Item
1. Description of Business
Organization
Nevada
Canyon Gold Corp., (the “Company”) was originally incorporated on February 27, 2014, in the state of Nevada as Tech Foundry
Ventures. On July 8, 2016, the Company changed its name to Nevada Canyon Gold Corp., in order to reflect its current business and strategy.
We
are a US-based natural resource company headquartered in Reno, Nevada. The Company has a large, strategic land position and royalties,
in multiple projects, within some of Nevada’s highest-grade historical mining districts. Majority of the Company’s projects
and royalties (collectively, the “Projects”) are located within the state of Nevada which is rated as one of the best places
to explore and mine in the world. The Projects all have excellent year around access, with good infrastructure in proven and active mining
districts.
We
have never been party to any bankruptcy, receivership or similar proceeding, nor have we undergone any material reclassification, merger,
consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.
Our
principal business, executive, and registered statutory office is located at 316 California Avenue, Suite 543, Reno, NV 89509 and our
telephone number is (888) 909-5548, fax is (888) 909-1033 and email contact is info@nevadacanyongold.com. Our website address
is www.nevadacanyongold.com.
Business
Nevada
Canyon has a three-fold business model: (1) Exploration project accelerator; (2) mineral royalty acquisitions; and (3) precious-metals
streaming.
●
An exploration project accelerator means finding under-valued or distressed assets, providing initial investment capital for geological
and exploration work, then selling the assets to other mining companies for premium returns without large capital expenditures. In this
model, Nevada Canyon retains a royalty, recovers its costs, and avoids the high cost of putting mines into production. This can create
short term upside value in these assets at very low risk while retaining a long-term royalty at a very low-cost basis. Nevada Canyon’s
geological team discovers, interprets, and builds the geological models, then increases the land package through additional land acquisitions.
The mineral resources are increased and upgraded, followed by the sale to larger mining companies.
●
Nevada Canyon’s second business model is the acquisition of mineral property royalties (net smelter royalties or “NSR’s”).
The Company plans to generate revenue from selling mineral properties to mining companies while retaining a long-term royalty for the
life of the mine. This business model also includes the purchase of existing royalties from third parties as well as optioned sales of
properties that provide ongoing revenue and eventual royalties. Nevada Canyon will stake and/or assemble drill-ready land packages for
mining companies to explore and develop, then sell those claims while retaining a royalty. Nevada Canyon will also option exploration
properties to mining or exploration companies for staged payments to the Company while retaining a royalty. Lastly, Nevada Canyon will
also acquire royalties related to producing or near-term producing properties with close proximity to producing mines.
●
The Company’s third business model is a precious-metals streaming company. A precious-metals streaming company provides up-front
capital for mine development in exchange for a percentage of the precious metals output at a below-market cost, in some instances up
to an 80% discount to market. Nevada Canyon can then sell what it receives from its partners at market prices and retain the difference
as profit.
Nevada
Canyon has identified numerous gold and silver streaming opportunities and is not tied to the performance of any one producer. Most importantly,
streaming companies are instant beneficiaries of rising physical metal prices. For example, the average cash cost per gold equivalent
ounce (“GEO”) is $400 for Nevada based on comparable operating streaming Companies. This offers investors cost predictability,
direct leverage to increasing precious metals prices and in a high-quality asset base within Nevada. This portion of our business model
offers investors commodity price leverage and exploration upside but with a much lower risk profile than a traditional mining company.
Nevada
Canyon management (“Management”) has vast contacts within the mining industry and extensive experience in mineral property
acquisitions and divestures with over 30 years-experience operating in Nevada. This enables us the unique ability to assemble valuable
land packages near producing mines, which can then be sold to the mine operators while retaining a life-of-mine royalty. Nevada Canyon
can generate near-term revenue through mineral property sales and generate long-term revenue through life-of-mine royalties. This strategy
allows for the bypass of risk and the expense of exploration programs and/ or large production capital costs while keeping our overhead
low.
We
believe this multi-level business model is a significant improvement on the typical project generator/joint venture model. It allows
the Company to maintain a large portfolio of properties and generate significant deal flow. Shareholder value is highly leveraged to
the price of gold. As prices increase, we anticipate seeing growth in the value of our properties, the cash flow from our option portfolio,
our equity investments in mid-tier/junior companies, and a higher market valuation on our growing royalty portfolio and the blue sky
of our exploration programs. We also hope this revenue generating, low overhead type business model will also allow Nevada Canyon the
ability to provide a potential dividend distribution to its shareholders.
As
of the date of this Annual report on Form 10-K, our mineral property interests are comprised of the Lazy Claims Property, the Loman Property,
and the Agai-Pah Property located in Mineral County, Nevada, the Swales Property located in Elko County, Nevada, and the Belshazzar Property
located in Quartzburg mining district, Boise County, Idaho. In addition, we acquired a 2% net smelter returns royalty (“NSR”)
on the Palmetto Project, located in Esmeralda County, Nevada, and have an option to acquire 100% interest of Target Minerals, Inc’s
(“Target”) 1% production royalty on the Olinghouse Project, located in the Olinghouse Mining District, Washoe County, Nevada.
Lazy
Claims Property
On
August 2, 2017, we entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc.
(“Tarsis”), a Nevada corporation, to lease rights to three Lazy claims totaling 60 acres (the “Lazy Claims”).
The term of the Lazy Claims Agreement is ten years and is subject to extension for an additional two consecutive 10-year terms. Full
consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, which we paid upon
the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. We agreed
to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale
of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, we will
not be required to pay a $2,000 annual minimum payment. As of the date of this Annual Report on Form 10-K, we retain our leasing rights
to the Lazy Claims.
Location
and means of access
The
Lazy Claims consist of three claims (60 acres) and are located within the Walker Lane shear zone, a 60-mile-wide structural corridor
extending in a southeast direction from Reno, Nevada. The Project is located in Mineral County, Nevada, with year-round access and established
infrastructure, 18 miles southeast of Hawthorne, NV via U.S. Highway 95.
Geology
The
US Geological Survey has mapped the area and has published the results as Miscellaneous Field Studies maps, MF 1485 and MF 1486. Mapped
units include Paleozoic metasediments, Mesozoic sediments and intrusions, and Cenozoic volcanic rocks and porphyry intrusions. Like most
of the Walker Lane, the area has a strong system of N50W- trending, normal and strike-slip faults along with a series of generally NE-trending
thrust faults. The area has seen prospecting since the late 1800’s and contains hundreds of prospect pits and adits that explore
various styles of base and precious metal mineralization.
The
published USGS geologic quadrangle map for the Pamlico mine area, (MF 1485, MF 1486, Oldow, 1985), shows the eastern portion of the Lazy
Claims project area underlain by a thick, undivided sequence of folded and faulted Mesozoic and or Paleozoic volcanic and sedimentary
rocks. The western portion of the project is underlain by Jurassic- to Triassic-age Sunrise and Gabbs Formations comprising interbedded
limestones and calcareous mudstones. Locally, black Tertiary basalt caps the older rocks. The structural fabric is dominated by NW-trending,
Walker Lane structures and by an older N70o E fabric, several phases of strongly altered and locally mineralized intrusive rocks as well
as zones of jasperoids and strong silicification has been identified.
Mineralization
Previous
work on the project has identified the following discrete zones of mineralization: (1) the Lazy Man gold zone which is a structurally-controlled,
intrusion-related gold deposit that produced about 1,200 oz Au from NW-trending, high grade zones partially hosted by altered rhyolite
dikes, (2) areas of strong vuggy silica alteration in both intrusive porphyritic rocks and volcanic agglomerates particularly in the
footwall of the Lazy Man zone, (3) a large area of barite and copper mineralization with intense bleaching east of the gold zone, (4)
strong copper showings to the southeast of the gold zone, (5) the Loman antimony mine to the southwest of the gold zone, (6) skarn zones
to the west of the gold zone, (7) a large zone of strong IP response to the west of the gold zone, and (8) a pyrrhotite porphyry intrusion
west of the gold zone.
Exploration
history
The
Lazy Claims cover several past-producing small-scale high-grade mines, altered and mineralized zones discovered by geological compilations
and mapping of the historical workings, discovered by the previous exploration on the Project. The previous sampling on the project has
revealed the presence of copper, bismuth, and antimony as well as pervasive lower grade gold mineralization, cut by vein structures (some
previously mined) of higher grade gold. Previous induced polarization surveys also denoted the presence of significant coincident I.P.
anomalies. Below is a summary of previous exploration of identified mineralized areas within the properties.
Lazy
Man Mine
The
main structure that the mine workings explore has an N35oW trend and dips about 60o to the southwest. The vein
was discovered in 1933 by a local prospector. The mine is credited with historic production of about 1,200 ounces of gold from 2,800
feet (853 m) of underground workings. The three main shafts explore about 1,000 feet (304 m) of strike length on the vein, and the shafts
extend to a maximum depth of 300 feet (91 m). The workings have been mapped and sampled in some detail by Congdon and Carey in 1974,
and many multi-ounce gold values are noted in the remaining vein material. One 4.9 foot-long (1.5 m) sample from a cross cut on the 300
level contained 2.2 oz Au/ton (68.4g/t). The high-grade veins occur within a broader zone of intense quartz-sericite alteration, which
has previously been mapped as rhyolite. Most of the mine dumps are composed of this “rhyolite”, and Congdon and Carey measured
approximately 8,000 tons of this material containing from 0.09 to 0.21 oz Au/ton (3.07 to 7.1 g/t Au). Gold occurs in iron oxide-filled
fractures along with druzy quartz veinlets, and there is occasionally visible gold. Detailed mapping around the old workings of the Lazy
Man mine has delineated a zone of intense acid-leaching in intrusive porphyritic rocks and volcanic agglomerates primarily in the footwall
of the vein. The rock now has a porous and vuggy appearance; this style of alteration is interpreted to be “Vuggy Silica”
alteration that is typical of the upper levels of high-sulfidation ore deposits. Surrounding the vuggy silica zone is a zone of strong
argillic alteration. Recent work has discovered previously unrecognized mineralized zones east of and parallel to the Lazy Man vein that
contain silicified, brecciated outcrops assaying 2.26 g/t Au and 8,150 ppm As. These zones have been traced for over 1,200 feet (365
m) and are up to 60 feet (18 m) wide.
Exploration
program
In
2020 we completed a portion of the Phase I exploration program on the Lazy Claims Property, which consisted of reconnaissance prospecting,
geological mapping, surface trenching, and relocating historical workings. Completion of the Phase I program was initially scheduled
for spring of 2021, however, due to the continued restrictions associated with COVID-19 pandemic, the phase was put on hold. The Company
intends to resume Phase I later in 2023. Phase I program will provide accurate modern data to assist in the planning of the Phase II
drill program.
Loman
Property
In
December 2019 we acquired 27 unpatented mining claims for a total of $10,395 (the “Loman Property”). Due to certain regulatory
restrictions associated with COVID-19 pandemic, the Company was required to delay the re-registration of the Loman Property claims into
the Company’s name. The Loman claims were transferred and re-registered into the Company’s name in the fourth quarter of
the fiscal 2021.
Location
and means of access
The
Loman Property is located in Mineral County, Nevada, within the Walker Lane shear zone, a 60-mile-wide structural corridor extending
in a southeast direction from Reno, Nevada, located 20 miles southeast of Hawthorne, Nevada, along U.S. Highway 95. The project has excellent
year-round access and infrastructure within Mineral County, one of the most pro-mining counties and highest-grade gold districts of Nevada.
