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Item 7. Management’s Discussion and Analysis

2024-03-08 compared with 2023-03-08 · 58 added, 42 removed, 73 unchanged (58% of the section changed)

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Current Business Activities

ITH is a company engaged in the acquisition and development of mineral properties.

The Company currently holds or has the right to acquire interests in a development stage project in Alaska referred to as the “Livengood Gold Project” or the “Project”.

The Company has not yet begun extraction of mineralization from the deposit or reached commercial production.

The Company has a 100% interest in the Livengood Gold Project, which as of December 31, 2023, has proven and probable reserves of 430.1 million tonnes at an average grade of 0.65 g/tonne (9.0 million ounces) based on a gold price of $1,680 per ounce and a measured and indicated mineral resource, exclusive of mineral reserves, of 274.51 million tonnes at an average grade of 0.52 g/tonne (4.62 million ounces), based on a gold price of $1,650 per ounce, both as reported in the Technical Report Summary (the “TRS”) attached as Exhibit 96.1 to the 2022 Annual Report on Form 10-K/A filed with the SEC on October 17, 2023.

A more complete description of the Livengood Gold Project, including detailed presentation of resources and reserves, is set forth in Part I, Item 2.

Properties of this Annual Report on Form 10-K.

Livengood Gold Project Developments

During February 2022, the Company completed the Technical Report Summary (the “TRS”) and subsequently announced on March 9, 2022, that the Board had approved a 2022 budget of $3.2 million.

The 2022 work program advanced the baseline environmental data collection in critical areas of hydrology and waste rock geochemical characterization needed to support future permitting, as well as advanced community engagement.

On March 8, 2023, the Company announced that the Board had approved a 2023 work program that advanced the baseline environmental data collection in critical areas of hydrology and waste rock geochemical characterization needed to support future permitting, as well as advanced community engagement.

Livengood Gold Project Technical Report Summary

The TRS detailed a project that would process 65,000 tons per day and produce 6.4 million ounces of gold over 21 years from a gold resource estimated at 13.6 million ounces at 0.60 g/tonne.

The TRS utilized a third-party review by Whittle Consulting and BBA Inc.

The TRS details a project that would process 65,000 tons per day and produce 6.4 million ounces of gold over 21 years from a gold reserve estimated at 9.0 million ounces at 0.65 g/tonne.

The study utilized a third-party review by Whittle Consulting and BBA Inc.

to integrate new interpretations based on an expanded geological database, improved geological modelling, new resource estimation methodology, an optimized mine plan and production schedule, additional detailed metallurgical work at various gold grades and grind sizes, changes in the target grind for the mill, new engineering estimates, and updated cost inputs, all of which significantly de-risk the Project.

The TRS has estimated the capital costs of the Project at $1.93 billion, the total cost per ton milled at $13.12, the all-in sustaining costs at $1,171 per ounce, and the net present value (5%) at $1,800/oz of $400 million.

The Project configuration evaluated in the TRS is a conventional, owner-operated surface mine that will utilize large-scale mining equipment in a blast/load/haul operation.

The TRS has estimated the capital costs of the Project at $1.93 billion, the total cost per ton milled at $13.12, the all-in sustaining costs at $1,171 per ounce, and net present value (5)% at $1,800/oz of $400 million.

The Project configuration evaluated in the TRS is a conventional, owner-operated surface mine that would utilize large-scale mining equipment in a blast/load/haul operation.

Mill feed would be processed in a 65,000 tons per day comminution circuit consisting of primary and secondary crushing, wet grinding in a single semi-autogenous (“SAG”) mill and single ball mill followed by a gravity gold circuit and a conventional carbon in leach (“CIL”) circuit.

Whittle Enterprise Optimization

Prior to beginning the Pre-Feasibility Study (the “PFS”), the Company retained Whittle Engineering and BBA Inc.

Prior to beginning the Pre-feasibility Study (“PFS”) for the Livengood Gold Project which is summarized in the TRS, the Company retained Whittle Engineering and BBA Inc.

to collaborate on an enterprise optimization study (the “Whittle and BBA Study”) to review various technologies and project configurations and to recommend the optimum configuration for the PFS.

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The Whittle and BBA Study determined that the gravity/CIL plant at p80 250 micron with conventional tailings provided the highest net present value, which is the configuration detailed in the PFS.

The PFS was prepared by independent third-party consultants.

The Company cautions that the PFS is preliminary in nature, and is based on technical and economic assumptions which will be further refined and evaluated in a full feasibility study.

