Rise Gold Corp. 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS", "INTENDS", "WILL", "HOPES", "SEEKS", "ANTICIPATES", "EXPECTS" AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO PRESENT AND FUTURE OPERATIONS, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE US TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OUR OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS. Description of Business We are a mineral exploration company that was incorporated in the state of Nevada in 2007. Our primary asset is our interest in the Idaho-Maryland Gold Mine property (the "I-M Mine Property"), which is a major past producing high-grade property near Grass Valley, California, United States, which we own outright through our wholly owned Nevada subsidiary, Rise Grass Valley, Inc. Our common stock is currently listed in Canada on the Canadian Securities Exchange (the "CSE") under the symbol "RISE". We are a reporting issuer in British Columbia, Alberta, and Ontario in Canada. Our common stock is also currently traded in the United States on the OTCQX under the symbol "RYES". We are an SEC reporting company by virtue of our class of common stock being registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Business Development Developments in our Company's business during the July 31, 2022 fiscal year and the six-month period ended January 31, 2023 include the following: On January 31, 2023, the Company completed the first tranche of a non-brokered private placement for gross proceeds totalling $1,779,626 through the issuance of 4,449,066 units at a price of $0.40 per Unit, where each Unit consists of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share at an exercise price of $0.60 until January 31, 2025. Certain directors of the Company purchased an aggregate of 1,476,363 Units of this first tranche of the private placement for gross proceeds of $590,545. The Company has paid fees of $2,767 and issued 6,900 finder's warrants relating to the first tranche, where each finder's warrant entitles the holder to acquire one common share at a price of $0.60 until January 31, 2025. The Company has paid associated legal fees of $4,889 in connection with this financing. Subsequent to the period ended January 31, 2023, the Company completed the second and final tranche of the non-brokered private placement for gross proceeds of $1,220,374 through the sale of 3,050,934 units at a price of $0.40 per Unit, where each Unit consists of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share at an exercise price of $0.60 until February 17, 2025. Certain directors of the Company purchased an aggregate of 917,936 Units of this second tranche of the private placement for gross proceeds of $367,174. The Company has paid fees of $1,420 and issued 3,540 finder's warrants relating to the second tranche, where each finder's warrant entitles the holder to acquire one common share at a price of $0.60 until February 17, 2025. The Company raised a total of $3,000,000 through the sale of 7,500,000 Units. 16 Subsequent to the period ended January 31, 2023, the Company renegotiated its debt agreement with Eridanus Capital LLC whereby the Company has agreed to pay $250,000 to Eridanus to reduce the outstanding balance of the loan and issue 575,000 share purchase warrants to Eridanus. The maturity date of the loan has been extended by one year to September 4, 2024 and the interest rate has been reduced to 15% for a period of 12 months following the date of issuance of the Eridanus Warrants. Each Warrant entitles the holder to acquire one share at an exercise price of $0.60 for a period of two years from the date of issuance. The Eridanus Warrants and any shares acquired upon the exercise of the Eridanus Warrants will be subject to statutory hold periods in accordance with applicable United States and Canadian securities laws. Subsequent to the period ended January 31, 2023, the Company granted a total of 1,045,000 stock options to employees, officers, directors, and consultants of the Company, exercisable at a weighted average price of $0.53 per share for a period of five years. On December 16, 2022, the Company announced that Nevada County released the Final Environmental Impact Report (“FEIR”) for the Idaho-Maryland Mine Project. The report’s release represents a major milestone toward approving the Company’s Use Permit application to reopen the historic past-producing Idaho-Maryland Gold Mine. On February 7, 2022, the Company granted a total of 805,000 stock options to employees, officers, directors, and consultants of the Company, exercisable at a price of $0.65 (C$0.82) per share with an expiry date of February 7, 2027. On January 31, 2022, the Company completed a non-brokered private placement for gross proceeds totalling $2,407,000 through the issuance of 6,017,500 units at a price of $0.40 per Unit, where each Unit consists of one common share of common stock and one share purchase warrant. Each warrant entitles the holder to acquire one additional common share at an exercise price of $0.60 until January 28, 2024. Certain directors of the Company purchased an aggregate of 2,075,000 Units of this private placement for gross proceeds of $830,000. Plan of Operations As at January 31, 2023, the Company had a cash balance of $1,800,079, compared to a cash balance of $471,918 as at July 31, 2022. Our plan of operations for the next 12 months is to complete the Use Permit process in Nevada County California. The Company submitted the application for a Use Permit to Nevada County on November 21, 2019. On April 28, 2020, with a vote of 5-0, the Nevada County ("County") Board of Supervisors approved the contract for Raney Planning & Management Inc. ("Raney") to prepare an Environmental Impact Report ("EIR") and conduct contract planning services on behalf of the County for the proposed Idaho-Maryland Mine Project. On January 4, 2022, the Company announced that the Nevada County government released the Draft Environmental Impact Report for the Idaho-Maryland Mine Project. The public comment period ended on April 4, 2022. On December 16, 2022, the Company announced that Nevada County has released the Final Environmental Impact Report ("FEIR") for the Idaho-Maryland Mine Project. A general outline of remaining milestones in the process to approval of the permit is outlined as follows: 1) The Nevada County Planning Commission holds a public hearing to consider the Final EIR and makes a recommendation on project approval to the Nevada County Board of Supervisors; 2) The Board of Supervisors holds a public hearing to consider and make a final decision on the Idaho-Maryland Mine Project. A majority vote of the five supervisors is required to approve the Project. Project Design The Use Permit application proposes underground mining to recommence at an average throughput of 1,000 tons per day. The existing Brunswick Shaft, which extends to ~3400 feet depth below surface, would be used as the primary rock conveyance from the I-M Mine Property. A second service shaft would be constructed by raising from underground to provide for the conveyance of personnel, materials, and equipment. Gold processing would be done by gravity and flotation to produce gravity and flotation gold concentrates. Processing equipment and operations would be fully enclosed in attractive modern buildings and numerous mature trees located on the perimeter of the Brunswick site would be retained to provide visual shielding of aboveground project facilities and operations. 