What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-11 compared with 2021-02-11 · 137 added, 99 removed, 370 unchanged (39% of the section changed)

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Meeting Company forecasts and budgets;

Anticipated capital expenditures;

Anticipated capital expenditures and availability of future financings;

Prices of gold and associated minerals;

Timing and amount of future discoveries (if any) and production of natural resources on our Peak Gold Joint Venture Property;

Timing and amount of future discoveries (if any) and production of natural resources on the Contango Property and the Manh Choh Joint Venture Property;

Operating costs and other expenses;

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Risk Factors, in our Annual Report on Form 10-K for the year ended June 30, 2020, and Part I, Item 2.

Risk Factors, in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, these factors include among others:

Risk Factors, in our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020 and December 31, 2020, these factors include among others:

Ability to raise capital to fund capital expenditures;

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Impact of new and potential legislative and regulatory changes on mining operating and safety standards, including as a result of the recent presidential and congressional elections in the U.S.;

Uncertainties of any estimates and projections relating to any future production, costs and expenses;

Uncertainties of any estimates and projections relating to any future production, costs and expenses (including changes in the cost of fuel, power, materials, and supplies);

Timely and full receipt of sale proceeds from the sale of any of our mined products (if any);

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Potential mechanical failure or under-performance of facilities and equipment;

Environmental risks;

Environmental and regulatory, health and safety risks;

Strength and financial resources of competitors;

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All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

The Company engages in exploration for gold ore and associated minerals in Alaska through a 30.0% membership interest in Peak Gold, LLC (the “Joint Venture Company”), which leases approximately 675,000 acres for exploration and development and through its wholly-owned subsidiary, Contango Minerals Alaska, LLC (“Contango Minerals”), which separately leases approximately 167,000 acres for exploration.

On September 29, 2020, the Company, CORE Alaska, LLC (“CORE Alaska”) and KG Mining (Alaska), Inc.

The Company engages in exploration for gold, silver, and copper ores in Alaska.

The Company has a 30.0% membership interest in Peak Gold, LLC (the “Joint Venture Company”), which leases approximately 675,000 acres from the Tetlin Tribal Council (the “Manh Choh Joint Venture Property”) for exploration and development and through its wholly-owned subsidiary, CORE Alaska, LLC (“CORE Alaska”).

The Company’s wholly-owned subsidiary, Contango MineralsAlaska, LLC (“Contango Minerals”), owns 100% interest in the mineral rights to approximately 220,000 acres of State of Alaska mining claims located north and northwest of the Peak Gold Joint Venture Property (the “Contango Property”).

Kinross Transaction

On September 29, 2020, the Company, CORE Alaska, LLC and KG Mining (Alaska), Inc.

(“KG Mining”), an indirect wholly-owned subsidiary of Kinross Gold Corporation, a corporation formed under the laws of Ontario, Canada (“Kinross”), entered into a Purchase Agreement (the “CORE Purchase Agreement”), pursuant to which CORE Alaska sold a 30.0% membership interest (the “CORE JV Interest”) in the Joint Venture Company, to KG Mining (the “CORE Transactions”).

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The 809,744 shares of Common Stock were acquired by KG Mining from Royal Gold, as part of the Royal Gold Transactions (described below) and were subsequently canceled by the Company.

Of the $32.4 million cash consideration, $1.2 million constituted a reimbursement prepayment to the Company by KG Mining relating to its CORE Alaska’s proportionate share of silver royalty payments that the Joint Venture Company may be obligated to pay to Royal Gold, with the understanding that as a result of such reimbursements, KG Mining would bear the entire economic impact of those silver royalty payments due from the Joint Venture Company.

Of the $32.4 million cash consideration, $1.2 million constituted a reimbursement prepayment to the Company by KG Mining of amounts relating to CORE Alaska’s proportionate share of certain silver royalty payments that the Joint Venture Company may be obligated to pay to Royal Gold, with the understanding that as a result of such reimbursements, KG Mining would bear the entire economic impact of those silver royalty payments due from the Joint Venture Company.

Concurrently with the CORE Purchase Agreement, KG Mining, in a separate transaction, acquired from Royal Gold (i) 100% of the equity of Royal Alaska, LLC (“Royal Alaska”), which held a 40.0% membership interest in the Joint Venture Company.

Therefore, as of December 31, 2020, the Company held a 30.0% membership interest in the Joint Venture Company, and KG Mining held a 70.0% membership interest in the Joint Venture Company.

Therefore, as of March 31, 2021, the Company held a 30.0% membership interest in the Joint Venture Company, and KG Mining held a 70.0% membership interest in the Joint Venture Company.

Prior to the Kinross Transactions (described below), the Joint Venture Company, the Company, Contango Minerals, CORE Alaska, Royal Gold and Royal Alaska entered into a Separation and Distribution Agreement, dated as of September 29, 2020 (the “Separation Agreement”).

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Under the Option Agreement, Contango Minerals granted the Joint Venture Company an option, subject to certain conditions contained in the Option Agreement, to purchase approximately 13,000 acres of the Alaska state mining claims which were contributed to Contango Minerals pursuant to the Separation Agreement., together with all extralateral rights, water and water rights, and easements and rights of way in connection therewith, that are held by Contango Minerals.