The
Loman Property consists of 27 unpatented mining claims having a combined area of approximately 540 acres. The Loman Property covers several
past producing small-scale high-grade gold and copper mines, altered and mineralized zones discovered by previous geological compilations
and mapping of the historical workings. Historical sampling on the project has revealed the presence of copper, bismuth, and antimony
as well as pervasive lower grade gold mineralization, cut by vein structures (some previously mined) of higher-grade gold. Previous geophysical
surveys also denoted the presence of significant coincident I.P. and magnetic anomalies. These factors clearly demonstrate the potential
of this relatively unexplored project for the discovery of gold mineralization.
The
Loman Property is located near several past producing mines including the Bodie, Aurora, Borealis, Pamlico, Evening Star, Mabel, Mindoro
and Camp Douglas Mines. Held by private interests for most of its history, the Loman Property remains very underexplored with a potential
for new discoveries on several exploration targets with multiple zones.
Exploration
program
In
2020 we completed a portion of our Phase I program that consisted of reconnaissance prospecting, geological mapping, surface trenching,
relocating historical workings and ground based geophysical surveying. Completion of the Phase I program will provide accurate modern
data to assist in the planning of the Phase II drill program. Phase I was initially expected continue in the spring 2021, with Phase
II to begin shortly after the compilation of the Phase I results. Due to the restrictions associated with COVID-19 pandemic, Phase I
was put on hold and the Company plans to resume it later in 2023.
Agai-Pah
Property
On
May 19, 2021, we entered into an exploration lease with option to purchase agreement (the “Agai-Pah Property Agreement”)
with MSM Resource, L.L.C., (“MSM”) a Nevada limited liability Corporation on the Agai-Pah Property, consisting of 20 unpatented
mining claims totaling 400 acres (the “Agai-Pah Property”). Alan Day, the managing member of MSM, is a director of the Company
and a related party.
The
term of the Agai-Pah Property Agreement commenced on May 19, 2021, and continues for ten years, subject to the Company’s right
to extend the Agai-Pah Property Agreement for two additional terms of ten years each, and subject to the Company’s option to purchase
the Property.
Full
consideration of the Agai-Pah Property Agreement consists of the following: (i) an initial cash payment of $20,000 to be paid within
90 days from the execution of the Agai-Pah Property Agreement on May 19, 2021 (the “Effective Date”), and (ii) annual payments
of $20,000 to be paid on the anniversary of the Effective Date while the Agai-Pah Property Agreement remains in effect.
The
Company has the exclusive option and right to acquire 100% ownership of the Agai-Pah Property (the “Agai-Pah Purchase Option”).
To exercise the Agai-Pah Purchase Option, the Company will be required to pay $750,000 (the “Agai-Pah Purchase Price”). The
Agai-Pah Purchase Price can be paid in either cash and/or equity of the Company, or a combination thereof, at the election of MSM. The
annual payments paid by the Company to MSM, shall not be applied or credited against the Purchase Price. The Company made the initial
cash payment of $20,000 on November 6, 2021, pursuant to a verbal extension granted to the Company by MSM, and made the first $20,000
anniversary payment on June 20, 2022.
Location
and means of access
The
Agai-Pah Property consists of 20 unpatented mining claims with a combined area of 162 hectares (400 acres). The Property is located in
the northwestern portion of the Gillis Range, within the Buckley Mining District, in Mineral County, Nevada, 13 miles north-east of the
town of Hawthorne, and 22 miles SW of the Rawhide Mine. The Property is within the Walker Lane shear zone, a 60-mile-wide structural
corridor extending in a southeast direction from Reno, Nevada. The project has excellent year-round access and infrastructure within
Mineral County, Nevada.
Geology
and Mineralization
The
property is underlain by meta-volcanic rocks of the Permo-Triassic Excelsior Formation. The local stratigraphy consists of interbedded
volcanics, conglomerate and occasional limestone lenses that have been altered through metamorphisim to hornfelsic greenstones and localized
calcsilicate and marble skarns. The area is cross-cut by a large northwest to southeast structural trend, with the mineralization occurring
along this trend and along skarn contacts.
Mineralization
occurs as hydrothermal alteration and veining along structures and along contacts with carbonate rocks. Silver, lead, copper and gold
are found within clay altered shears, quartz veins and hornfeslic scarns. In the west central portion of the property, a quartz vein
is exposed within a small open pit which exhibits visible chlorargyrite (AgCl) with assay values to 1.76% silver.
Exploration
history
The
Agai-Pah property contains numerous historical workings consisting of underground workings with multi-level vertical shafts, several
adits at different sub-levels, declines and a number of prospects pits that dig along structures. An existing road network provide access
to the numerous historical workings. Historical sampling on the project has revealed the presence of silver, copper, gold, lead, zinc,
barium and barite. There have been at least two periods of mining on the property, with the first in the early 1900’s, and then
later in the late 1980’s. The early 1900’s, work consisted of excavation of at least 15 adits, 5 vertical shafts, declines
and numerous prospects pits that dig along structures.
The
second episode of mining took place in the late 1980s when a small pit was excavated, and ore material was mined and transported approximately
2 miles to the west to a small heap leach. During this time about two kilometers of roads were built, several large trenches were completed,
and a number of shallow drill holes (12+) were drilled. All the drill holes noted during this historical work were vertical and most
were drilled in the hanging wall of the ore-bearing structures. An extensive sampling program was undertaken in early 1988, evidenced
by aluminum sample tags widely spaced in the areas of alteration. No historical data has been found from any of this historical exploration
work.
Exploration
program
Due
to the restrictions associated with COVID-19 pandemic, the Company has yet to start any exploration activities on the Agai-Pah Property.
The Company plans to start with Phase I exploration program later in 2023. Phase I of the exploration program on the Agai-Pah Property,
will consist of reconnaissance prospecting, geological mapping, surface trenching, and relocating historical workings. Once completed,
the Phase I program will provide accurate modern data to assist in the planning of the Phase II exploration program. Phase II will consist
of a ground-based geophysical survey and final compilation of all the Phase I results.
Belshazzar
Property
On
June 4, 2021, we entered into an exploration lease with option to purchase agreement (the “Belshazzar Property Agreement”)
with Belshazzar Holdings, L.L.C., (“BH”) a Nevada limited liability Corporation on the Belshazzar Property, consisting of
ten unpatented lode mining claims and seven unpatented placer mineral claim totaling 200 acres (the “Belshazzar Property”).
Alan Day, the managing member of BH, is a director of the Company and a related party.
The
term of the Belshazzar Property Agreement commenced on June 4, 2021, and continues for ten years, subject to the Company’s right
to extend the Belshazzar Property Agreement for two additional terms of ten years each, and subject to the Company’s option to
purchase the Belshazzar Property.
Full
consideration of the Belshazzar Property Agreement consists of the following: (i) an initial cash payment of $20,000 to be paid within
90 days from the execution of the Belshazzar Property Agreement on June 4, 2021 (the “effective date”), and (ii) annual payments
of $20,000 to be paid on the anniversary of the Effective Date while the Belshazzar Property Agreement remains in effect.
The
Company has the exclusive option and right to acquire 100% ownership of the Belshazzar Property (the “Belshazzar Purchase Option”).
To exercise the Belshazzar Purchase Option, the Company will be required to pay $800,000 (the “Belshazzar Purchase Price”).
The Belshazzar Purchase Price can be paid in either cash and/or equity of the Company, or a combination thereof, at the election of BH.
The annual payments paid by the Company to BH, shall not be applied or credited against the Belshazzar Purchase Price. The Belshazzar
Property is subject to a 1% Gross Returns Royalty payable to the property owner, from the commencement of commercial production subject
to certain terms. The Company made the initial cash payment of $20,000 on November 6, 2021, pursuant to a verbal extension granted to
the Company by BH, and made the first $20,000 anniversary payment on June 20, 2022.
Location
and means of access
The
Belshazzar Property consists of 10 unpatented mineral claims and 7 placer mineral claims in a combined area of approximately 200 acres
situated along the upper reaches of Fall Creek within the Quartzburg mining district. The Belshazzar Property is accessed via 16 miles
of mostly gravel road from Idaho City, with year-round access. The Quartzburg district is in the western part of a larger mining region
known as the Boise Basin, which produced over 2.8 million troy ounces of gold from placer and lode mines (Anderson, 1947).
Geology
and Mineralization
The
Boise Basin is underlain by Cretaceous-age plutonic rocks of the Idaho Batholith, consisting chiefly of biotite granodiorite and muscovite-biotite
granite. Stocks of platonic rocks of Eocene age, including diorite, quartz monzodiorite, hornblende-biotite granodiorite, gabbro and
biotite granite have intruded into the Idaho Batholith.
The
Belshazzar and Mountain Chief mines are situated at opposite ends of a northeast-striking, mineralized shear zone in Cretaceous biotite
granodiorite of the Idaho Batholith. Three roughly parallel fissure veins have been identified within this shear zone, with the Belshazzar
being the central and most prominent. The Centennial vein lies 680 feet to the south and has received only a limited amount of underground
development work from the Belshazzar mine. A third vein is located approximately 600 feet to the north of the Belshazzar vein and has
seen only limited prospecting from the surface.
Exploration
history
The
Belshazzar Property hosts the past producing Belshazzar mine. Approximately 3,000 feet of underground workings consisting of several
adits at different levels, sub-levels with connecting vertical shafts and milling facilities. By 1914, the Belshazzar mine had its own
boarding house, bunk house, barn, assay office, blacksmith shops, sawmill and IO-stamp mill. Construction of a new mill was completed
in 1924. A 1,700-foot-long aerial tramway connected ore bins at the No. 2 portal with the mill on Fall Creek (Quinn, 1914) remains of
a tram terminal can still be seen at the No. 2 portal and at the site of the original mill (Dan Turmes, Idaho Dept. of Environmental
Quality, 2008) The last known production from the Belshazzar mine was reported in 1941 (Mitchell, 2008). Exact production figures for
the mine are not available.
As
early as 1914, “high grade specimen rock” was being reported from the Belshazzar mine (Quinn 1914), this material was found
in the drift on the No. 3 level. A reported (Campbell,1927) “nugget” which yielded $245 in gold, equivalent at the time to
almost 12 ounces. During 1928, it was noted that “some remark ably rich segregations of native gold” had been found in a
section of the vein between the 401 and No. 3 levels. Several hand-sorted lots of this material contained between 48 and 435 ounces of
gold, and one single specimen of pure metal reportedly weighed 105 ounces (Mitchell, 2008). Some of the ore was so rich that it was shipped
directly to the assay office in Boise without treatment. Most of the specimen gold found at the Belshazzar was probably melted down,
as few specimens are known to have survived from the active mining period ending in 1931.
In
recent years, a “ waste” rock dump located near the portal of the mine’s 401-foot level has, with the aid of modern
metal detectors, produced hundreds of wire gold specimens, ranging from microscopic in size to over 20 troy ounces. Total recent gold
specimen production to-date is unknown but is probably well in excess of 800 ounces of gold
Exploration
program
Due
to the restrictions associated with COVID-19 pandemic, the Company has yet to start any exploration activities on the Belshazzar Property.
The Company plans to start with Phase I exploration program later in 2023. Phase I of the exploration program on the Belshazzar Property,
will consist of reconnaissance prospecting, geological mapping, surface trenching, and relocating historical workings. Once completed,
the Phase I program will provide accurate modern data to assist in the planning of the Phase II exploration program. Phase II will consist
of a ground-based geophysical survey and final compilation of all the Phase I results.
Swales
Property
On
December 27, 2021, we entered into an exploration lease with option to purchase agreement (the “Swales Property Agreement”)
with Mr. W. Wright Parks III., (“Mr. Parks”) on the Swales Property, consisting of 40 unpatented lode mining claims totaling
800 acres (the “Swales Property”).
The
term of the Agreement commenced on December 27, 2021, and continues for ten years, subject to the Company’s right to extend the
Swales Property Agreement for two additional terms of ten years each, and subject to the Company’s option to purchase the Swales
Property.
