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. ("Rise Grass Valley"). 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 Market 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, 2023 fiscal year and the three-month period ended October 31, 2023 include the following: On September 6, 2023, the Company submitted a Petition to the County of Nevada, California (the "County") asserting its vested right to mine at the I-M Mine Property. As demonstrated in the Petition, mining operations on the I-M Mine Property are a vested use, protected under the California and federal Constitutions, and a use permit is not required for mining operations to continue. The Company owns the I-M Mine Property consisting of 175 acres of surface land and a 2,560 acre mineral estate (the "Vested Mine Property"), located in the County. Before the I-M Mine Property was consolidated into its current configuration in 1941, it existed as multiple historical mines and operations. For the vested right to be recognized by the County, the Company needs to demonstrate the fact that mine operations were being conducted both before and immediately after the County first required a permit to mine in 1954. The Petition and its exhibits are replete with historical evidence that mining was conducted at the I-M Mine Property prior to, during, and after 1954, when the County first required a use permit. Once vested, this right to mine endures unless it is abandoned, which has not occurred. Abandonment only occurs if two conditions are met: (1) there is evidence of a property owner's actual intent to abandon the vested mining right; and (2) an overt act (or failure to act) demonstrating such intent. The California Supreme Court has held that a vested mining right is not abandoned merely because the mine has been inactive for periods of time, and the Court has found that cessation of use alone does not constitute abandonment of a mine. The evidence set out in the Petition establishes the various previous owners evidenced their intent to retain the vested right to mine by continuously recording mineral reservations, entering into leases, and making plans for resuming mining in the future, even when mining operations were suspended. There is no evidence that any owner of the I-M Mine Property intended to abandon the vested mining right or took an overt act demonstrating that intent (let alone both). In addition, the vested right was already confirmed in 1980 by the County. 16 The Nevada County Board of Supervisors ("Board of Supervisors") will hold a public hearing regarding the Company's Petition on December 13 and 14, 2023. We are subject to the vested rights being confirmed by the County. A decision on the Petition is not discretionary, rather the Board of Supervisors must decide whether to confirm the vested rights by reviewing the historical facts in light of how the California Supreme Court has interpreted the relevant legal principles. Subsequent to the period ended October 31, 2023, the Company provided an update on its vested rights at the I-M Mine Property. To view the full version of the November 30, 2023 press release, please visit https://www.risegoldcorp.com/news_items. On December 7, 2023, the Company announced that it has completed two tranches of non-brokered private placements that total $967,957 through the sale of 5,377,541 total units at a price of $0.18 per unit with each unit comprising of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share of common stock at an exercise price of $0.26 for a period of two years from the date of issuance. The Company paid fees of $6,480 and issued 36,000 finder's warrants where each finder's warrant entitles the holder to acquire one share at a price of $0.26 until November 7, 2025. On September 26, 2023, the Company granted a total of 397,780 stock options to officers and directors of the Company. The stock options are exercisable at a price of $0.26 per share until September 22, 2028. The Company appointed Joseph Mullin as President and CEO of the Company as at September 25, 2023. Ben Mossman will continue in his position as a director of the Company and serve as an advisor. The Company also appointed two new directors in Clynton Nauman on September 7, 2023, and Daniel Oliver Jr. on July 10, 2023. On June 5, 2023, the Company sent a letter to the Board of Supervisors that highlights significant irregularities with the May 10 to 11, 2023 Planning Commission Hearing regarding the Company's proposed mining operations at the I-M Mine Property (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 County Planning Commission (the "Planning Commission") hearing on the Idaho-Maryland Mine Project. The 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 Idaho-Maryland Mine Project. A majority vote of the five supervisors is required for approval. 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 of common stock at an exercise price of $0.60 for a period of two years from the date of issuance. The Eridanus warrants and any shares of common stock 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 $154,218, 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 per share for a period of five years. 