As a result, the Company controls approximately 167,000 acres, subject to the Option Agreement, and the Joint Venture Company leases an estimated 675,000 acres for the exploration of gold ore and associated minerals as of December 31, 2020.

As a result, at the closing of the CORE Transactions, the Company received control of approximately 167,000 acres, subject to the Option Agreement, and the Joint Venture Company leases an estimated 675,000 acres for the exploration of gold ore and associated minerals as of March 31, 2021.

In February 2021, the Tetlin Tribal Council approved of a new name for the Peak Gold Joint Venture Project.

From now on, the project will be referred to as the Manh Choh Project.

The renaming was a result of close consultation with the local Upper Tanana Athabascan Village of Tetlin on whose land the project is situated.

The name “Manh Choh” (“mon-CHO”) was chosen by the Village of Tetlin Tribal Council and can be translated from the Upper Tanana Athabascan language to “Big Lake,” referring to the nearby Tetlin Lake, a site of high cultural and subsistence significance for the community.

Kinross is a large gold producer with a diverse global portfolio and extensive operating experience in Alaska.

The Joint Venture Company plans to mine ore from the Peak and North Peak deposits and then process ore at the existing Fort Knox mining and milling complex located approximately 250 miles away.

The use of the Fort Knox mill is expected to accelerate the development of the Peak Gold Joint Venture Property and result in significantly reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall risk for Peak Gold Joint Venture Property.

The use of the Fort Knox mill is expected to accelerate the development of the Manh Choh Joint Venture Property and result in significantly reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall risk for Manh Choh Joint Venture Property.

On January 8, 2015, the Company and a subsidiary of Royal Gold, Inc.

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The Company contributed a 100% leasehold interest in an estimated 675,000 acres (the “Tetlin Lease”) from the Tetlin Tribal Council, the council formed by the governing body for the Native Village of Tetlin, an Alaska Native Tribe (the “Tetlin Tribal Council”);

and State of Alaska mining claims near Tok, Alaska (together with other property, the “Peak Gold Joint Venture Property”), and Royal Gold made an initial investment into the Joint Venture Company of $5.0 million.

and State of Alaska mining claims near Tok, Alaska (together with other property, formerly the “Peak Gold Joint Venture Property”), and Royal Gold made an initial investment into the Joint Venture Company of $5.0 million.

By September 29, 2020, Royal Gold had contributed approximately $37.1 million to the Joint Venture Company and earned a cumulative economic interest of 40.0%.

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KG Mining and CORE Alaska entered into the Amended and Restated Limited Liability Company Agreement of the Joint Venture Company (the “A&R JV LLCA”) on October 1, 2020 to address the new ownership arrangements and to incorporate additional terms that will permit the Joint Venture Company to further develop and produce from its properties.

As of December 31, 2020, the Company had approximately $31.9 million of cash.

As of December 31, 2020, the Company had funded a total of $2.4 million to the Joint Venture Company for its portion of the calendar year 2020 budget.

During the last calendar quarter of 2020, the Joint Venture Company engaged in drilling and testing, environmental work, engineering studies, and other items.

As of March 31, 2021, the Company had approximately $26.2 million of cash.

On December 10, 2020, the Management Committee approved a total budget of $18.0 million for the calendar year 2021 to undertake in-fill drilling, engineering and environmental studies necessary to complete a feasibility-level study, additional exploration, community relations, and to prepare the project for formal permitting.

The Company’s proportionate share of the approved budget is approximately $5.4 million.

As of March 31, 2021, the Company had funded approximately $2.5 million to the Joint Venture Company during calendar year 2021.

In addition, the Company plans to fund a roughly $3.0 million exploration program to explore for additional resources on 100%-owned Triple Z prospect in late 2021, focused on the areas immediately adjacent to the known Joint Venture Company resources.

The Company also plans to continue its exploration efforts on its earlier stage Eagle and Hona projects located immediately north of the Peak Gold project area

Since 2009, the Company’s primary focus has been the exploration of a mineral lease with the Native Village of Tetlin whose governmental entity is the Tetlin Tribal Council (“Tetlin Tribal Council”) for the exploration of minerals near Tok, Alaska on a currently estimated 675,000 acres (the “Tetlin Lease”) and almost all of the Company’s resources have been directed to that end.

All significant work presently conducted by the Company has been directed at exploration of the Tetlin Lease and increasing understanding of the characteristics of, and economics of, any mineralization.

There are no known quantifiable mineral reserves on the Tetlin Lease or any of the Company’s other properties as defined by the SEC Industry Guide 7.

The Company also plans to continue its exploration efforts on its earlier stage Eagle and Hona projects located immediately north of the Manh Choh project area.

During the quarter ended March 31, 2021, the Company staked a new property called Shamrock in the Richardson Mining District located in central Alaska right along the Alaska Hwy corridor approximately 70 miles from Fairbanks, Alaska.

The property includes a total of 368 Alaska State mining claims covering approximately 52,920 acres and gives the Company a dominant land position in the Richardson district.