Full
consideration of the Swales Property Agreement consists of the following: (i) an initial cash payment of $20,000 to be paid within 90
days from the execution of the Belshazzar Agreement on December 27, 2021 (the “effective date”), and (ii) annual payments
of $20,000 to be paid on the anniversary of the Effective Date while the Swales Property Agreement remains in effect.
The
Company has the exclusive option and right to acquire 100% ownership of the Swales Property (the “Swales Purchase Option”).
To exercise the Swales Purchase Option, the Company will be required to pay $750,000 (the “Swales Purchase Price”). The Swales
Purchase Price can be paid in either cash and/or equity of the Company, or a combination thereof, at the election of Mr. Parks. The annual
payments paid by the Company to Mr. Parks, shall not be applied or credited against the Swales Purchase Price. The Company made the initial
cash payment of $20,000 on January 15, 2022, and accrued $20,000 which were payable on the first anniversary of the Swales Property Agreement.
The Company made the first anniversary payment on March 14, 2023.
Location
and means of access
The
Swales Property consists of 40 unpatented mining claims with a combined area of 800 acres. The Swales Property is located within the
Carlin Trend, one of the richest mining districts in the world, and home to some of the largest gold mines in the US. The property is
approximately 13 miles northeast of Nevada Gold Mine’s Gold Quarry Mine and 16 miles east southeast of Nevada Gold Mine’s
Goldstrike Mine, all of which are located along the gold rich Carlin Trend. There are currently eight producing gold mines within the
Carlin Trend. Collectively, these mines have to date produced over 100 million ounces of gold (Nevada Bureau of Mines 2019) and still
contain more than 21 million ounces of gold reserves (Nevada Gold Mines, LLC Carlin Complex 2020). The Swales Property has excellent
year-round access and infrastructure within Elko County, one of the most pro-mining counties in the pro-mining states and highest-grade
gold districts of Nevada.
Geology
and Mineralization
Geologically,
the Swales Property is underlain by Upper plate Ordovician Vinini Formation (upper plate of the Roberts Mountains thrust) with windows
of Lower plate Mississippian to Silurian Roberts Mountains Formation limestone (Lower plate of Roberts Mountains thrust), the ideal host
rocks for a Carlin type gold deposit. These rocks have been intruded by Tertiary rocks identified as Monzonite porphyry to the west of
the property with many prospects and historic mining. Much of the property is covered by alluvium, but silicified, iron stained jasperoids
are found throughout the property where outcrops are exposed. Small gold anomalies occur in the upper plate rocks at Swales Mountain
which suggests the possibility of more extensive deposits in the Roberts Mountains Formation where it lies concealed by gravels or in
the broken rock within the Roberts Mountains thrust.
Exploration
history
The
Swales Property contains numerous historical workings consisting of prospects pits that dig along structures found throughout the property
where outcrops are exposed. The Swales Property is located within the Carlin Trend, one of the richest mining districts in the world,
and home to some of the largest gold mines in the USA. There are currently eight producing gold mines within the Carlin Trend. Collectively,
these mines have to date produced over 100 million ounces of gold (Nevada Bureau of Mines 2019) and still contain more than 21 million
ounces of gold reserves. (Nevada Gold Mines, LLC Carlin Complex 2020) The Swales Property has excellent year-round access and infrastructure
within Elko County, one of the most pro-mining counties in the pro-mining states and highest-grade gold districts of Nevada.
Exploration
program
Due
to the restrictions associated with COVID-19 pandemic, the Company has yet to start any exploration activities on the Swales Property.
The Company plans to start with Phase I exploration program later in 2023. Phase I of the exploration program on the Swales Property,
will consist of reconnaissance prospecting, geological mapping, surface trenching, and relocating historical workings. Once completed,
the Phase I program will provide accurate modern data to assist in the planning of the Phase II exploration program. Phase II will consist
of a ground-based geophysical survey and final compilation of all the Phase I results.
Olinghouse
Project
On
December 17, 2021, our wholly-owned subsidiary, Nevada Canyon, LLC, entered into an Option to Purchase Agreement (the “Olinghouse
Agreement”) with Target Minerals, Inc (“Target”), to acquire 100% interest of Target’s 1% production royalty
on the Olinghouse Project.
The
Company has the exclusive right and option (the “Olinghouse Purchase Option”), exercisable at any time during the Olinghouse
Option Period, as further defined below, at its sole discretion, to acquire 100% of a 1% production royalty from the net smelter returns
on all minerals and products produced from certain properties comprising the Olinghouse Project.
The
term of the Olinghouse Purchase Option shall be the later of one year, or 60 days after the date on which the Company delivers to Target
a written notice to exercise the Olinghouse Purchase Option, subject to further extension if Target’s conditions to closing are
not fully satisfied or otherwise waived by the Company. Full consideration of the Olinghouse Agreement consists of the following: (i)
an initial cash option payment of $200,000 payable upon execution of the Agreement, which the Company paid on December 18, 2021, and
(ii) purchase price (the “Olinghouse Purchase Price”) which shall be paid by the Company to Target in either cash or common
shares of the Company, the determination of which shall be as follows:
|
● |
if the Company’s
10-day volume weighted average price (“VWAP”) Calculation is less than $1.25 per share, the Olinghouse Purchase Price
shall be paid in cash; or |
|
● |
if the Company’s
10-day VWAP Calculation is more than $1.25 per share, the Olinghouse Purchase Price shall be paid in the form of 2,000,000 Shares
of the Company’s common stock. |
On
December 23, 2022, the Company and Target agreed to extend the Olinghouse Purchase Option for an additional one-year term, expiring on
December 17, 2023, for a one-time cash payment of $40,000.
Location
and means of access
The
Olinghouse Project is located approximately 30 miles east of Reno, Nevada in the Olinghouse mining district. The project has excellent
year-round access via state roads with existing infrastructures in place.
Exploration
history
The
Olinghouse property was operated by Alta Gold in the late 1990’s and had a Feasibility Study completed in 1997. The mine went into
production in 1999, however, due to historically low gold prices combined with a substantial debt load, Alta Gold went bankrupt shortly
thereafter, in late 2000.
Classification | |
Ton (000’s) | | |
Au/ton oz | |
Au oz | |
Indicated 0.010 Au/ton cut-off | |
| 18,244 | | |
0.0381 | |
| 695,128 | |
| |
| | | |
Total Au oz | |
| 695,128 | |
The
historic geologic resource as outlined in the above table is from the 1997 Alta Gold Feasibility Study based on over 600 drill holes
collared at 100 ft centers. The historic geologic resource contained 18,244,830 tons (695,128 ounces) of gold at an average grade of
0.0381 oz/ton gold at an 0.01 oz/ton cut-off. The Olinghouse Project has had no modern exploration since the Alta Gold bankruptcy in
2000. The historical mineralized resource is open at depth and along strike, with excellent potential to increase the historical mineralized
resources.
Nevada
Canyon considers this historical estimate to be reliable and relevant, however it is not treating this historic estimate as current compliant
mineral resources.
The
Olinghouse Project’s current owner is Lake Mountain Mining LLC (“LMM”), a private Nevada company. LMM is currently
reviewing its financing plans for additional exploration, required permitting, economic studies and various capital expenditures towards
a production re-start decision in the near future.
Palmetto
Project
On
January 27, 2022, the Company’s wholly-owned subsidiary, Nevada Canyon, LLC, entered into a Royalty Purchase Agreement (the “Royalty
Agreement”) with Smooth Rock Ventures, LLC, a wholly-owned subsidiary of Smooth Rock Ventures Corp. (“Smooth Rock”),
to acquire a 2% net smelter returns royalty (“NSR”) on the Palmetto Project (the “Palmetto Project”), located
in Esmeralda County, Nevada. Alan Day, the Company’s director, is also a director and CEO of Smooth Rock.
To
acquire the 2% NSR on the Palmetto Project, Nevada Canyon agreed to pay Smooth Rock a one-time cash payment of $350,000, which was paid
on February 7, 2022.
Location
and means of access
The
Palmetto Project, consists of 116 unpatented mining claims totaling 2,217 acres located in Esmeralda County, Nevada, within the southern
portion of the Walker Lane gold trend.
Exploration
history
The
Palmetto Project’s owner, Smooth Rock Ventures Corp (“Smooth Rock”), engaged WSP Canada Inc. to complete a current
resource estimation of the Palmetto Project (Palmetto Resource Estimation and Technical Report, McCracken, October 20, 2020) using drill
data up to October 2017 and applying certain economic constraints. The current mineral resource statement was updated by WSP to reflect
a change in gold pricing and an adjustment in the mining costs in the generation of the constraining pit shells.
The
table below summarizes the pit constrained resource estimation at the 0.15 g/t gold cut-off and remaining underground resource estimation
at the 2.0 g/t gold cut-off.
Classification | |
Tonnes (000’s) | | |
Au g/t | | |
Ag g/t | | |
Au oz. | | |
Ag oz. | |
Inferred (Pit) | |
| 9,397 | | |
| 0.93 | | |
| 6.38 | | |
| 281,581 | | |
| 1,926,652 | |
Inferred (U/G) | |
| 170 | | |
| 2.76 | | |
| 17.51 | | |
| 11,114 | | |
| 95,926 | |
Total inferred | |
| 9,567 | | |
| 0.96 | | |
| 6.58 | | |
| 296,695 | | |
| 2,022,578 | |
The
above mineral resource estimation was completed using NI 43-101 standards of practice and classified as an inferred resource.
The
Palmetto Project has had significant exploration work completed to date by Newmont Gold, Phelps Dodge Corp, Cambior Inc., Romarco Minerals,
Curran Corp., Amselco Minerals, Escape Gold Group Inc., and most recently by ML Gold Corp. To date, 173 drill holes totaling 43,940 meters
have been completed on several targets within the Palmetto Project. The initial “Discovery Hole” was drilled by Phelps Dodge
in 1988, and bonanza gold-silver veins were subsequently drilled by Romarco Minerals in 1997-2002.
There
are several additional mineralized zones hosting significant grades within close proximity to the inferred resource zones. These zones
have yet to be included in the resource estimate due to drilling density. Smooth Rock sees these areas having immediate potential to
significantly increase the overall resource on the Palmetto Project by increasing the drilling density between mineralized shells. Evidence
suggests that there is significant potential to expand the resource in multiple directions.
Exploration
program
On
February 22, 2021, Smooth Rock commenced an initial four-hole diamond drill program. The program was designed to expand the current resource
by drilling the mineralized zones laterally and at depth, to extend the present known mineralization. Drilling also targeted the high-grade
feeder chutes contained in deformation corridors, paralleling the main structural trends, and explored other areas of the Palmetto project
outside of the inferred resource area.
Highlights
included drill hole SRV 21-01 returning 31.4 g/t Au over 6.5 meters, including 44.3g/t Au over 0.8 meters, and 122.5 g/t Au over 1.1
meters from a depth of approximately 85 meters. Drill hole SRV 21-02 returned 1.73 g/t Au over 2.8 meters, at a depth starting at 102.4
meters.
The
2021 drill results align with Smooth Rock’s interpreted geological model, based on the compilation of all historical data from
previous drilling and exploration programs. The information from the compilation and interpretation of the 2021 drill program greatly
aided in acceleration of drilling, geological mapping and understanding of the gold mineralization at the Palmetto Project.
In
May 2022, Smooth Rock began a drill program, which was designed to expand the current resource by extending the known mineralized zones
laterally and at depth. Drilling targeted the high-grade feeder chutes and explored other areas of the project outside of the inferred
resource area. The drill program was hampered by drill rig breakdowns, extensive technical drilling issues with ground water, loose broken
ground, and the inability of the drill crew to successfully mud any of the holes in order to reach the drill holes’ targeted depths.