17 The Company would produce barren rock from underground tunnelling and sand tailings as part of the project which would be used for creation of approximately 58 acres of level and useable industrial zoned land for future economic development in Nevada County. A water treatment plant and pond, using conventional processes, would ensure that groundwater pumped from the mine is treated to regulatory standards before being discharged to the local waterways. Detailed studies by professionals in the fields of civil and electrical engineering, biology, hydrology, cultural resources, traffic, air quality, human health, vibration, and sound have guided the design of the project. Approximately 300 employees would be required if the mine reaches full production. Employees The Company has one full-time employee, which is the Chief Executive Officer. Our other officers and directors provide services to us on an as-needed basis, and we plan to rely on their efforts, as well as those of a number of independent consultants, to manage our operations for the foreseeable future. Government Regulations We plan to engage in mineral exploration and development activities and will accordingly be exposed to environmental risks associated with mineral exploration activity. We are the operator of the I-M Mine Property. Our exploration and development activities will be subject to extensive federal, state and local laws, regulations and permits governing protection of the environment. Among other things, our operations must comply with the provisions of the Federal Mine Safety and Health Act of 1977 as administered by the United States Department of Labor. Our plan is to conduct our operations in a way that safeguards public health and the environment. We believe that our operations comply with applicable environmental laws and regulations in all material respects. The costs associated with implementing and complying with environmental requirements can be substantial and possible future legislation and regulations could cause us to incur additional operating expenses, capital expenditures, restrictions and delays in developing or conducting operations on our properties, including the I-M Mine Property, the extent of which cannot be predicted with any certainty. 18 Results of Operations For the Periods Ended January 31, 2023 and 2022 The Company's operating results for the periods ended January 31, 2023 and 2022 are summarized as follows: Three months Three months Six months Six months ended January ended January ended January ended January 31, 2023 31, 2022 31, 2023 31, 2022 EXPENSES Accretion expense $ 28,963 $ 28,963 $ 57,926 $ 57,926 Consulting $ 172,686 141,233 278,256 270,746 Directors' fees $ 20,000 20,000 40,000 40,000 Filing and regulatory $ 24,782 9,626 33,332 16,156 Foreign exchange loss $ 24,522 25,439 65,480 32,338 General and administrative $ 37,914 107,901 118,797 214,624 Geological, mineral, and prospect costs $ 113,618 204,035 237,607 258,559 Interest expense $ 112,363 91,125 210,178 123,248 Professional fees $ 70,033 113,124 224,129 236,824 Promotion and shareholder communication $ 77,371 51,044 85,319 58,407 Salaries $ 33,750 33,750 67,500 67,500 Loss $ (716,002 ) $ (826,240 ) $ (1,418,524 ) $ (1,376,328 ) Gain (loss) on fair value adjustment on derivative liability (746,509 ) (272,421 ) (728,525 ) 64,672 Other income 1,033 14,212 1,033 14,907 Net loss and comprehensive loss for the period $ (1,461,478 ) $ (1,084,449 ) $ (2,146,016 ) $ (1,296,749 ) Basic and diluted loss per common share $ (0.02 ) $ (0.03 ) $ (0.04 ) $ (0.05 ) Weighted average number of common shares outstanding (basic and diluted) 32,837,257 32,787,798 32,837,257 26,868,410 Liquidity and Capital Resources Working Capital At January 31, 2023 At July 31, 2022 At July 31, 2021 Current Assets $ 2,133,238 $ 986,577 $ 1,156,426 Current Liabilities $ 872,603 $ 349,960 $ 199,902 Working Capital $ 1,260,635 $ 636,617 $ 956,524 Cash Flows For the six-month period ended January 31, 2023 For the six-month period ended January 31, 2022 Net Cash used in Operating Activities $ (493,809 ) $ (1,238,580 ) Net Cash used in Investing Activities $ - $ - Net Cash provided by Financing Activities $ 1,821,970 $ 2,392,998 Net increase in Cash During the Period $ 1,328,161 $ 1,154,418 19 As of January 31, 2023, the Company had $1,800,079 in cash, $2,133,238 in current assets, $6,882,292 in total assets, $872,603 in current liabilities and $2,735,069 in non-current liabilities, a working capital of $1,260,635 and an accumulated deficit of $25,154,620. During the six-month period ended January 31, 2023, the Company used $493,809 (2022 - $1,238,580) in net cash on operating activities. The difference in net cash used in operating activities during the two periods was largely due to the lower net loss for the most recent period as a result of the revaluation adjustment of the derivative liability. The Company had no investing activities during the six-month periods ending January 31, 2023 (January 31, 2022 - $Nil). The Company received net cash of $1,821,970 (2022 - $2,392,998) from financing activities related to the private placement during the six-month periods ending January 31, 2023. The Company expects to operate at a loss for at least the next 12 months. It has no agreements for additional financing and cannot provide any assurance that additional funding will be available to finance its operations on acceptable terms in order to enable it to carry out its business plan. There are no assurances that the Company will be able to complete further sales of its common stock or any other form of additional financing. If the Company is unable to achieve the financing necessary to continue its plan of operations, then it will not be able to carry out any exploration work on the Idaho-Maryland Property or the other properties in which it owns an interest and its business may fail. As such, these material uncertainties cast a substantial doubt regarding the Company's ability to continue as a going concern. Off Balance Sheet Arrangements The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. 20 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.