The property has excellent infrastructure being right along the Alaska Hwy and adjacent to the Trans Alaska Pipeline with several gravel roads and ATV trails providing good access to entire property.

Since 2009, the Company’s primary focus has been the exploration of a mineral lease with the Native Village of Tetlin whose governmental entity is the Tetlin Tribal Council (“Tetlin Tribal Council”) for the exploration of minerals near Tok, Alaska on a currently estimated 675,000 acres (the “Tetlin Lease”) constituting the Manh Choh Joint Venture Property and almost all of the Company’s resources have been directed to that end.

All significant work presently conducted by the Company has been directed at exploration of the Manh Choh Joint Venture Property and increasing understanding of the characteristics of, and economics of, any mineralization.

The Company also separately owns the mineral rights to approximately 220,000 acres of State of Alaska mining claims for exploration, subject to the Option Agreement described below.

There are no known quantifiable mineral reserves on the Manh Choh Joint Venture Property, the Contango Property or any of the Company’s other properties as defined by the SEC Industry Guide 7.

The Tetlin Lease originally had a ten-year term beginning July 2008, which was extended for an additional ten years to July 15, 2028.

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These payments lowered the production royalty to a range of 2.25% to 4.25%, depending on the type of metal produced and the year of production.

On or before December 31, 2020, the Tetlin Tribal Council had the option to increase its production royalty by (i) 0.25% by payment to the Joint Venture Company of $150,000, (ii) 0.50% by payment to the Joint Venture Company of $300,000, or (iii) 0.75% by payment to the Joint Venture Company of $450,000.

On or before March 31, 2021, the Tetlin Tribal Council had the option to increase its production royalty by (i) 0.25% by payment to the Joint Venture Company of $150,000, (ii) 0.50% by payment to the Joint Venture Company of $300,000, or (iii) 0.75% by payment to the Joint Venture Company of $450,000.

The Tetlin Tribal Council exercised this option on December 30, 2020.

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The Company believes that it and the Joint Venture Company hold good title to their properties, in accordance with standards generally accepted in the mineral industry.

As is customary in the mineral industry, the Company conducted only a preliminary title examination at the time it acquired the Tetlin Lease.

As is customary in the mineral industry, the Company conducted only a preliminary title examination at the time it entered into the Tetlin Lease.

The Joint Venture Company conducted a title examination prior to the assignment of the Tetlin Lease to the Joint Venture Company and performed certain curative title work.

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A significant amount of additional work is likely required in the exploration of the properties before any determination as to the economic feasibility of a mining venture can be made.

The following table summarizes the Tetlin Lease and unpatented mining claims held by the Joint Venture Company and the Company (collectively, the “Peak Gold Joint Venture Property”) as of December 31, 2020 :

The following table summarizes the Tetlin Lease and unpatented mining claims held by the Joint Venture Company and the Company as of March 31, 2021 :

Estimated Acres

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State Mining Claims

Eastern Interior

Gold, Copper, Silver

State Mining Claims

Joint Venture Company:

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The Company believes that equity ownership aligns the interests of the Company’s executives and directors with those of its stockholders.

As of December 31, 2020, the Company’s directors and executives beneficially own approximately 25.1% of the Company’s Common Stock.

As of March 31, 2021, the Company’s directors and executives beneficially own approximately 24.7% of the Company’s Common Stock.

An additional 12.8% of the Company’s Common Stock is beneficially owned by the Marital Trust of Mr.

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Gold, Silver, and Copper Exploration

The Company controls approximately 167,000 acres of State of Alaska mining claims and the Joint Venture Company leases the Tetlin Lease (an estimated 675,000 acres) for the exploration of gold and associated minerals.

The Company controls approximately 220,000 acres of State of Alaska mining claims constituting the Contango Property and the Joint Venture Company leases the Manh Choh Joint Venture Property (an estimated 675,000 acres) for the exploration of gold and associated minerals.

The State of Alaska mining claims controlled by the Company are subject to the Option Agreement described above.

To date, our exploration has concentrated on the Tetlin Lease, with only a limited amount of exploration work performed on the Tok, Eagle, Bush, West Fork, Triple Z, and Noah claims.

To date, our exploration has concentrated on the Manh Choh Joint Venture Property, with only a limited amount of exploration work performed on the Tok, Eagle, Bush, West Fork, Triple Z, and Noah claims of the Contango Property.

The Management Committee decided to release the Bush and West Fork claims in September 2020.

The Shamrock claim area was acquired in March 2021.

The Management Committee of the Joint Venture Company approved an exploration budget for calendar 2019 of $6.9 million, of which the Company’s share was approximately $4.1 million.

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The Company funded a total of $4.1 million to the Joint Venture Company during calendar year 2019, which related to both the 2019 and 2018 exploration programs.

As of December 31, 2020, the Company had funded a total of $2.4 million to the Joint Venture Company for its portion of the calendar year 2020 budget.

During the last calendar quarter of 2020 after the consummation of the Kinross Transactions, the Management Committee approved a budget of approximately $5.7 million for drilling and testing, environmental work, engineering studies, and other items.