17 On February 17, 2023, the Company completed a non-brokered private placement over two tranches for gross proceeds totalling $3,000,000 through the issuance of 7,500,000 units in total at a price of $0.40 per unit, where each unit consisted of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share of common stock at an exercise price of $0.60 until January 31, 2025 and February 17, 2025. Certain directors of the Company purchased an aggregate of 3,870,662 units of the private placement for gross proceeds of $1,548,265. The Company paid fees of $4,014 and issued 10,440 finder's warrants, where each finder's warrant entitles the holder to acquire one share of common stock at a price of $0.60 until January 31, 2025 and February 17, 2025. The Company paid legal fees of $10,563 in connection with this financing. Plan of Operations As at October 31, 2023, the Company had a cash balance of $686,283, compared to a cash balance of $758,272 as at July 31, 2023. Our plan of operations for the next 12 months is to complete the vested rights hearings in the County. We are subject to the vested rights being confirmed by the Board of Supervisors of the County. If the Board denies the Petition, the County will schedule a public hearing with the Board of Supervisors to consider approval of the original Use Permit application. On September 6, 2023, the Company submitted a Petition to the County asserting its vested right to mine at the I-M Mine Property. As demonstrated in the Petition, mining operations on the I-M Mine Property are a vested use, protected under the California and federal Constitutions, and a use permit is not required for mining operations to continue. The Board of Supervisors will hold a public hearing regarding the Company's Petition on December 13 and 14, 2023. The Company had previously submitted the application for a Use Permit to the County on November 21, 2019. On April 28, 2020, with a vote of 5-0, the 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 County government released the Draft EIR for the Idaho-Maryland Mine Project. The public comment period ended on April 4, 2022. On December 16, 2022, the Company announced that the County released the FEIR for the Idaho-Maryland Mine Project. The 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 Board of Supervisors that the FEIR not be certified and that the Use Permit be denied. 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 the 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. 18 Employees During the year ended July 31, 2023, and until September 23, 2023, the Company had one full-time employee, which was the former Chief Executive Officer and President, who now serves as an advisor to the Company. Our current Chief Executive Officer and President provides services pursuant to a consulting agreement, and other officers and directors provide services to us on an as-needed basis. 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, its 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 its properties, including the I-M Mine Property, the extent of which cannot be predicted with any certainty. 19 Results of Operations For the Periods Ended October 31, 2023 and 2022 EXPENSES Accretion expense $ 30,113 $ 28,963 Consulting 52,583 105,570 Directors' fees 28,022 20,000 Filing and regulatory 12,907 8,550 Foreign exchange loss 12,987 40,958 General and administrative 145,159 80,883 Geological, mineral, and prospect costs 361,525 123,989 Interest expense 63,543 97,815 Professional fees 337,541 154,096 Promotion and shareholder communication 20,011 7,948 Salaries 84,301 33,750 Share-based compensation 90,361 - Loss $ (1,239,053 ) $ (702,522 ) Gain (loss) on fair value adjustment on derivative liability (82,481 ) 17,984 Write-off on receivable (64,438 ) - Other income 7,547 - Net loss and comprehensive loss for the period $ (1,378,425 ) $ (684,538 ) Basic and diluted loss per common share $ (0.03 ) $ (0.02 ) Weighted average number of common shares outstanding (basic and diluted) 40,362,800 32,787,798 The Company's operating results for the periods ended October 31, 2023 and 2022 are summarized as follows: Liquidity and Capital Resources Working Capital At October 31, 2023 At July 31, 2023 At July 31, 2022 Current Assets $ 808,189 $ 980,843 $ 986,577 Current Liabilities $ 1,001,414 $ 508,571 $ 349,960 Working Capital $ (193,225 ) $ 472,272 $ 636,617 Cash Flows For the three-month period ended October 31, 2023 For the three-month period ended October 31, 2022 Net Cash used in Operating Activities $ (512,857 ) $ (305,113 ) Net Cash used in Investing Activities $ - $ - Net Cash provided by Financing Activities $ 440,868 $ - Net increase/(decrease) in Cash During the Period $ (71,989 ) $ (305,113 ) 20 As of October 31, 2023, the Company had $686,283 in cash, $808,189 in current assets, $5,480,145 in total assets, $1,001,414 in current liabilities and $1,754,066 in non-current liabilities, a working capital deficit of $193,225 and an accumulated deficit of $28,047,411. During the three-month period ended October 31, 2023, the Company used $512,857 (2022 - $305,113) 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 three-month period ending October 31, 2023 (October 31, 2022 - $Nil). The Company received net cash of $440,868 (2022 - $Nil) from financing activities related to the private placement during the three-month periods ending October 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. 21 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.