The PFS is based on an updated Project mineral resource estimate effective as of August 20, 2021 using a different mineral resource model than used in the April 2017 Report.

On March 7, 2023, the Company announced that the Board had approved a 2023 budget of $3.3 million to advance the Livengood Gold Project.

The TRS was prepared by independent third-party consultants.

The Company cautions that the TRS is preliminary in nature and is based on technical and economic assumptions which will be further refined and evaluated in a full feasibility study.

The TRS is based on an updated Project mineral resource estimate effective as of August 20, 2021.

The Company has determined that the mineral resource estimate of August 20, 2021 remains current as of December 31, 2023.

On January 22, 2024, the Company announced that it had completed a non-brokered private placement (the “Private Placement”) pursuant to which it issued common shares to existing major shareholders to raise gross proceeds of approximately $2.5 million.

The Private Placement consisted of 3,807,911 common shares of the Company, representing approximately 1.9% of the 195.9 million common shares issued and outstanding prior to the completion of the Private Placement, at a price of $0.664 per common share, the closing price of the Company’s common shares on the NYSE American on January 12, 2024.

The Private Placement was taken up by current institutional shareholders of the Company, Paulson & Co.

Inc., Sprott Asset Management USA, Inc., and Kopernik Global Investors, LLC on behalf of Heptagon plc Kopernik Global All-Cap Equity Fund.

The Company intends to use the net proceeds of the Private Placement for general working capital purposes.

On March 8, 2024, the Company announced that the Board had approved a 2024 budget of $3.3 million and endorsed the associated 2024 work program to advance the Livengood Gold Project.

The 2024 work program will advance the baseline environmental data collection in critical areas of hydrology and waste rock geochemical characterization needed to support future permitting, as well as advance community engagement.

The Company remains open to a strategic alliance to help support the future development of the Project while considering all other appropriate financing options.

The size of the gold resource, the Project’s favorable location, and the Company’s proven team are some of the reasons the Company would potentially attract a strategic partner with a long-term development horizon who understands the Project is highly leveraged to gold prices.

The size of the gold resource, the Project’s favorable location, and the Company’s proven team are some of the reasons the Company could potentially attract a strategic partner with a long-term development horizon who understands the Project is highly leveraged to gold prices.

Results of Operations

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The following discussion highlights certain selected financial information and changes in operations between the year ended December 31, 2023 and the year ended December 31, 2022.

Mineral property exploration expenditures were $1,138,134 for the year ended December 31, 2022 compared to $3,517,540 for the year ended December 31, 2021.

The decrease of $2,379,406 is primarily due to work completed in the year ended December 31, 2021 toward the updated Pre-Feasibility Study for the Livengood Gold Project of $2,072,121, reduced baseline environmental costs $239,826, reduced land maintenance costs of $62,510 and timing variances of legal costs of $4,949.

Share-based payment charges were $415,186 during the year ended December 31, 2023 compared to $448,474 during the year ended December 31, 2022.

The $86,643 decrease in share-based payment charges during the period was mainly the result of equity compensation issued or granted to certain officers and employees of the Company at a lower issue price during the year ended December 31, 2022 as compared to the year ended December 31, 2021.

The Company granted 451,085 deferred share units (“DSUs”) of C$0.92 per DSU and 240,000 incentive stock options at an issue price of C$0.92 per option during the year ended December 31, 2022 compared to 316,795 DSUs of C$1.31 per DSU and 240,000 incentive stock options at an issue price of C$1.31 per option during the year ended December 31, 2021.

All DSUs granted in each of these periods were fully vested upon issuance and all options vest one-third on the grant date, one-third on the first anniversary, and one-third on the second anniversary.

The $33,288 decrease in share-based payment charges during the year was mainly the result of equity compensation issued or granted to certain officers and employees of the Company at a lower issue price during the year ended December 31, 2023 as compared to the year ended December 31, 2022.

The Company granted 526,984 deferred share units (“DSUs”) at an issue price of C$0.63 per DSU, 145,614 DSUs at an issue price of C$0.57 per DSU, and 240,000 incentive stock options at an issue price of C$0.63 per option during the year ended December 31, 2023 compared to 451,085 DSUs at an issue price of C$0.92 per DSU and 240,000 incentive stock options at an issue price of C$0.92 per option during the year ended December 31, 2022.

All DSUs granted in each of these years were fully vested upon issuance.

All options vest one-third on the grant date, one-third on the first anniversary, and one-third on the second anniversary.

At December 31, 2023, there was $46,265 of unrecognized compensation expense related to non-vested options outstanding.