However, due to weather delays and COVID-19 related delays, the Joint Venture Company only spent approximately $3.0 million during the last calendar quarter of 2020.

The additional work that couldn't be completed in 2020 is included in the calendar 2021 budget.

However, due to weather delays and COVID-19 related delays, the Joint Venture Company spent approximately $3.0 million during the last calendar quarter of 2020.

The additional work that could not be completed in 2020 is included in the calendar 2021 budget.

The Company’s proportionate share of the approved budget is approximately $5.4 million.

In addition, the Company plans to fund a roughly $3.0 million exploration program to explore for additional resources on 100%-owned Triple Z, Hona, and Eagle prospects in 2021, located immediately north and northwest of the Peak Gold project area.

From inception to December 31, 2020, the Joint Venture Company has incurred $50.6 million in exploration program expenditures.

As of December 31, 2020, the Company has contributed approximately $11.8 million in cash to the Joint Venture Company.

As of March 31, 2021, the Company had funded approximately $2.5 million to the Joint Venture Company during calendar year 2021.

From inception to March 31, 2021, the Joint Venture Company has incurred $53.4 million in exploration program expenditures.

As of March 31, 2021, the Company has contributed approximately $14.3 million in cash to the Joint Venture Company.

After the consummation of the Kinross Transactions, the Company has a 30.0% membership interest in the Joint Venture Company, with KG Mining holding the other 70.0%.

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The Joint Venture Company plans to mine ore from the Peak and North Peak deposits and then transport the ore to the Kinross owned Fort Knox operation located 250 highway miles where the ore will be processed at the existing Fort Knox mining and milling complex.

The use of the Fort Knox mill is expected to accelerate the development of Peak Gold Joint Venture Property and result in significantly reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall execution risk for the Peak Gold Joint Venture Property.

100% Owned State of Alaska Mining Claims

Contango Property

Triple Z Prospect.

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Once the land transfer is completed, the Company plans to drill this well-defined porphyry copper-gold-silver-molybdenum target, potentially in late 2021.

Eagle Prospect .

The 64,900 acres Eagle claim block was staked in 2012 and 2013 to cover favorable Peak Gold stratigraphy mapped along trend by State Geologists.

The Eagle block is underlain by similar geology as the northern Tetlin Hills and limited reconnaissance stream sediment and pan concentrate samples collected by Federal government agencies in the 1970’s revealed widespread copper and arsenic (an excellent pathfinder element for gold) anomalies within the area now covered by the Eagle claims (note - gold was not analyzed for in the original government sampling).

In 2013 a reconnaissance level stream sediment and pan concentrate sampling program was completed over most of the southern part of the Eagle claim block and identified an area over 10 kilometers along a northwest corridor where every creek draining the northeast slopes of the mountains are strongly anomalous in gold, arsenic and copper.

Further sampling continued along the northwest trend shows additional anomalous creeks up towards the Dome prospect, albeit far fewer streams have been sampled.

Follow up field exploration is planned for this early-stage project during the 2021 field program.

The objective of the geologic investigation on the Eagle claim block will focus on identifying drill targets in the area.

Hona Prospect .

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Interval (meters)

Shamrock Prospect.

In early 2021 , The Company staked the Shamrock prospect in the Richardson Mining District located in central Alaska right along the Alaska Hwy corridor approximately 70 miles from Fairbanks, Alaska.

The property includes a total of 368 Alaska State mining claims covering approximately 52,920 acres and gives the Company a dominant land position in the Richardson district (see the map below).

The property has excellent infrastructure being right along the Alaska Hwy and adjacent to the Trans Alaska Pipeline with several gravel roads and ATV trails providing good access to entire property.

In addition, a high-voltage power line traverses along the southern property boundary.

This electrical grid provides power to the Pogo gold mine operated by Northern Star Resources Limited which produced approximately 175,000 ounce of gold in 2020 and is located approximately 50 miles to the northeast of the Shamrock property.

Placer gold was discovered in the Richardson District on Tenderfoot Creek in 1905 and alluvial mining has continued intermittently until as recently as 2010.

The Richardson District produced over 100,000 ounces of gold since the early 1900s.

The Richardson District is characterized by gentle slopes and broad, alluvium-filled valleys.

The area is unglaciated but largely overlain by windblown loess, generally a few meters in thickness but locally up to 50 meters thick.

The Shamrock prospect is underlain by a series of metamorphic schists and gneisses that make up the Lake George Subterrane of the more broadly distributed Yukon Tanana Terrane across interior Alaska and the Yukon, which is host to a number of large gold deposits.

Peak metamorphism occurred around 110 million years.

Retrograde metamorphism resulted in cooling, gneiss dome formation and a transition from ductile deformation of the metamorphic fabric to brittle deformation, as well as a series of low-angle shears across the region.

Mid- Cretaceous extension resulted in regional uplift and denudation of the metamorphic gneiss domes.

Post-uplift plutonic activity often occurs along the margins of these domes where zones of extreme thinning are common.

Two ages of intrusive activity are noted at 105my and 85my.

Both mid-Cretaceous intrusive rocks are genetically related to lode gold mineralization.

