fees of $37,656.
Other Income (Expense)
Other income (expense) for three months ended March 31, 2020, was $(15,030) as
compared to $(350,213) for three months ended March 31, 2019, a decrease in
other expense of $335,053. The net decrease in other expense for the current
period measurement is mainly comprised of the following expense components:
decrease in financing costs on commodity supply agreements of $60,830, a
decrease in interest expense of $142,942 and a decrease in interest on mandatory
redemption shares by a related party of $127,800. The decreased interest expense
and financing costs on commodity supply agreements are a result of debt
write-off at our fiscal year ended June 30, 2019 and the mandatory shares were
returned in the current period of measurement.
Operating Results for the Nine Months Ended March 31, 2020 and 2019
Revenue
During the nine months ended March 31, 2020 and 2019, the Company had no revenue
in the periods of measurement.
Operating Costs and Expenses
Our operating expenses incurred in nine months ended March 31, 2020, decreased
$533,452 from $2,394,410 in the nine months ended March 31, 2019 to $1,860,958
for the current period of measurement. The decreases in operating expenses in
the current period of measurement are attributable to increased exploration and
mine related costs of $863,480, and decreased general and administrative of
$1,396,932.
The increase in exploration and mine related costs were incurred on the Jim Crow
mine and consisted mainly of $518,207 in wages and payroll burden costs,
depreciation of $30,888 and other mine related costs of $314,385. The decrease
in general and administrative was mainly attributable to decreased costs
attributable to warrants issued of $1,433,655, in consulting fees related to
working capital raises of $218,954, vehicle operating costs of $11,281 and
transfer agent fees of $19.417. These decreases were offset by increases in the
following: salary compensation and payroll burden of $56,471, property and
liability insurance of $15,154, audit and accounting fees of $104,289, and legal
fees of $107,069.
Other Income (Expense)
Other income (expense) for nine months ended March 31, 2020, was $(15,560) as
compared to $(294,380) for nine months ended March 31, 2019, a decrease in other
expense of $278,690. The net decrease in other expense for the current period of
measurement is mainly comprised of decreases in following income components:
gain on debt extinguishment of $112,625 and recovery of misappropriated funds of
$350,521 and by offset by decreases in the following other expenses consisting
of: interest on mandatory redemption shares by a related party of $127,800,
financing costs on commodity supply agreement of $166,725 and interest expense
of $444,466. The decreased interest expense and financing costs on commodity
supply agreements are a result of debt write-off at our fiscal year ended June
30, 2019 and the mandatory shares were returned in the current period of
measurement.
--------------------------------------------------------------------------------
22
--------------------------------------------------------------------------------
Liquidity and Capital Resources; Plan of Operation
The financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities and
commitments in the normal course of business. Should the Company be unable to
continue as a going concern, it may be unable to realize the carrying value of
its assets and to meet its liabilities as they become due.
The Company has recorded a net loss of $1,876,518 for the nine months ended
March 31, 2020, and has a total accumulated deficit of $95,355,188 and a working
capital deficit at March 31, 2020 of $4,811,112. The Company used in operating
activities, approximately $1.26 million. The Company currently has no source of
generating revenue.
To continue as a going concern, the Company is dependent on continued capital
financing for project development, repayment of various debt facilities and
payment of current operating expenses until the Company has put into production
an acceptable source to generate mineralized ore to generate a revenue stream.
Currently we have no commitment from any party to provide additional working
capital and there is no assurance that any funding will be available as
required, or if available, that its terms will be favorable or acceptable to the
Company.
At March 31, 2020, the Company was in default on approximate payments on
delinquent accounts payable of $3.2 million, on a note payable of $399 thousand
and accrued liabilities of $696 thousand.
© Edgar Online, source Glimpses
SANTA FE GOLD CORPORATION 