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Wages and benefits

Excluding share-based payment charges of $322,052 and $380,878, respectively, consulting fees decreased to $229,111 for the year ended December 31, 2022 from $231,509 for the year ended December 31, 2021.

The decrease of $2,398 is primarily due to a timing variance for general IT services.

Regulatory expenses were $137,947 for the year ended December 31, 2022 compared to $178,264 for the year ended December 31, 2021.

The decrease of $40,317 is primarily due to reduced SEDAR filings fees of $20,789, reduced TSX listing fees of $20,054, and reduced NYSE listing fees of $3,407, partially offset by increased EDGAR filings fees of $2,050 and increased transfer agent fees of $1,883.

Excluding share-based payment charges of $117,994 and $143,957, respectively, wages and benefits increased to $796,084 for the year ended December 31, 2022 from $791,116 for the year ended December 31, 2021.

The increase of $4,968 is primarily due to payroll-related benefit accruals as at December 31, 2022.

Professional fees were $267,056 for the year ended December 31, 2023 compared to $226,439 for the year ended December 31, 2022.

The increase of $15,845 is primarily due to the timing of audit services of $36,350 and increased XBRL costs of $1,211 partially offset by reduced legal fees of $17,777 and reduced tax services of $3,939.

Insurance costs were $202,893 for the year ended December 31, 2022 compared to $179,659 for the year ended December 31, 2021.

The increase of $23,234 is primarily due to premium increases to maintain coverage.

The increase of $40,617 is primarily due to increased legal fees of $54,660 partially offset by reduced audit and tax services due to timing of $12,849 and reduced XBRL costs of $1,194.

Travel costs were $45,925 for the year ended December 31, 2023 compared to $29,935 for the year ended December 31, 2022.

The increase of $11,471 is primarily due to travel related to investor relations conferences.

The increase of $15,990 is primarily due to increased travel requirements.

Excluding share-based payment charges of $5,711 and $8,428 for the years ended December 31, 2023 and 2022, respectively, investor relations decreased to $45,809 for the year ended December 31, 2023 from $57,163 for the year ended December 31, 2022.

The decrease of $11,355 is primarily due to reduced participation in investor relations conferences.

Excluding share-based payment charges of $79,960 and $117,994 for the years ended December 31, 2023 and 2022, respectively, wages and benefits decreased to $741,529 for the year ended December 31, 2023 from $796,084 for the year ended December 31, 2022.

The decrease of $54,555 is primarily due to payroll-related benefit accruals as at December 31, 2023.

Excluding share-based payments, all other operating expense categories reflected only moderate changes period over period.

Other items amounted to other income of $404,346 during the year ended December 31, 2022 compared to an expense of $64,839 during the year ended December 31, 2021.

The Company had a foreign exchange gain of $348,207 during the year ended December 31, 2022 compared to a foreign exchange loss of $101,818 during the year ended December 31, 2021 as a result of the impact of exchange rates on certain of the Company’s U.S.

Other items amounted to other income of $88,532 during the year ended December 31, 2023 compared to other income of $404,346 during the year ended December 31, 2022.

The Company had a foreign exchange loss of $30,754 during the year ended December 31, 2023 compared to a foreign exchange gain of $348,207 during the year ended December 31, 2022 as a result of the impact of exchange rates on certain of the Company’s U.S.

dollar cash balances.

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As at December 31, 2023, the Company reported cash and cash equivalents of $1,687,690 compared to $4,847,429 at December 31, 2022.

The decrease of approximately $2.9 million resulted mainly from operating expenditures on the Livengood Gold Project of approximately $2.9 million and a negative foreign currency transaction impact of $0.3 million, partially offset by financing activities of $0.3 million.

The decrease of approximately $3.2 million resulted mainly from planned expenditures on operating activities during the year ended December 31, 2023.

Our anticipated expenditures for year 2024 are approximately $3.3 million, including $539,528 for mineral property leases and $206,215 for mining claim government fees.

Total commitments for years 2024 through 2029 for mineral property leases and mining claim government fees are $3,324,780 and $1,237,290, respectively.

As at March 7, 2023, management believes that the Company has sufficient financial resources to maintain its operations for the next twelve months.

Based on cash and cash equivalents on hand of $1,687,690 as of December 31, 2023 and estimated $2.2 million of net proceeds from the Private Placement, as at March 7, 2024, management believes that the Company has sufficient financial resources to maintain its operations for the next twelve months.

The Company had no cash flows from financing activities during the year ended December 31, 2023.

On January 22, 2024, the Company announced that it had completed the Private Placement pursuant to which it issued 3,807,911 common shares to existing major shareholders to raise gross proceeds of approximately $2.5 million.