There are three types of gold deposit types that the Company plans to explore for on the Shamrock prospect:

1) Gold in the low angle quartz veins characterized as “Pogo Type” mineralization;

2) Intrusive Related Gold deposits (IRG) associated with igneous intrusions where they intersect deep seated crustal structures (“Fort Knox Type”);

and 3) high level rhyolite intrusive dikes associated clay and silica alteration which occurs in the Democrat and Banner Dikes area of the property.

The property was previous owned by Coeur Mining who inherited the property as a result of acquiring North Empire Resources for their Sterling Gold Project located in Nevada.

The Richardson property (as it was referred to by Coeur Mining) was non-core and the claims were dropped in 2020.

Based on historic work, there are a number of well-defined soil anomalies with limited drilling that remain under-explored.

The map below shows the location of the Shamrock Prospect:

Joint Venture Company

Chief Danny Prospect Area .

The Chief Danny Prospect Area currently is the most advanced exploration target on the Tetlin Lease and is comprised of several distinct mineralized areas:

The Chief Danny Prospect Area currently is the most advanced exploration target on the Manh Choh Joint Venture Property and is comprised of several distinct mineralized areas:

Main Peak Zone, Discovery Zone, West Peak Zone, North Peak Zone, Saddle Zone a nd the 7 O’clock area.

The Tetlin Lease is owned by the Joint Venture Company, of which the Company has a 30.0% interest.

The Manh Choh Joint Venture Property is leased by the Joint Venture Company, of which the Company has a 30.0% interest.

The Chief Danny prospect was discovered during rock, stream sediment and pan concentrate sampling in 2009 and since then has been explored using top of bedrock soil auger sampling, trenching, ground IP geophysics, airborne magnetic and resistivity surveys and core drilling.

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The Joint Venture Company has also conducted some environmental base line studies on the areas surrounding the Chief Danny prospect, as well as airborne magnetic and resistivity programs.

From 2009 through December 31, 2020, the Joint Venture Company conducted field-related exploration work at the Chief Danny Prospect, including collecting the following samples:

From 2009 through April 30, 2021, the Joint Venture Company conducted field-related exploration work at the Chief Danny Prospect, including collecting the following samples:

IP/Geophysics

The map below depicts the location of the core holes drilled in the East Peak and North Saddle zones.

The image below shows the Peak Gold project and surrounding targets:

The image below shows the Manh Choh project and surrounding targets:

The image below shows the approximate location of planned in-fill, geotechnical, hydrological and metallurgical drill holes during the $18 million 2021 Peak Gold, LLC program.

The objective of the program is to advance the feasibility study and permitting for the Peak and North Peak deposits.

2021 Drilling Program.

During the quarter ended March 31, 2021, the Joint Venture Company spent $2.8 million on drilling, environmental and permitting work, engineering studies, community relations, and other related work.

The Joint Venture Company's 2021 drilling program began in late February 2021.

Since drilling commenced, the Joint Venture Company has completed the geotechnical drilling that it began in the last quarter of 2020.

The geotechnical information collected will be incorporated into the overall pit design and mine plan.

The Joint Venture Company also completed 19,382 core ft.

of in-fill drilling, condemnation drilling, exploration, and drilling of a monitoring well.

Also, during the quarter, planning commenced for the step-out exploratory drilling that will take place in spring and summer 2021.

2020 Drilling Program.

During the quarter ended December 31, 2020, the Joint Venture Company spent approximately $3.0 million on drilling, metallurgical testing, environmental and permitting work, engineering studies, and other related work.

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Three geotechnical holes were completed with total drill length of approximately 1,800 ft.

An additional 8 geotechnical holes will be completed in 2021.

The geotechnical information collected will be incorporated into the overall pit design and mine plan.

No exploration drilling was performed by the Joint Venture Company during the quarter, however a plan is being developed to perform exploration drilling during 2021.

2019 Exploration Program.

During the quarter ended December 31, 2019, the Joint Venture Company spent an estimated $1.6 million on program activities, including metallurgical testing, geochemical data analyses, geophysical surveys landholding fees and other related expenses.

During the quarter ended September 30, 2019, the Joint Venture Company spent an estimated $2.8 million on program activities, including 7.6 line kilometers of IP geophysical surveys and 125 soil auger sampling and 146 rock chip samples within the Chief Danny area.

Exploration drilling consisted of 1,771 meters in four holes, which included three holes for 1,117 meters in the East Peak area and one hole of 654 meters at the North Saddle.

Significant Drill Intercepts from the 2019 Program.

Sample intervals are calculated using 0.5 grams per tonne (gpt) lower cut off for gold with no internal waste less than cutoff grade that is greater than 3 meters in thickness.

Intercepts shown are drill intercept lengths.

True width of mineralization is unknown.

The grade cutoff for gold (Au) is 0.5 gpt;

for silver (Ag) is 10 gpt;

and for copper (Cu) is 0.1%.

The following table summarizes the significant drilling results obtained for the complete 2019 Program:

From (meters)

Interval (meters)

2019 Exploration Program – continued.

During the quarter ended June 30, 2019, the Joint Venture Company spent an estimated $1.7 million on program activities, including 23.3 line kilometers of IP geophysical surveys and 1,363 soil auger sampling within the Chief Danny area.