A total of seven holes were drilled, with none of the seven holes achieving their targeted depths, two of the seven holes drilled were
abandoned before hitting bedrock. Consequently, the Smooth Rock ended the drill program early with only a total drilled footage of 2,095
feet (638.5m) of a planned 5,000-7,500-foot drill program.
Highlight
of the 2022 drill program included the drill hole SRV 22-09, which returned 10.98 g/t Au over 9.2 meters, from a depth of 88.4 meters,
including 18.87 g/t Au over 4.6 meters, from a depth of 89.9 meters. This drill hole was drilled over 32 meters west northwest of drill
hole SRV 21-01, demonstrating the continuity and flat lying nature of the gold mineralization.
Smooth
Rock is planning a follow up drill program in early 2023, subject to drill contractor availability.
Competition
The
mineral exploration business is an extremely competitive industry. We are competing with many other exploration companies looking for
minerals. We are one of the smallest exploration companies and a very small participant in the mineral exploration business. Being a
junior mineral exploration company, we compete with other similar companies for financing and joint venture partners, and for resources
such as professional geologists, camp staff, helicopters, and mineral exploration contractors and supplies. We do not represent a competitive
presence in the industry.
Raw
Materials
The
raw materials for our exploration programs include camp equipment, hand exploration tools, sample bags, first aid supplies, groceries,
and propane. All of these types of materials are readily available from a variety of local suppliers.
Dependence
on Customers
As
a junior exploration company, we have no customers.
Trademarks
and Patents
We
have no intellectual property such as patents or trademarks and, other than the obligations under the exploration lease agreement with
Tarsis Resources US Inc. and the Royalty Agreement with Smooth Rock, no royalty agreements or labor contracts.
Need
for Any Government Approval of Principal Products or Services
Our
exploration activities on our exploration projects may require permits from the BLM and several other governmental agencies. We may be
unable to obtain these permits in a timely manner, on reasonable terms, or at all. If we cannot obtain or maintain the necessary permits,
or if there is a delay in receiving these permits, our timetable and business plan for exploration of our exploration claims will be
adversely affected. Furthermore, the mining business is subject to various levels of government controls and regulations, which are supplemented
and revised from time to time. We cannot predict what additional legislation or revisions might be proposed that could affect our business
or when any proposals, if enacted, might become effective. Such changes, however, could require more operating capital and expenditures
and could prevent or delay some of our operations.
The
various levels of government controls and regulations address, among other things, the environmental impact of mining and mineral processing
operations. For mining and processing, legislation and regulations in various jurisdictions establish performance standards, air and
water quality emission standards and other design or operational requirements for various components of operations, including health
and safety standards. Legislation and regulations also establish requirements for decommissioning, reclaiming and rehabilitating mining
properties following the cessation of operations, and may require that some former mining properties be managed for long periods of time.
As we are not mining or processing, and are unlikely to do so for some years, we have not investigated these regulations.
None
of the exploration work that we have completed to date requires an environmental permit, however, we must ensure timely repair of any
damage done to the land during exploration.
We
believe that we are in substantial compliance with all material government controls and regulations on the Lazy Claims Property and on
the Loman Property.
Research
and Development
We
have not spent any money on research and development activities.
Employees
At
the present time, we do not have any employees other than our sole officer who devotes his time as needed to our business and expects
to continue devoting approximately 10 hours per week in 2023.
Item
1A. Risk Factors
We
are subject to those financial risks generally associated with early-stage enterprises. Since we have sustained losses since inception,
we will require financing to fund our development activities and to support our operations and will independently seek additional financing.
However, we may be unable to obtain such financing. We are also subject to risk factors specific to our business strategy and the mining
and exploration industry.
RISKS
ASSOCIATED WITH OUR COMPANY AND INDUSTRY
The
following are certain risk factors that could affect our business, financial position, results of operations or cash flows. These risk
factors should be considered along with the forward-looking statements contained in this Annual Report on Form 10-K because these factors
could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. The following
discussion is not an all-inclusive listing of risks, although we believe these are the more material risks that we face. If any of the
following occur, our business, financial position, results of operations or cash flows could be negatively affected. We caution the reader
to keep these risk factors in mind and refrain from attributing undue certainty to any forward-looking statements, which speak only as
of the date of this Annual Report.
We
own passive interests in mining properties, and it is difficult if not impossible for us to ensure properties are developed or operated
in our best interest
Aside
from properties controlled within our exploration project accelerator, we are not and will not be directly involved in the exploration,
development and production of minerals from, or the continued operation of, the mineral projects underlying royalties, streams and similar
interests that are or may be held by us. The exploration, development and operation of such properties is determined and carried out
by third party owners and operators and any revenue that may be derived from our asset portfolio will be based on any production by such
owners and operators. Third party owners and operators will generally have the power to determine the manner in which the properties
are exploited, including decisions regarding feasibility, exploration and development of such properties or decisions to commence, continue
or reduce, or suspend or discontinue production from a property.
The
interests of third-party owners and operators and our interests may not always be aligned. As an example, it will usually be in our interest
to advance development and production on properties as rapidly as possible, in order to maximize near-term cash flow, while third party
owners and operators may take a more cautious approach to development, as they are exposed to risk on the cost of exploration, development
and operations. Likewise, it may be in the interest of owners and operators to invest in the development of, and emphasize production
from, projects or areas of a project that are not subject to royalties, streams or similar interests that are or may be held by us.
Our
inability to control or influence the exploration, development or operations for the properties in which we hold or may hold royalties,
streams and similar interests may have a material adverse effect on our business, results of operations and financial condition. In addition,
the owners or operators may take action contrary to our policies or objectives; be unable or unwilling to fulfill their obligations under
their agreements with us; or experience financial, operational or other difficulties, including insolvency, which could limit the owner
or operator’s ability to advance such properties or perform its obligations under arrangements with us.
We
may not be entitled to any compensation if the properties in which we hold or may hold royalties, streams and similar interests discontinue
exploration, development or operations on a temporary or permanent basis.
The
owners or operators of the projects in which we hold interests may, from time to time, announce transactions, including the sale or transfer
of the projects or of the operator itself, over which we have little or no control. If such transactions are completed, it may result
in a new operator, which may or may not explore, develop or operate the project in a similar manner to the current operator, which may
have a material adverse effect on our business, results of operations and financial condition. The effect of any such transaction on
us may be difficult or impossible to predict.
None
of our royalty and other interests are on currently producing properties and these and any future royalty, streaming or similar interests
we acquire, particularly on development stage properties, are subject to the risk that they may never achieve production.
None
of the properties underlying our royalty and other interests are in production nor do they have established mineral reserves. These and
any future royalty, streaming or similar interests we acquire may not achieve production or produce any revenues. While the discovery
of gold deposits may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major
expenditures may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and
processing facilities at a particular site. It is impossible to ensure that exploration or development programs planned by the owners
or operators of the properties underlying royalties, streams and similar interests that are or may be held by us will result in profitable
commercial mining operations. Whether a mineral deposit will be commercially viable depends on several factors, including cash costs
associated with extraction and processing; the particular attributes of the deposit, such as size, grade and proximity to infrastructure;
mineral prices, which are highly cyclical; government regulations, including regulations relating to prices, taxes, royalties, land tenure,
land use and environmental protection; and political stability. The exact effect of these factors cannot be accurately predicted but
the combination of these factors may result in one or more of the properties underlying our current or future interests not receiving
an adequate return on invested capital. Accordingly, there can be no assurance the properties underlying our current or future interests
will be brought into a state of commercial production.
The
failure of any of the properties underlying our interests to achieve production on schedule or at all would have a material adverse effect
on our asset carrying values or the other benefits we expect to realize from our royalties and other interests or the acquisition of
royalty interests, and potentially our business, results of operations, cash flows and financial condition.
We
have limited or no access to data or the operations underlying our existing or future royalty and other interests
We
are not, and will not be, the owner or operator of any such properties underlying our existing or future royalties, streams and similar
interests and have no input in the exploration, development or operation of such properties. Consequently, we have limited or no access
to related exploration, development or operational data or to the properties themselves. This could affect our ability to assess the
value of such interest. This could also result in delays in cash flow from that anticipated by us, based on the stage of development
of the properties underlying our existing or future royalties and similar interests. Our entitlement to payments in relation to such
interests may be calculated by the royalty payors in a manner different from our projections and we may not have rights of audit with
respect to such interests. In addition, some royalties, streams or similar interests may be subject to confidentiality arrangements that
govern the disclosure of information with regard to such interests and, as a result, we may not be in a position to publicly disclose
related non-public information. The limited access to data and disclosure regarding the exploration, development and production of minerals
from, or the continued operation of, the properties in which we have an interest may restrict our ability to assess value, which may
have a material adverse effect on our business, results of operations and financial condition. We attempt to mitigate this risk by building
relationships with various owners, operators and counterparties, in order to encourage information sharing which we believe increases
transparency.
We
are subject to many of the risks faced by the owners and operators of our existing or future royalty and other interests
To
the extent that they relate to the exploration, development and production of minerals from, or the continued operation of, the properties
in which we hold or may hold royalties, streams or similar interests, we will be subject to the risk factors applicable to the owners
and operators of such mines or projects.
Mineral
exploration, development and production generally involves a high degree of risk. Such operations are subject to all of the hazards and
risks normally encountered in the exploration, development and production of metals, including weather related events, unusual and unexpected
geology formations, seismic activity, environmental hazards and the discharge of toxic chemicals, explosions and other conditions involved
in the drilling, blasting and removal of material, any of which could result in damage to, or destruction of, mines and other producing
facilities, damage to property, injury or loss of life, environmental damage, work stoppages, delays in exploration, development and
production, increased production costs and possible legal liability. Any of these hazards and risks and other acts of God could shut
down such activities temporarily or permanently. Mineral exploration, development and production is subject to hazards such as equipment
failure or failure of retaining dams around tailings disposal areas, which may result in environmental pollution and consequent liability
for the owners or operators thereof. The exploration for, and development, mining and processing of, mineral deposits involve significant
risks that even a combination of careful evaluation, experience and knowledge may not eliminate.
We
may fund future acquisitions or other material transactions with equity or debt financings which could increase our debt service, further
leverage our assets and/or result in dilution to existing shareholders
In
the ordinary course of business, we engage in a continual review of opportunities to acquire royalties, streams or similar interests,
to establish new royalties, streams or similar interests on operating mines, to create new royalties, streams or similar interests through
financing mine development or exploration, or to acquire companies that hold royalty interests. We currently, and generally at any time,
have acquisition opportunities in various stages of active review, including, for example, our engagement of consultants and advisors
to analyze particular opportunities, analysis of technical, financial, legal and other confidential information, submission of indications
of interest and term sheets, participation in preliminary discussions and negotiations and involvement as a bidder in competitive processes.
We may consider obtaining debt commitments for acquisition financing. In the event that we choose to raise debt capital to finance any
acquisition, our leverage may be increased. We also could issue common shares to fund acquisitions. Issuances of common shares could
dilute existing shareholders and may reduce some or all of our per share financial measures.
Any
such acquisition could be material to us. All transactions include risks associated with our ability to negotiate acceptable terms with
counterparties. In addition, any such acquisition or other transaction may have other transaction-specific risks associated with it,
including risks related to the completion of the transaction, the project, its operators, or the jurisdictions in which the project is
located, and other risks discussed in this Annual Report on Form 10-K. There can be no assurance that any acquisitions completed will
ultimately benefit us.
The
volatility in gold and other commodity prices may have an adverse impact on the value of our royalty interests
The
value of our royalty interests and the potential future development of the projects underlying our interests are directly related to
the market price of gold and other commodity prices. Market prices may fluctuate widely and are affected by numerous factors beyond our
control or that of any mining company, including metal supply, industrial and jewelry fabrication, investment demand, central banking
economic policy, expectations with respect to the rate of inflation, the relative strength of the dollar and other currencies, interest
rates, gold purchases, sales and loans by central banks, forward sales by metal producers, global or regional political, trade, economic
or banking conditions, and a number of other factors.