Financing activities during the year ended December 31, 2022 included the exercise of stock options.

Proceeds of $290,290 were received on the issuance of 405,000 common shares.

The Company had no cash flows from financing activities during the year ended December 31, 2021.

The Company had no cash flows from investing activities during the years ended December 31, 2023 and December 31, 2022.

As at December 31, 2023, the Company had working capital of $1,757,465 compared to working capital of $4,711,616 at December 31, 2022.

The Company expects that it will operate at a loss for the foreseeable future, but believes its current cash and cash equivalents

will be sufficient for it to complete its anticipated 2023 work plan at the Livengood Gold Project and satisfy its currently anticipated general and administrative costs through the 2024 fiscal year.

The Company will require significant additional financing to continue its operations (including general and administrative expenses) in connection with advancing activities at the Livengood Gold Project and the development of any mine that may be determined to be built at the Livengood Gold Project, and there is no assurance that the Company will be able to obtain the additional financing required on acceptable terms, if at all.

The Company expects that it will operate at a loss for the foreseeable future but believes its current cash and cash equivalents will be sufficient for it to complete its anticipated 2024 work plan.

The Company will require significant additional financing to continue its operations beyond the 2024 fiscal year (including general and administrative expenses) in connection with advancing activities at the Livengood Gold Project and the development of any mine that may be built at the Livengood Gold Project, and there is no assurance that the Company will be able to obtain the additional financing required on acceptable terms, if at all.

In addition, any significant delays in the issuance of required permits for the ongoing work at the Livengood Gold Project, or unexpected results in connection with the ongoing work, could result in the Company being required to raise additional funds to advance permitting efforts.

The Company’s review of its financing options includes pursuing a future strategic alliance to assist in further development, permitting and future construction costs, although there can be no assurance that any such strategic alliance will, in fact, be realized.

The Company’s review of its financing options includes considering a future strategic alliance to assist in further development, permitting and future construction costs, although there can be no assurance that any such strategic alliance will, in fact, be pursued or realized.

Despite the Company’s success to date in raising significant equity financing to fund its operations, there is significant uncertainty that the Company will be able to secure any additional financing in the current or future equity markets.

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Other than cash held by its subsidiaries for their immediate operating needs in the United States, all of the Company’s cash reserves are on deposit with a major Canadian chartered bank.

The Company does not believe that the credit, liquidity or market risks with respect thereto have increased as a result of the current market conditions.

The Company does not believe that the credit, liquidity or market risks with respect thereto have increased as a result of current market conditions.

Critical Accounting Estimates

Mineral properties and exploration and evaluation expenditures

The Company’s mineral project is currently in the exploration and evaluation phase.

Mineral property assets

The Company’s mineral project is currently in the development stage, as defined under subpart 1300 of Regulation S-K.

Mineral property acquisition costs are capitalized when incurred.

Mineral property exploration costs are expensed as incurred.

At such time that the Company determines that a mineral property can be economically developed, subsequent mineral property expenses will be capitalized during the development of such property.

The Company assesses interests in exploration properties for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

Mineral property costs are expensed as incurred.

At such time that the Company makes a decision to proceed to production, subsequent mineral property expenses will be capitalized during the development of such property.

The Company assesses interests in its mineral property assets for impairment at least annually, but will also conduct an assessment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

The assets that are tested for recoverability are the Company’s long-lived assets related to mineral property rights and claims.

At December 31, 2023, the Company’s mineral property assets totaled approximately $55 million.

As these assets are all similar in nature (they represent mining claims or rights to mining claims all within the same area), they are viewed as one asset group for impairment testing purposes.

The Company evaluates recoverability of its mineral property assets based on the undiscounted cash flows using the life of mine cash flows beginning

with production as stated in the TRS for the Livengood Gold Project, which uses a life of mine of approximately 21 years.

The estimates used in the life of mine cash flows are subject to uncertainty, including as a result of the assumed gold price.

At the reporting period end, price of gold is compared to the prior year-end gold price.

The price of gold on December 31, 2023 was $2,063, or $249 and 14% higher than the price of $1,814 at December 31, 2022.

The Livengood Gold Project is a long-term project that will take time to develop and eventually monetize making the use of a longer-term gold price assumption in the TRS more appropriate compared to recent spot prices for gold.

As at December 31, 2023, the Company concluded that the recoverability of the mineral property assets exceeded the carrying value.

Impairment analysis includes assessment of the following circumstances:

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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-K

Item 7. Management’s Discussion and Analysis