Drill targets were assessed and initial drilling to test East Peak and North Saddle started in mid-August.

In addition, seven monitor wells were installed in and around the deposit area to initiate groundwater characterized to support baseline date collection.

During the quarter ended March 31, 2019, the Joint Venture Company spent an estimated $0.3 million on program activities, including metallurgical testing, geochemical data analyses, landholding fees and other related expenses.

The map below shows the location of the 2020 and 2021 drilling program:

Consulting Services provided by Avalon Development Corporation

Until January 8, 2015, the Company was a party to a Professional Services Agreement (“PSA”) with Avalon Development Corporation (“Avalon”) to provide certain geological consulting services and exploration activities with respect to the Peak Gold Joint Venture Property.

Pursuant to the PSA, Avalon provided geological consulting services and exploration activities, including all field work at the Tetlin Lease.

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Adverse Climate Conditions

Weather conditions affect the Joint Venture Company’s ability to conduct exploration activities and mine any ore from the Peak Gold Joint Venture Property in Alaska.

Weather conditions affect the Company’s and the Joint Venture Company’s ability to conduct exploration activities and mine any ore from the Contango Property and the Manh Choh Joint Venture Property in Alaska.

While the Company believes exploration, development work and any subsequent mining may be conducted year-round, the arctic climate limits many exploration and mining activities during certain seasons.

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These payments lowered the production royalty to a range of 2.25% to 4.25%.

The Tetlin Tribal Council exercised the option to increase its production royalty by 0.75% by payment to the Joint Venture Company of $450,000 on December 30, 2020.

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The Company received $32.4 million in cash consideration in conjunction with the Kinross Transactions.

Of the $32.4 million, $1.2 million constituted a reimbursement prepayment to the Company relating to its proportionate share of silver royalty payments that the Joint Venture Company may be obligated to pay to Royal Gold, with the understanding that KG Mining will bear the entire economic impact of those royalty payments due from the Joint Venture Company.

Of the $32.4 million, $1.2 million constituted a reimbursement prepayment to the Company relating to its proportionate share of certain silver royalty payments that the Joint Venture Company may be obligated to pay to Royal Gold, with the understanding that KG Mining will bear the entire economic impact of those royalty payments due from the Joint Venture Company.

Pursuant to Article IV of the A&R JV LLCA, if the Joint Venture Company terminates, or the Company’s membership interest falls below 5% prior to when the prepaid royalty is paid out, the $1.2 million (less any portion already paid out) is refundable to KG Mining.

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The Company’s consolidated financial statements include the investment in the Joint Venture Company, which is accounted for under the equity method.

The Company has designated one of the three members of the Management Committee and on December 31, 2020 held a 30.0% ownership interest in the Joint Venture Company.

The Company has designated one of the three members of the Management Committee and on March 31, 2021 held a 30.0% ownership interest in the Joint Venture Company.

KG Mining serves as the manager of the Joint Venture Company and manages, directs, and controls operations of the Joint Venture Company.

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The cumulative losses of the Joint Venture Company exceed the historical cost of the assets contributed to the Joint Venture Company;

therefore, the Company’s investment in the Joint Venture Company as of December 31, 2020 is zero.

therefore, the Company’s investment in the Joint Venture Company as of March 31, 2021 is zero.

The portion of the cumulative loss that exceeds the Company’s investment will be suspended and recognized against earnings, if any, from the investment in the Joint Venture Company in future periods.

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Neither the Company nor the Joint Venture Company has any recurring source of revenue other than contributions by the Company and KG Mining to the Joint Venture Company, and, in addition to the consideration received in the Kinross Transactions, the Company’s ability to continue as a going concern is dependent on the Company’s ability to raise capital to fund its future exploration and working capital requirements.

In the future, the Joint Venture Company may generate revenue from a combination of mineral sales and other payments resulting from any commercially recoverable minerals from the Peak Gold Joint Venture Property.

The Company does not expect the Joint Venture Company to generate revenue from mineral sales in the foreseeable future.

If the Peak Gold Joint Venture Property fails to contain any proven reserves, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

If the Manh Choh Joint Venture Property fails to contain any proven reserves, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

Other potential sources of cash, or relief of demand for cash, include external debt, the sale of shares of our stock, joint ventures, or alternative methods such as mergers or sale of our assets.

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The Company will need to generate significant revenues to achieve profitability and it may never do so.

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

General and Administrative Expense.

General and administrative expense for the three months ended December 31, 2020 and 2019 were $2,602,591 and $1,150,944, respectively.

General and administrative expense for the three months ended March 31, 2021 and 2020 were $2.1 million and $1.3 million, respectively.

The Company’s general and administrative expense primarily relates to audit fees, legal fees, management fees, payroll and stock-based compensation expense.

The current year increase is the result of increased payroll related fees.

The Company added three new employees during 2020, and in December 2020, the Company’s executives that previously provided services to the Company via the Management Services Agreement with JEX, began receiving compensation directly from the Company, and the management fee under the Management Services Agreement with JEX was reduced.