Volatility
in gold prices is demonstrated by its annual high and low prices over the past decade as reported by the London Bullion Market Association:
| |
Gold | |
| |
($/ounce) | |
Calendar Year | |
High | | |
Low | |
2012 - 2013 | |
$ | 1,792 | | |
$ | 1,192 | |
2014 - 2015 | |
$ | 1,385 | | |
$ | 1,049 | |
2016 - 2017 | |
$ | 1,366 | | |
$ | 1,077 | |
2018 - 2019 | |
$ | 1,355 | | |
$ | 1,178 | |
2019 - 2020 | |
$ | 1,536 | | |
$ | 1,287 | |
2020 - 2021 | |
$ | 2,067 | | |
$ | 1,472 | |
2021 - 2022 | |
$ | 2,039 | | |
$ | 1,629 | |
Declines
in market prices could cause an operator to cease or slowdown exploration and development activities, reduce, suspend or terminate production
from an operating project or construction work at a development project which would negatively impact our ability to obtain revenues
from our interests in the future. A price decline may result in a material and adverse effect on our business, results of operations
and financial condition.
Our
future growth is to a large extent dependent on our acquisition strategy and our ability to identify and negotiate the purchase of additional
assets
As
part of our business strategy, we will seek to purchase or otherwise acquire gold and other precious metal royalties, streams or similar
interests from third party natural resource companies and others. In pursuit of such opportunities, we may fail to select appropriate
acquisition targets or negotiate acceptable arrangements, including arrangements to finance acquisitions. There can be no assurance that
we will be able to identify and complete any acquisition, transaction or business arrangement that we pursue on favorable terms or at
all, or that any acquisition, transaction or business arrangement completed will ultimately benefit us.
If
we are unable to continually identify and acquire additional assets on terms that are favorable to us, our business, results of operations
and financial condition may be materially adversely affected.
Our
operating results and ability to generate revenue could be adversely impacted if we experience challenges with our existing assets, including
our royalty interests
Problems
concerning the existence, validity, enforceability, terms or geographic extent of our royalty interests could adversely affect our business
and revenues, and our interests may similarly be materially and adversely impacted by change of control, bankruptcy or the insolvency
of operators.
Defects
in or disputes relating to the royalty interests we hold or acquire may prevent us from realizing the anticipated benefits from these
interests and could have a material adverse effect on our business, results of operations, cash flows and financial condition. Material
changes could also occur that may adversely affect management’s estimate of the carrying value of our royalty interests and could
result in impairment charges. While we seek to confirm the existence, validity, enforceability, terms and geographic extent of the royalty
interests we acquire, there can be no assurance that disputes or other problems concerning these and other matters or other problems
will not arise. Confirming these matters is complex and is subject to the application of the laws of each jurisdiction to the particular
circumstances of each parcel of mining property and to the agreement reflecting the royalty interest. Similarly, in many jurisdictions,
royalty interests are contractual in nature, rather than interests in land, and therefore may be subject to risks resulting from change
of control, bankruptcy or insolvency of operators, and our royalty interests could be materially restricted or set aside through judicial
or administrative proceedings. We often do not have the protection of security interests that could help us recover all or part of our
investment in a royalty interest in the event of an operator’s bankruptcy or insolvency.
Operators
may interpret our existing or future royalty or other interests in a manner adverse to us or otherwise may not abide by their contractual
obligations, and we could be forced to take legal action to enforce our contractual rights.
Royalty
interests are generally subject to uncertainties and complexities arising from the application of contract and property laws in the jurisdictions
where the mining projects are located. Operators and other parties to the agreements governing our existing or future royalty or other
interests may interpret our interests in a manner adverse to us or otherwise may not abide by their contractual obligations, and we could
be forced to take legal action to enforce our contractual rights. We may or may not be successful in enforcing our contractual rights,
and our revenues relating to any challenged royalty interests may be delayed, curtailed or eliminated during the pendency of any such
dispute or in the event our position is not upheld, which could have a material adverse effect on our business, results of operations,
cash flows and financial condition. Disputes could arise challenging, among other things, methods for calculating the royalty interest,
various rights of the operator or third parties in or to the royalty interest or the underlying property, the obligations of a current
or former operator to make payments on royalty interests, and various defects or ambiguities in the agreement governing a royalty interest.
We
depend on the services of our Chief Executive Officer, management and other key employees and the loss of any key employee coupled with
an inability to replace the key employee could harm our operating results
We
believe that our success depends on the continued service of our key executive management personnel. We are entirely dependent on the
efforts of Jeffrey Cocks, our president, CEO, CFO, and director, and our new directors, Mr. Day and Mr. List. The loss of services of
key members of management or other key employees could disrupt the conduct of our business and jeopardize our ability to maintain our
competitive position in the industry. From time to time, we may also need to identify and retain additional skilled management and specialized
technical personnel to efficiently operate our business. The number of persons skilled in the acquisition, exploration and development
of royalty interests is limited and there is competition for such persons. Recruiting and retaining qualified executive management and
other key employees is critical to our success and there can be no assurance of such success. If we are not successful in attracting
and retaining qualified personnel, our ability to execute our business model and growth strategy could be affected, which could have
a material adverse effect on our business, results of operations, cash flows and financial condition.
Certain
of our directors and officers also serve as directors and officers of other companies in the mining sector, which may cause them to have
conflicts of interest
Certain
of our directors and officers also serve as directors and officers of, or have significant shareholdings in, other companies involved
in natural resources investment, exploration, development and production and, to the extent that such other companies may engage in transactions
or participate in the same ventures in which we participate, or in transactions or ventures in which we may seek to participate, they
may have a conflict of interest in negotiating and concluding terms with respect to such participation. In cases where our directors
and officers have an interest in other companies, such other companies may also compete with us for the acquisition of royalties, streams
or similar interests. Such potential conflicts of interests of our directors and officers may have a material adverse effect on our business,
results of operations and financial condition.
Our
limited operating history makes our business prospects extremely speculative
Nevada
Canyon is an exploration company and has no history of operations, mining or refining mineral products. As such, we are subject to many
risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and
other resources and lack of revenues. There is no assurance that we will be successful in achieving a return on an investment for investors
in the Common Shares and Nevada Canyon’s likelihood of success must be considered in light of its early stage of operations.
There
can be no assurance that our properties or any property we may obtain in the future will be successfully placed into production, produce
minerals in commercial quantities or otherwise generate operating earnings. Advancing projects from the exploration stage into development
and commercial production requires significant capital and time and will be subject to the successful completion of further technical
studies, permitting requirements and the construction of mines, processing plants, roads and related works and infrastructure. We will
continue to incur losses until mining-related operations successfully reach commercial production levels and generate sufficient revenue
to fund continuing operations.
We
will likely need additional capital in order to finance our business plans and there is no guarantee we will have access to that capital
on favorable terms, or at all
Part
of our business plan is to focus on exploring for minerals and we intend to use our working capital to carry out such exploration. Other
than the current cash, and our investment in WRR shares, we have no secured source of financing, including, but not limited to, operating
cash flow and no assurance that acceptable additional funding will be available to it for the further exploration and development of
our projects. We have incurred net losses in the past and likely will incur losses in the future and will continue to incur losses until
and unless we can derive sufficient revenues from our mineral projects. These conditions, including other factors described herein, create
a material uncertainty regarding our ability to continue as a going concern.
It
is likely that the development and exploration of our assets will require substantial additional financing. Further exploration and development
of or assets and/or other properties acquired by us may be dependent upon our ability to obtain acceptable financing through equity or
debt, and there can be no assurance that we will be able to obtain adequate financing in the future or that the terms of such financing
will be acceptable. Failure to obtain such additional financing could result in the delay or indefinite postponement of further exploration
and development of our projects and we may become unable to carry out our business objectives.
We
currently rely on only a limited number of properties and our inability to increase and diversify our assets could harm our operating
results
Our
material property interests consist of the Loman Property, the Swales Property and the Agai Pah Silver Property all of which are located
in Nevada and the Belshazzar Property which is located in Idaho. As a result, unless we acquire additional property interests and diversify
our asset base, any adverse developments affecting these properties would have a material adverse effect upon us and would materially
and adversely affect the potential mineral resource production, profitability, financial performance and results of our operations. While
we may seek to acquire additional mineral properties in accordance with our business objectives, there can be no assurance that we will
be able to identify suitable additional mineral properties or, if we do identify suitable properties, that we will have sufficient financial
resources to acquire such properties or that such properties will be available on terms acceptable to us or at all and that we will be
able to successfully develop such properties and bring such properties into commercial production.
The
properties in which we hold interests are all in the early stages of exploration and development and, as such, they may never produce
sufficient income to be profitable to us
We
are a junior exploration company focused primarily on the acquisition, exploration and development of mineral properties located in Nevada.
Our properties have no established mineral reserves due to the early stage of exploration at this time. Any reference to potential quantities
and/or grade is conceptual in nature, as there has been insufficient exploration to define any mineral resource and it is uncertain if
further exploration will result in the determination of any mineral resource. Quantities and/or grade described in this Annual Report
should not be interpreted as assurances of a potential resource or reserve, or of potential future mine life or of the profitability
of future operations.
The
exploration and development of mineral deposits involves a high degree of financial risk over a significant period of time. Few properties
that are explored are ultimately developed into producing mines and there is no assurance that any of our projects can be mined profitably.
Substantial expenditures are required to establish mineral resources and reserves through drilling, to develop metallurgical processes
to extract the metal from the ore and in the case of new properties, to develop the mining and processing facilities and infrastructure
at any site chosen for mining. It is impossible to ensure that our current exploration and development programs will result in profitable
commercial mining operations. Our profitability will be, in part, directly related to the cost and success of its exploration and development
programs, which may be affected by a number of factors. Substantial expenditures are required to establish mineral resources and reserves
that are sufficient to support commercial mining operations and to construct, complete and install mining and processing facilities on
those properties that are actually developed.
No
assurance can be given that any particular level of recovery of minerals will be realized or that any potential quantities and/or grade
will ever qualify as a mineral resource or reserve, or that any such mineral resource or reserve will ever qualify as a commercially
mineable (or viable) deposit which can be legally and economically exploited.
Where
expenditures on a property have not led to the discovery of mineral resources or reserves, incurred expenditures will generally not be
recoverable.
LAND
TITLE AND ROYALTY RISKS
There
are many uncertainties, including, but not limited to, title matters; as a result, any defects in title could cause us to lose certain
rights in the properties we own
There
are uncertainties as to title matters in the mining industry. Any defects in title could cause us to lose rights in our mineral properties
and jeopardize our business operations. Our mineral property interests currently consist of unpatented mining claims located on lands
administered by the United States’ Department of Interior’s Bureau of Land Management (the “BLM”), Nevada State
Office to which we only have possessory title. Because title to unpatented mining claims is subject to inherent uncertainties, it is
difficult to determine conclusively the ownership of such claims. These uncertainties relate to such things as sufficiency of mineral
discovery, proper location and posting and marking of boundaries, proper and timely payment of annual BLM claim maintenance fees, the
existence and terms of royalties, and possible conflicts with other claims not determinable from descriptions of record.
