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 nine-month period ended April 30, 2023 include the following: On June 5, 2023, the Company sent a letter to the Nevada County Board of Supervisors that highlights significant irregularities with the May 10-11 Planning Commission Hearing regarding the Idaho-Maryland Mine Project. The letter details Brown Act violations, egregious abuses of the Company's constitutionally protected rights to due process, as well as the Planning Commission's noncompliance with the County's ethics training and adopted policies for conducting the business of Board-appointed bodies. To view the full version of the press release, please visit https://www.risegoldcorp.com/news_items. On May 12, 2023, the Company announced the result of the Planning Commission hearing on the Idaho-Maryland Mine Project. The Nevada County Planning Commission held a public hearing on May 10 and May 11, 2023 to consider the Final Environmental Impact Report (the "FEIR"). At the conclusion of the public hearing the Planning Commission recommended to the Nevada County Board of Supervisors that the FEIR not be certified and that the Use Permit be denied. The remaining milestone in the Use Permit process, including the consideration of the FEIR will take place at a Board of Supervisors public hearing to consider and make a final decision on the IMM Project. A majority vote of the five supervisors is required for approval. The County has stated that the Board of Supervisors hearing will take place no sooner than August 2023. 16 On February 17, 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 3,050,936 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 $1,247 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 has paid associated legal fees of $10563 in connection with this financing. The Company raised a total of $3,000,000 through the sale of 7,500,000 Units. In February 2023, the Company renegotiated its debt agreement with Eridanus Capital LLC whereby the Company 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. The fair value of these warrants was calculated to be $132,868 which was netted against the loan payable balance. On February 21, 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 (C$0.72) per share for a period of five years. 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. 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 April 30, 2023, the Company had a cash balance of $1,298,450, 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. 17 The Nevada County Planning Commission held a public hearing on May 10 and May 11, 2023 to consider the FEIR. At the conclusion of the public hearing, the Planning Commission recommended to the Nevada County Board of Supervisors that the FEIR not be certified and that the Use Permit be denied. The remaining milestone in the Use Permit process, including the consideration of the FEIR will take place at a Board of Supervisors public hearing to consider and make a final decision on the IMM Project. A majority vote of the five supervisors is required for approval. The County has stated that the Board of Supervisors hearing will take place no sooner than August 2023. 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. 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 April 30, 2023 and 2022 Three months Three months Nine months Nine months ended April ended April ended April 30, ended April 30, 30, 2023 30, 2022 2023 2022 EXPENSES Accretion expense $ 41,104 $ 28,017 $ 99,030 $ 85,943 Consulting 186,094 128,605 464,350 399,351 Directors' fees 20,000 20,000 60,000 60,000 Filing and regulatory 13,470 10,629 46,802 26,785 Foreign exchange loss (gain) (26,781 ) 7,331 38,699 39,669 General and administrative 147,829 48,198 266,626 262,822 Geological, mineral, and prospect costs 438,319 79,132 675,926 337,691 Interest expense 56,850 71,704 267,028 194,952 Professional fees 181,335 221,727 405,464 458,551 Promotion and shareholder communication 68,947 91,190 154,266 149,597 Salaries 33,750 33,750 101,250 101,250 Share-based compensation 466,527 406,790 466,527 406,790 Loss $ (1,627,444 ) $ (1,147,073 ) $ (3,045,968 ) $ (2,523,401 ) Gain (loss) on fair value adjustment on derivative liability 274,107 187,652 (454,418 ) 252,324 Other income (expense) (5 ) (20 ) 1,029 14,887 Net loss and comprehensive loss for the period $ (1,353,342 ) $ (959,441 ) $ (3,499,357 ) $ (2,256,190 ) Basic and diluted loss per common share $ (0.04 ) $ (0.03 ) $ (0.09 ) $ (0.09 ) Weighted average number of common shares outstanding (basic and diluted) 39,742,958 32,787,798 34,483,714 28,798,174 The Company's operating results for the periods ended April 30, 2023 and 2022 are summarized as follows: Liquidity and Capital Resources Working Capital At April 30, 2023 At July 31, 2022 At July 31, 2021 Current Assets $ 1,451,634 $ 986,577 $ 1,156,426 Current Liabilities $ 247,424 $ 349,960 $ 199,902 Working Capital $ 1,204,210 $ 636,617 $ 956,524 Cash Flows For the nine-month period ended April 30, 2023 For the nine-month period ended April 30, 2022 Net Cash used in Operating Activities $ (1,936,299 ) $ (1,783,874 ) Net Cash used in Investing Activities $ - $ - Net Cash provided by Financing Activities $ 2,762,831 $ 2,392,998 Net increase in Cash During the Period $ 826,532 $ 609,124 19 As of April 30, 2023, the Company had $1,298,450 in cash, $1,451,634 in current assets, $6,135,008 in total assets, $247,424 in current liabilities and $2,176,048 in non-current liabilities, a working capital of $1,204,210 and an accumulated deficit of $26,507,962. During the nine-month period ended April 30, 2023, the Company used $1,936,299 (2022 - $1,783,874) in net cash on operating activities. The difference in net cash used in operating activities during the two periods was largely due to the difference between the loss (gain) of the revaluation adjustment of the derivative liability. The Company had no investing activities during the nine-month period ending April 30, 2023 (April 30, 2022 - $Nil). The Company received net cash of $2,985,423 (2022 - $2,392,998) from financing activities related to the private placement during the nine-month periods ending April 30, 2023. The Company received cash of $27,408 (2022 - $Nil) from financing activities related to an option exercise during the nine-month periods ending April 30, 2023. The Company also made a loan payment of $250,000 during the period ended April 30, 2023 (2022 - $Nil). 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.