The Company also paid its executives bonuses totaling $0.5 million.

There were no payroll related fees in December 2019.

General and administrative expense for the period ended December 31, 2019, primarily related to stock based compensation expense of $882,881 related to restricted stock granted to our officers and directors in November 2019, November 2018, November 2017, November 2016, August 2016, September 2015, and November 2014, all pursuant to the Equity Plan.

The stock based compensation expense for the quarter ended March 31, 2021 was approximately $1.0 million.

The current year increase is the result of increased payroll and benefit related fees.

In December 2020, the Company added two new employees, and the Company’s executives that previously provided services to the Company via the Management Services Agreement with JEX, began receiving compensation and benefits directly from the Company, and the management fee under the Management Services Agreement with JEX was reduced.

General and administrative expense for the period ended March 31, 2020, primarily related to stock based compensation expense of $0.9 million related to restricted stock granted to our officers and directors in January 2020, November 2019, November 2018, November 2016, August 2016, September 2015, and November 2014, all pursuant to the Equity Plan.

Loss from Equity Investment in the Joint Venture Company .

The loss from the Company’s equity investment in the Joint Venture Company for the three months ended December 31, 2020 and 2019 was $1,123,452 and $1,800,000, respectively.

The loss from the Company’s equity investment in the Joint Venture Company for the three months ended March 31, 2021 and 2020 was $2,490,000 and $600,000, respectively.

Pursuant to the terms of the A&R JV LLCA, the Company and KG Mining are required to jointly fund the joint venture operations in proportion to their membership interests in the Joint Venture Company to avoid dilution.

The Company invested $1,123,452 in the Joint Venture Company during the three months ended December 31, 2020, and $1,800,000 during the three months ended December 31, 2019.

The Company invested $2,490,000 in the Joint Venture Company during the three months ended March 31, 2021, and $600,000 during the three months ended March 31, 2020.

The portion of the cumulative loss that exceeds the Company’s cumulative investment will be suspended and recognized against earnings, if any, from the Company’s investment in the Joint Venture Company in future periods.

The suspended losses for the period from inception to December 31, 2020 are $ 21.8 million.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

The suspended losses for the period from inception to March 31, 2021 are $ 21.1 million.

Income Tax Benefit/(Expense).

The Company recognized an income tax benefit of $0.2 million for the three months ended ended March 31, 2021, compared to $0 for the three months ended March 31, 2020.

T he Company is forecasting book and taxable income for the year ended June 30, 2021, as a result of the income driven by the gain on the sale of the CORE JV Interest in connection with the Kinross Transactions.

The current quarter benefit is a true up to the expense recognized in previous quarters.

The Company had a net loss in all quarters of fiscal year June 30, 2020.

Nine Months Ended March 31, 2021 Compared to Nine Months Ended March 31, 2020

General and Administrative Expense.

General and administrative expense for the six months ended December 31, 2020 and 2019 was $6,127,582 and $2,141,935, respectivel y.

General and administrative expense for the nine months ended March 31, 2021 and 2020 was $8.3 million and $3.5 million, respectivel y.

The Company’s general and administrative expense primarily relates to audit fees, legal fees, management fees, payroll, and stock-based compensation expense.

The current year increase is the result of non-recurring legal and transaction related fees associated with the CORE Transactions of approximately $2.9 million and payroll related fees.

The current year increase is the result of non-recurring legal and transaction related fees associated with the CORE Transactions of approximately $3.0 million and payroll related fees of $0.6 million.

Payroll related fees increased because i n December 2020, the Company added two new employees, and the Company’s executives that previously provided services to the Company via the Management Services Agreement with JEX, began receiving compensation and benefits directly from the Company, and the management fee under the Management Services Agreement with JEX was reduced.

The Company also paid its executives bonuses totaling $0.5 million.

There were no payroll related fees in December 2019.

General and administrative expense for the period ended December 31, 2019 primarily related to stock based compensation expense of $1,623,323 related to restricted stock granted to our officers and directors in November 2019, November 2018, November 2017, November 2016, August 2016, September 2015, and November 2014, all pursuant to the Equity Plan.

The majority of the Company's payroll related fees did not begin until December 2020.

General and administrative expense for the period ended March 31, 2020 primarily related to stock based compensation expense of approximately $2.5 million related to restricted stock granted to our officers and directors in January 2020, November 2019, November 2018, November 2016, August 2016, September 2015, and November 2014, all pursuant to the Equity Plan.

Loss from Equity Investment in the Joint Venture Company .

The loss from the Company’s equity investment in the Joint Venture Company for the six months ended December 31, 2020 and 2019 was $1,371,252 and $2,700,000, respectively.

The loss from the Company’s equity investment in the Joint Venture Company for the nine months ended March 31, 2021 and 2019 was $3,861,252 and $3,300,000, respectively.

The Company invested $1,371,252 in the Joint Venture Company during the six months ended December 31, 2020, and $2,700,000 during the six months ended December 31, 2019.

The Company invested $3,861,252 in the Joint Venture Company during the nine months ended March 31, 2021, and $3,300,000 during the nine months ended March 31, 2020.