The
present status of our unpatented mining claims located on public lands allows us the right to mine and remove valuable minerals, such
as precious and base metals, from the claims conditioned upon applicable environmental reviews and permitting programs. We are also allowed
to use the surface of the land solely for purposes related to mining and processing the mineral-bearing ores. However, legal ownership
of the land remains with the United States. We remain at risk that the mining claims may be forfeited either to the United States or
to rival private claimants due to failure to comply with statutory requirements. Prior to 1993, a mining claim locator who was able to
prove the discovery of valuable, locatable minerals on a mining claim, and to meet all other applicable federal and state requirements
and procedures pertaining to the location and maintenance of federal unpatented mining claims, had the right to prosecute a patent application
to secure fee title to the mining claim from the federal government. The right to pursue a patent, however, has been subject to a moratorium
since October 1993, through federal legislation restricting the BLM from accepting any new mineral patent applications. If we do not
obtain fee title to our unpatented mining claims, there can be no assurance that we will be able to obtain compensation in connection
with the forfeiture of such claims.
Pending
federal legislation may materially curtail or in some cases eliminate certain rights we have in our assets
In
recent years, members of the United States Congress have repeatedly introduced bills which would supplant or alter the provisions of
the General Mining Act of 1872, a United States federal law that authorizes and governs prospecting and mining for economic minerals,
such as gold, platinum, and silver, on federal public lands. Such bills have proposed, among other things, to either eliminate the right
to a mineral patent, impose a federal royalty on production from unpatented mining claims, render certain federal lands unavailable for
the location of unpatented mining claims, afford greater public involvement in the mine permitting process, provide for citizen suits,
and impose new and stringent environmental operating standards and mined land reclamation requirements in addition to those already in
effect. Such proposed legislation could change the cost of holding unpatented mining claims and could significantly impact our ability
to develop mineralized material on unpatented mining claims. Currently, all of our mining claims are on unpatented claims. Although we
cannot predict what legislative changes might occur, the enactment of these proposed bills could adversely affect the potential for development
of our mining claims, the economics of any mines that we bring into operation on federal unpatented mining claims, and as a result, adversely
affect our financial performance.
Challenges
to our mineral property interests may have adverse effects on assets including, but not limited to, a reduction in our interest, diverting
valuable resources and management time, and a requirement that we compensate other persons
There
may be challenges to title to the mineral properties in which we hold a material interest. If there are title defects with respect to
any properties, we might be required to compensate other persons or to reduce our interest in the affected property. Furthermore, in
any such case, the investigation and resolution of these issues would divert our management’s time from ongoing exploration and
development programs. Title insurance generally is not available for mining claims in the U.S. and our ability to ensure that we have
obtained secure claim to individual mineral properties may be limited. We may be subject to prior unregistered liens, agreements, transfers
or claims, including native land claims and title may be affected by, among other things, undetected defects. In addition, we may be
unable to operate the properties as permitted or to enforce our rights with respect to our properties. The failure to comply with all
applicable laws and regulations, including a failure to pay taxes or annual BLM claim maintenance fees may invalidate title to portions
of our properties. We may incur significant costs related to defending the title to our properties. A successful claim contesting title
to a property may cause us to compensate other persons, or to reduce our interest in the affected property or to lose our rights to explore
and, if warranted, develop that property. This could result in us not being compensated for our prior expenditures relating to the property.
Also, in any such case, the investigation and resolution of title issues would divert management’s time from ongoing exploration
and, if warranted, development programs.
We
could face expensive and time consuming challenges related to defects in title
The
ownership and validity or title of unpatented mining claims and concessions can at times be uncertain and may be contested. We also may
not have, or may not be able to obtain, all necessary surface rights to develop a property. We have taken reasonable measures, in accordance
with industry standards for properties at the same stage of exploration as that of our properties, to ensure proper title to our properties.
However, there is no guarantee that title to any of our properties will not be challenged or impugned.
Interpretations
of royalty agreements and unfulfilled contractual obligations of certain third parties that we rely on could force us to take legal action
that would be expensive and time consuming
Royalty
interests in our properties, and any other royalty interests in respect of our properties which may come into existence, may be subject
to uncertainties and complexities arising from the application of contract and property laws in the jurisdictions where the mining projects
are located. Operators and other parties to the agreements governing the royalty interests in Nevada, or other royalty interests, may
interpret their interests in a manner adverse to us, and we could be forced to take legal action to enforce our rights. Challenges to
the terms of the royalty interests in Nevada or the existence of other royalties could have a material adverse effect on our business,
results of operations, cash flows and financial condition. Disputes could arise with respect to, among other things:
|
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The existence or geographic
extent of the royalty interests; |
|
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The
methods for calculating royalties; |
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Third
party claims to the same royalty interest or to the property on which a royalty interest exists, or the existence of additional royalties
on the same property; |
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Various
rights of the operator or third parties in or to a royalty interest; |
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● |
Production
and other thresholds and caps applicable to payments of royalty interests; |
|
● |
The
obligation of an operator to make payments on royalty interests; |
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Various
defects or ambiguities in the agreement governing a royalty interest; and |
|
● |
Disputes
over the interpretation of buy-back rights. |
Breaches
of contracts with third parties could result in expensive litigation
Parties
to contracts do not always honor contractual terms and contracts themselves may be subject to interpretation or technical defects. Accordingly,
there may be instances where we would be forced to take legal action to enforce our contractual rights. Such litigation may be time consuming
and costly and there is no guarantee of success. Any pending proceedings or actions or any decisions determined adversely to us may have
a material and adverse effect on our results of operations, financial condition.
Our
exploration operations are highly regulated and our inability to comply with certain regulations would have a material adverse effect
on our operations.
Our
exploration operations are subject to government legislation, policies and controls relating to prospecting, development, production,
environmental protection, including plant and animal species, and more specifically including the greater sage-grouse, mining taxes and
labor standards. In order for us to carry out our activities, various licenses and permits must be obtained and kept current. There is
no guarantee that the Company’s licenses and permits will be granted, or that once granted will be maintained and extended. In
addition, the terms and conditions of such licenses or permits could be changed and there can be no assurances that any application to
renew any existing licenses will be approved. There can be no assurance that all permits that we require will be obtainable on reasonable
terms, or at all. Delays or a failure to obtain such permits, or a failure to comply with the terms of any such permits that we have
obtained, could have a material adverse impact on us We may be required to contribute to the cost of providing the required infrastructure
to facilitate the development of our properties and will also have to obtain and comply with permits and licenses that may contain specific
conditions concerning operating procedures, water use, waste disposal, spills, environmental studies, abandonment and restoration plans
and financial assurances. There can be no assurance that we will be able to comply with any such conditions and non-compliance with such
conditions may result in the loss of certain of our permits and licenses on properties, which may have a material adverse effect on us.
Future taxation of mining operators, and the timing thereof, cannot be predicted with certainty so planning must be undertaken using
present conditions and best estimates of any potential future changes. There is no certainty that such planning will be effective to
mitigate adverse consequences of future taxation on us.
The
volatility of the global financial markets may have a negative effect on our ability to raise money which could harm our operating results.
Recent
global financial conditions have been characterized by increased volatility and access to public financing, particularly for junior mineral
exploration companies, has been negatively impacted. These conditions, which include potential disruptions due to a U.S. Government shutdown,
may affect our ability to obtain equity or debt financing in the future on terms favorable to us or at all.
Market
events and conditions, including the disruptions in the international credit markets and other financial systems, in China, Japan and
Europe, along with political instability in the Middle East and Russia and falling currency prices expressed in United States dollars
have resulted in commodity prices remaining volatile. These conditions have also caused a loss of confidence in global credit markets,
excluding the United States, resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers
and creating a climate of greater volatility, tighter regulations, less liquidity, widening credit spreads, less price transparency,
increased credit losses and tighter credit conditions. Notwithstanding various actions by governments, concerns about the general condition
of the capital markets, financial instruments, banks and investment banks, insurers and other financial institutions caused the broader
credit markets to be volatile and interest rates to remain at historical lows. These events are illustrative of the effect that events
beyond the Company’s control may have on commodity prices. Access to public financing has been negatively impacted by sovereign
debt concerns in Europe and emerging markets, as well as concerns over global growth rates and conditions. If such conditions continue,
our operations could be negatively impacted.
Global
financial conditions could suddenly and rapidly destabilize in response to future events, as government authorities may have limited
resources to respond to future crises. Future crises may be precipitated by any number of causes, including natural disasters, pandemics
(including the COVID-19 pandemic), geopolitical instability, changes to energy prices or sovereign defaults.
Any
sudden or rapid destabilization of global economic conditions could negatively impact our ability to obtain equity or debt financing
or make other suitable financing arrangements. Increased levels of volatility and market turmoil can adversely impact our operations
and the value and the price of the Common Stock of the Company could be adversely affected.
Changes
in the market price of gold, silver and other metals, which in the past has fluctuated widely, will affect the profitability of our operations
and financial condition.
Our
profitability and long-term viability depend, in large part, upon the market price of gold, copper, silver and other metals and minerals
which may be produced from our mineral claims, and from which we may derive revenues under any agreement we may enter into with a company
that conducts mining operations on our claims. The market price of gold and other metals is volatile and is impacted by numerous factors
beyond our control, including:
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● |
sales by central banks
and other holders, speculators and producers of gold and other metals in response to any of the below factors. |
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the relative strength of
the U.S. dollar and certain other currencies; |
|
● |
interest rates; |
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● |
global or regional political,
financial, or economic conditions; |
|
● |
supply and demand for jewelry
and industrial products containing metals; and |
|
● |
expectations with respect
to the rate of inflation; |
A
material decrease in the market price of gold and other metals could affect the commercial viability of our mineral claims and any of
our future anticipated development and production assumptions if any. Lower gold prices could also adversely affect our ability to finance
future development of our mining claims, all of which would have a material adverse effect on our financial condition and results of
operations. There can be no assurance that the market price of gold and other metals will remain at current levels or that such prices
will improve.
Many
of our assumptions regarding our operating results are based on mineral resource estimates by third parties; if those estimates are materially
inaccurate for any reason, our actual operating results could also be materially effected.
Mineral
resource estimates will be based upon geological data supplied by our personnel, confirmed and calculated by independent qualified persons
(geologists and engineers). These estimates are inherently subject to uncertainty and are based on geological interpretations and inferences
drawn from drilling results and sampling analyses and may require revision based on further exploration or development work. The estimation
of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or
other relevant issues. As a result of the foregoing, there may be material differences between actual and estimated mineral reserves,
which may impact the viability of our projects and have a material impact on us.
The
grade of mineralization which may ultimately be mined may differ from the indicated by drilling results and such differences could be
material. The quantity and resulting valuation of mineral reserves and mineral resources may also vary depending on, among other things,
mineral prices (which may render mineral reserves and mineral resources uneconomic), cut-off grades applied and estimates of future operating
costs (which may be inaccurate). Production can be affected by such factors as permitting regulations and requirements, weather, environmental
factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. Any material change in
quantity of mineral resources, mineral reserves, grade, or stripping ratio may also affect the economic viability of any project undertaken
by us. In addition, there can be no assurance that mineral recoveries in small scale, and/or pilot laboratory tests will be duplicated
in a larger scale test under on-site conditions or during production. To the extent that we are unable to mine and produce as expected
and estimated, our business may be materially and adversely affected.
There
is no certainty that any of the mineral resources identified on any of our properties will be realized, that any mineral resources will
ever be upgraded to mineral reserves, that any anticipated level of recovery of minerals will in fact be realized, or that an identified
mineral reserve or mineral resource will ever qualify as a commercially mineable (or viable) deposit which can be legally and economically
exploited. Until a deposit is actually mined and processed, the quantity of mineral resources and mineral reserves and grades must be
considered as estimates only, and investors are cautioned that we may ultimately never realize production on any of its properties.
We
may not be able to obtain adequate insurance coverage, or coverage at all, in order to insure us against the risks of our operations;
any uninsured or underinsured losses could have a negative impact on our operating results.
Our
business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labor
disputes, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment, natural
phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to mineral properties
or production facilities, personal injury or death, environmental damage to our properties or the properties of others, delays in the
ability to undertake exploration, monetary losses and possible legal liability.
We
do not currently have insurance and currently do not have any plans to obtain insurance. Insurance against certain risks, including those
related to environmental matters or other hazards resulting from exploration, is generally not available to us or to other companies
within the mining industry. In addition, we do not carry business interruption insurance relating to our mineral claims. Accordingly,
delays in returning to any future exploration could produce severe near-term impact on our business. Any losses from these events may
result in significant costs that could have a material adverse effect on our financial performance, financial position and results of
operations.
In
conducting our operations, we are required to comply with certain health and safety rules which can be expensive and time consuming.
Our
operations are subject to various health and safety laws and regulations that impose various duties on the Company in respect of its
operations, relating to, among other things, worker safety and the surrounding communities. These laws and regulations also grant the
relevant authorities broad powers to, among other things, close unsafe operations and order corrective action relating to health and
safety matters. The costs associated with the compliance with such health and safety laws and regulations may be substantial and any
amendments to such laws and regulations, or more stringent implementation thereof, could cause additional expenditure or impose restrictions
on, or suspensions of, our operations. We expect to make significant expenditures to comply with the extensive laws and regulations governing
the protection of the environment, waste disposal, worker safety, mine development and protection of endangered and other special status
species, and, to the extent reasonably practicable, to create social and economic benefit in the surrounding communities near our mineral
properties, but there can be no guarantee that these expenditures will ensure our compliance with applicable laws and regulations and
any non-compliance may have a material and adverse effect on us.
The
costs of compliance with environmental laws and obtaining and maintaining environmental permits and governmental approvals required for
construction and/or operation, which currently are significant, may increase in the future and could materially and adversely affect
our business, financial condition, future results, and cash flow; any non-compliance with such laws or regulations may result in the
imposition of liabilities which could materially and adversely affect our business, financial condition, future results, and cash flow.
All
phases of our operations are subject to environmental regulation in the jurisdictions in which we operate, certain of which are set forth
below. Environmental legislation is evolving in a manner which may result in stricter standards and enforcement, increased fines and
penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility
for companies and their officers, directors and employees. These laws address emissions into the air, discharges into water, management
of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of
lands disturbed by mining operations. The costs associated with compliance with such laws and regulations are substantial. Compliance
with environmental laws and regulations and future changes in these laws and regulations may require significant capital outlays and
may cause material changes or delays in our operations and future activities. It is possible that future laws, regulations, or more restrictive
interpretations of current laws and regulations by governmental authorities could have a significant adverse impact on our properties
or some portion of our business, causing us to re-evaluate those activities at that time.
U.S.
Federal Laws: CERCLA, and comparable state statutes, impose strict, joint and several liabilities on current and former owners and operators
of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon
for the government to file claims requiring cleanup actions, for reimbursement for government-incurred cleanup costs, or for natural
resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly
caused by hazardous substances released into the environment. RCRA, and comparable state statutes, govern the disposal of solid waste
and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective
actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration,
mining and processing sites long after activities on such sites have been completed.
CAA,
as amended restricts the emission of air pollutants from many sources, including mining and processing activities. Our mining operations
may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use
of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring and/or control requirements
under the CAA and state air quality laws. New facilities may be required to obtain permits before work can begin, and existing facilities
may be required to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on our
production levels or result in additional capital expenditures in order to comply with the rules.
NEPA
requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental
impacts of their proposed actions, including issuances of permits to mining facilities, and assessing alternatives to those actions.
If a proposed action could significantly affect the environment, the agency must prepare a detailed statement known as an EIS. The United
States Environmental Protection Agency (“EPA”), other federal agencies, and any interested third parties will review and
comment on the scoping of the Environmental Impact Statement (“EIS”) and the adequacy of and findings set forth in the draft
and final EIS. This process can cause delays in the issuance of required permits or result in changes to a project to mitigate its potential
environmental impacts, which can in turn impact the economic feasibility of a proposed project.
CWA,
and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States. The
discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an
analogous state agency. The CWA regulates storm water from mining facilities and requires a storm water discharge permit for certain
activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and
regulations implemented thereunder also prohibit discharges of dredged and fill materials in wetlands and other waters of the United
States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal and administrative
penalties for unauthorized discharges of pollutants and impose liability on parties responsible for those discharges for the costs of
cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.
SDWA
and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate the drilling and operation of subsurface
injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been
delegated to the state. The program requires that a permit be obtained before drilling a disposal or injection well. Violation of these
regulations and/or contamination of groundwater by mining related activities may result in fines, penalties, and remediation costs, among
other sanctions and liabilities under the SDWA and state laws. In addition, third party claims may be filed by landowners and other parties
claiming damages for alternative water supplies, property damages, and bodily injury.
Nevada
Laws: At the state level, mining operations in Nevada are also regulated by the Nevada Department of Conservation and Natural Resources,
Division of Environmental Protection. Nevada state law requires mine operators to hold Nevada Water Pollution Control Permits, which
dictate operating controls and closure and post-closure requirements directed at protecting surface and ground water.
Other
Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill
operations. Any changes to these laws and regulations could have an adverse impact on our financial performance and results of operations
by, for example, requiring changes to operating constraints, technical criteria, fees or surety requirements.
Our
industry is highly competitive and we will be at a competitive disadvantage for assets and financial resources relative to larger, better
funded companies in the same space.
The
mining industry is highly competitive in all of its phases, both domestically and internationally. Our ability to acquire properties
and develop mineral resources and reserves in the future will depend not only on our ability to develop our present properties, but also
on our ability to select and acquire suitable producing properties or prospects for mineral exploration, of which there is a limited
supply. We may be at a competitive disadvantage in acquiring additional mining properties because we must compete with other individuals
and companies, many of which have greater financial resources, operational experience and technical capabilities than us. We may also
encounter competition from other mining companies in our efforts to hire experienced mining professionals. Competition could adversely
affect our ability to attract necessary funding or acquire suitable producing properties or prospects for mineral exploration in the
future. Competition for services and equipment could result in delays if such services or equipment cannot be obtained in a timely manner
due to inadequate availability and could also cause scheduling difficulties and cost increases due to the need to coordinate the availability
of services or equipment. Any of the foregoing effects of competition could materially increase project development, exploration or construction
costs, result in project delays and generally and adversely affect us and our business and prospects.
The
price of our Common Stock depends on many factors that could materially change or fluctuate resulting in volatility and unpredictability.
The
market price of the Common Stock could be subject to significant fluctuations due to various factors and events, including any regulatory
or economic changes affecting the Company’s operations, variations in the Company’s operating results, developments in the
Company’s business or its competitors, or changes in market sentiment towards the Common Stock. Investors should be aware that
the value of the Common Stock may be volatile and investors may, on disposing of the Common Stock, realize less than their original investment
or may lose their entire investment.
The
Company’s operating results and prospects from time to time may be below the expectations of market analysts and investors. In
addition, stock markets from time to time suffer significant price and volume fluctuations that affect the market price of the securities
listed thereon and which may be unrelated to the Company’s operating performance. These factors include macroeconomic developments
and political environments in North America and globally and market perceptions of the attractiveness of particular industries. As at
the date hereof, there remains a significant amount of uncertainty and economic disruption caused by COVID-19 that has increased market
and share price volatility and had a catastrophic impact on access to capital and liquidity. Any of these events could result in a decline
in the market price of the Common Stock. The Common Stock may, therefore, not be suitable as a short-term investment. In addition, the
market price of the Common Stock may not reflect the underlying value of the Company’s net assets. The price at which the Common
Stock will be traded and the price at which investors may realize their shares will be influenced by a large number of factors, some
specific to the Company and its proposed operations, and some which may affect the business sectors in which the Company operate, including
the pervasive and ongoing impact of COVID-19. Such factors could also include the performance of the Company’s operations, variations
in operating results, announcements by the Company (i.e. disappointing results of exploratory drilling, the incurrence of environmental
liabilities or other material developments), announcements of material developments by the Company’s competitors, involvement in
litigation, large purchases or sales of the Common Stock, liquidity or the absence of liquidity in the Common Stock, limited trading
volume, the prices of gold and other precious metals, legislative or regulatory changes relating to the business of the Company, the
Company’s ability to raise additional funds, other material events and general financial market and economic conditions. In the
event that the occurrence of any of these events causes the price of the Common Stock to decrease, investors may be forced to sell their
shares at a loss.
The
failure of our current or future strategic partners and joint venture partners to meet their obligations could have a material adverse
effect on our operating results.
We
may in the future enter into partnerships, option agreements and/or joint ventures as a means of acquiring additional property interests
or to fully exploit the exploration and production potential of its assets. The failure of any partner to meet its obligations to us
or other third parties, or any disputes with respect to third parties’ respective rights and obligations, could have a material
adverse effect on our rights under such agreements. We may also be unable to exert direct influence over strategic decisions made in
respect of properties that are subject to the terms of these agreements, which may have a materially adverse impact on the strategic
value of the underlying mineral claims. Furthermore, in the event we are unable to meet our obligations or share of costs incurred under
agreements to which it is a party, the Company may have its property interests subject to such agreements reduced as a result or face
the termination of such agreements.
We
sell additional equity and/or issue additional equity in order to acquire additional assets; any issuance of equity could result in significant
dilution to our existing shareholders.
We
believe that we are adequately financed to carry out our exploration and development plans for the next 12-month period. However, financing
the development of a mining operation through to production, should feasibility studies show it is recommended, would be expensive and
we would require additional capital to fund development and exploration programs and potential acquisitions. We cannot predict the size
of future issuances of Common Stock or the issuance of debt instruments or other securities convertible into Common Stock in connection
with any such financing. Likewise, we cannot predict the effect, if any, that future issuances and sales of our securities will have
on the market price of its Common Stock. If we raise additional funds by issuing additional equity securities, such financing may substantially
dilute the interests of existing shareholders. Sales of a substantial number of shares of Common Stock, or the availability of such Common
Stock for sale, could adversely affect prevailing market prices for our securities and a securityholder’s interest in us.
Because
the climate has an effect on our operations and the ability for our assets, present or future, to maximize their potential, the impact
of climate change and expensive regulations related to climate change could have a material adverse effect on our operations.
Climate
change could have an adverse impact on our operations. The potential physical impacts of climate change on our operations are highly
uncertain and would be particular to the geographic circumstances in areas in which it operates. These may include changes in rainfall
and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These changes in climate could have
an impact on the cost of development or production on Nevada Canyon’s mines and adversely affect the financial performance of its
operations.
Regulations
and pending legislation governing issues involving climate change could result in increased operating costs, which could have material
adverse effect on our business. A number of governments or governmental bodies have introduced or are contemplating regulatory changes
in response to climate and its potential impacts. Legislation and increased regulation regarding climate change could impose significant
costs on us, our venture partners and our suppliers, including costs related to increased energy requirements, capital equipment, environmental
monitoring and reporting and other costs to comply with such regulations. Any adopted climate change regulations could also negatively
impact our ability to compete with companies situated in areas not subject to such regulations. Given the emotion, political significance
and uncertainty around the impact of climate change and how it should be dealt with, we cannot predict how legislation and regulation
will affect its financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased
awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in the
natural resources industry could harm our reputation.
Through
no fault of our own, we could be involved in expensive and time consuming litigation that could have a material adverse effect on our
operations.
We
may become involved in disputes with other parties in the future which may result in litigation. The results of litigation cannot be
predicted with certainty. If we are unable to resolve these disputes favorably, it may have a material adverse impact on the ability
to carry out our business plan.
Influence
of third-party stakeholders
Some
of the lands in which we hold an interest, or the exploration equipment and roads or other means of access in which we intend to utilize
in carrying out our work programs or general business mandates, may be subject to interests or claims by third party individuals, groups
or companies. In the event that such third parties assert any claims, our work programs may be delayed even if such claims are not meritorious.
Such delays may result in significant financial loss and loss of opportunity for us.
Expense
and time consuming internal financial controls may or may not be effective in ensuring that transactions are authorized and properly
recorded and reported; any inadvertent failure of our internal financial controls could result in undue time, resources and expense that
could harm our operating results.
Internal
controls over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized,
assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. A control system, no
matter how well designed and operated, can provide only reasonable, and not absolute, assurance with respect to the reliability of financial
reporting and financial statement preparation. Though we intend to put into place a system of internal controls appropriate for its size,
and reflective of its level of operations, there are limited internal controls currently in place. We have a very limited history of
operations and has not made any assessment as to the effectiveness of its internal controls. If we identify material weakness in our
internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act
in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public
accounting firm is unable to express an opinion as to the effectiveness of its internal control over financial reporting when required,
investors may lose confidence in the accuracy and completeness of our financial reports and the market price of the Common Stock could
be negatively affected. We also could become subject to investigations by the stock exchange on which the securities are listed, the
Commission, or other regulatory authorities, which could require additional financial and management resources.
Risks
Relating to our Common Stock
An
active market in which investors can resell their Common Stock may not develop which could adversely affect an investor’s ability
to sell their Common Stock.
We
cannot predict the extent to which an active market for our Common Stock will develop or be sustained, or how the development of such
a market might affect the market price of our Common Stock. Even if a trading market develops, investors may not be able to resell their
Common Stock at or above the initial acquisition price. Investors are cautioned that if an active market for our Common Stock does not
arise, investors may not be able to resell their Common Stock or may be forced to do so at a loss.
The
market price of our Common Stock will likely be volatile as significant price fluctuations are common in what the Securities and Exchange
Commission deems is a “penny stock.”
The
trading price of the stock and the price at which we may sell stock in the future are subject to fluctuations in response to any of the
following:
|
● |
Limited trading volume
in the Common Stock; |
|
● |
Quarterly variations in
operating results; |
|
● |
Involvement in litigation; |
|
● |
General financial market
conditions; |
|
● |
The prices of gold and
other precious metals; |
|
● |
Announcements
by us of, for example, disappointing results of exploratory drilling, the incurrence of environmental liabilities or other material
developments; |
|
● |
Announcements
by us of, for example, disappointing results of exploratory drilling, the incurrence of environmental liabilities or other material
developments; |
|
● |
Announcements
of material developments by our competitors; |
|
● |
Our
ability to raise additional funds; |
|
● |
Changes
in government regulations; and |
|
● |
Other
material events. |
In
the event that the occurrence of any of these events causes the price of our Common Stock to decrease, investors may be forced to sell
their shares at a loss.
Currently
authorized and future issuances of Preferred Stock, which rank senior to our Common Stock for the purposes of dividends and liquidating
distributions will, and any future issuances of debt securities, which would rank senior to our Common Stock upon our bankruptcy or liquidation
may, adversely affect the level of return you may be able to achieve from an investment in our Common Stock.
Currently
Authorized Preferred Stock may have preference on bankruptcy over the Common Stock and holders of potentially future issued Preferred
Stock are entitled to receive from the assets of the Company in priority to the holders of Common Stock on a liquidation, dissolution,
winding up or other distribution of assets of the Company. In the future, we may attempt to increase our capital resources by offering
debt securities or additional Preferred Stock. Upon a potential bankruptcy or liquidation, holders of our debt securities or Preferred
Stock, and lenders with respect to other borrowings we may make, may receive distributions of our available assets prior to any distributions
being made to holders of our Common Stock. Because our decision to issue debt securities or Preferred Stock in any future offering, or
borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate
the amount, timing or nature of any such future offerings or borrowings. Holders of our Common Stock must bear the risk that any future
offerings we conduct or borrowings we make may adversely affect the level of return they may be able to achieve from an investment in
our Common Stock, upon bankruptcy or otherwise.
Our
Common Stock is subject to penny stock rules making it more difficult to trade our Common Stock, all of which would adversely affect
the value of the Common Stock.
The
Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny Stocks are
generally equity securities with a price per share of less than $5.00, other than securities registered on certain national securities
exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, before
effecting a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing
specified information. In addition, the penny stock rules require that, before effecting any such transaction in a penny stock not otherwise
exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for
the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written
agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure
requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore shareholders
may have difficulty selling their Common Stock.
FINRA
sales practice requirements may limit a shareholder’s ability to buy and sell our stock.
In
addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending and investment
to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to
recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer’s financial status, tax status, investment objectives and other information. The FINRA requirements
may make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may have the effect of reducing
the level of trading activity in our Common Stock. As a result, fewer broker-dealers may be willing to make a market in our common stock,
reducing a shareholder’s ability to resell our Common Stock.
Our
management has broad discretion as to the use of certain of the net proceeds generated from our equity financing, which means that investors
will need to rely on the judgment of our management regarding the use of proceeds.
Our
management has broad discretion in the application of the net proceeds designated to fund our capital expenditures on existing mineral
properties, acquire additional acreage leaseholds, acquire additional producing properties and associated leaseholds, or for general
corporate purposes, which are subject to change in the future, and which may change in response to the proceeds raised pursuant to the
Purchase Rights or exercise of the Warrants, if any. Accordingly, you will have to rely upon the judgment of our management with respect
to the use of these proceeds. Our management may spend a portion or all of the net proceeds from any equity financing in ways that holders
of our Common Stock may not desire or that may not yield a significant return or any return at all. The failure by our management to
apply these funds effectively could harm our business. Pending their use, we may also invest the net proceeds from this Offering in a
manner that does not produce income or that loses value.
We
are a reporting issuer under the Exchange Act and we are considered a smaller reporting company and are exempt from certain disclosure
requirements, which could make our Common Stock less attractive to potential investors
Rule
12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed
issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:
●
Had a public float of less than US$250 million as of the last business day of its most recently completed second fiscal quarter, computed
by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price
at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the
common equity; or
●
In the case of initial registration statement under the Securities Act, or the Exchange Act, for shares of its common equity, had a public
float of less than US$250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying
the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration
statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or
●
In the case of an issuer whose public float as calculated under the foregoing paragraphs of this definition was zero or less than $700
million, had annual revenues of less than US$100 million during the most recently completed fiscal year for which audited financial statements
are available
We
believe that we are a smaller reporting company, and as such that we are not required and may not include a Compensation Discussion and
Analysis section in our proxy statements; we will provide only two years of financial statements; and we need not provide the table of
selected financial data. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers
that are not smaller reporting companies. These “scaled” disclosure requirements make our Common Stock less attractive to
potential investors, which could make it more difficult for our shareholders to sell their Units.
We
are taxed as a corporation for U.S. federal income tax purposes which means we will be subject to a material amount of entity-level taxation
which would reduce and/or eliminate cash that otherwise may be used to make dividends.
We
will pay U.S. federal income tax on our tax income at the corporate tax rate, which is currently a maximum of 21%, and will pay state
and local income tax at varying rates, including the Nevada Net Proceeds Tax. Distributions will generally be taxed again as corporate
dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions, or credits will
flow through to you. In addition, changes in current state law may subject us to additional entity-level taxation by individual states.
Because of state budget deficits and other reasons, several states are evaluating ways to subject corporations to additional forms of
taxation. We will be subject to a material amount of entity-level taxation, which will result in a material reduction in the anticipated
cash flow and after-tax return to our shareholders.
A
non-US holder of our Common Stock, Warrants, or Warrant Shares will be treated as having income that is “effectively connected”
with a United States trade or business upon the sale or disposition of our Common Stock, Warrants, or Warrant Shares unless (i) our Common
Stock is regularly traded on an established securities market and (ii) the non-U.S. holder did not meet certain ownership thresholds
during the applicable testing period.
A
non-US holder of our Common Stock, Warrants, or Warrant Shares generally will incur U.S. Federal income tax on any gain realized upon
a sale or other disposition of our Common Stock to the extent our Common Stock constitutes a “United States real property interest”
(“USRPI”), under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). A USRPI includes stock in
a “United States real property holding corporation.” We are and expect to continue to be for the foreseeable future, a “United
States real property holding corporation.”
Under
FIRPTA, a non-U.S. holder is taxed on any gain realized upon a sale or other disposition of a USRPI as if such gain were “effectively
connected” with a United States trade or business of the non-U.S. holder. A non-U.S. holder thus will be taxed on such a gain at
the same graduated rates generally applicable to U.S. persons. In addition, a non-U.S. holder would have to file a U.S. federal income
tax return reporting that gain. A non-U.S. holder that is a foreign corporation and not entitled to treaty relief or exemption also may
be subject to the 30% branch profits tax on such gain.
However,
if our Common Stock and Warrant Shares are regularly traded on an established securities market (the “Regularly Traded Exception”),
then gains realized upon a sale or other disposition of our Common Stock or Warrant Shares will not be treated as gains from the sale
of a USRPI, as long as the non-U.S. holder did not own: (i) more than 5% of our Common Stock at any time during the five-year period
preceding the sale or other disposition or, if shorter, the non-U.S. holder’s holding period for its Common Stock; (ii) Warrants
with a fair market value on the date acquired by such holder greater than the fair market value on that date of 5% of our Common Stock;
or (iii) aggregate equity securities of the Company with a fair market value on the date acquired in excess of 5% of the fair market
value of the Common Stock on such date. Our Common Stock currently trades on the OTC Pinks. At this time, it is uncertain whether our
Common Stock will continue to be considered as being regularly traded on an established securities market in the U.S. Accordingly, we
can provide no assurances that the Common Stock, Warrants or Warrant Shares will meet the Regularly Traded Exception at the time a non-U.S.
holder purchases such securities or sells, exchanges, or otherwise disposes of such securities. In the event that our Common Stock or
Warrant Shares do not meet the Regularly Traded Exception, then gains recognized by a non-U.S. holder upon a sale or other disposition
of our Common Stock or Warrant Shares will be subject to tax under FIRPTA unless an exemption applies. Since the Warrants are not expected
to be listed on a securities market, the Warrants are unlikely to qualify for the Regularly Traded Exception. The foregoing summary is
qualified in its entirety by the discussion contained herein under the heading “Material U.S. Federal Income Tax Considerations
for U.S. Holders and Non-U.S. Holders.”
Our
ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited which would effect our ability
to take full advantage of the tax benefits of carryforwards.
Under
Section 382 and related provisions of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes
an “ownership change” (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year
period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to
offset its post-change income may be limited. We may in the future experience, an “ownership change.” Thus, our ability to
utilize carryforwards of our net operating losses and other tax attributes to reduce future tax liabilities may be substantially restricted.
At this time, we have not completed a study to assess whether an ownership change under Section 382 of the Code may occur in the foreseeable
future, or whether there have been due to the costs and complexities associated with such a study. Therefore, we may not be able to take
full advantage of these carryforwards for federal or state tax purposes.
The
tax treatment of corporations or an investment in our Common Stock, Warrants or Warrants Shares could be subject to potential legislative,
judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
The
present U.S. federal income tax treatment of corporations, including us, or an investment in our Common Stock, Warrants and Warrant Shares
may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time, members of Congress
and the President propose and consider substantive changes to the existing U.S. federal income tax laws that affect corporations. Any
modification to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it
more difficult or impossible to meet our cash flow needs for operations, acquisitions or other purposes. We are unable to predict whether
any of these changes or other proposals will be enacted. However, it is possible that a change in law could affect us, and any such changes
could negatively impact the value of an investment in our Common Stock, Warrants or Warrant Shares.
For
all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the future
involves a high degree of risk.