WMTN Westmountain Gold Inc (PK)

Item 8.01 Other Events.

WestMountain Gold, Inc. (the “ Company ” ) recently experienced a significant slough event at its mining property located in Alaska (referred to in our prior periodic filings as the “ TMC Project ” or “ Terra ” ).  The slough event occurred sometime between the evening hours of September 1, 2016, and the early afternoon hours of September 2, 2016, in the area of the TMC Project where the Company was conducting bulk surface sampling operations.  No injuries were reported and no equipment was lost or damaged as a result of the significant slough event due to the Company taking safety precautions to evacuate that area after earlier minor slough events.  However, the slough event caused approximately 25,000 tons of rock material to completely cover the main vein in the bulk surface sampling area.

Due to the extensive coverage and ongoing safety concerns in this area caused by the slough event, the Company ceased all surface bulk sampling operations at the TMC Project and believes it is likely that the surface bulk sampling operations at the TMC Project will remain closed permanently.  The Company ’ s strategy had been to use cash flow generated from its surface bulk sampling operations to help fund the expansion of resources and the pursuit of underground mining development at the TMC Project.  If surface bulk sampling operations remain closed permanently or for any extended period of time, the Company will be forced to change its business plan, which may include implementing underground mining development sooner than expected and relying solely on that underground mining development to exploit the TMC Project and generate revenues.  Additionally, in the absence of expected revenues from surface bulk sampling operations, the Company believes it will be necessary to raise more equity or debt financing than originally planned to commence underground mining development. We expect the build out of such operations would cost a minimum of $3,000,000 to $5,000,000 and that commencement of underground development could occur no earlier than June 2017.  Accordingly, the Company will likely remain in the exploration stage of its mining operations longer than originally anticipated.

The Company ’ s 2016 Operations Plan (the “ 2016 Operations Plan ” ; included as an Exhibit to the Company ’ s Current Report on Form 8-K dated January 29, 2016) relied on revenue expected to be generated almost exclusively from our surface bulk sampling operations at the TMC Project to fund our operational costs for the 2016 season and other upcoming obligations.  Prior to the slough event, we excavated approximately 1,357 tons of vein material from our surface bulk sampling operations (compared to 2,250 to 2,500 tons that we expected to mine from the surface sampling operations for the entire 2016 season).    

To date, we have processed approximately 890 tons of vein material (including vein material remaining from the 2015 season) and have an estimated additional 1,470 tons of vein material that has yet to be processed.  Even if we are able to process the estimated remaining 1,470 tons of vein material, our total processed tonnage will fall well short of the 3,600 tons projected in the 2016 Operations Plan.  Due to the decrease in actual excavated vein material compared to expected excavated vein material caused by the slough event, actual revenues for the 2016 season will fall well short of the Company ’ s projections set forth in the 2016 Operations Plan.

As a result of the expected reduced revenue caused by the slough event, the Company will most likely be unable to fund future operational costs, including planning and commencement of any potential underground mining development.  Additionally, we will likely be unable to meet certain loan obligations that come due in 2016 and are secured by the assets of the Company (a full description of the Company ’ s outstanding loans may be found in the Company ’ s periodic and current reports filed with the Securities and Exchange Commission).  Failure to pay the loan obligations when they come due may result in the lenders accelerating all amounts due and foreclosing on the assets of the Company to satisfy the balances.  If foreclosure occurs, it will likely result in the Company ’ s shareholders losing their entire investment.

With the complete cessation of surface bulk sampling operations at the TMC Project, and no immediate prospects for alternative surface bulk sample operations, the Company ’ s potential revenue stream is limited to the remaining vein material that has already been excavated and is either currently in process or waiting to be processed. Because the Company expects this revenue will be insufficient to fund our current and future operational expenses and obligations, the Company is currently assessing its options.  It is likely that the Company will need to raise additional new capital through the issuance of equity and/or debt in the near term to fund our loan obligations and continue operations, in addition to the capital that would need to be raised for the commencement of underground mining development at the TMC Project.  Since our ability to raise additional capital will be affected by many factors, most of which are not within our control (including the “ Risk Factors ” set forth in the Company ’ s Annual Report on Form 10-K for the fiscal year ended October 31, 2015, as filed with the SEC on February 16, 2016), no assurance can be given that the Company will in fact be able to raise the required capital in a timely manner or that the proposed terms of any such financing will be favorable or acceptable to the Company.  If we are unsuccessful in obtaining or agreeing to financing, the Company may be forced to discontinue all operations and will fail, which will likely result in the Company ’ s shareholders losing their entire investment.