The portion of the cumulative loss that exceeds the Company’s cumulative investment will be susp ended and recognized against earnings, if any, from the Company’s investment in the Joint Venture Company in future periods.

The suspended losses for the period from inception to December 31, 2020 are $21.8 million.

The suspended losses for the period from inception to March 31, 2021 are $21.1 million.

Gain on Sale of a Portion of the Investment in the Joint Venture Company.

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As of the date of the CORE Transaction, the Company's investment in the Joint Venture Company had a zero balance, therefore the $39.6 million gain approximates the full fair value of the CORE JV Interest surrendered in the CORE Transactions.

Income Tax Benefit/(Expense).

The Company recognized an income tax expense of $1.6 million for the nine months ended ended March 31, 2021, compared to $0 for the nine months ended March 31, 2020.

The Company had a net loss in all quarters of fiscal year June 30, 2020.

Liquidity and Capital Resources

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Of the $32.4 million cash consideration, $1.2 million constituted a reimbursement prepayment to the Company of its proportionate share of certain silver royalty payments that the Joint Venture Company may be obligated to pay to Royal Gold, with the understanding that KG Mining will bear the entire impact of those royalty payments due from the Joint Venture Company.

As of December 31, 2020, the Company had approximately $31.9 million of cash.

As of March 31, 2021, the Company had approximately $26.2 million of cash.

The Company’s proportionate share of the approved budget is approximately $5.4 million.

As of March 31, 2021, the Company has funded approximately $2.5 million to the Joint Venture Company during calendar year 2021.

The Company also plans to continue its exploration efforts on its earlier stage Eagle and Hona projects located immediately north of the Peak Gold project area.

The Company also plans to continue its exploration efforts on its earlier stage Eagle and Hona projects located immediately north of the Manh Choh project area.

Due to cash received in the Kinross Transaction and the capital raise completed in September 2020, the Company believes that it has sufficient liquidity to meet its working capital requirements for the next twelve months.

The Company’s cash needs going forward will primarily relate to capital calls from the Joint Venture Company and general and administrative expenses of the Company.

The Company’s cash needs going forward will primarily relate to capital calls from the Joint Venture Company, exploration of the Contango Property, and general and administrative expenses of the Company.

If a large budget is undertaken, and no additional financing is obtained, the Company can elect not to fund its portion of the approved budget, in which case the Company would maintain sufficient liquidity to meet its working capital requirements for the next twelve months.

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To date, neither the Company nor the Joint Venture Company has generated any revenue from mineral sales or operations.

The Company currently does not have any recurring source of revenue.

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As a result, the Company’s ability to contribute funds to the Joint Venture Company and retain its membership interest will depend on its ability to raise capital.

The Company has limited financial resources and the ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, the exploration results achieved at the Peak Gold Joint Venture Property, as well as the market price of metals.

The Company has limited financial resources and the ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, the exploration results achieved at the Manh Choh Joint Venture Property, as well as the market price of metals.

The Company cannot be certain that financing will be available to the Company on acceptable terms, if at all.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” which risks could materially affect our business, financial condition or future results.

There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended June 30, 2020 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, other than updating the risk factors below.

The risks described in our Annual Report on Form 10-K for the year ended June 30, 2020, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and below are not the only risks the Company faces.

There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended June 30, 2020 and our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020 and December 31, 2020, other than updating the risk factors below.

The risks described in our Annual Report on Form 10-K for the year ended June 30, 2020, our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020 and December 31, 2020 and below are not the only risks the Company faces.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

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The Company’s Common Stock is thinly traded.

As of December 31, 2020, there were approximately 6.2 million shares of the Company’s Common Stock outstanding, with directors and officers beneficially owning approximately 25.1% of the Common Stock and the Marital Trust of Mr.

As of March 31, 2021, there were approximately 6.2 million shares of the Company’s Common Stock outstanding, with directors and officers beneficially owning approximately 24.7% of the Common Stock and the Marital Trust of Mr.

Peak, the Company’s former Chairman, beneficially owning approximately 12.8% of the Company's Common Stock .

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Since the Company's Common Stock is thinly traded (average trading volume of 452 shares of Common Stock per day for fiscal year 2021 to date), the purchase or sale of relatively small Common Stock positions may result in disproportionately large increases or decreases in the price of the Company's Common Stock.

A change in tax laws in key jurisdictions could materially increase the Company’s tax expense.

The Company is subject to income taxes in the United States and the State of Alaska, and changes to income tax laws and regulations, or the interpretation of such laws, in any of the jurisdictions in which the Company operates could significantly increase its effective tax rate and ultimately reduce its cash flows from operating activities and otherwise have a material adverse effect on its financial condition.

Additionally, various levels of government are increasingly focused on tax reform and other legislative actions to increase tax revenue and/or no longer provide certain advantageous tax write-offs to certain natural resource oriented industries, and President Biden’s campaign proposals included increasing the U.S.

corporate income tax rate from 21% to 28%.

If implemented by taxing authorities, such changes in U.S.

federal and state tax laws or in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, could have a material adverse effect on the Company’s business, results of operations, or financial condition.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis